Norms For Judicial Review

Source: The Hitavada      Date: 15 Jan 2018 10:47:15

In an earlier case, the Supreme Court has said, “We may add that the owner or employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents.


The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions.

IN THE judgement of the case - M/s Sam Built Well Pvt. Ltd. v. Deepak Builders & Others, delivered on December 14, 2017, Justice R. F. Nariman and Justice Navin Sinha, at the Supreme Court, have held that a division bench of the Punjab & Haryana High Court exceeded parameters of judicial review while appreciating technical evaluation and holding respondent Deepak Builders as eligible.


The appeal, in this case, involved a notice inviting tender of March 16, 2017, by which the Director of the Institute of Nano Science and Technology Campus at Knowledge City Sector 81, Mohali, invited percentage rate composite bids from eligible firms/contractors in a two bid system for construction of the Institute consisting of research, academic and administrative buildings together with hostel, residential, amenity and utility buildings. The estimated cost of the said project was Rs. 162.18 crores, with earnest money payable being Rs. 1.72 crores. The period for completion was stated to be 20 months and the last date for submission of tender was April 10, 2017. Clause 8 of the said notice is important and was as under: “8. contractors/bidders, who fulfil the minmum criteria shall be eligible to apply. Joint ventures/consortium are not accepted.


(a) Should have satisfactorily completed the works as mentioned during the last date of submission of bids.
(i) Three similar completed works each costing not less than Rs. 64.9 crores, or
(ii)Two similar completed works each costing not less than Rs. 97.3 crores,
(iii) One similar completed work of aggregate cost not less than Rs. 129.7 crores.
Similar work shall mean work of “construction of institutional/educational buildings campus with minimum 5 storeys RCC framed structure building including electrical, plumbing , fire fighting, HVAC works under composite contract executed in India in a single contract.”


Several persons submitted their bids including the respondent-Deepak Builders, who claimed that it had done 4 similar works. Pre-bid meetings were conducted in March, 2017 and ultimately respondent-Deepak Builders submitted its tender on April 7, 2017. Five out of 16 bidders, who initially came forward, participated in the tender process. Admittedly, a technical evaluation report of April 24, 2017 stated that the eligibility criteria contained in Clause of the NIT was not met by the respondent-Deepak Builders.

This was reiterated by two other expert bodies namely, Tata Consultancy Services and the Buildings Works Committee of the Institute. The second respondent then addressed a letter to Deepak Builders, informing it about its ineligibility. On May 3, 2017, Deepak Builders filed a writ petition, which was dismissed by the Single Judge Stating that “similar work”, which requires to be considered under Clause 8 of the NIT would be work, which involves not only construction of administrative blocks, but also several other buildings. Looking at the 4 projects, the last of which was kept out of consideration, it was found that none of the work could be said to be “similar” in nature and referring to the fact that three specialists had stated that Deepak Builders was ineligible, the Court adopted the hands-off posture, considering the limited parameters of judicial review. However, by the impugned judgement of August 4, 2017, the division bench of the HC allowed the appeal of Deepak Builders and set aside the judgement of the Single Judge stating that though there were no mala fides in this case, the judgement of the Single Judge was incorrect and that, therefore, Deepak Builders was clearly eligible.

The appeal was then disposed of by directing the second respondent to consider Deepak Builders’ bid, along with other eligible bids, and award the contract after assessing the bids on all permissible criteria. Pursuant to the said judgement, the Apex-Court was informed that the tender was ultimately awarded on August 20, 2017 to the Deepak Builders for the reason that it quoted a figure of roughly 4 to 5 crores less than that of the appellant. Further, even though it is December, 2017, the appellant has, admittedly, not yet left the site of construction and resultantly respondent - Deepak builders has not commenced work.


Appellant’s counsel urged that it was incorrect to state that the National Building Code of India, 2016 which is framed by the Bureau of Industrial Costs and Prices does not apply to the facts of this case in as much as the special conditions of the tender specifically make the said Code applicable and that, therefore, the expert committee reports based on the provisions of the Code cannot be interfered with.


Also according to the counsel the Single Judge correctly appreciated that in tender matters, judicial review is very limited and the HC division bench, while setting aside the judgement of the Single Judge, had not kept in view the parameters of judicial review of tenders. Equally, according to him, it being clear that there were no mala fides or perversity involved, it was not possible for a Writ Court, sitting in judicial review, to interfere with the tender process as had been done by the division bench.

After hearing the lawyers for both the parties, the SC thought it important to set out the parameters of judicial review in cases like the present one. In a similar case, Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd.(2016) 16 SCC 818 on page 825-26, paragraph 4.2(a) of Section III of the tender conditions in that case again spoke of a certain minimum number of “similar minimum Contracts” as previous work experience. In that case, the question before the SC was whether an inter-State railway project could be similar to metro civil construction work. After laying down the parameters of judicial review and referring to various judgements for the same the Court held:


“We may add that the owner or employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given.

In the present appeals, although there does not appear to be any ambiguity or doubt about the interpretation given by NMRCL to the tender conditions, we are of the view that even if there was such an ambiguity or doubt, the HC ought to have refrained from giving its own interpretation unless it had come to a clear conclusion that the interpretation given by NMRCL was perverse or mala fide or intended to favour one of the bidders. This was certainly not the case either before the HC or before this Court.”


The Supreme Court already noticed that three expert committees scrutinised Deepak Builder’s tender and found it ineligible. The impugned judgement of the division bench of the HC expressly states that no mala fides are involved in this case. Equally, while setting aside the judgement of the Single Judge, the division bench did not state that the three expert committees reached a perverse conclusion. To merely set aside the judgement of the Single Judge and then jump to the conclusion that respondent-Builders’ tender was clearly eligible, would be directly contrary to the judgements aforestated.


Not having found mala fides or perversity in the technical experts’ reports, the principle of judicial restraint kicks in, and any appreciation by the Court itself of technical evaluation, best left to technical experts, would be outside its ken. As a result the Court found that the Single Judge was correct in his reliance on the three expert committee reports. The division bench in setting aside the aforesaid judgement has clearly gone outside the bounds of judicial review. Therefore, the Apex Court set aside the judgement of the division bench and restored that of the Single Judge. Appellant’s counsel stated that the appellant was willing to match the offer of the respondent-Builder.

The Court recorded this statement and ordered that the tender awarded to the respondent-Builder on August 20, 2017, based upon the division bench judgement must be set aside and award of the tender to the appellant must be restored. The Court also added that it would be open to the second respondent to accept the offer of the appellant’s counsel, that the project will be executed at the amount indicated by the respondent-Builders.