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Tata Motors Vs The Brihanmumbai Electric Supply

Tata Motors Vs The Brihanmumbai Electric Supply

The Apex Court pronounced a judgement in the case titled Tata Motors Vs The Brihan Mumbai Electric Supply & Transport Undertaking (BEST) And Others dated 19th May 2023 wherein the court dismissed the appeal of TATA Motors (Appellant)  and allowed the appeals filed by Brihan Mumbai Electric Supply and Transport Undertaking (BEST) herein referred as (“R1”) and EVEY herein referred as (“R2”), where the court set aside the part of High Court’s judgment and Order wherein, the decision of R1  for accepting the tender of R2, was set aside.

Due to the issues raised in all the captioned appeals being common and challenging the self-same order passed by the Hon’ble High Court of  Bombay dated 05.07.2022 in the Writ Petition (L) No. 15548 of 2022, those were taken up for hearing analogously and been disposed of by this common judgment and order.

The Appeal arising out of SLP(C) No. 15708 of 2022 was filed by TATA Motors Limited (for short, “TATA Motors”); the Appeal arising out of SLP(C) No. 11871 of 2022  was filed by EVEY Trans Pvt. Ltd. (for short, “EVEY”)  The Appeal arising out of SLP(C) No. 11933 of 2022 was filed by Brihan Mumbai Electric Supply & Transport Undertaking (for short, “BEST”), a statutory corporation operating under the provisions of the Mumbai Municipal Corporation Act, 1888. The present article shall discuss the aspects covered in the case.

Facts of the Case

The facts of the case are mentioned below –

  • A tender was floated by Brihan Mumbai Electric Supply and Transport Undertaking (‘BEST’), i.e. R1, for the supplying, operating and maintaining 1400 (+50 per cent variation) Single Decker AC Electric Buses with drivers for the purpose of public transport service within the city of Mumbai together with other civil infrastructure development at the BEST depots for a period of 12 years.
  • There were eight market players in total who participated in the Tender process, including EVEY Trans Pvt. Ltd. (‘EVEY’) (R2) and TATA Motors (Appellant). In the pre-bid meeting held on 11th March 2022, the appellant submitted its pre-bid points, wherein it requested R1 for considering its bid for 200 Km/day with 75 minutes of opportunity charging time during the day operations and range testing conditions.
  • Certain specifications were revised by the R1. However, the modifications which were requested by the appellant were rejected.R1 opted for a specific reference to “in actual conditions” followed by excluding any reference to “AIS 040” or “Standard Conditions” in the Tender specifications.
  • The bid was submitted by the appellant on 25th April 2022, wherein it guaranteed an operating range of 200 Km with 80% State of Charge (‘SoC’) (i.e. 20% reserve left upon running 200 Km in single charge). However, the same was achieved “in standard test conditions as per AIS 040”, which was considered a deviation from the specifications.
  • The bid by R2 was submitted on 2nd May 2022, claiming that the same was submitted without deviating from the Tender conditions, including the condition of a minimum operating range of 200 Km in a single charge.
  • The Tender bids were opened on 04-05-2022. BEST, in its technical suitability evaluation dated 06-05-2022, held TATA Motors, along with four other bidders, to be “technically non-responsive”. TATA Motor’s bid was rejected on account of technical deviation with respect to the operating range in its Annexure F and Annexure Y, respectively.
  • The bid which R2 had offered in the said report was deemed to be “technically responsive”. Aggrieved by the technical suitability evaluation issued by R1, which led to the rejection of the bid of TATA Motors, the latter approached the HC. During the pendency of the aforesaid Writ Petition (WP), R1 awarded the tender-favouring R2 with the Letter of Acceptance dated 20th May 2022.
  • The High Court vide its impugned order considered the view that the requirement for the operating range to be more than 200 Km in a single charge in actual conditions was unambiguous. Accordingly, the High Court upheld the disqualification of the appellant, thereby rejecting their claim from being considered an eligible bidder due to their failure in complying with the tender’s technical requirements.
  • It was also held by the HC that the email sent by R2 dated 06th May 2022 ought not to have been entertained, and the technical bid evaluation, which was released on the same day, didn’t depict fairness in the actions of R1. Therefore, the High Court declared R2 also as an unsuccessful bidder. Thus, aggrieved by the said Order of the High Court, all three parties had preferred the present appeal before the Court with their respective petitions.
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Whether the High Court, after upholding the disqualification of TATA Motors from the Tender, justified in further exercising to determine the disqualification of R2 and that R1, at its discretion, may undertake a fresh tender process?

Observations and Ruling of the Court

The court made the following observations-

  • The Court said that its interference was necessary due to it being the guardian of fundamental rights and therefore being duty-bound for such interference in the event of the presence of arbitrariness, irrationality, mala fides and bias; it must be remembered that today there are many public sector undertakings competing with the private industry.
  • The contracts entered into between private parties don’t attract scrutiny under writ jurisdiction. Undoubtedly, the bodies which fall within the meaning of “State ” according to Article 12 of the  Indian Constitution are bound for acting fairly and are amenable to the writ jurisdiction of superior courts, but the exercise of such discretionary power must be done with a great deal of restraint and caution.
  • Further, the Court observed that it’s important for the courts to realize their limitations and the havoc which needless interference in commercial matters can cause. It was also observed that “in contracts which involves technical issues, the Courts should be even more reluctant because most of us in Judges’ robes don’t have the necessary expertise for the adjudication upon technical issues beyond our domain.
  • The Courts shouldn’t be using a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give ‘fair play in the joints’ to the government and public sector undertakings in matters related to contracts. The Courts shouldn’t be interfering where such interference will cause unnecessary loss to the public exchequer”.
  • The Court observed that it wasn’t disputed that the first and the foremost requirement of the Tender was the prescribed operating range of the single-decker buses, which would be operating for around an average of 200 Kms in a single charge in “actual conditions” with 80 per cent SoC without any interruption.
  • The court noted that the appellant deviated from this requirement in their bid and had informed the R1 that it could carry the operating range in the “standard test conditions”, which want as per the Tender conditions.
  • Therefore, the High Court had rightly observed in its impugned judgement that the bid of the appellant failed in complying with the said requirement and essential term of the Tender. However, the Court opined that there wasn’t any need for the High Court to enter into the fray of investigating the decision of R1 to declare R2 as the eligible bidder, having once declared the appellant as “non-responsive” and having stood disqualified from the Tender process as the court wasn’t exercising its writ jurisdiction in the public interest.
  • Further, the Court said that the High Court looked into a petition filed by a party trying to assert its own rights. The Court referred to the case of Raunaq International Ltd. v. I.V.R. Construction Ltd., wherein it was observed that the grant of judicial relief at the instance of a party not fulfilling the requisite criteria is something which could be termed as misplaced. Further, the Court noted that the submission of Annexure Y would have been made by the original “Successful Bidder” subsequent to the evaluation of the bid.
  • The Court said that the restriction on the revision of documents under Clause 16 of Schedule I, which states, “No addition/correction, submission of documents will be allowed after the opening of technical bid,” was only limited to the documents necessary to be included in the technical bid and would not be applicable to any such document which doesn’t form a part of the technical bid.
  • The Court also viewed that the High Court should have been a bit slow and circumspect in reversing the action of R1 permitting R2 for submission of a revised Annexure Y regarding the Tender. Therefore, the Court held that no error was committed by R1, or it cannot be held guilty of favouritism, etc., in permitting R2 for the submission of a revised Annexure Y as the earlier one was incorrect owing to a clerical error. Thus, this exercise itself wasn’t sufficient for declaring the entire bid offered by R2 as unlawful or illegal.
  • The Court further observed that ordinarily, a writ Court should refrain itself from the imposition of its decision over the decision of the employer with regard to the acceptance of the bid of a tenderer unless something very gross or palpable is pointed out.
  • The Court ordinarily shouldn’t interfere in matters with regard to tender or contract. To set at nothing the entire tender process at the stage when the contract is well underway wouldn’t be in the public interest. Initiating a fresh tender process at this stage may be time-consuming and also a loss to the public exchequer to the tune of crores of rupees.
  • The financial burden/implications on the public exchequer that may be needed to be met by the State if the Court directs for the issuance of a fresh tender notice should be one of the guiding factors that should be kept in mind by the court. The Court referred to Air India Ltd. v. Cochin International Airport Ltd., reported in (2000) 2 SCC 617, wherein there was a review of the law with regards to the award of a contract by the State and public sector corporations, and it was held that the award of a contract, whether by a private party or by a State, is essentially a commercial transaction.
  •  It can choose its own method for arriving at a decision, and it is free for granting any relaxation for bona fide reasons if the tender conditions permit such a relaxation. It was further held that the State, its corporations, agencies and instrumentalities have the public duty to be fair to all concerned.
  • Even when some defect has been found in the decision-making process, the Court must exercise its discretionary powers under Article 226 with great caution, and it should be exercised only in furtherance of public interest and not merely in the making out of a legal point. The interest of the larger public must always be considered by the court for deciding whether its intervention is required or not. Only when it arrives at a conclusion that overwhelming public interest requires interference should the Court interfere.
  • Further, the Court referred to Jagdish Mandal v. State of Orissa and Others, (2007) 14 SCC 517, wherein it was observed that at the time of invoking the power of judicial review in matters as to tenders or award of contracts, there is a need to keep in mind certain features about the evaluations of tenders and awarding of contracts being essentially commercial functions and principles of equity and natural justice must stay at a distance in such matters.
  • If the decision with regard to the award of a contract is bona fide and is in the public interest, Courts wouldn’t be interfering in the same by exercising powers of judicial review even if an error in assessment, procedural aberration or prejudice to a tenderer is made out. The power of judicial review won’t be invoked for the protection of private interest at the cost of public interest or for deciding contractual disputes.
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Therefore, the Court set aside that part of the impugned judgment as well as the order passed by the High Court by which the decision of the R1 for accepting the tender of R2 was set aside, and it was left to the discretion of BEST for undertaking the fresh tender process. Further, the appeal filed by the appellant was dismissed, and the appeals filed by the respondents were allowed.

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