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Wave Industries Private Limited v. State Of Jharkhand
Structured Summary of the Opinion (Letters Patent Appeal)
Factual and Procedural Background
The appellant company submitted a bid pursuant to an e-Tender notice dated 04 March, 2015. The tender process provided that the technical bid would be opened on 27 March, 2015 and the financial bid on 30 March, 2015. The Tender Committee disqualified the appellant in the technical evaluation on the ground that the Pollution Control Certificate submitted by the appellant was valid only up to 31 December, 2014. The appellant challenged that decision by filing W.P. (C) No. 1445 of 2015, which was dismissed by the Single Judge by order dated 07 May, 2015. The present Letters Patent Appeal (LPA) was preferred against that dismissal. The parties were represented before the Division Bench by Mr. Anil Kumar Sinha for the appellant and Mr. Rajesh Shankar, Government Advocate, for the State.
Note: The opinion contains an internal inconsistency in the date of technical bid opening — paragraph 4 records the date as 27 March, 2015, while paragraph 9 refers to the technical bid being opened on 27 March, 2014. The summary reflects the dates as presented in the opinion.
Legal Issues Presented
- Whether the Tender Committee correctly disqualified the appellant in the technical bid because the Pollution Control Certificate on record was not valid on the relevant date(s) of the tender process.
- Whether the requirement of a valid Pollution Control Certificate was a mandatory eligibility condition of the tender (i.e., a condition precedent that must exist at the time of technical evaluation) or could be treated as a mere directory/curable/directorial requirement permitting subsequent supplementation.
- Whether the court should exercise judicial review to interfere with the tender process in these circumstances, having regard to principles limiting intervention in commercial/state contracts and the existence of third party interests (financial bid opened and contract awarded).
Arguments of the Parties
Appellant's Arguments
- The appellant contended that the Pollution Control Certificate (PCC) disqualification was not a mandatory eligibility condition; it was, according to counsel, "director in nature" (directory), and therefore the Tender Committee could have asked the appellant to produce a valid PCC at the time the technical bid was opened rather than disqualifying it outright.
- The appellant relied on three prior decisions in support of its submissions: K. Vinod Kumar v. S. Palanisamy (AIR 2003 SC 3171), Tejas Constructions & Infrastructure Pvt. Ltd. v. Municipal Council, Sendhwa ((2012) 6 SCC 464), and Rashmi Metaliks Ltd. v. Kolkata Metropolitan Development Authority ((2013) 10 SCC 95).
- Before the Writ Court the appellant also filed a supplementary affidavit producing a Pollution Control Certificate said to have been issued on 05.05.2015 with effect from 01.01.2015, and argued that this certificate would cover the period relevant to the e-Tender notice.
Respondent-State's Arguments
- The State submitted that the Tender Committee correctly found the appellant ineligible because the appellant did not have a valid Pollution Control Certificate on the date the technical bid was opened, and disqualification was therefore justified.
- The State further submitted that the financial bid has been opened and the contract awarded to a qualifying bidder, creating third party interests; for that reason, the appellant was not entitled to relief at this stage.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| K. Vinod Kumar v. S. Palanisamy, AIR 2003 SC 3171 | This information was not available in the provided opinion. |
The decision was relied upon by the appellant; the court observed generally that the appellant could not derive any benefit from the decisions relied upon (see para 14). |
| Tejas Constructions & Infrastructure Pvt. Ltd. v. Municipal Council, Sendhwa, (2012) 6 SCC 464 | Principles limiting judicial review of contracts/administrative action where commercial transactions are involved; courts should not interfere in awards of contracts except where substantial public interest is involved or mala fides are shown. | The court reproduced and applied the passage explaining that intervention under Article 226 is permissible only when substantial public interest is involved or the transaction is mala fide, and used it to support non-interference in the present tender dispute (paras 15–21). |
| Rashmi Metaliks Ltd. v. Kolkata Metropolitan Development Authority, (2013) 10 SCC 95 | This information was not available in the provided opinion beyond that the case was relied upon by the appellant. |
The court noted Rashmi Metaliks was distinguishable on facts (para 12) and observed the appellant could not derive benefit from the decisions relied upon (para 14). |
| Raunaq International Ltd. v. I.V.R Construction Ltd. | Reiterated the principle that writ courts should not interfere with commercial transactions involving the State except where substantial public interest exists or transactions are mala fide. | The court cited Raunaq to explain elements of public interest and to support the proposition that mere commercial disputes between tenderers do not generally invite judicial interference (para 16–18). |
| Sterling Computers Ltd. v. M & N Publications Ltd. | The power of judicial review in contracts focuses on whether there was any infirmity in the decision-making process; if the process was reasonable, rational and non-arbitrary, the court will not interfere. | The court invoked this principle to emphasize that the decision-making process must be examined and, if reasonable, should not be disturbed (para 19). |
| Air India Ltd. v. Cochin International Airport Ltd. | Award of contract is essentially commercial; the State may choose its own method and terms of invitation to tender. Judicial scrutiny is limited to examining the decision-making process for mala fides or arbitrariness; intervention only when overwhelming public interest requires it. | The court relied on this authority to stress that commercial considerations govern contract awards and courts must exercise Article 226 jurisdiction with caution — interfering only for mala fides, arbitrariness or overriding public interest (para 20–21). |
| Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd.; Jagdish Mandal v. State of Orissa | Laid down tests/questions a court should pose before interfering in tender/contractual matters: (i) whether the process was mala fide or intended to favour someone, or (ii) whether the decision was so arbitrary/irrational that no reasonable authority could have reached it; and whether public interest is affected. | The court applied these tests as the correct framework for deciding whether to exercise judicial review in tender matters and concluded the tests did not favour interference in the present case (paras 21–28 reference). |
| Vimal Kumar's case (referred to as "Vimal Kumar's case (supra)") | This information was not available in the provided opinion. |
The court stated that Vimal Kumar's case (supra) and Rashmi Metaliks case (supra) are distinguishable on facts (para 12). |
| Rajasthan State Industrial Development & Investment Corpn. v. Diamond & Gem Development Corpn. Ltd., (2013) 5 SCC 470 | The contract must be interpreted by giving actual/plain meaning to the words; courts should not make a new contract for parties. | The court relied on this principle to emphasize that tender terms must be given literal meaning and a bidder must fulfill all tender conditions; the Tender Committee cannot relax conditions in favour of one tenderer (para 13). |
Court's Reasoning and Analysis
The Division Bench reviewed the record, the impugned Single Judge order, and the tender documents. The court's analysis proceeded along the following lines:
- Examination of Tender Terms: The tender's technical check-list expressly required that a bidder possess a valid Pollution Control Certificate issued by the State Pollution Control Board. The court observed that this requirement was part of the terms of the tender (para 7).
- Assessment of the Appellant's Documentary Position: The appellant had produced a Pollution Control Certificate that, on the face of the record before the Tender Committee, was valid only up to 31 December, 2014. The Tender Committee therefore concluded the appellant did not have a valid certificate at the time the technical bid was opened (paras 4, 7).
- Supplementary Evidence Filed Later: The appellant filed a supplementary affidavit before the Writ Court producing a Pollution Control Certificate issued on 05.05.2015, stated to be effective from 01.01.2015. The court emphasized that this certificate was issued after the date when the tender notice was issued (04.03.2015) and after the technical bid was opened (see para 8 and the dates in paras 4 and 9 of the opinion).
- Plain and Literal Interpretation of Tender Conditions: The court reiterated the settled principle that terms of contract/tender must be given a plain and literal meaning and that bidders must fulfill all stipulated conditions. It held that where tender conditions require a valid certificate at the relevant time, subsequent supplementation (after technical evaluation) could not, as a matter of law, cure the earlier absence of eligibility (paras 8, 13).
- Limits of Judicial Review in Contractual Matters: The court examined and applied authorities explaining that judicial review of commercial/state contract awards is circumscribed. Interference is justified only where substantial public interest is involved, or where mala fides, arbitrariness or a vitiated decision-making process are established. The court concluded that the precedents relied upon by the appellant did not support interference in this case and that those decisions were distinguishable on facts (paras 11, 15–23, 30).
- Third Party/Finality Considerations: The court took account of the fact that the financial bid had been opened and the contract awarded to a qualifying bidder, creating third party interests. This fact weighed against granting retrospective relief to the appellant (paras 10, 14, 31).
- Conclusion of Non-Interference: Considering the literal terms of the tender, the timing of issuance of the Pollution Control Certificate produced later, the settled principles limiting judicial intervention, and the existence of third party interests, the court concluded there was no basis to interfere with the Single Judge's dismissal of the writ petition (paras 13, 14, 15).
Holding and Implications
Holding: The Letters Patent Appeal is dismissed and the impugned order dated 07 May, 2015 (dismissing W.P. (C) No. 1445 of 2015) is upheld.
Implications:
- Direct effect on the parties: The appellant remains disqualified in the technical bid for lack of a valid Pollution Control Certificate on the relevant date(s) of the tender process; the contract has been awarded to a qualifying bidder and the appellant is not entitled to relief at this stage.
- Third-party interests: The court expressly noted that the opening of the financial bid and award of the contract had created third party interests, which militated against upsetting the procurement outcome.
- Precedential effect: The decision applies established principles regarding literal interpretation of tender conditions and the limited scope of judicial review in commercial/state contractual matters. The opinion does not purport to lay down a new legal principle; it applies settled authorities to the facts and finds those authorities relied on by the appellant to be distinguishable or unavailing. Accordingly, no new precedent was created by this order beyond reaffirming those established principles in the context of the facts of this case.
Disposition: The appeal was dismissed and the court ordered accordingly (paras 15–16).
The present Letters Patent Appeal is preferred against the impugned order dated 07 May, 2015, passed by the learned Single Judge in W.P (C) No. 1445 of 2015, whereby the writ petition has been dismissed.
2. Heard Mr. Anil Kumar Sinha, learned senior counsel appearing for the appellant as well as Mr. Rajesh Shankar, learned Government Advocate appearing for the Respondent-State Government.
3. Perused the impugned order delivered by the learned Single Judge in W.P (C) No. 1895 of 2013 and other relevant materials placed on record.
4. The brief facts giving rise to the present appeal are as under:-
The appellant-Company pursuant to e-Tender notice dated 04 March, 2015, submitted its bid. The date for opening the technical bid was 27 March, 2015 and the financial bid was to be opened on 30 March, 2015. The Tender Committee found the petitioner-Company disqualified in the technical bid on the ground that the certificate issued by the Pollution Control Board was valid only up to 31 December, 2014. Aggrieved by the decision of the Tender Committee dated 30 March, 2015, the appellant approached this Court by way of filing W.P (C) No. 1445 of 2015 and the said writ petition was dismissed vide order dated 07 May, 2015. Hence, this appeal.
5. Mr. Anil Kumar Sinha, learned senior counsel appearing for the appellant submits that the appellant-Company disqualified in the technical bid on the ground that the valid Pollution Control Certificate issued by the Pollution Control Board, was valid only up to 31 December, 2014. It is submitted that it was not an eligibility condition for the tenderer as it was not a mandatory requirement. According to Mr. Sinha it was director in nature and therefore, at the time when technical bid was opened, the Tender Committee could have asked the appellant to produce valid Pollution Control Certificate.
The learned counsel for the appellant, in support of his submissions, has referred to and relied upon the following three decisions: -
(i) K. Vinod Kumar v. S. Palanisamy reported in AIR 2003 SC 3171
(ii) Tejas Constructions and Infrastructure Private Ltd. v. Municipal Council, Sendhwa reported in (2012) 6 SCC 464
(iii) Rashmi Metaliks Limited v. Kolkata Metropolitan Development Authority reported in (2013) 10 SCC 95
6. Mr. Rajesh Shankar, learned Government Advocate appearing for the respondent-State of Jharkhand while opposing the Letters Patent Appeal submitted that the Tender Committee found that the appellant-Company was not eligible on the date when the technical bid was opened and, therefore, it has rightly been declared disqualified in the technical evaluation. The learned counsel for the Respondent-State further submitted that even the financial bid has also been opened and the contract is awarded to the qualifying bidder. Thus, a third party interest has also been created in this case and for this reason also, the appellant at this stage is not entitled for any relief.
7. Considering the aforesaid rival submissions and having regard to the facts and circumstances of the present appeal, it appears that the check-list of technical bid discloses that the bidder should have valid Pollution Control Certificate, issued by the Pollution Control Board of the State. It appears that the appellant submitted Pollution Control Certificate, which was valid only till 31 December, 2014 and, therefore, as per the terms of the technical bid, the appellant was not having a valid Pollution Control Certificate.
8. It is well settled law that the terms of contract must be given a plain and literal meaning and bidder must fulfill all the conditions of the Tender. It also appears that before the Writ Court, supplementary affidavit was filed by the petitioner/appellant to bring on record the Pollution Control Certificate, issued to the petitioner on 05.05.2015, which is valid with effect from 01.01.2015 It has been argued that since the Pollution Control Certificate has been issued in favour of the petitioner on 05.05.2015, it would cover the period when e-Tender under notice was issued and accordingly, the appellant may be declared qualified in technical bid.
9. On perusal of the tender document, it becomes clear that a bidder must have valid Pollution Certificate and, therefore, when the Tender notice was issued on 04 March, 2015 and when the technical bid was opened on 27 March, 2014, the appellant was not having valid Pollution Control Certificate, as it reveals from the record that the same was issued on 05.05.2015
10. We have perused the decisions referred to and relied upon by the learned senior counsel for the appellant. The said decisions were also cited before the learned Writ Court. But in our view the appellant cannot derive any benefit from the same.
11. In the case of Tejas Constructions and Infrastructure Private Ltd. v. Municipal Council, Sendhwa reported in (2012) 6 SCC 464 cited by Mr. Sinha, the Hon'ble Apex Court has discussed about the power of judicial review in respect of contracts/administrative action. The relevant abstract is reproduced hereinbelow: -
17. In Raunaq International Ltd. v. I.V.R Construction Ltd. this Court reiterated the principle governing the process of judicial review and held that the writ court would not be justified in interfering with commercial transactions in which the State is one of the parties to the same except where there is substantial public interest involved and in cases where the transaction is mala fide. The Court observed: (SCC pp. 500-01, paras 10-11)
“10. What are these elements of public interest? (1) Public money would be expended for the purposes of the contract. (2) The goods or services which are being commissioned could be for a public purpose, such as, construction of roads, public buildings, power plants or other public utilities. (3) The public would be directly interested in the timely fulfilment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. Poor quality of work or goods can lead to tremendous public hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in redoing the entire work—thus involving larger outlays of public money and delaying the availability of services, facilities or goods, e.g, a delay in commissioning a power project, as in the present case, could lead to power shortages, retardation of industrial development, hardship to the general public and substantial cost escalation.
11. When a writ petition is filed in the High Court challenging the award of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the court would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the court is satisfied that there is a substantial amount of public interest involved, or the transaction is entered into mala fide, the court should not intervene under Article 226 in disputes between two rival tenderers.”
19. Reference may also be made to Sterling Computers Ltd. v. M & N Publications Ltd.6 where this Court held that the power of judicial review in respect of contracts entered into on behalf of the State primarily involves examination of the question whether there was any infirmity in the decision-making process, and if such process was reasonable, rational and non-arbitrary, the Court would not interfere with the decision.
20. In Air India Ltd. v. Cochin International Airport Ltd.7 this Court held that the award of contract was essential in commercial transactions which involves commercial consideration and results in commercial decision. While taking such decision the State can choose its own method on terms of invitation to tender and enter into negotiations. The following passage from the decision is apposite: (SCC pp. 623-24, para 7)
“7. … The award of contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. … Even when some defect is found in the decision-making process the court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should intervene.”
21. To the same effect is the decision of this Court in Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd. and Jagdish Mandal v. State of Orissa where this Court laid down the following tests for judicial interference in exercise of power of judicial review of administrative action: (Jagdish Mandal case, SCC p. 531, para 22)
“22. … Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone.
OR
Whether the process adopted or decision made is so arbitrary and irrational that the court can say: ‘the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached’.
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no interference under Article 226.”
12. Vimal Kumar's case (supra) and Rashmi Metaliks case (supra) are also distinguishable on facts.
13. In view of the detailed discussion made by the learned Writ Court in paras. 4 to 7, we find that there is no infirmity in the decision taken by the learned Writ Court. It is well-settled law that the terms of contract must be given a plain and literal meaning. It is also well-settled principle that a bidder must fulfill all conditions of the tender and it is not open to Tender Committee to relax the condition in favour of one tenderer. The contract is to be interpreted, giving an actual meaning to the words contained in the contract and it is not permissible for the Court to make a new contract, as held in the case of Rajasthan State Industrial Development & Investment Corpn. v. Diamond & Gem Development Corpn. Ltd. reported in (2013) 5 SCC 470.
14. Moreover, it also appears that the financial bid has also been opened and the contract is awarded to the qualifying bidder. Thus, a third party interest has also been created in this case and for this reason also, the petitioner at this stage is not entitled for any relief.
15. As a sequel to the aforesaid discussion, we do not find any reason to interfere with the well reasoned judgment of learned Writ Court. Resultantly, the instant appeal merits dismissal at this stage itself.
16. Ordered accordingly.
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