Date of the Judgment: 27 March 2018
Citation: 2018 INSC 247
Judges: Ranjan Gogoi, J., R. Banumathi, J., Mohan M. Shantanagoudar, J.
Can a High Court interfere with the technical evaluation of a tender process conducted by an expert body? The Supreme Court of India addressed this question in a recent case involving the Ujjain Municipal Corporation’s tender for door-to-door collection and transportation of municipal solid waste. The Court emphasized that judicial review of such decisions is limited and that the opinions of technical experts should be respected unless there is clear evidence of bias or arbitrariness. The Court also clarified that a bidder cannot rely on the experience of a third party if they have explicitly stated they are not part of a consortium.
Case Background
The Ujjain Municipal Corporation issued a Notice Inviting Tender (NIT) on 01 May 2015, seeking an agency to manage door-to-door collection and transportation of municipal solid waste for a 10-year period. The tender process involved a two-envelope system, with separate technical and financial bids. The Municipal Corporation appointed M/s Eco Save System Pvt. Ltd. as a technical expert to evaluate these bids. The last date for submitting online tenders was 01 June 2015, with the technical bids opened on 02 June 2015, and financial bids on 04 June 2015.
Three bidders were in contention: Global Waste Management Cell Private Limited, BVG India Limited, and Earth Connect Transway. The technical expert analyzed the bids and awarded marks based on the NIT’s specifications. The technical evaluation carried 80% weightage, while the financial evaluation carried 20%. Only bidders scoring at least 60% in the technical evaluation would have their financial bids opened. The final score was a combination of weighted technical and financial scores. Global Waste Management Cell Pvt. Ltd. secured the highest final score and was awarded the contract.
BVG India Limited, the second-highest scorer, challenged the award of the contract in the High Court of Madhya Pradesh, Bench at Indore. The High Court allowed the writ petition, setting aside the contract awarded to Global Waste Management Cell Private Limited. The Municipal Corporation and Global Waste Management Cell Private Limited then appealed to the Supreme Court.
Timeline
| Date | Event |
|---|---|
| 01 May 2015 | Ujjain Municipal Corporation issued Notice Inviting Tender (NIT) for municipal solid waste management. |
| 21 May 2015 | Original last date for submission of tenders. |
| 01 June 2015 | Revised last date for submitting online tenders. |
| 02 June 2015 | Opening of technical bids. |
| 04 June 2015 | Opening of financial bids. |
| 03 June 2015 – 06 June 2015 | Technical eligibility evaluation completed by the technical expert. |
| 16 June 2015 | Financial bids of the technically qualified bidders were opened. |
| 18 June 2015 | Final scores of the bidders were released by the technical expert. |
| 24 October 2013 | Date of Pimpri Chinchwad Municipal Corporation (PCMC) Certificate submitted by BVG India Limited. |
| 15 January 2015 | Date of certificate submitted by Global Waste Management Cell Private Limited in respect of Mira Bhayandar. |
| 26 April 2016 | Supreme Court granted an interim order staying the operation of the High Court’s order. |
| 07 April 2016 | High Court of Madhya Pradesh allowed the writ petition filed by BVG India Limited. |
| 27 March 2018 | Supreme Court of India delivered the final judgment. |
| 28 March 2018 | Supreme Court of India issued a correction order. |
Course of Proceedings
The High Court of Madhya Pradesh, Bench at Indore, allowed the writ petition filed by BVG India Limited, setting aside the contract awarded to Global Waste Management Cell Private Limited. The High Court independently evaluated the technical and financial bids, disagreeing with the technical expert’s assessment. The High Court increased the marks given to BVG India Limited in the technical evaluation, which led to a different outcome. The High Court also found that the Mira Bhayander certificate produced by the successful bidder was submitted after the technical evaluation.
The Municipal Corporation and Global Waste Management Cell Private Limited appealed to the Supreme Court against this decision. During the pendency of the appeal, the Supreme Court granted an interim order staying the High Court’s order, allowing Global Waste Management Cell Private Limited to continue with the contract.
Legal Framework
The Supreme Court referred to several key legal principles in its judgment. It emphasized that judicial review of administrative decisions, especially in contract matters, is limited. The Court cited the judgment in Tata Cellular v. Union of India, (1994) 6 SCC 651, which states that while courts can review the decision-making process to prevent arbitrariness, they cannot substitute their own judgment for that of the administrative body or technical experts.
The Court also referred to the Solid Waste Management Rules, 2016, which mandate that urban local bodies ensure door-to-door collection of segregated waste and its transportation in covered vehicles to processing or disposal facilities.
Arguments
Arguments on behalf of the Municipal Corporation and Global Waste Management Cell Private Limited:
- The High Court erred in relying on the Pimpri Chinchwad Municipal Corporation (PCMC) certificate submitted by BVG India Limited because the certificate belonged to BVG Kshitij Waste Management Services Private Limited, and no connection was established between the two entities.
- The High Court acted as an appellate authority by independently evaluating the tenders and increasing the marks for responsiveness from 5 to 10 and for experience and quantity of waste handled per day.
- The High Court incorrectly applied the formula for evaluating the financial bids.
- The High Court wrongly concluded that the Mira Bhayander certificate produced by Global Waste Management Cell Private Limited was submitted after the technical evaluation, when it was submitted before the technical evaluation.
Arguments on behalf of BVG India Limited:
- The High Court was justified in correcting the errors committed by the technical expert while rejecting the bid of BVG India Limited.
- The financial bid of BVG India Limited was the lowest, and thus, it should have been accepted to safeguard the financial interests of the corporation.
Arguments on behalf of the Technical Expert:
- The technical expert acted fairly, keeping in mind the public interest.
- The technical expert has extensive experience in the field of Municipal Solid Waste Management Projects.
- The technical expert meticulously considered all relevant aspects while evaluating the technical and financial bids.
Submissions of Parties
| Main Submission | Sub-Submissions by Municipal Corporation and Global Waste Management Cell Private Limited | Sub-Submissions by BVG India Limited |
|---|---|---|
| Technical Evaluation |
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| Financial Evaluation |
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| Mira Bhayander Certificate |
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| Expertise |
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Issues Framed by the Supreme Court
The Supreme Court framed the following issues for consideration:
- Whether under the scope of judicial review, the High Court could ordinarily question the judgment of the expert consultant on the issue of technical qualifications of a bidder when the consultant takes into consideration various factors including the basis of non-performance of the bidder?
- Whether a bidder who submits a bid expressly declaring that it is submitting the same independently and without any partners, consortium or joint venture can rely upon the technical qualifications of any third party for its qualification?
- Whether the High Court is justified in independently evaluating the technical bids and financial bids of the parties, as an appellate authority, for coming to the conclusion?
Treatment of the Issue by the Court
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Judicial Review of Expert’s Technical Evaluation | High Court should not ordinarily interfere with the expert’s judgment. | Courts should respect the expertise of technical consultants unless there is evidence of bias or mala fides. |
| Reliance on Third-Party Technical Qualifications | Bidder cannot rely on third-party qualifications if it declared it was not part of a consortium. | A bidder must stand on its own qualifications when it explicitly states it is not part of a consortium. |
| High Court’s Independent Evaluation | High Court is not justified in acting as an appellate authority. | Courts should exercise judicial restraint and not re-evaluate technical and financial bids unless there is evidence of mala fides, arbitrariness, or perversity. |
Authorities
Cases Relied Upon by the Court:
- Tata Cellular v. Union of India, (1994) 6 SCC 651: This case was cited for the principle that judicial review of administrative decisions is limited and that courts should not substitute their own judgment for that of the administrative body.
- Master Merin Services (P) Ltd. v. Metcalfe & Hodgkinson (2005) 6 SCC 138: This case was cited to state that the court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
- Sterling Computers Ltd. v. M & N Publications Ltd. (1993) 1 SCC 445: This case was cited to state that the court can examine whether the “decision-making process” was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution.
- Raunaq International Limited v. I.V.R. Construction Limited, (1999) 1 SCC 492: This case was cited to highlight the various commercial considerations that are of paramount importance while arriving at a commercial decision.
- Air India Limited v. Cochin International Airport Limited (2000) 2 SCC 617: This case was cited to state that the Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not.
- U.P. Financial Corporation v. Naini Oxygen & Acetylene Gas Ltd. (1995) 2 SCC 754: This case was cited to state that it is not for the courts to substitute its decision for the decision of the Corporation.
- U.P. Financial Corporation v. Gem Cap (India) Pvt. Ltd. & Ors. (1993) 2 SCC 299: This case was cited to state that the High Court cannot sit as an appellate authority over the acts and deeds of the corporation.
- Karnataka State Financial Corporation v. Micro Cast Rubber & Allied Products (P) Ltd. & Ors. (1996) 5 SCC 65: This case was cited to state that the action of the financial corporation should not be interfered with if it has acted broadly in consonance with the guidelines.
- Karnataka State Industrial Investment & Development Corporation Limited v. Cavalet India Ltd. & Ors. (2005) 4 SCC 456: This case was cited for the legal principles regarding the scope of judicial review in matters involving financial corporations.
- B.S.N. Joshi and Sons Ltd. v. Nair Coal Services Ltd. (2006) 11 SCC 548: This case was cited to summarize the scope of judicial review and the interference of superior courts in the matter of award of contracts.
- Delhi Science Forum v. Union of India (1996) 2 SCC 405: This case was cited to state that the onus to demonstrate that such decision has been vitiated is on the person who questions the validity thereof.
- Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium) (2016) 8 SCC 622: This case was cited for the principle that the employer can deviate from the terms and conditions of the tender if the changes affected all intending applicants alike.
- Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd. and Ors. (2016) 16 SCC 818: This case was cited to state that the owner or the employer of a project is the best person to understand and appreciate its requirements and interpret its documents.
- Jagdish Mandal v. State of Orissa and Ors. (2007) 14 SCC 517: This case was cited to state that the soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone.
- Meerut Development Authority v. Assn. of Management Studies (2009) 6 SCC 171: This case was cited to state that the soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone.
- Trilochan Mishra Etc v. State of Orissa & Ors (1971) 3 SCC 153: This case was cited to state that the Government has a right to enter into a contract with a person well known to it.
- Ramana Dayaram Shetty v. International Airport Authority of India (1979) 3 SCC 489: This case was cited for the interpretation of essential conditions in a tender.
- Montecarlo Ltd. v. NTPC Ltd. (2016) 15 SCC 272: This case was cited to highlight the freedom of the owner to decide in matters of tenders.
Legal Provisions Considered by the Court:
- Article 14 of the Constitution of India: This article was mentioned in the context of ensuring fairness and non-arbitrariness in the tender process.
- Article 226 of the Constitution of India: This article was mentioned in the context of the power of the High Court to issue writs.
- Solid Waste Management Rules, 2016: The Court noted that these rules mandate door-to-door collection of segregated waste and its transportation.
Authorities Considered by the Court
| Authority | Court | How it was Considered |
|---|---|---|
| Tata Cellular v. Union of India, (1994) 6 SCC 651 | Supreme Court of India | Followed – Principles of limited judicial review in administrative decisions. |
| Master Merin Services (P) Ltd. v. Metcalfe & Hodgkinson (2005) 6 SCC 138 | Supreme Court of India | Followed – Court does not sit as a court of appeal. |
| Sterling Computers Ltd. v. M & N Publications Ltd. (1993) 1 SCC 445 | Supreme Court of India | Followed – Court can examine the “decision-making process”. |
| Raunaq International Limited v. I.V.R. Construction Limited, (1999) 1 SCC 492 | Supreme Court of India | Followed – Commercial considerations in tender process. |
| Air India Limited v. Cochin International Airport Limited (2000) 2 SCC 617 | Supreme Court of India | Followed – Larger public interest should be kept in mind. |
| U.P. Financial Corporation v. Naini Oxygen & Acetylene Gas Ltd. (1995) 2 SCC 754 | Supreme Court of India | Followed – Courts should not substitute their decision. |
| U.P. Financial Corporation v. Gem Cap (India) Pvt. Ltd. & Ors. (1993) 2 SCC 299 | Supreme Court of India | Followed – High Court cannot act as appellate authority. |
| Karnataka State Financial Corporation v. Micro Cast Rubber & Allied Products (P) Ltd. & Ors. (1996) 5 SCC 65 | Supreme Court of India | Followed – Action of financial corporation should not be interfered with. |
| Karnataka State Industrial Investment & Development Corporation Limited v. Cavalet India Ltd. & Ors. (2005) 4 SCC 456 | Supreme Court of India | Followed – Principles of judicial review in financial corporation matters. |
| B.S.N. Joshi and Sons Ltd. v. Nair Coal Services Ltd. (2006) 11 SCC 548 | Supreme Court of India | Followed – Scope of judicial review in contract awards. |
| Delhi Science Forum v. Union of India (1996) 2 SCC 405 | Supreme Court of India | Followed – Onus to demonstrate vitiated decision is on the petitioner. |
| Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium) (2016) 8 SCC 622 | Supreme Court of India | Followed – Employer can deviate from NIT terms if applied to all. |
| Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd. and Ors. (2016) 16 SCC 818 | Supreme Court of India | Followed – Owner is best to interpret tender documents. |
| Jagdish Mandal v. State of Orissa and Ors. (2007) 14 SCC 517 | Supreme Court of India | Followed – Soundness of decision can be questioned on limited grounds. |
| Meerut Development Authority v. Assn. of Management Studies (2009) 6 SCC 171 | Supreme Court of India | Followed – Soundness of decision can be questioned on limited grounds. |
| Trilochan Mishra Etc v. State of Orissa & Ors (1971) 3 SCC 153 | Supreme Court of India | Followed – Government has right to contract with known person. |
| Ramana Dayaram Shetty v. International Airport Authority of India (1979) 3 SCC 489 | Supreme Court of India | Followed – Interpretation of essential tender conditions. |
| Montecarlo Ltd. v. NTPC Ltd. (2016) 15 SCC 272 | Supreme Court of India | Followed – Freedom of owner in tender matters. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | Court’s Treatment |
|---|---|
| High Court erred in relying on PCMC certificate of BVG Kshitij. | Accepted – The Court agreed that the High Court erred in relying on the PCMC certificate as it belonged to a different entity and no relationship was established. |
| High Court acted as appellate authority in re-evaluating technical bids. | Accepted – The Court found that the High Court acted as an appellate authority by independently evaluating the technical bids. |
| High Court wrongly increased marks for responsiveness. | Accepted – The Court held that the High Court was not justified in increasing the marks for responsiveness as BVG India Limited had suppressed vital information about show cause notices. |
| High Court incorrectly applied the formula for financial bid evaluation. | Accepted – The Court agreed that the High Court’s method for evaluating the financial bid was incorrect and illogical. |
| High Court wrongly concluded Mira Bhayander certificate was submitted after technical evaluation. | Accepted – The Court found that the High Court’s finding on the Mira Bhayander certificate was factually incorrect. |
| High Court justified in correcting errors of technical expert. | Rejected – The Court held that the High Court was not justified in correcting the technical expert’s evaluation. |
| Technical expert wrongly rejected BVG India Limited’s bid. | Rejected – The Court upheld the technical expert’s decision, finding it was based on a fair assessment. |
| BVG India Limited’s financial bid was the lowest. | Considered but not decisive – The Court acknowledged the lowest financial bid but emphasized that technical qualifications and public interest were more important. |
| Accepting BVG India Limited’s bid would safeguard financial interests. | Rejected – The Court held that the bid should be accepted not only based on the outcome of the financial bid, but also based on the evaluation of the technical bid. |
| Technical expert acted fairly and in public interest. | Accepted – The Court found that the technical expert acted fairly and in the public interest. |
| Technical expert has vast experience in municipal solid waste management. | Accepted – The Court acknowledged the technical expert’s experience and expertise in municipal solid waste management. |
How each authority was viewed by the Court?
- Tata Cellular v. Union of India, (1994) 6 SCC 651: The Court reiterated the principle of judicial restraint in reviewing administrative decisions, emphasizing that courts should not substitute their own judgment for that of experts.
- Master Merin Services (P) Ltd. v. Metcalfe & Hodgkinson (2005) 6 SCC 138: The Court reiterated that the court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
- Sterling Computers Ltd. v. M & N Publications Ltd. (1993) 1 SCC 445: The Court reiterated that the court can examine whether the “decision-making process” was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution.
- Raunaq International Limited v. I.V.R. Construction Limited, (1999) 1 SCC 492: The Court reiterated the importance of commercial considerations in tender decisions.
- Air India Limited v. Cochin International Airport Limited (2000) 2 SCC 617: The Court reiterated that the Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not.
- U.P. Financial Corporation v. Naini Oxygen & Acetylene Gas Ltd. (1995) 2 SCC 754: The Court reiterated that it is not for the courts to substitute its decision for the decision of the Corporation.
- U.P. Financial Corporation v. Gem Cap (India) Pvt. Ltd. & Ors. (1993) 2 SCC 299: The Court reiterated that the High Court cannot sit as an appellate authority over the acts and deeds of the corporation.
- Karnataka State Financial Corporation v. Micro Cast Rubber & Allied Products (P) Ltd. & Ors. (1996) 5 SCC 65: The Court reiterated that the action of the financial corporation should not be interfered with if it has acted broadly in consonance with the guidelines.
- Karnataka State Industrial Investment & Development Corporation Limited v. Cavalet India Ltd. & Ors. (2005) 4 SCC 456: The Court reiterated the legal principles regarding the scope of judicial review in matters involving financial corporations.
- B.S.N. Joshi and Sons Ltd. v. Nair Coal Services Ltd. (2006) 11 SCC 548: The Court reiterated to summarize the scope of judicial review and the interference of superior courts in the matter of award of contracts.
- Delhi Science Forum v. Union of India (1996) 2 SCC 405: The Court reiterated that the onus to demonstrate that such decision has beenvitiated is on the person who questions the validity thereof.
- Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium) (2016) 8 SCC 622: The Court reiterated that the employer can deviate from the terms and conditions of the tender if the changes affected all intending applicants alike.
- Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd. and Ors. (2016) 16 SCC 818: The Court reiterated that the owner or the employer of a project is the best person to understand and appreciate its requirements and interpret its documents.
- Jagdish Mandal v. State of Orissa and Ors. (2007) 14 SCC 517: The Court reiterated that the soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone.
- Meerut Development Authority v. Assn. of Management Studies (2009) 6 SCC 171: The Court reiterated that the soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone.
- Trilochan Mishra Etc v. State of Orissa & Ors (1971) 3 SCC 153: The Court reiterated that the Government has a right to enter into a contract with a person well known to it.
- Ramana Dayaram Shetty v. International Airport Authority of India (1979) 3 SCC 489: The Court reiterated the interpretation of essential conditions in a tender.
- Montecarlo Ltd. v. NTPC Ltd. (2016) 15 SCC 272: The Court reiterated the freedom of the owner to decide in matters of tenders.
The Supreme Court allowed the appeal filed by the Municipal Corporation and Global Waste Management Cell Private Limited, setting aside the judgment of the High Court. The Court found that the High Court had exceeded its jurisdiction by re-evaluating the technical and financial bids and substituting its own judgment for that of the technical expert. The Court emphasized that judicial review in such matters is limited and that the opinions of technical experts should be respected unless there is clear evidence of bias or arbitrariness.
Ratio Decidendi
The ratio decidendi of this case is that courts should exercise judicial restraint in reviewing technical evaluations conducted by expert bodies in tender processes. Unless there is clear evidence of mala fides, arbitrariness, or perversity, courts should not substitute their own judgment for that of the experts. Additionally, a bidder cannot rely on the qualifications of a third party if it has explicitly stated that it is not part of a consortium or joint venture.
Flowchart of the Case