Review Petition No.63 of 2009,Writ Petition No.1893 of 2009,Review Petition (Lodging) No.52 of 2009,Writ Petition (Lodging) No.1243 of 2009

10th December, 2009

Petitioner Counsel: Mr. ASPI CHINOY,Mr. MAHESH LONDE,M/s. Sanjay Udeshi & Co.,Mr. M. M. VASHI,M/s. M. P. Vashi & Associates
Respondent Counsel: Mr. E. P. BHARUCHA,Ms. S. V. GHARAPURE,Mr. S. U. KAMDAR,M/s. Z. A. JARIWALA,M/s. Thakore Jariwala ,Associates,Mr. R. A. THORAT,Mr. P. J. THORAT

Cases Cited:
M/s. Prestress India Corporation Vs. U. P. State Electricity Board, 1988 (Suppl) SCC 716 [Para 4]
Sri Shankaranarayana Construction Co. Vs. Konkan Railway Corporation Ltd., 2004(2) ALL MR 636=2004(2) Bom.C.R. 676 [Para 4]
H. K. Kapoor Vs. Union of India, 122(2005) DLT 455 (D.B.) [Para 6]

JUDGMENT

SWATANTER KUMAR, C.J.:- Municipal Corporation of Greater Mumbai had issued a tender notice inviting bids for awarding work of repair and maintenance of roads as indicated therein on 23rd January, 2009. The last date for submission of documents was 9th February, 2009. The petitioners were one of the bidders. However, their bids were not accepted resulting in filing of the writ petitions aforenoticed which was partly allowed by this court by a detailed judgment dated 20th August, 2009 and directed the Corporation to invite fresh tenders. It will be useful to refer to the relevant extract in the operative part of the judgment at this stage itself:

"........ It is a settled norm of administrative prudence that higher the power greater is the responsibility to be cautious and fair which has now been accepted as a legal principle. The binding terms and conditions and accepted criteria was duly provided for and, thus, it was for the Corporation to show that it had acted in accordance therewith and its action was free of arbitrariness. The action of the Corporation has undermined the dignity of settled administrative norms and good governance. In fact, from the record, it is abundantly clear that the Corporation has failed to maintain absolute fairness and transparency in its procedure, decision making process and the final decision in awarding the contract. It can also be useful to notice that there is no clarity in the terms and conditions of the tender itself as to what would be the extent of use of each of the specified technologies while carrying out the repairs and maintenance of the roads. Undefined quantity and unspecified quality have not only resulted in giving rise to confusion but have considerably affected costing factors. To arrive rationally at a comparative cost study at L1, there had been no definite criteria as the bidders were not required to state their bid amount with reference to each of the specified technologies. In our view, this is a serious lacunae in the terms and conditions of the tender and doubt expressed by the (Chief Engineer Roads) in his note dated 4th April, 2009 is fully justified and the Authorities of the Corporation were expected to consider that aspect in a more objective and realistic manner. The Corporation is expected to discharge its obligation in accordance with the basic rule of law. The statutory power vested in the Commissioner of the Corporation to enter into contracts under Section 69 of the Act is to be exercised cautiously. He too has to exercise such power subject to approval of the Competent Authority if so specified. The Standing Committee is expected to exercise its power of approval expeditiously but certainly in a manner which is in line with the principle of fairness and transparency. In our view, both, the Commissioner of the Corporation and the Standing Committee have failed to act in exercising this basic principle. The entire decision making process and the decision suffer from defect of uncertainty, ambiguity and arbitrariness.

44. Rule is made absolute in Writ Petition (Lodging) No.1243 of 2009. The Letter of Intent dated 6th July, 2009 issued to Respondent Nos.4 to 6 is hereby quashed with a further direction that the Corporation shall invite fresh tenders by stating its terms and conditions with certainty and without ambiguity while keeping in mind the economic interest of the Corporation and ensuring the achievement of the public object.

45. In view of the above, nothing survives in Writ Petition No.765 of 2009 and the same is accordingly disposed of. Rule is discharged.

46. No order as to costs."

Against the above judgment, the petitioners preferred Special Leave Petition before the Supreme Court which was disposed of by the Supreme Court vide its order dated 5th October, 2009 and the order reads as under:

"Learned Senior Counsel appearing on behalf of the petitioners submits that the question as to what should be done after setting aside of the grant of tender in favour of respondent Nos.4 to 6 and the specific prayer regarding the award of tender in favour of present petitioners was specifically argued before the High Court. However, we do not find any consideration of argument if at all made. The petitioners are, therefore, allowed to withdraw this Special Leave Petition with liberty to file a review petition, if needs be, before the High Court regarding the relief claimed by the petitioners now of the grant of tender in their favour."

In furtherance to the said order, the petitioners have filed the present review petition No.63 of 2009 praying that the contract ought to be awarded to them as the court had set aside awarding of contract to the private respondents. Thus, the only relief that the court could grant was to direct awarding of the contract to the petitioners. It was argued by the learned counsel appearing for the petitioners with reference to certain observations and findings.

2. It is contended that the court had recorded specific findings that carbon core technology was one of the essential features for inviting tenders and the bidders were expected to be able to use the said technology for execution of the work. An essential condition of submitting a letter from Carbon core material manufacturer/supplier for continuous supply of material was subsequently amended and a joint venture agreement with manufacturer/ supplier as J. V. Partners was allowed. The court has also recorded a finding that the private respondents had not satisfied the original criteria and even the criteria as amended vide corrigendum dated 10th February, 2009 and as such, their bids could not have been accepted. The third finding recorded by the court is that confusion was caused by the Corporation itself which resulted in arbitrariness and favoritism to respondent Nos.4 to 6. On this premise, it is contended that awarding of contract in favour of the private respondents has been held to be bad and, therefore, the only finding that could be recorded, in view of the prayer made in the writ petition, was awarding of contract to the petitioners. Therefore, the direction issued by the court as aforeindicated, requiring inviting fresh tenders, thus, is a mistake in law and needs to be corrected.

3. The learned counsel appearing for the respondent-Corporation has submitted that the present review petition is neither maintainable nor is justified on any accepted norms of law for the grant of the relief prayed. Of course, these submissions have been made without prejudice to their rights of inviting of fresh tenders. In any case, it is the discretion of the Corporation and nobody has a vested right to regulate the commercial affairs of the Corporation. The respondents further contend that review petition deserves to be dismissed.

4. The learned counsel appearing for the review petitioners, while referring to various findings and observations and relying upon the judgment of the Supreme Court in the case of M/s. Prestress India Corporation Vs. U.P. State Electricity Board and others, 1988 (Suppl) SCC 716 submitted that once the court had recorded the finding that there was arbitrariness and unreasonableness on the part of the Corporation, then giving partial relief to the petitioner may not be correct as the petitioner would be entitled to get the entire reliefs i.e. awarding of the contract. Reliance has also been place on the judgment of this court in the case of Sri Shankaranarayana Construction Co. and another Vs. Konkan Railway Corporation Ltd. and others, 2004(2) Bombay C.R. 676 : [2004(2) ALL MR 636] to contend that the tender should be awarded to the petitioner and any kind of preferential treatment of any other person is not permissible in law.

5. As far as principle of law stated in the above judgments, relied upon by the petitioner are concerned, can hardly be disputed but what is to be examined by the court is whether these judgments have any application on law and facts of the case in hand. To maintain an application for review, it is essential that the same should fall squarely within the ambit and scope of Order 47, Rule 1 of the scope of Civil Procedure Code and ancillary principles thereto. The only clause of the provision which can be invoked by the petitioner is that review of the judgment is called for 'any other seen reason. What has to be seen is that the reasons stated by the applicant are sufficient reasons in reviewing the order and would essentially meet the ends of justice. Review has a limited scope and jurisdiction and is expected to be exercised with due care and caution. The doctrine of finality has its own application as it is a principle enunciated on public policy. The courts, while exercising jurisdiction under Article 226 of the Constitution of India, would not disturb or review its order unless the grounds stated in the provisions are satisfied or there some injustice is done to the parties concerned. In the present case, the judgments relied upon by the learned counsel appearing for the petitioners, in our opinion, would hardly have any application to the facts and circumstances of the case in hand. It is true that the State or its instrumentalities have every right to award contract to any person but its action in such commercial field must be regulated by principles of fairness and transparency. Distribution of State largesse is a matter which is normally determined by the concerned authority but decision making process of such distribution should be free of arbitrariness and favoritism. In the event where the court records finding that these principles have been violated then the court has to examine what relief the petitioners, in a given case, would be entitled to. It is not an absolute principle of law without exception that the petitioners must be granted the relief prayed for even if there are findings as to the presence of element of arbitrariness and favoritism or violation of the terms of the contract, in a matter relating to awarding of contract or tender recorded by the court. Sometimes in the larger public interest, the court has every jurisdiction to direct inviting of fresh tender instead of directing that the tender be awarded to a particular party. Thus, the court has to examine on the basis of the judgment and also on the basis of such findings it had recorded as to whether would it be justified in passing an order directing invitation of fresh tenders or the relief ought to have been granted to the petitioner as prayed.

6. We may also notice that scope of review petition is a limited one. The petitioner cannot be permitted re-agitate and have the matter reheard as the provisions for review and its application has to be construed in a strict manner. Reference in this regard can be made to a judgment of the Delhi High Court in the case of H. K. Kapoor Vs. Union of India and others, [122(2005) Delhi Law Times 455 (DB)] which reads thus -

"In the case of H. K. Kapoor Vs. Union of India & Ors. [122(2005) Delhi Law Times 455 (DB)], a Division Bench of this Court held that an attempt on the part of the petitioner or applicant to have the matter reheard on the basis of a review application would not be permissible. A party cannot be permitted to agitate or re-agitate the issues by filing the review application. Such applications would even be beyond the purview and scope of Order 47, Rule 1 of the CPC."

7. In light of the above principles, now we may refer to the facts and findings for that purpose. As already noticed, the court had recorded a positive finding that the use of carbon core technology was an essential feature for invitation of tenders and the bidders were expected to fulfill the said condition. Private respondents did not satisfy the original and even the modified condition as per the corrigendum. The waiver in favour of the said respondents smacks of favoritism. The entire course of awarding the tender was put on a different path after the Commissioners meeting with the Chief Minister as recorded in paragraph 27 of the judgment and which is sought to be refuted. This course of action was contrary to the advice given by the technical experts and apparently contrary to the terms and conditions of the tender. Besides recording these findings, the court had specifically noticed the terms and conditions of the tender and certain facts which were revealed from the records, produced by the Corporation during the course of hearing. The following findings, recorded in different paragraphs of the judgment, can usefully be referred hereto:

"...... It is a settled norm of administrative prudence that higher the power greater is the responsibility to be cautious and fair which has now been accepted as a legal principle. The binding terms and conditions and accepted criteria was duly provided for and, thus, it was for the Corporation to show that it had acted in accordance therewith and its action was free of arbitrariness. The action of the Corporation has undermined the dignity of settled administrative norms and good governance. In fact, from the record, it is abundantly clear that the Corporation has failed to maintain absolute fairness and transparency in its procedure, decision making process and the final decision in awarding the contract. It can also be useful to notice that there is no clarity in the terms and conditions of the tender itself as to what would be the extent of use of each of the specified technologies while carrying out the repairs and maintenance of the roads. Undefined quantity and unspecified quality have not only resulted in giving rise to confusion but have considerably affected costing factors. To arrive rationally at a comparative cost study at L-1, there had been no definite criteria as the bidders were not required to state their bid amount with reference to each of the specified technologies. In our view, this is a serious lacunae in the terms and conditions of the tender and doubt expressed by the Chief Engineer (Roads) in his note dated 4th April, 2009 is fully justified and the Authorities of the Corporation were expected to consider that aspect in a more objective and realistic manner. The Corporation is expected to discharge its obligation in accordance with the basic rule of law. The statutory power vested in the Commissioner of the Corporation to enter into contracts under Section 69 of the Act is to be exercised cautiously. He too has to exercise such power subject to approval of the Competent Authority if so specified. The Standing Committee is expected to exercise its power of approval expeditiously but certainly in a manner which is in line with the principle of fairness and transparency. In our view, both, the Commissioner of the Corporation and the Standing Committee have failed to act in exercising this basic principle. The entire decision making process and the decision suffer from defect of uncertainty, ambiguity and arbitrariness."

"The principle object of inviting tenders in question was to use best and/or different technologies and different steps as per requirement while keeping the economic interest of the Corporation in mind and ensuring achievement of a laudable public purpose that roads in the suburbs and City of Mumbai should be maintained and kept in a good condition. To achieve this object, the Corporation had issued voluminous terms and conditions of the tender containing specification, methodology, criteria and the procedure it intended to adopt for awarding of the tender. Paramount considerations of public purpose and economic interest of the Corporation were ignored at least in terms of procedure. Deletion, variation and then completely waiving even the substituted conditions, which were material, casts a serious shadow of doubt on the action of the Corporation. While distributing the State largesse specially in the form of awarding of contract of high magnitude, the obligation on the part of the Corporation to be fair, transparent and judicious is on a higher pedestal."

"The sudden change in decision making process and the decision itself that too without any properly recorded reasons shows the unreasonableness in the action of the Corporation. How the Corporation could leave a discretion vested in it for getting the work executed at the mercy of the tenderers as to which one of the specified technology was to be used, is an aspect which is beyond comprehension of reasonable mind. To our mind, it would be for the Officers of the Corporation to decide as to which road and which section would require repairs based on which technology and it is not for the tenderer to decide which road he would repair with what technology, more so, a tenderer who does not even have the basic requisite of carboncor technology. It appears that suddenly larger public interest and the interest of the Corporation was overlooked and procedures were varied for sustaining the private interest."

"...... However, we have already expressed our opinion that the said decision of the Corporation is not in consonance with the language, spirit and public purpose sought to be achieved by the tender conditions. Another aspect which needs to be examined by the Court is that the Corporation first itself created a monopoly that it only named one supplier of carboncor in terms of clause 2.45.6 whose letter was stated to be mandatory. This was modified by Corrigendum dated 10th February, 2009 permitting Joint Venture agreement to be submitted instead of letter from the said concern. From the record of the Corporation, it appears that even this supplier had written letters to the Corporation that by awarding contracts to the persons who had neither obtained letter nor Joint Venture agreement from the said concern, the Corporation would be breaching the terms and conditions of the invitation to tender. After opening the packets and negotiating with persons, then, without proper disclosure to all concerned, this term was wiped out for reasons which are unknown. This creation and then abolishing of terms show monopolistic attitude regarding an essential technology and it creats a shadow of doubt on the entire methodology adopted by the Corporation in finalizing the tenders."

"...... Here we have noticed that apparently Respondent Nos.4 to 6 had not satisfied the original criteria and even the criteria stated by Corrigendum dated 10th February, 2009. Of course, even the subsequent decisions i.e. decision taken after opening of Packet C was without recording proper reasons by the Corporation on its file. It was never communicated to all the tenderers, that without letter of Joint Venture agreement relating to carboncor technology, the tenderers would be held eligible."

8. In paragraph 18 of the judgment, the court also noticed and found that there was ambiguity and uncertainty, both in terms of the contract as well as expectations of the Corporation from tenders, created and which existed even subsequent to inviting of tender. Uncertainty, economic loss, ambiguity in relation as to whether carbon core technology was or was not to be used by tenderer, loss of revenue and favoritism was writ large. Once the court records findings in relation to such serious matters which vitiates the entire process of selection, no particular individual can be permitted to benefit therefrom. It is of great importance and a better course that all persons are given a fair chance to participate in the tender afresh and in accordance with law.

9. From the bare reading of the above recorded findings in the judgment, it is clear that the action of the respondent-Corporation not only suffers from arbitrariness and favoritism but the entire decision making process was defective and stood vitiated being in contrary to the specific terms and conditions of the notice inviting tenders. Furthermore, the ambiguities in the terms and conditions of the tender, particularly, introduced by subsequent corrigendum and letters issued by the Corporation were in complete contradiction to the terms and conditions of the notice inviting tenders. Creation of the monopoly of carbon core material manufacturer/supplier by the Corporation exhibited clear, unjust and unfair actions on part of the Corporation in relation to distribution of State largesse. The most important aspect, as a matter of fact, is that it would not be in public interest to permit grant of absolute and entire relief to the petitioners as it is bound to hurt the economic interests of the Corporation and the public interest at large. If the tender work is directed to be given to the petitioners notwithstanding the ambiguities, uncertainties, specifically noticed in the judgment as well as created by the conduct of the Corporation, would tilt the balance in favour of the private interest rather than larger public interest. The use of the most sophisticated technology for the benefit and in favour of the larger public interest would stand defeated.

10. In the above paras, thus, we have recorded specific reasons as to why it will be in the larger public interest as well as the economic interest of the Corporation not to grant tender to the petitioners in preference to issuance of the direction to the respondent-Corporation to invite fresh tenders. The Corporation itself has also decided to invite fresh tenders and such a decision squarely falls within the domain of the competent authorities in the Corporation.

11. In the circumstances aforenoticed, we do not see any reason to review our judgment dated 20th August, 2009 or any part thereof as prayed by the petitioners. Both the Review Petitions are dismissed with no order as to costs.

Petition dismissed.