IN THE HIGH COURT OF JUDICATURE OF ANDHRA PRADESH
AT HYDERABAD
*THE HON'BLE SRI JUSTICE C.V.NAGARJUNA REDDY
+W.P.No.27823 of 2010
% 27-12-2010
# M/s.Radiant Info Systems Limited
Represented by its General Manager,
Bangalore. .. Petitioner
Vs.
$ The A.P. State Road Transport Corporation,
Represented by its Vice Chairman &
Managing Director, Hyderabad
and others .. Respondents
! Counsel for petitioner : Sri D.Prakash Reddy, Senior Counsel
^ Counsel for respondents : Sri K.Madhava Reddy
? CASES REFERRED :
1. 2009(1) SCJ 634
2. AIR 2004 S.C. 1962
3. AIR 1996 S.C. 11
4. 2007(5) ALT 745 (DB)
Between:
M/s.Radiant Info Systems Limited
Represented by its General Manager,
Bangalore. .. Petitioner
And
The A.P. State Road Transport Corporation,
Represented by its Vice Chairman &
Managing Director, Hyderabad
and others .. Respondents
Counsel for petitioner : Sri D.Prakash Reddy, Senior Counsel
Counsel for respondents : Sri K.Madhava Reddy
The court made the following :
ORDER:
This Writ Petition is filed for a mandamus to declare the action of the respondents in issuing tender notification dated 15-10-2010 for development of application software, integration, migration, up-gradation of existing data centre to handle 5000 concurrent users from 1000 concurrent users without considering the proposal given by the petitioner under Swiss Challenge System as illegal and arbitrary. The petitioner sought for a consequential direction to process the proposal given by it under Swiss Challenge System.
At the Interlocutory stage, with the consent of the learned counsel for the parties, the Writ Petition is taken up for hearing and disposal.
I have heard Sri D.Prakash Reddy, learned Senior Counsel appearing for the petitioner and Sri K.Madhava Reddy, learned Standing Counsel for A.P. State Road Transport Corporation, for the respondents.
The petitioner is an I.T. Services organisation which offers software solutions to various entrepreneurs. Respondent No.3 invited tenders on 8-9-2006 for development of application software for Online Passenger Reservation System (OPRS) in three-tier architecture set up and running of data centre network etc., and maintaining the same including the application software in the respondents-Corporation on turn key model. The petitioner has entered into a teaming agreement with M/s.Bharat Electronics Limited and M/s.Wipro Technologies Limited and participated in the tender process. The said contract was entrusted to one of the petitioner’s teaming partners i.e., M/s.Bharat Electronics Limited and an agreement was entered into on 26-5-2007 for a period of three years with effect from 22-2-2008. As the three years period was coming to a close, the respondents were making preparations for award of contract for the future period. The petitioner alleged that in the meeting held on 23-9-2010, the respondents have informed the petitioner that they have taken a decision to upgrade the existing system to support 5000 concurrent users by adopting Swiss Challenge methodology for tender process. The petitioner further averred that it was informed by the respondents that as per the prevailing norms, the original proponent has to give the first proposal which will be used by the respondents-Corporation to float Swiss Challenge tender process under which third parties will be invited to make better offers (challenges) for the proposed purchase during the designated period and that thereafter the original proponent gets the right to counter-match any superior offers given by the third party, that the petitioner has accordingly submitted its proposal including the pricing to the respondents on 29-9-2010. Later, the petitioner came to know that the respondents have issued tender notification dated 15-10-2010 for development of application software, integration, migration, up-gradation of existing data centre to handle 5000 concurrent users from 1000 concurrent users, setting up of disaster recovery centre, providing of IBW, leased lines between DRC and DC, MGBS, MPLS, VPN connections to 10+1 major bus stations and maintenance of the same in APSRTC for existing OPRS project including e-ticketing for a period of five years on commission basis on net seats sold under BOT model. Feeling aggrieved by the said act of the respondents even before finalising the petitioner’s proposal, it has filed the present Writ Petition.
This court by order dated 22-11-2010 directed that if the bids received pursuant to tender notification dated 15-10-2010 were not opened, they shall not be opened and if the bids were already opened, no further steps shall be taken pending further orders.
The Chief Engineer (IT) of the respondents-Corporation – respondent No.1, filed a counter affidavit wherein it is inter alia stated that after commissioning of e-ticketing facility in OPRS, the performance of the system went down drastically for which neither M/s.Bharat Electronics Limited nor its consortium partners were able to provide suitable remedy and that therefore the respondents have decided to go in for up-gradation of data base services to improve the performance. It is further averred that apart from the petitioner, seven other firms i.e., M/s.Abhibus, M/s.Redbus, M/s.Fruition, M/s.S.G. Technologies, M/s.Rosmerta Technologies, M/s.Ram Informatics and M/s.Trimax have given proposals on their own for up-gradation /maintenance of the project in different business models and that the petitioner itself has submitted two proposals on 29-9-2010 and 13-10-2010 voluntarily. It is further pointed out that having regard to its proposals dated 29-9-2010, the petitioner has deliberately kept silent on its second proposal dated 13-10-2010. While denying the petitioner’s allegation that in the meeting held on 23-9-2010, the respondents have decided to go in for Swiss Model Challenge System, it is mentioned that on the said date some informal discussions in I.T. section in connection with the existing OPRS project have taken place and that taking advantage of such informal discussions the petitioner submitted a proposal on 29-9-2010 on its own and that there was no obligation on respondent No.1 to respond to the said proposal. Respondent No.3 also denied making any comments on the management on 21-9-2010 as no formal meeting as alleged by the petitioner has taken place on that day. It is also submitted that the petitioner has purchased the tender document for participation in the tender and that respondent No.1 has proposed CMMI Level 3 certification with a view to provide better services to the public as the same is globally approved for software solutions. Respondent No.3 has pleaded that there is no illegality in issuing the tender notification.
A reply affidavit is filed by the petitioner which need not be specifically adverted to as much part of it contains reiteration of its stand taken in the affidavit filed in support of the Writ Petition.
The short issue that arises for consideration in this Writ Petition is whether by issuing the impugned tender notification, the respondents have committed any illegality or acted with arbitrariness.
The law is well settled that except in cases of irrationality, malafides and patent arbitrariness, the courts would not exercise the power of judicial review to scuttle the tender process. While restating this settled legal position, the Supreme Court in Siemens Public Communication Networks Pvt. Ltd. and another Vs. Union of India and others [1] held at para-14 as under:
“The law relating to award of contract by State and public sector corporations was discussed in Air India Ltd., Vs. Cochin International Airport Ltd (2000) 2 SCC 617) 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 to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It was further held that the State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision making process, the court must exercise its discretionary powers 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 interfere.”
In Directorate of Education Vs. Educomp Datamatics Limited [2] the Apex Court had this to say:
“It is well settled now that the courts can scrutinise the award of the contracts by the government or its agencies in exercise of its powers of judicial review to prevent arbitrariness or favoritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular v. Union of India – AIR 1996 SC 11. After examining the entire case law the following principles have been deduced:
(1) The modem trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. [Emphasis supplied]
In Air India Limited v. Cochin International Airport Limited – (2000)1 SCR 505, this Court observed:
"The award of a 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. [Emphasis supplied]”
The availability of freedom and flexibility in the employer in award of contracts has thus been well recognised by the Constitutional courts as is evident from the above mentioned Judgments. The superior courts exercising their jurisdiction under Article 226 of the Constitution of India would only step in to interfere with the decision making process of the employer in award of contracts only if the same is vitiated by patent illegality, impropriety or irrationality (See : Tata Cellular Vs. Union of India [3]).
In Manisha & Mulay (JV), Aurangabad Vs. A.Krishna Reddy, Partner Incharge, AKR-Coastal (JV), Hyd and others [4], a Division Bench of this Court, of which I am a party, after extensive survey of the case law on this aspect, concluded as under:
“The proposition which can be culled out from the above noted judgments is that the Courts possessing the power of judicial review should exercise restraint in interfering with the award of contract by the State and/or its agencies and instrumentalities. The element of public interest should always be kept in mind while examining the legality of the decision making process and the Courts should not readily infer arbitrariness in the exercise of discretion by the State authorities. The power of judicial review should be exercised only when it is shown that the action of the State authorities is wholly arbitrary, malicious or violative of any provision of the Constitution or any law enacted by the competent Legislatures. If two interpretations of tender conditions are plausible, then the Courts must given due weightage to the views of the expert bodies and the State functionaries who have experience to deal with such matters.”
The only basis on which the whole writ petition hinges itself is that the respondents and in particular, respondent No.3, having invited the petitioner to submit its proposals for Swiss Challenge method and having received the proposal, are not justified in issuing the fresh tender notification without considering its proposal. In the light of the denial by respondent No.3 of the allegation that a formal meeting was held on 23-9-2010 in which a decision was taken to adopt Swiss Challenge method, this court summoned the record from the respondents. With the permission of the court, the learned counsel assisting the learned Senior Counsel for the petitioner has perused the record. The learned counsel was candid in his submission that no minutes relating to the alleged meeting dated 23-9-2010 is available on record. In the absence of any material in support of the petitioner’s plea that the respondents have held a formal meeting and taken a conscious decision to switch over to the Swiss Challenge method, the petitioner’s plea remains a mere ipsi dixit. Such a plea therefore cannot be accepted. Even assuming that in a formal meeting such a decision was indeed taken, that by itself would not create any right in the petitioner to insist that the respondents are bound by such a decision. The management of respondent No.1, which is vested with the power and charged with the duty of administering the Corporation, shall be conceded to have freedom to take any decision which in its opinion will improve the efficiency for the betterment of the administration and efficient performance. Therefore, even if at the relevant point of time, the respondents have thought of switching over to Swiss Challenge method, their abandoning such a decision later cannot be termed as either illegal or arbitrary. It is not the pleaded case of the petitioner that the decision of the respondents not to go for Swiss Challenge method is guided by any extraneous considerations or it is an act of mala fide exercise of power. Unless the petitioner is able to establish that a right came to be vested in it, it cannot force the respondents to adopt to a particular system. The petitioner has not denied the averment contained in the counter-affidavit that it has submitted two proposals which included the one dated 13-10-2010. Evidently, the proposal dated 13-10-2010 pertains to a different method from the one relating to Swiss Challenge. If a decision was taken by respondent No.1-Corporation to switch over to Swiss Challenge method as pleaded by the petitioner, there was no need for the petitioner to submit a proposal for a different method. The petitioner has also not denied the averment contained in the counter-affidavit that seven other firms also submitted their proposals on their own for up-gradation/maintenance of the project in different business models. These uncontroverted facts would further weaken the plea of the petitioner that receipt of its proposal for Swiss Challenge system by the respondents would give rise to a reasonable presumption in its favour even in the absence of any material. Having carefully considered the facts of the case in their entirety, I am of the opinion that the petitioner failed to make out any case for interference of this court with the tender process initiated by the respondents.
For the above mentioned reasons, the Writ Petition fails and accordingly the same is dismissed.
Before parting with this case, it is noteworthy that the petitioner, by filing the present Writ Petition with unsubstantiated averments, has stalled the tender process for a period of more than one month. Therefore, I deem it appropriate that the petitioner shall pay costs of Rs.10,000/- (Rupees Ten thousand only) to the respondents. Ordered accordingly.
____________________
C.V. Nagarjuna Reddy.,J
Date : 27-12-2010
L.R. copies to be marked
AM
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