WP(C) No.154 of 2013 Page 1 of 69

IN THE GAUHATI HIGH COURT

(HIGH COURT OF ASSAM, NAGALAND, MIZORAM & ARUNACHAL PRADESH)

WP(C) No.154 of 2013 Drillmec S.p.A, 12, Via 1 Maggio, 290227 Gariga di Podenzan, Piacenza, Italy.

……Petitioner

-Versus-

1. Oil India Limited, Having its registered office at PO: Duliajan-786602, District: Dibrugarh, Assam, India and the Corporate Office at Plot No.19, Sector 16-A, Near Film City, Noida-201301, Uttar Pradesh, India. 2. Central Business Committee, Oil India Limited, Plot No.19, Sector 16-A, Near Film City, Noida-201301, Uttar Pradesh, India. 3. The Head Materials, Materials Department, Oil India Limited, PO: Duliajan-786602, District: Dibrugarh, Assam, India. 4. China Petroleum Technology and Development Corporation Tower B, No.8, Jinxingyuan, Talyangong, Chaoyang Disrict, Beijing, China-100029. 5. Bharat Heavy Electricals Limited, Integrated Office Complex, Lodi Road, New Delhi-110003, India. 6. Independent External Monitors, C/o Oil India Limited, Plot No.19, Sector 16-A, Near Film City, Noida- 201301, Uttar Pradesh, India.

……..Respondents

Advocates for the petitioner :- Mr. P.K. Goswami, Sr. Advocate, Mr. C. Chowdhury, Mr. A. Gayan, Mr. A. Deka, Mr. B. Bora, Advocates.

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Advocates for the respondents :- Mr. S.N. Sarma, Standing Counsel, OIL , Mr. K N Choudhury, Sr. Advocate, Mr. A Sarma, Mr. S Choudhury, Advocates for the respondent Nos.1 to 3 and 6, Mr. A.K. Ganguly, Sr. Advocate, Mr. K. Goswami, Mr. R.R. Kaushik, Mr. R. Kaman, Mr. R. Kalita, Advocates respondent No.4.

- B E F O R E -

THE HON’BLE MR. JUSTICE B.P. KATAKEY

Dates of Hearing : 2nd May, 2013; 7th May, 2013; 9th May, 2013;

16th May, 2013; 17th May, 2013; 27th May,

2013; 28th May, 2013; 30th May, 2013 and 31st

May, 2013.

Date of Judgment & Order : 28th June, 2013.

JUDGMENT & ORDER (CAV)

Drillmec S.p.A., a Company registered in Italy and

working in the area of manufacture and supply of land rigs for the

purpose of exploration and development of Oil and Gas, has filed the

present petition praying for a writ in the nature of mandamus

directing the Oil India Limited (in short, “OIL”) to settle the tender

process initiated vide tender notices Nos.SDG9008P11/07 and

SDG7289P13/07 in strict compliance of the mandatory provisions of

law and other guidelines formulated and also restraining the

respondent OIL from awarding the contract in favour of the

respondent No.4, apart from a direction to award the contract in

favour of the petitioner by quashing the 430th meeting of the

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Corporate Business Committee (in short, “CBC”) held on 27th

December, 2012 in relation to the aforesaid tender notices, contending

inter alia that though the petitioner, the respondent No.4 and the

respondent No.5 were found to be technically responsive in the

technical bids, there is a move to bestow undue benefit to the

respondent No.4 by flauting the mandatory guidelines of the Central

Vigilance Commission, guidelines of the respondent OIL issued in

respect of the said tender process and other mandatory provisions of

law, despite emergence of the petitioner as the lowest bidder.

According to the petitioner, the respondent OIL entered into

negotiation with the respondent No.4, whose bid was higher than

that of the petitioner, ignoring the lowest bid offered by the petitioner

by taking cognizance of unsolicited communications issued by the

respondent No.4 challenging the fresh price bid of the petitioner, even

without asking for any clarification from the petitioner on the fresh

price bid, if they have any doubt on the offer of the petitioner. It is

also the case of the petitioner that they have never been informed

about the grounds, if any, for rejection of their offer and why

negotiation has not been done with it, though was the lowest bidder

and instead was negotiating with the respondent No.4. Further case

of the petitioner is that they, for the first time, came to know about

the reasons for rejection of their bids while they have been served

with a copy of the affidavit-in-opposition filed by the respondent OIL,

disclosing the grounds on which the petitioner’s bid has been rejected.

[2] The writ petition has been opposed by the respondent OIL

as well as the respondent No.4 by filing separate affidavits, basically

contending that the writ petition is not maintainable because of

suppression of material facts; the petitioner being a company

registered in Italy and not a natural person, is not entitled to file writ

petition for enforcement of the fundamental rights under Articles 14

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and 19 of the Constitution; the writ petition is not maintainable, the

same being supported by an affidavit by a person, who has not been

authorized to do so and the petitioner being guilty of the violation of

the terms and conditions of the tender is not entitled to the relief

claimed.

[3] The relevant undisputed facts leading to filing of the writ

petition may be noticed as under:-

(i) A process, initially for supply and commissioning of two

2000 HP VFD rig package, one with top drive and another with

provision for top drive, was initiated by the respondent OIL in

the month of August, 2010, by floating open global e-tender

inviting bid under single stage 2(two) bid system, fixing 21st and

22nd September, 2010 as the dates for Pre-bid Conference.

27(twenty-seven) parties, who have purchased the tender

documents, including the petitioner, the respondent No.4 and

the respondent No.5 participated in the Pre-bid Conference.

5(five) parties, which includes the petitioner, respondent No.4

and the respondent No.5, submitted their technical and

commercial bids. On 15th June, 2011, the technical bids of all the

bidders were opened. The petitioner, respondent No.4 and the

respondent No.5 were found to be technically responsive. The

Head-Material of the respondent OIL thereafter, on 20th

January, 2012 submitted a proposal before the Tender

Committee-cum-Approving Authority for putting up of a note to

the CBC recommending opening of the price bids of 3(three)

technically responsive bidders, namely, the petitioner,

respondent No.4 and the respondent No.5. In the said

proposal, the approving authority was informed about the

various deviations in the bids submitted by all the 3(three)

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bidders, which have been accepted by the user department

while evaluating the offer, which includes the deviation by the

petitioner relating to non furnishing the price of 63 major rig

components, apart from non extension of the bid validity by the

respondent No.5, M/s BHEL. The Tender Committee-cum-

Approving Authority having approved the said proposal placed

the same before the Local Management Committee (in short,

“LMC”), on whose recommendation note dated 16th February,

2012 was placed before the CBC of the respondent OIL seeking

approval for opening of the commercial bids of the aforesaid

3(three) bidders indicating the deviations including the deviation

relating to the stipulation of the petitioner that it would not

disclose the price of 63 major rig components. The CBC in its

425th meeting held on 2nd March, 2012, has approved the

opening of the price bids of 2(two) bidders, namely, the

petitioner and the respondent No.4, condoning the deviations

as mentioned above. The CBC, however, in view of non

extension of bid validity, decided not to open the price bid of

the respondent No.5. Accordingly, price bid of the petitioner

and the respondent No.4 were opened on 7th March, 2012.

(ii) Note dated 23rd May, 2012 was, thereafter, placed before

the CBC, pursuant to the decision of the LMC taken in its

meetings dated 1st May, 2012; 8th May, 2012 and 15th May,

2012, pointing out certain discrepancies in the bids. The CBC in

its 427th Meeting held on 11th June, 2012 decided to refer the

matter to the Independent External Monitors (in short, “IEMs”)

for their opinion, as envisaged in Clause-7 of the tender

conditions, who have on 19th July, 2012 recommended

invitation of fresh price bid. The CBC in its 427th Meeting held

on 9th August, 2012, accordingly, decided to re-invite the fresh

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price bid from all the 3(three) technically acceptable bidders,

namely, the petitioner, respondent No.4 and the respondent

No.5, for 2(two) numbers of 2000 HP drilling rig packages with

top drive, instead of one number each with and without top

drive. Consequently the respondent OIL on 1st September, 2012

informed the aforesaid 3(three) technically responsive bidders to

submit the fresh price bids fixing 26th September, 2012 as the last

date for such submission, which, however, was subsequently

extended to 3rd October, 2012. All the aforesaid 3(three)

bidders accordingly submitted their fresh price bids. The

petitioner in the fresh price bid has inserted the following clause,

which was not put in the earlier price bid submitted by it:-

“Drillmec reserved the right to manufacture and test the rigs, or part of them, in any of its facilities, which belong to us as per their availability at the time of contract awarding.”

The petitioner in the fresh price bid has indicated the

consolidated price of 19 components instead of 63 major rig

components. The respondent No.5 also did not disclose the

price of all the 63 major rig components.

(iii) The fresh price bid of the bidders were opened on 3rd

October, 2012 and thereafter, it was sent to the user

department, which has confirmed that the offers are in order as

per the tender requirement as far as type and the quantity of

spares are concerned with the further observation that the offer

made by the petitioner is the lowest. The LMC in its proceeding

dated 9th October, 2012 scrutinized the offers made by all the

3(three) bidders and found that the petitioner has put the

aforementioned clause in the price bid. The LMC having regard

to the attending facts and circumstances decided to have the

clarification from the petitioner and to reconfirm that all the

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points agreed by them in their technical bids and during

technical clarification sought by OIL will be honoured by them.

The LMC, however, before obtaining such clarification decided

to place the matter before the CBC for approval/concurrence.

The decision of the LMC was also approved by the Appropriate

Authority-cum-Tender Committee on 12th October, 2012. A

note dated 13th October, 2012 was, accordingly, placed before

the CBC, which was considered on 3rd December, 2012 in its

429th Meeting. In the meantime, 3(three) unsolicited

communications dated 12th October, 2012; 16th October, 2012

and 19th October, 2012 were received by the respondent OIL

form the respondent No.4 contending that the fresh price bid

submitted by the petitioner is to be rejected because of

incorporation of the aforesaid clause in the price bid, in view of

Clause-1 of the Bid Rejection Criteria (Commercial), as well as

for not providing the cost of all 63 major rig components.

(iv) The CBC in its 429th Meeting held on 3rd December, 2012

took up the aforesaid note dated 13th October, 2012 as well as

the unsolicited communications received from the respondent

No.4, for consideration. A decision was taken in the said

meeting to obtain the opinion from the learned Solicitor General

of India. An opinion dated 14th December, 2012 was then

obtained from the learned Attorney General of India, based on

which the CBC in its 430th Meeting held on 27th December, 2012

decided to accept the said opinion and to call the respondent

No.4 for negotiation on price to match with the price quoted by

the petitioner.

[4] I have heard Mr. PK Goswami, learned senior counsel for

the petitioner, Mr. KN Choudhury and Mr. AK Ganguly, learned

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senior counsel appearing for the respondent Nos.1, 2, 6 and

respondent No.4, respectively. The respondent No.5 has not

contested the writ petition.

[5] Mr. Goswami, learned senior counsel appearing for the

petitioner, submits that the petitioner for the first time, from the

affidavit-in-opposition filed by the respondent OIL, came to know

about the grounds on which the petitioner’s bid has been rejected,

namely, (i) insertion of a new condition in the form of a foot note, in

the commercial bid of the petitioner, reserving the right to

manufacture and test the rigs, or part of them, in any of the facilities,

which belong to them, as per their availability at the time of their

contract awarding, (ii) quotation of the price of only 19 major

components against the tender requirement of 63 major components,

prescribed in the Price Bid Format and (iii) inability of the respondent

OIL to determine whether or not the API certificates furnished by the

petitioner alongwith the bid documents covers other facilities of the

petitioner, where the petitioner reserve the right to manufacture or

test the rigs or part of them. According to the petitioner, they have

never been informed by the respondent OIL, at any time, prior to

filing of the affidavit-in-opposition, about the grounds on which their

bids have been rejected and as such, they did not have any knowledge

about the same. The learned senior counsel submits that the petitioner

has filed the petition apprehending disqualification, as they came to

learn that the respondent OIL had decided to disqualify the petitioner

in the tender process, and for directing the respondent authorities to

settle the tender process, initiated vide tender notices, in strict

compliance of the mandatory provisions of law and other guidelines

formulated thereunder and also for restraining the respondent OIL

from awarding the contract in favour of the respondent No.4.

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[6] Referring to the first ground of rejection of the petitioner’s

bid, as disclosed by the respondent OIL in their affidavit-in-opposition,

it has been submitted by Mr. Goswami, learned senior counsel, that

the foot note in the price bid, reserving the right to manufacture or

test the rigs or part of them in any facilities belonging to the

petitioner, has been incorporated in the price bid to inform the

respondent OIL that the petitioner is open to the idea of

manufacturing the aforesaid rig components in any of its facilities

available, as during the course of deliberation, the IEM, to whom

earlier price bid was sent for verification, enquired with the

representative of the petitioner as to whether it is feasible on the part

of the petitioner company to manufacture the components in Italy or

elsewhere. According to the learned counsel, by putting such Clause

in the price bid, the petitioner does not intend to manufacture the

aforesaid components in any units other than the manufacturing unit

in respect of which API license has been furnished and was mentioned

only to make its position clear that if the respondent OIL wants that

such components are to be manufactured other than in Italy, they are

free to do so. The learned senior counsel further submits that such

deliberation between the representative of the petitioner and the IEM

has not been denied by the respondent OIL in its additional affidavit

filed on 1st April, 2013. The learned senior counsel submits that the

said foot note does not in any manner indicate that the petitioner

would manufacture the components of the rigs in violation of the

terms and conditions of the bid documents, which requires

manufacture of certain components in API licensed manufacturing unit

with specification 4F.

[7] Mr. Goswami further submits that the bid of the petitioner

has been rejected on the ground of violation of clause-1.0 of the

Commercial Bid Rejection Criteria, on the ground that the price bid of

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the petitioner contains the aforementioned Clause, reserving the right

to manufacture the rig components in any of its factory, which cannot

be done as in the said clause, there is no negative stipulation of

rejection of the price bid in case of insertion of such clause. The

learned counsel referring to the various clauses of the bid document,

more particularly, the stipulation under the head ‘make of rig

accessories’, has also submitted that the petitioner has no option but

to manufacture 2(two) components, namely, Crown Block Assembly

and Mast and Sub-structure in API licensed factory with specification

4F and to procure other equipments from any of the approved

vendors specified by the respondent OIL. In any case, according to

the learned senior counsel, there being provision for inspection and

test of all the rig components during manufacture, prior to dispatch as

well as Third Party Inspection of the rig components and the rigs to be

supplied, to ensure manufacture of the rig components and the rig as

per specification, in the manufacturing unit having API specification

4F, putting a condition in the price bid, in the form of foot note,

cannot be the ground for rejection of the petitioner’s bid, as the

petitioner cannot, under the terms and conditions of the bid,

manufacture the rig components in any non API licensed

manufacturing unit.

[8] The learned senior counsel has also submitted that since the

port of origin has been mentioned as Italy, the petitioner would not,

therefore, manufacture those 2(two) components in its manufacturing

unit at Houston in USA and carry it to Italy for transhipment to

Kolkata (India), incurring heavy cost. The learned senior counsel

submits that since the petitioner’s technical bid was accepted and the

petitioner having submitted the technical bids with a stipulation of

manufacturing of those 2(two) components in a manufacturing unit in

respect of which the API license has been submitted, no reasonable

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person would have taken the view that the petitioner would

manufacture those 2(two) equipments in any factory other than the

API certified factory. The learned senior counsel further submits that

there being a provision for clarification in Clause-2 of the additional

notes appended to Section-20 of the bid documents, the respondent

OIL, in case of any doubt whether the rig components would be

manufactured in the manufacturing unit, in respect of which API

license was submitted alongwith the bid, would have sought for

clarification from the petitioner, as recommended by the LMC, more

so when the price difference is substantial, which would not have

caused any further delay in finalization of the process, which has

already taken more than 2(two) years from the date of floating the

tender, for no fault of the petitioner. The learned senior counsel

submits that the respondent OIL has taken the decision to reject the

bid of the petitioner on that count, not based on its independent

decision but based on the opinion of the Law Officer of the Union of

India, and unsolicited communications received from the respondent

No.4, despite the stipulation in Clause-14.1 of the terms and conditions

of the bid.

[9] Referring to Clause-15 of the technical bid rejection

criteria, it has further been submitted that though a bidder is required

to furnish, alongwith the bid documents, a valid license of API

specification 4F for a period of not less than 10(ten) years

continuously without any break, preceding the technical bid opening

date, it has nowhere been mentioned in the tender documents or in

the guidelines issued by the respondent OIL, in the matter of awarding

the contract, that the components of the rigs must be manufactured in

the manufacturing unit in respect of which the API license with

specification 4F has been furnished alongwith the bid documents. The

learned senior counsel, therefore, submits that reserving the right by

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the petitioner to manufacture the rig components in any of the

manufacturing unit belonging to the petitioner, do not violate any of

the conditions in the bid documents.

[10] The learned senior counsel also submits that the bid of the

petitioner cannot be rejected on the ground of putting such condition,

on the ground that such condition has no relation with the

commercial bid but has relation to the technical bid, once the

petitioner is found to be technically responsive. According to the

learned senior counsel, the stage for scrutinizing as to whether the

bidder is technically responsive, being over and the petitioner having

been found technically responsive and consequently the price bid

being opened, the respondent OIL cannot subsequently reject the bid

of the petitioner on the ground that such condition, put in the price

bid in the form of a foot note, renders the petitioner’s bid technically

non-responsive.

[11] The learned senior counsel, in relation to the second

ground of rejection of petitioner’s bid, has submitted that the

petitioner from the very beginning has informed the respondent OIL

that it will not disclose the price of individual major rig components,

by indicating it in the checklist appended to the technical bids. The

respondent OIL having taken note of the same, in its proceeding dated

16th February, 2012 and pursuant to the decision of the CBC, decided

to open the first price bid of the petitioner alongwith the price bid of

M/s BHEL (respondent No.5), who also refused to disclose the price of

individual rig components, and hence, the respondent OIL cannot

contend that since the petitioner did not disclose the price of the

individual rig components, its bid is in violation of the terms and

conditions of the bid documents. The learned senior counsel further

submits that the stipulation in the new price format supplied to the

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various bidders on 1st September, 2012, requiring providing breakup of

prices alongwith the bid format, wherever specified in original tender

document, has to be interpreted accordingly, inasmuch as, the

requirement of disclosure of price of all the rig components has been

relaxed by the respondent OIL by its conduct by accepting the

petitioner’s stipulation of non disclosure. It is also submitted that the

respondent OIL has taken a conscious decision to accept the offer

without disclosure of the price of all 63 major rig components and

hence it cannot reject the second price bid of the petitioner on that

count.

[12] The learned counsel submits that the non disclosure of the

price of each major rig components being necessary for accounting

purpose of the respondent OIL, and the petitioner having undertaken

to disclose the same in case the contract is awarded, the purpose for

which such price of individual rig components is necessary would be

served and cannot be treated as essential condition, so as to reject the

bid of the petitioner. The learned senior counsel further submits that

had disclosure of the price of 63 major rig components been the

essential condition of the bid, the respondent OIL would not have

taken the decision to open its price bids, namely, the first as well as

the fresh. The learned senior counsel further submits that quotation of

the price of 63 major components having no relation to the object of

procuring rigs, such condition, in any case, cannot be termed as

mandatory, hence, violation, if any, would not make a bidder

commercially non responsive.

[13] The learned senior counsel, referring to Clause-5.1 of the

Bid Evaluation Criteria (Commercial), has submitted that the price of

the individual 63 major rig components cannot be the basis for

commercial evaluation of the bid submitted by the bidders, as in the

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said clause it has specifically been stipulated that the comparison of the

bid will be done on the basis of the grand total value and not on the

basis of the price of individual 63 major rig components. The learned

counsel, therefore, submits that non disclosure of the price of

individual 63 rig components, in any case, cannot be the basis for

rejection of the price bid of the petitioner, whose offer is much lower

than the offer of the respondent No.4, which, according to the

learned senior counsel, has been done by the respondent OIL at the

instance of the respondent No.4 acting on the unsolicited

communications issued by them.

[14] Referring to the ‘commercial bid format summary’

furnished to the bidders by the respondent OIL, before submission of

the fresh price bid, it has been submitted that what the bidders were

asked to furnish is the price of the components under 19 heads and

accordingly the petitioner having submitted the price bids disclosing

the price under those 19 heads, its price bid cannot be rejected on the

ground of non furnishing of the price of 63 major components, as

stipulated in Annexure-A4 to the bid documents, which, according to

the learned senior counsel, is not required to be complied with, in

view of the subsequent commercial bid format supplied to the bidders.

[15] The learned senior counsel, with regard to the third

ground of rejection of the petitioner’s bid, has submitted that the same

is not at all tenable in facts and law, as the respondent OIL could have

obtain the clarification from the petitioner on the foot note. That

part, there being provision for inspection, monitoring and checking,

apart from the ultimate rejection of the rigs as well as forfeiture of the

guarantee money, it would absolutely be not difficult on the part of

the respondent OIL to ensure that the rig components are

manufactured only in a manufacturing unit belong to the petitioner

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having API license with specification 4F, which components, in any

case, have to be manufactured in such API licensed unit with

specification 4F. The learned senior counsel further submits that

Section-20 of the bid documents having provided that the rig

components must have the API monogram die stamped on the body,

it would not be difficult on the part of the respondent OIL to verify as

to whether the rig components have been manufactured in API

licensed manufacturing unit with specification 4F. The learned senior

counsel submits that the grounds on which the petitioner’s bid has

been rejected are irrational and unreasonable and no person having

properly instructed in law would have rejected the petitioner’s bid on

such unreasonable, arbitrary and irrational ground.

[16] The learned senior counsel further submits that though the

power, under the terms and conditions of the bid, to seek clarification

by the respondent OIL in any matter, is discretionary, it becomes the

duty on the part of the respondent OIL to seek clarification from the

petitioner on the foot note appended to the price bid, if it has any

doubt in that respect, as, such power is coupled with a duty to seek

clarification, in the interest of the respondent OIL for procuring the

best available rig system that too at a much lesser price. Learned

counsel further submits that the respondent OIL while exercising the

discretion did not take into consideration all relevant facts and took

into consideration the opinion of the Law Officer of the Union of

India only. It has also been submitted that the difference of price

quoted by the petitioner and the respondent No.4 being substantial

and the rig system offered having found to be technically suitable, the

rejection of the petitioner’s bid on irrational, arbitrary and

unreasonable conditions is against the public interest, as the

respondent OIL in that case would acquire the rig system at a much

higher price from the respondent No.4.

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[17] The learned senior counsel in support of his contention has

referred to the decisions of the Apex Court in Hirday Narain -Vs-

Income Tax Officer, Bareilly reported in 1970 (2) SCC 355; in

Khudiram Das -Vs- The State of West Bengal & Ors. reported in AIR

1975 SC 550; G.B. Mahajan & Ors. -Vs- Jalgaon Municipal Council

& Ors. reported in (1991) 3 SCC 91; in Poddar Steel Corporation -Vs-

Ganesh Engineering Works & Ors. reported in (1991) 3 SCC 273; in

Tata Cellular -Vs- Union of India reported in (1994) 6 SCC 651; in

Monarch Infrastructure (P) Ltd. -Vs- Commissioner, Ulhasnagar

Municipal Corporation & Ors. reported in (2000) 5 SCC 287; in

Directorate of Education & Ors. -Vs- Educomp Datamitcs Ltd. &

Ors. reported in (2004) 4 SCC 19; in Jagdish Mandal -Vs- State of

Orissa & Ors. reported in (2007) 14 SCC 517; in Meerut Development

Authority -Vs- Association of Management Studies & Anr. reported

in (2009) 6 SCC 171 and in Indian Railway Catering and Tourism

Corporation Ltd. & Anr. -Vs- Doshion Veolia Water Solutions Private

Ltd. & Ors. reported in (2010) 13 SCC 364 as well as of this Court in

Sterlite Technologies Ltd. & Anr. -Vs- Assam Power Distribution Co.

Ltd. & Ors. reported in 2011 (5) GLT 600.

[18] Mr. K.N. Choudhury, learned senior counsel appearing for

the respondent OIL, referring to the first and the third grounds of

rejection of the petitioner’s bid, has submitted that the bid of the

petitioner has rightly been rejected, the same being not in conformity

with the terms and conditions of the NIT. According to the learned

counsel, the bid of the petitioner becomes non responsive technically,

in view of the clause put in the commercial bid, reserving the right to

manufacture and test the rights or part of them in any facilities belong

to the petitioner as per the availability at the time of contract

awarding, in as much as Clause-15 of the bid rejection and bid

evaluation criteria, in respect of evaluation of the technical bids,

provides for manufacturing of the rig or part of them in such unit,

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which has a valid license of API specification 4F for a period of not less

than 10(ten) years continuously without any break preceding the bid

(technical) opening date. The learned senior counsel submits that by

putting such condition, the petitioner reserves the right of

manufacturing the rigs or any part of it in any manufacturing unit,

which may or may not have a valid API license with specification 4F

for a period of not less then 10(ten) years. The learned counsel,

therefore, submits that though such a condition has been put in the

price bid of the petitioner, without putting the same in the technical

bid, it amounts to violation of the conditions in the technical bid even

though the petitioner was earlier found to be technically responsive

and hence the bid of the petitioner was rightly rejected by the

respondent OIL, which decision of the authority, therefore, cannot be

termed as arbitrary. It has also been submitted that the submission of

the petitioner that under the terms and conditions of the NIT, since

certain components of the rigs cannot be manufactured in a

manufacturing unit not having the valid license of API with

specification 4F, putting such clause in the price bid would not violate

the terms and conditions of the bid, more so, when the bid documents

stipulates that the equipments must have API monogram die stamped

on the body and as such, whether the equipments manufactured in

another unit other than the unit in respect of which the valid license of

API specification 4F has been submitted with the bid documents, could

be ascertained by such API monogram, cannot be accepted in view of

the fact that under the terms and conditions of the NIT, the bidder has

to manufacture those components in the unit in respect of which the

license has been furnished with the bid. It has also been submitted

that in any case from such API monogram die stamped on the body of

the equipments, it is not possible to ascertain whether the

manufacturing unit where such equipments are manufactured has the

valid license of API with specification 4F for a period of not less than

WP(C) No.154 of 2013 Page 18 of 69

10(ten) years. According to the learned senior counsel, there being a

specific condition in that respect in the NIT, the bidders have to

comply with such conditions.

[19] Mr. Choudhury further submits that the inspections either

by the TPI Agencies or Pre-dispatched or during manufacturing or at

the time of delivery, as provided in the terms and conditions of the

NIT, being relate to the inspections after awarding of the contract in

favour of a bidder, to ensures manufacture of the required

components or equipments in a validly licensed manufacturing unit

having API specification 4F, the petitioner cannot contend that in view

of such in built checks provided in the terms and conditions of the bid,

the authority ought not to have rejected the bid of the petitioner on

the ground of putting a condition. The learned senior counsel submits

that the inspection as provided in the terms and conditions relates to

the quality, control and not for verifying as to whether the

manufacturing unit where the equipments or parts of the rigs have

been manufactured have the valid API license with specification 4F for

a continuous period of 10(ten) years before submission of the technical

bids. That apart, the cost of such inspections is to be borne by the

respondent OIL, which would be an additional financial burden and

hence there is no reason as to why the respondent OIL would be

exposed to such burden for the fault of the petitioner.

[20] The learned senior counsel, referring to the deliberation

during the Pre-Bid Conference held with the intending bidders on 28th

and 29th September, 2010, has submitted that the petitioner in fact

during the discussion in the Pre-Bid Conference requested for

reduction of the period of API license with specification 4F from

10(ten) years to 5(five) years, which was rejected and as such, the

petitioner knew that the equipments are to be manufactured only in

WP(C) No.154 of 2013 Page 19 of 69

the manufacturing unit having API license with specification 4F

continuously for a period of 10(ten) years prior to submission of the

technical bids. The petitioner despite participation in the Pre-Bid

Conference and rejection of their offer for reduction of the period of

API license with specification 4F did not even made any whisper in the

writ petition relating to the same, thereby suppressing material facts,

which itself disentitled the petitioner from getting the relief under

Article 226 of the Constitution of India.

[21] The learned senior counsel, relating to the submission of

the petitioner that the respondent OIL could have, in respect of the

said clause reserving the right to manufacture the rigs or any

components in any manufacturing unit belonging to the petitioner,

seek clarification from the petitioner instead of straightway rejecting

the bid, has submitted that the same also cannot be accepted as

Clause-14 of Section 20 of the general terms and conditions of the

tender prohibits acceptance of any offer or modification to offers after

the bid closing date and time. It has also been submitted that though

the discretion under Clause-14.2 has been given to the respondent OIL

to seek clarification from the bidder, the same has to be read

alongwith Clause-8.0, which provides that the bids not complying

with the OIL’s requirement may be rejected without seeking any

clarification. The learned counsel further submits that it is within the

discretion of the respondent OIL to seek clarification and if such

discretion has been validly exercised by the OIL in not asking for any

clarification without any malafide intention, the writ Court may not

interferer with the decision of the respondent OIL not to exercise the

discretion, more so, when it is obligatory on the part of the bidders to

comply with the terms and conditions of the bid documents, who

were informed that bids not complying with the OIL’s requirement

may be rejected without asking for any clarification. According to the

WP(C) No.154 of 2013 Page 20 of 69

learned senior counsel, the petitioner, therefore, cannot, as a matter of

right, claim that the respondent OIL must seek clarification relating to

the said clause appended to the price bid.

[22] The learned senior counsel further submits that the

discretion exercised by the respondent OIL not to seek the clarification

from the petitioner in the matter of the said clause cannot be termed

as irrational or arbitrary, more so when there is no malafide alleged

and such decision was taken by the respondent OIL having regard to

the attending facts and circumstances. It has also been submitted that

even assuming but not admitting that the respondent OIL in exercising

its discretion should have asked the petitioner to clarify on the

aforesaid clause, the petitioner’s bid being defective in not furnishing

the price of all 63 major rig components, the petitioner in any case, is

not entitled to any relief.

[23] Mr. Choudhury further submits that the averments of the

petitioner in the affidavit-in-reply filed against the affidavit-in-

opposition of the respondent No.4 that the intention of the petitioner

is to manufacture the rig components in Italy facility, in respect of

which API license of specification 4F was submitted alongwith the

tender documents, cannot be reconciled or accepted, in view of the

specific condition put by the petitioner in the form of the said clause,

in the price bid, reserving the right to manufacture the rig components

in any of its facilities, which may be other than the facility at Italy.

The learned senior counsel, therefore, submits that since the decision

making process has not been vitiated by any arbitrary, irrational or

unreasonable action on the part of the respondent authority, the

petitioner is not entitled to any relief in exercise of the writ

jurisdiction, more so, when it is a contractual matter.

WP(C) No.154 of 2013 Page 21 of 69

[24] Referring to the second ground, on which the petitioner’s

bid was found to be non responsive, i.e. failure to mention the price

of all 63 major rig components, in terms of Annexure-A4, it has been

submitted that though the petitioner in the checklist appended to the

technical bid informed the respondent authority about the company’s

policy of not disclosing the price of components and the petitioner

was found to be technically responsive, it does not mean that the

respondent OIL cannot reject the petitioner’s bid on the ground of

violation of the conditions in the NIT, more particularly, of Clause-5

of the additional note appended to Section-20 of the bid documents,

which provides that the bidders must indicate the price of all major rig

components as specified under different Sections for drilling rig

packages in the format furnished in Annexure-A4. It has also been

submitted that in the bid format (summary) supplied to the bidders

alongwith the communication dated 1st September, 2012, for

submission of the fresh price bid, the bidders were informed to

provide breakup of price alongwith the bid format furnished wherever

specified in the original tender document and as such, the bidders are

required to give the breakup of the price in respect of all 63 major rig

components as specified in Annexure-A4 to the bid documents and

hence, it does not fit in the mouth of the petitioner that by supplying

the bid format on 1st September, 2012, the respondent OIL has given

up the requirement of giving breakup of prices in respect of all 63

major rig components.

[25] The learned counsel further submits that though in the

technical checklist, the petitioner has mentioned about the company’s

policy of not disclosing the price of each of the major rig components

and consequently in the first price bid submitted, the petitioner did

not mention the price of any of the 63 major rig components, the

petitioner, by conduct, has given up its policy of not disclosing the

WP(C) No.154 of 2013 Page 22 of 69

price of rig components, as in the fresh price bid submitted they have

disclosed the price of 19 rig components, instead of 63 major rig

components, which they are required to give in terms of Annexure-A4

to the bid documents. The learned senior counsel submits that the

petitioner’s price bid being contrary to the terms and conditions of the

bid documents, has rightly been rejected by the respondent OIL, as the

petitioner having chosen to submit the bids, they must comply with all

the mandatory requirements of the bid documents, which includes

disclosure of the price of all 63 major rig components.

[26] The learned senior counsel, referring to Clause-1.0 of

Annexure-B to the bid documents, which provides the bid rejection

criteria and bid evaluation criteria in respect of the commercial bids,

submits that since the petitioner has failed to disclose the price of all

63 major rig components, in terms of Annexure-A4, the respondent

authority has no alternative but to reject the commercial bid of the

petitioner, as the said clause provides that the price bid must contain

the price schedule and the bidders commercial terms and conditions

and for its non compliance, the bid will be rejected. The learned

senior counsel submits that Clause-1.0 has been violated by the

petitioner in two ways, namely, by non conforming to Annexure-A4

of the bid documents and also by putting a condition, in the form of a

clause reserving the right to manufacture the rig components in any of

its facilities, which is not a commercial condition but a technical

condition. The learned senior counsel further submits that during the

Pre-Bid Conference, all the bidders were informed about the

requirement of submission of the price bid in terms of Annexure-A4 to

the bid documents by rejecting the contentions of the bidders

including the petitioner to waive such requirement.

WP(C) No.154 of 2013 Page 23 of 69

[27] Referring to Clause 7.2.1 of the OIL’s Booklet for e-

Procurement ICB Tenders, which were also made available to the

bidders and applicable in the present process, informing the bidders,

that they shall have to fill in completely all fields in the price schedule

furnished in the bidding documents in respect of the items quoted, it

has been submitted that despite that the petitioner has chosen to

mention the prices of 19 components instead of 63 as required. The

learned senior counsel submits that the respondent No.5, M/s BHEL,

also though in the checklist of the technical bid informed the

respondent OIL against its policy of non disclosure of the price of

major rig components, it has, however, in the fresh price bid

mentioned the price of all the 63 major rig components, as required

by Annexure-A4 to the bid documents.

[28] It has also been submitted that the requirements of having

the price of all the 63 major components is for compliance of the

International Financial Reporting System (IFRS) and for correct

booking of capital expenditure and as such, it cannot be said that such

condition is not mandatory requirement. It has also been submitted

that the requirement of mentioning the price of all the 63 major

equipments is also felt necessary by the respondent OIL, so that the

bidders whose bid is ultimately accepted, in case of requirement of

replacement of any major components, do not charge the high price,

thereby avoiding unnecessary spending of public money. In any case,

according to the learned counsel, since the bidder is bound to comply

with the terms and conditions of the NIT, which includes furnishing

the price of all 63 major equipments, the bid submitted by the

petitioner cannot be accepted, as he has admittedly quoted the price

of 19 components only.

WP(C) No.154 of 2013 Page 24 of 69

[29] Referring to the decisions cited by the learned senior

counsel for the petitioner, it has been submitted by the learned senior

counsel that those are not applicable in the facts and circumstances of

the present case. It has also been submitted that as held by the Apex

Court in Poddar Steel Corporation (supra) since the petitioner has

failed to conform to the mandatory requirement of the bid

documents, the petitioner’s bid has rightly been rejected by the

respondent OIL. Referring to the decision of the Apex Court in

Gursharan Singh & Anr. -Vs- New Delhi Municipal Committee &

Ors. reported in (1996) 2 SCC 459, it has been submitted that the

guarantee of equality before law being a positive concept, it cannot be

enforced by a citizen or Court in a negative manner, i.e. if an illegality

or irregularity has been committed in favour of any individual or a

group of individuals, others cannot invoke the jurisdiction of the

Court that the same irregularity or illegality be committed by the State

or an authority within the meaning of Article 12 of the Constitution,

so far such petitioners are concerned, on the reasoning that they have

been denied the benefits, which have been extended to others

although in an irregular or illegal manner, the petitioner cannot claim

the relief in the present writ petition solely on the ground that the

unsolicited communications from the respondent No.4 has been

accepted by the respondent OIL, despite the stipulation in Clause-14 of

the bid documents, when the petitioner itself is guilty of violation of

the mandatory conditions of the bid documents.

[30] Placing reliance on the decision of the Apex Court in

Raunaq International Ltd. -Vs- I.V.R. Construction Ltd. & Ors.

reported in (1999) 1 SCC 492, it has also been submitted that the

price being not always the sole criteria for awarding the contract and

the same being only one of the criterias, public interest does not

require acceptance of the petitioner’s bid when its bid is defective

WP(C) No.154 of 2013 Page 25 of 69

being violative of the mandatory conditions of the bid documents and

as such, it cannot be said that since the petitioner’s bid is found to be

the lowest, his bid, irrespective of the violation of the mandatory

requirements of the bid documents, must be accepted. The learned

senior counsel further submits that as held by the Apex Court in

Larsen & Toubro Ltd. & Anr. -Vs- Union of India & Ors. reported in

(2011) 5 SCC 430, that after the price bid is opened, there cannot be

any change of the offer of the bidders in any respect, the respondent

OIL has not committed any illegality in not asking for clarification in

respect of the aforesaid clause, reserving the right to manufacture the

rig components in any of the petitioner’s unit other than the unit in

respect of which the API license has been submitted, more so, when

such a course of action is not permissible under the terms and

conditions of the bid documents. The learned senior counsel referring

to the decision in W.B. State Electricity Board -Vs- Patel Engineering

Company Ltd. & Ors. reported in (2001) 2 SCC 451 submits that the

best way to adhere to the transparency being to follow the tender

conditions, the action on the part of the respondent OIL in rejecting

the bid of the petitioner, cannot be termed as arbitrary, irrational or

unreasonable, such action being to adhere the transparency in the

decision making process.

[31] The learned counsel placing reliance on the decisions of

the Apex Court in Rajasthan Housing Board & Anr. -Vs- G.S.

Investments & Anr. reported in (2007) 1 SCC 477 and in Siemens

Public Communication Networks Private Ltd. & Anr. -Vs- Union of

India & Anr. reported in (2008) 16 SCC 215, further submits that the

scope of judicial review of the decision making process, in exercise of

the power under Article 226 of the Constitution of India, being very

limited, which is required to be exercised with great care and caution

and only in furtherance of public interest and not on the ground of

WP(C) No.154 of 2013 Page 26 of 69

making out of a legal issue by the person seeking a writ and where

two views are possible and no malafide or arbitrariness is alleged or

shown, the High Court cannot interfere with the view taken by the

authority in the commercial matter and if the decision of awarding the

contract is bonafide and in public interest, the Court will not exercise

the power of judicial review and interfere with the decision making

process of the authority, even if it is accepted, for sake of argument,

that there is a procedural lacuna. The learned counsel referring to the

facts and circumstances of the instant case, has submitted that since it is

admitted by the petitioner that they have not mentioned the price of

all the 63 major rig components, which is a mandatory requirement,

this Court may not interfere with the decision making process of the

respondent OIL merely on the ground that the petitioner has offered

the lowest price. The learned counsel, therefore, submits that the writ

petition filed by the petitioner deserves dismissal.

[32] Mr. Ganguly, learned senior counsel appearing for the

respondent No.4, raising the question of maintainability of the writ

petition supported by an affidavit filed by Shri Vamaraju Sree

Satyamurti, has submitted that since the respondent No.4 has

challenged the authority purportedly given by the petitioner in favour

of said Sree Murti for filing the writ petition, it was incumbent on the

part of the petitioner to produce such authority before this Court,

when Sree Murti has claimed that he has been authorized by the

petitioner to file the writ petition and to swear the affidavit, which

having not been done, the writ petition supported by an affidavit by

an unauthorized person deserves to be dismissed. It has also been

submitted that Drillmec India Private Limited, of which Sree Murti

claims to be the Director, being not a bidder in the bidding process,

the writ petition filed with the affidavit of the Director of Drillmec

deserves to be dismissed as not maintainable.

WP(C) No.154 of 2013 Page 27 of 69

[33] Referring to the corporate entity of the petitioner, it has

also been submitted by the learned senior counsel that since the

petitioner has claimed a right under Article 19(1)(g) as well as under

Article 14 of the Constitution of India, the petitioner is not entitled to

any relief, such protection of specific fundamental rights being only

guaranteed to a natural person and not to corporate entities, as held

by the Apex Court in State Trading Corporation of India Ltd. -Vs-

Commissioner of Tax Officer & Ors. reported in (1964) 4 SCR 99; in

Barium Chemicals Ltd. -Vs- Company Law Board reported in 1966

Supp SCR 311; in Divisional Forest Officer -Vs- Biswanath Tea

Company Ltd. reported in (1981) 3 SCC 238. It has also been

submitted that the petitioner being a foreign entity, registered in Italy,

is not entitled to invoke the fundamental rights guaranteed under

Articles 14, 19 and 21 of the Constitution of India and the writ petition

being based on the claim of violation of the fundamental rights under

Article 14 and 19(1)(g) of the Constitution of India, the same deserves

to be dismissed. The learned senior counsel in support of his

contention has placed reliance on the decision of the Apex Court in

Indo-China Steam Navigation Co. Ltd. -Vs- Jasjit Singh, Addl.

Collector of Customs reported in (1964) 6 SCC 594 as well as in

British India Steam Navigation Co. Ltd. -Vs- Jasjit Singh, Addl.

Collector of Customs reported in AIR 1964 SC 1451.

[34] Mr. Ganguly further submits that the petitioner is not

entitled to the discretionary relief under Article 226 of the

Constitution of India, as it has suppressed material facts relating to the

condition put by it in the price bid, reserving the right to manufacture

and test the rig, or any part of them in any of its facility as per their

availability at the time of awarding the contract, and also about non

disclosure of the price of all 63 major rig components, as per the

format Annexure-A4 to the bid documents. According to the learned

WP(C) No.154 of 2013 Page 28 of 69

counsel, had those facts been disclosed in the writ petition, the Court

would not have passed an interim order, as has been passed in the

instant case. The learned senior counsel submits that because of such

suppression and consequent interim order passed, the entire project

has suffered, thereby exposing the respondent OIL to financial loss,

which in turn is against the public interest. The learned counsel in

support of his contention has placed reliance on the judgments passed

by the Apex Court in Prestige Lights Ltd. -Vs- State Bank of India

reported in (2007) 8 SCC 449 as well as in Kishore Samrite -Vs- State

of Uttar Pradesh & Ors. reported in (2013) 2 SCC 398.

[35] On the merit of the writ petition, the learned senior

counsel submits that since the respondent OIL has followed the

transparent bidding process, the decision making process has not been

vitiated warranting interference by this Court in exercise of the writ

jurisdiction under Article 226 of the Constitution of India. It has been

submitted that despite clear stipulation in the bid documents, in

different clauses, intimating the bidders that in case of failure to furnish

all the information may entail rejection without seeking any

clarification and also despite the direction issued to submit the bids in

the format only, the petitioner has put a condition reserving the right

to manufacture the rig components in any of its manufacturing unit,

that too in such a manner, which has the possibility of overlooking it,

since there is no indication in the bid documents submitted by the

petitioner relating to putting such condition in the price bid.

[36] The learned senior counsel further submits that in the

terms and conditions of the bid documents as well as during the Pre-

Bid Conference of the bidders, which was attended by the petitioner

also, the respondent OIL has informed all concerned about the

requirement of disclosing the price of each of the 63 major rig

WP(C) No.154 of 2013 Page 29 of 69

components as per Annexure-A4 to the bid documents and the terms

and conditions of the bid documents having stipulated that failure to

furnish all the information, as required, would entail the rejection of

the bids without any clarification, the petitioner cannot file writ

petition claiming that its bid has to be accepted despite failure to

furnish the price of each of the major 63 rig components as well as

despite violation of the terms and conditions of the bid. The learned

senior counsel submits that the requirement to furnish the price of all

the 63 major components is not a empty formality so as to render

such requirement as non essential as contended by the petitioner, as,

such requirement was in conformity with the International Financial

Reporting System (IFRS) as well as the accounting system, which is also

a relevant factor in taking a decision by the respondent OIL relating to

the bidder in whose favour the contract has to be awarded. The

learned counsel submits that though normally the lowest bidder is to

be preferred in public interest, such principle applies when the bidder

fulfills the condition of bid. The learned senior counsel submits that in

the instant case, the petitioner having violated the conditions of the

bid, cannot clam that it should be awarded with the contract solely on

the ground that it has quoted the lowest price. The learned senior

counsel further submits that the public interest requires adherence to

the rules and conditions of the NIT and merely because the bid was

lowest, the requirement of the compliance of the conditions of the bid

cannot be ignored.

[37] Mr. Ganguly also submits that in the instant case, it is

being an international bidding, which is highly competitive, and the

nature of work being highly technical and very high degree of care

and meticulous adherence to the requirement of bid is inherent in such

bidding and as the petitioner admittedly having violated the terms

and conditions of the bid document, they are not entitled to the relief

WP(C) No.154 of 2013 Page 30 of 69

as claimed in the writ petition. The learned senior counsel in support

of his contention has placed reliance on the decisions of the Apex

Court in W.B. State Electricity Board -Vs- Patel Engineering Co. Ltd.

& Ors. reported in (2001) 2 SCC 451 and in Siemens Public

Communication Networks Private Ltd. (supra).

[38] The learned senior counsel further submits that it is

apparent from the stipulation in the bid documents that the

respondent OIL had decided to purchase the rigs manufactured by

only those manufactures, who has valid license of API specification 4F

and that too for not less than 10(ten) years continuously without any

break preceding the technical bid opening date. In the instant case, as

the petitioner, by putting a condition in the price bid, has reserved the

right to manufacture the rig components in any of the manufacturing

unit, other than the manufacturing unit in respect of which such API

license with specification 4F has been submitted alongwith the bid

documents, which condition relates to the technical bid, has violated

the technical qualification, which a bidder must have. Such condition,

submitted by the learned counsel, also violates the terms and

conditions of the bid. The petitioner in fact has stipulated an

additional condition in the price bid and if such condition was put in

the technical bid its bid would have been non responsive technically

and rejected and as such, the respondent OIL has not taken any

arbitrary, irrational or unreasonable decision to reject the bid of the

petitioner.

[39] The learned senior counsel, referring to the submissions

advanced by the learned senior counsel for the petitioner claiming that

the respondent OIL ought to have sought clarification from the

petitioner on the aforesaid conditions put in the price bid as well as

non disclosure of the prices of 63 major rig components, submits that

WP(C) No.154 of 2013 Page 31 of 69

by Clause-4.2 as well as Clause-8 of the bid documents all the bidders

have been informed that if they do not conform to the OIL’s terms

and conditions and the bid evaluation criteria, the bid of such bidders

may be rejected without seeking any clarification. The learned senior

counsel submits that though in Clause-14.2 of the bid documents, the

respondent OIL reserves the right to get the clarification from the

bidders, the petitioner having violated the terms and conditions of the

bid cannot claim a right that despite violation of the terms and

conditions, the OIL is duty bound to seek clarification on such

violation. It has also been submitted that, in any case, the respondent

OIL cannot seek clarification on such violation of the terms and

conditions, as it would amount to treating other bidders unfairly, who

have submitted their bids in full compliance of the terms and

conditions of the bid documents and it would also be in violation of

the requirement of adoption of fair and transparent procedure in the

bidding process.

[40] The learned senior counsel further submits that the

petitioner being at fault and having not complied with the terms and

conditions of the bid documents, cannot claim a right. It has also

been submitted that as the respondent OIL has not rejected the

technical bid of the petitioner at the threshold, even though they have

disclosed in the checklist that it is against their policy to disclose the

price of the rig components, the petitioner cannot claim a right

flowing from a mistake committed by the respondent OIL in not

rejecting the technical bid of the petitioner at the threshold, as the

mistake does not confer any right on the parties, more so when such

mistake can be corrected at any subsequent stage. The learned senior

counsel in support of his contention has placed reliance on the

judgment of the Apex Court in Union of India -Vs- S.R. Dhingra &

Ors. reported in (2008) 2 SCC 229. The learned counsel referring to

WP(C) No.154 of 2013 Page 32 of 69

the decision of the Apex Court in Poddar Steel Corporation (supra)

and in B.S.N. Joshi & Sons Ltd. -Vs- Nair Coal Services Ltd. & Ors.

reported in (2006) 11 SCC 548 further submits that essential

conditions of the bid documents must be adhered to and the authority

issuing the tender is required to enforce such conditions rigidly and in

case of non adherence, the contract cannot be awarded to a bidder,

whose bid is otherwise lowest.

[41] Countering the pleadings of the petitioner that the rigs

supplied by the respondent No.4 are not working well, it has been

submitted by the learned senior counsel for the respondent No.4 that

the respondent/ OIL never at any point of time informed the

petitioner that the rig supplied by them are not working well and, on

the other hand, the respondent OIL has taken a stand that the rigs

supplied are working well. The learned senior counsel submits that

such an aspersion on the respondent No.4 is not at all warranted, the

same having no basis on the facts.

[42] The learned senior counsel also submits that the scope of

judicial review of the commercial decision being very limited, which is

available only when the process adopted or decision made by the

authority is malafide or intended to favour someone or when the

process adopted or decision made is so arbitrary and irrational that no

responsible authority acting reasonably should have reach such

decision and such decision affects the public interest, the petitioner is

not entitled to the relief claimed in the writ petition as the petitioner

has claimed that the contract is to be awarded even if they have

violated the terms and conditions of the bid documents. It has also

been submitted that merely because a legal point is made out, the writ

Court will not exercise the writ jurisdiction in commercial contract,

which jurisdiction is to be exercised with great caution and only in

WP(C) No.154 of 2013 Page 33 of 69

furtherance of public interest. It has also been submitted that unless

the decision making process is contrary to law or actuated by malice

or suffers from consideration of irrelevant materials, the writ Court

would not exercise its jurisdiction under Article 226 of the

Constitution, that too at the instance of a bidder, who admittedly has

not submitted the bid complying with the terms and conditions of the

bid document. The learned senior counsel, therefore, submits that the

writ petition deserves to be dismissed with compensatory costs. The

learned counsel in support of his contention has placed reliance on the

decision of the Apex Court in Tata Cellular (supra); in Air India Ltd.

-Vs- Cochin International Airport Ltd. & Ors. reported in (2000) 2

SCC 617; in Centre for Public Interest Litigation & Anr. -Vs- Union

of India & Ors. reported in (2000) 8 SCC 606; in Jagdish Mandal

(supra) as well as in Arun Kumar Agarwal -Vs- Union of India & Ors.

[Writ Petition (C) No.69/2012] decided on 9th May, 2013.

[43] Mr. Goswami, learned senior counsel for the petitioner in

reply to the submissions advanced by the learned counsel appearing

for the respondents and referring to the first and the third grounds, on

which the petitioner’s bid has been rejected by the respondent OIL,

reiterating his earlier submission, has submitted that even the LMC in

the proceedings dated 13th October, 2012 as well as on 1st November,

2012 recommended to have the clarification as provided in the terms

and conditions of the bid. It has further been submitted that the

petitioner’s bid has been rejected, as is apparent from the aforesaid

proceedings of the LMC, based on the unsolicited communications

issued by the respondent No.4. The respondent OIL, though, never at

any point of time was inclined to reject the bid of the petitioner on

those ground, as the petitioner has made known the respondent OIL

that it will abide by its undertaking earlier given for strict compliance

of all the tender conditions including the manufacture of the aforesaid

WP(C) No.154 of 2013 Page 34 of 69

rig components in its Italy unit, it has taken the decision to do no at

the instance of the respondent No.4 submits the learned counsel.

[44] The learned senior counsel submits that the CBC has taken

a conscious decision to open of the price bid of the petitioner as well

as of M/s BHEL, the respondent No.5, despite non disclosure of the

price of individual 63 major rig components, and not to reject the

offer of the petitioner on the aforesaid grounds, based on the

recommendation of the LMC meeting held on 1st November, 2012

opining that the Drillmec specifically confirmed during clarification of

the technical bid that the mast and sub-structure and the other drilling

equipments requiring API monogram would be built in Italy and the

breakup of cost of major rig components being required for

accounting purpose to comply with IFRS. The learned senior counsel

further submits that in the said meeting of the LMC, it has also been

pointed out that requirement of the disclosure of the breakup of cost

of major rig components is a non essential condition, which view the

CBC in its 430th meeting, however, did not at all consider and took

the decision to reject the offer of the petitioner only on the opinion of

the Law Officer of the Union of India, without considering all relevant

materials including the minutes of the LMCs and without arriving at its

independent decision.

[45] It has also been submitted that since the LMC in its

proceedings dated 13th October, 2012 as well as 1st November, 2012

recommended to obtain the clarification of the doubt, which

according to the LMC, has created because of the condition put by the

petitioner in the price bid, reserving the right to manufacture the

equipments in any of its unit, the respondent OIL ought to have

exercise the discretion of have clarification, as stipulated in the terms

and conditions of the bid, in case it had any doubt that the petitioner

WP(C) No.154 of 2013 Page 35 of 69

would manufacture those equipments in a non API certified

manufacturing unit, keeping in mind the difference of the price quoted

by the petitioner and the respondent No.4 as well as the time, the

respondent OIL has already consumed since the date of issuance of the

global tender, more so when in the earlier stage of the process,

clarifications were sought for and furnished by different bidders on

some other issues. According to the learned senior counsel no further

clarification in fact was required as the LMC in its proceeding dated 1st

November, 2012 recorded that the petitioner confirmed during

clarification of technical bid that the mast and sub-structure and other

drilling equipments requiring API manufacture would be built in Italy

in respect of which API license with specification 4F was submitted

alongwith the tender documents. The learned senior counsel submits

that the entire action on the part of the respondent OIL was directed

to show undue favour and to award the contract in favour of the

respondent No.4 by ignoring the legitimate bid of the petitioner.

[46] Referring to the submissions advanced by the learned

senior counsel for the respondent No.4, questing the maintainability

of the writ petition, it has been submitted by the learned senior

counsel that since the petitioner has challenged the decision making

process of awarding the contract in favour of the respondent No.4, it

cannot be said that the petitioner is not entitled to the relief it being a

foreign company. The learned senior counsel also submits that the

respondent No.4, for the first time, alongwith the written submission

advanced has filed certain documents in support of the contention

that the person swearing the affidavit has not been authorized to

swear the affidavit on behalf of the petitioner, which is a foreign

company, even though the petitioner in its affidavits has specifically

stated about the authorization of the deponent to swear the affidavit

on behalf of the petitioner. The learned senior counsel further submits

WP(C) No.154 of 2013 Page 36 of 69

that the affidavit supporting the facts narrated in the writ petition can

be sworn by any person, who is conversant with the facts of the case

and since the deponent, who has been authorized to represent the

petitioner on their behalf pertaining to all matters relating to the

global tender in question as well as subsequent fresh price bid and

accordingly participated in all the proceeding and represented the

petitioner in all the stages of such tender process, he is competent to

swear the affidavit being conversant with the facts and having

authorized by the petitioner. Referring to documents filed by the

respondent No.4, during the course of argument, it has also been

submitted that Drillmec India Private Limited, of which the deponent

is a Director, has shareholding in the petitioner Company and Drillmec

India Private Limited in the meeting of the Board of Directors held on

7th January, 2013, has authorized the deponent, Mr. Murti and

another Director, to deal with the matters regarding the global tender

issued by the respondent OIL and hence, it cannot be said that the

deponent has not been authorized to swear the affidavit.

[47] The learned senior counsel further submits that the

submissions made by the learned counsel for the respondent No.4 that

the writ petition suffers from the vice of the suppression of material

facts, is misplaced, as the petitioner has filed the writ petition seeking

the reliefs at a stage when they were kept in dark by the respondent

OIL relating to the award of contract and also never at any point of

time were informed about the grounds on which their bids were

rejected, prior to filing of the affidavit-in-opposition by the

respondent OIL in the writ petition. It has, therefore, been submitted

that such submission of the learned senior counsel for the respondent

No.4 does not deserve any consideration.

WP(C) No.154 of 2013 Page 37 of 69

[48] Before proceeding to deal with the merit of the case, I

propose to consider the plea of maintainability of the writ petition

raised by the respondent No.4.

[49] The maintainability of the writ petition has been

questioned on the following 3(three) grounds:-

(i) Competence of Shri Vamaraju Sree Satyamurthy to swear the affidavit in support of the writ petition and to maintain the same on behalf of the writ petitioner Drillmec SpA;

(ii) The writ petitioner being a foreign entity, registered in Italy, which is a corporate entity, being not entitled to invoke the fundamental rights guaranteed under Articles 14, 19 and 21 of the Constitution of India, cannot maintain the writ petition; and

(iii) The writ petition suffers from gross suppression of material facts.

[50] Rule 1 of Chapter V-A of the Gauhati High Court Rules

provides that an application for a direction or order or writ under

Article 226 of the Constitution of India, other than writ of habeas

corpus, shall be drawn in the form contained in the Schedule to that

Chapter and shall be accompanied by an affidavit verifying the facts

relied upon. Rule 7 of Chapter-IV of the said Rules provides that the

facts stated in the application shall be verified by the solemn

affirmation of the applicant or by an affidavit to be annexed to the

application. Note appended to Rule 7 stipulates that such affidavit

may be by any person having cognizance of the facts stated. It also

provides that several persons may join in the affidavit, each deposing

separately to the facts, which are within their own knowledge.

[51] The word ‘cognizance’ has not been defined in the said

Rules. In Webster's Encyclopedic Unabridged Dictionary (new revised

edition), the meaning of the word ‘cognizance’ is given as

WP(C) No.154 of 2013 Page 38 of 69

‘knowledge, notice, perception’. In Black’s Law Dictionary (Seventh

Edition) meaning of the word ‘cognizance’ is given as

acknowledgment or admission of an alleged fact. A person, therefore,

who has the knowledge, notice or perception of facts narrated in the

writ petition, can swear the affidavit in support of the writ petition

filed.

[52] In the instant case, the writ petition filed by the Drillmec

S.p.A. is supported by an affidavit filed by Mr. Murthy claiming to be

the Director of Drillmec India Private Limited and duly authorized to

represent the petitioner and to swear the affidavit. The petitioner, in

reply to the affidavit filed by the respondent No.4, questioning the

authority of Mr. Murthy to swear the affidavit, has stated that he is

the Director of Drillmec India Private Limited, which works in

collaboration of the petitioner Company, which has the equity

participation in Drillmec India Private Limited and has been duly

authorized to represent the petitioner in the case. The respondent

No.4 in support of the contention that the petitioner has no equity

participation with the Drillmec India Private Limited, has filed a

document issued by the Ministry of Cooperate Affairs, Government of

India as well as a certificate issued by a Company Secretary, containing

the names of the shareholders of Drillmec India Private Limited,

alongwith the written submission filed, without, however, filing any

affidavit in support of those documents, though required to be filed.

Those documents having been filed during the course of argument by

the respondent No.4 and without any supporting affidavit as well as

after the hearing of arguments of the petitioner was over, normally

should not be taken into consideration in support of an issue raised by

any parties to the proceeding. I am, however, not proposing to reject

those documents on that ground. The petitioner during the reply

argument advanced has also produced 2(two) documents, i.e. a

WP(C) No.154 of 2013 Page 39 of 69

certificate issued by the petitioner Drillmec S.p.A. authorizing Drillmec

India Private Limited to represent them on their behalf pertaining to

all matters related to the global tender issued by the respondent OIL

and the resolution adopted by the Board of Directors of Drillmec India

Private Limited in its proceeding dated 7th January, 2013 authorizing

Mr. Murthy to deal with the matters relating to the respondent OIL’s

aforesaid tender submitted by Drillmec S.p.A, as per the authority

given by the petitioner. From the aforesaid 2(two) documents it,

therefore, appears that the petitioner Drillmec S.p.A. has authorized

Drillmec India Private Limited to represent them on their behalf in all

matters pertaining to the aforesaid global tender issued by the

respondent OIL, which Company in turn has authorized Mr. Murthy

to deal with the matters relating to the said global tender, by virtue of

which Mr. Murthy has filed the affidavit in support of the petition

filed by the petitioner Drillmec S.p.A. Mr. Murthy has also claimed

that he is acquainted with the facts and circumstances of the case,

which has not been disputed by the respondent No.4. Hence, Mr.

Murthy, who is conversant with the facts and circumstances relating to

the global tender issued by the respondent OIL, has the competence to

swear the affidavit supporting the pleadings in the writ petition.

Therefore, the first objection raised by the respondent No.4 relating to

the maintainability of the writ petition cannot be sustained.

[53] The respondent No.4 has also questioned the

maintainability of the petition filed by the petitioner Drillmec S.p.A.

on the ground that the same being a foreign corporate entity is not

entitled to invoke the fundamental rights guaranteed under Articles 14

and 19 of the Constitution of India, in support of which reliance has

been placed in the Apex Court judgments in State Trading

Corporation of India Ltd. (supra); Barium Chemicals Ltd. (supra);

WP(C) No.154 of 2013 Page 40 of 69

Biswanath Tea Company Ltd. (supra); Indo China Steam Navigation

Co. Ltd. (supra) and British India Steam Navigation Co. Ltd. (supra).

[54] The petitioner is a foreign corporate entity, who has filed

the petition challenging the decision making process of awarding the

contract, and at a stage when they were not informed about the

outcome of the tender submitted by them alongwith the respondent

Nos.4 and 5 and also about the grounds of rejection of their tender.

The petitioner has claimed that the decision making process has been

vitiated because of non adherence to the terms and conditions of the

bid, and not claiming fundamental right as guaranteed to a citizen

under Article 19 of the Constitution of India.

[55] Article 14 of the Constitution, which confers the right of

equality before law, unlike Article 19 of the Constitution, secures a

right to ‘any person’ of equality before law and equal protection of

law within the territory of India, which right cannot be denied by the

State. While under Article 14, such right is protected to any person, in

Article 19, the rights mentioned therein is protected to the citizens of

the country only and not to any person.

[56] In State Trading Corporation of India Ltd. (supra), the

question, which arose for consideration by the Apex Court was

whether the said Corporation can maintain a writ petition under

Article 32 of the Constitution of India for enforcement of the

fundamental right under Article 19 of the Constitution. A 9(nine)

Judges Bench of the Apex Court in the said case has, upon

consideration of the provisions of Part-III of the Constitution, held

that the makers of the Constitution deliberately and advisedly made a

clear distinction between the fundamental rights available to ‘any

person’ and those guaranteed to ‘all citizens’ and since the right under

WP(C) No.154 of 2013 Page 41 of 69

Article 19 of the Constitution is available to the citizens only, the same

cannot be enforced by a corporation, it is being not a natural person

but a juristic person. The Apex Court in the said case has not held that

the right under Article 14 of the Constitution cannot be invoked by a

corporation, as submitted by the learned senior counsel for the

respondent No.4. On the other hand, having regard to use of the

expression ‘citizen’ and ‘any person’ in different provisions of Part-III

of the Constitution, it has been held that the most reasonable view to

take of the provisions of the Constitution is to say that whenever any

particular right was to be enjoyed by a citizen of India, the

Constitution takes care to use the expression ‘any citizen’ or ‘all

citizens’ in clear contradiction to those rights, which were to be

enjoyed by all, irrespective of whether they are citizens or aliens, or

whether they were natural persons or juristic persons.

[57] A constitutional Bench of the Apex Court in Barium

Chemicals Ltd. (supra) placing reliance on the State Trading

Corporation of India Ltd. (supra) reiterated the said proposition of

law that the Company or the Corporation being not a citizen has no

fundamental right under Article 19 of the Constitution. The same

view has also been taken by the Apex Court in Biswanath Tea

Company Ltd. (supra). In Indo-China Steam Navigation Co. Ltd.

(supra), a constitutional Bench of the Apex Court, while considering

the penal action taken against the appellant before it, under the

provisions of the Sea Customs Act, 1878, has held that a foreign

company, being not a citizen within the meaning of Article 19 of the

Constitution is not entitled to claim the benefit of the said provision,

as such right is guaranteed only to the citizens of India. In the said

case, the Apex Court has also held that, the plea that mens rea being

not regarded as an essential element of Section 52-A of the Sea

Customs Act the said provision would be ultra vires Articles 14, 19 and

WP(C) No.154 of 2013 Page 42 of 69

31(1) of the Constitution and as such unconstitutional and invalid,

cannot be sustained for the simple reason that in supporting the said

pleas, inevitably the appellant has to fall back upon the fundamental

right guaranteed by Article 19(1)(f) of the Constitution. The Apex

Court has further held that certain rights guaranteed to the citizens of

India under Article 19 are not available to the foreigners and pleas

which may successfully be raised by the citizens on the strength of the

said rights guaranteed under Article 19 would be not available to the

non-citizens. In British India Steam Navigation Co. Ltd. (supra),

another constitutional Bench of the Apex Court, referring to the

decision in the State Trading Corporation of India Ltd. (supra), has

also held that a foreign company being not a citizen of India is not

entitled to claim the right under Article 19(1) of the Constitution of

India.

[58] From the aforesaid decisions, on which the learned senior

counsel for the respondent No.4 has placed reliance in support of the

contention that the petitioner being a foreign entity cannot maintain a

writ petition for violation of the right under Articles 14, 19 and 21 of

the Constitution of India, it, therefore, transpires that the foreign

company being not a natural person, but a juristic person, cannot

maintain a writ petition for enforcement of certain rights guaranteed

to a citizen under Part-III of the Constitution of India, like the right

under Article 19(1) of the Constitution, which specifically provides that

those rights are available to the ‘citizen’, unlike the rights under Article

14, which is available to ‘any person’. The Corporation including the

foreign entity, however, also cannot maintain a writ petition alleging

violation of the right under Article 14 of the Constitution of India if, to

be successful in such plea, such Corporation including the foreign

entity has to fall back upon the fundamental right guaranteed under

Article 19(1) of the Constitution.

WP(C) No.154 of 2013 Page 43 of 69

[59] The petitioner, which is a foreign company, as noticed

above, has filed the present petition challenging the decision making

process on the ground of violation of the terms and conditions of the

bids as well as non maintenance of the transparent, fair and open

procedure resulting in arbitrariness and unreasonableness in action,

within the meaning of Article 14 of the Constitution, therefore, can

maintain the writ petition. Hence, the second ground of challenge to

the maintainability of the writ petition also cannot be sustained.

[60] The third ground of maintainability, as raised by the

respondent No.4, is relating to the suppression of the material facts.

According to the respondent No.4, the petitioner in the writ petition

did not disclose about putting a condition in the price bid reserving

the right to manufacture the rig components in any of its facility

available at the time of awarding the contract as well as non

furnishing the price of 63 major rig components, in terms of

Annexure-A4 of the bid documents, thereby suppressed those material

facts and had those facts been disclosed, the writ Court would not

have entertain the writ petition and pass an interim order and hence,

the writ petition suffers from the vice of suppression of material facts.

[61] Material facts are those primary facts, material to the party

pleading, which must be pleaded by a party to establish the existence

of a cause of action. The relief claimed under Article 226 of the

Constitution of India being discretionary and equitable relief, the writ

Court naturally would dismiss a writ petition in case of suppression of

material facts or pleading of twisted facts, as the person claiming such

relief is required to approach the Court with clean hands, as held by

the Apex Court in Kishore Samrite (supra) and Prestige Lights Ltd.

(supra).

WP(C) No.154 of 2013 Page 44 of 69

[62] In the instant case, as discussed above, the petitioner was

not informed about rejection of its bid, not to speak of disclosure of

the grounds thereof. The petitioner has filed the writ petition claiming

strict adherence of the terms and conditions of the bid and to award

the contract, having regard to the lowest bid offered by it, contending

inter alia that despite such bid submitted by them, the respondent OIL

did not inform them anything and instead was pursuing negotiation

with the respondent No.4. They having not been informed about the

outcome of the tender process initiated as well as the grounds for

rejection of their bid, their petition cannot be dismissed on the ground

that the aforesaid facts have not been pleaded in the writ petition.

The respondent Nos.1 to 3 in their affidavit-in-opposition filed, for the

first time, has disclosed the factum of rejection of the bid as well as the

grounds of such rejection. Had the petitioner been informed about

the rejection of the bid, even without disclosing the ground therefor,

the writ petition would have suffered from vice of suppression of

material facts, had, the stipulation relating to incorporation of a clause

reserving the right to manufacture the rig components in any of its

facility available at the time of the contract as well as non furnishing

the price of 63 major rig components, not been pleaded in the writ

petition, which being not the case in hand, the third ground of

maintainability also stands rejected.

[63] Having held that the writ petition is maintainable, I shall

now proceed to deal with the scope of judicial review, under Article

226 of the Constitution of India, in contractual matters.

[64] A contract being a commercial transaction, evaluation of

tender and awarding the contracts are essentially commercial

functions. Principles of equity and natural justice stay at a distance. If

a decision relating to the award of contract is bonafide and is in public

WP(C) No.154 of 2013 Page 45 of 69

interest, the Courts will not, normally, in exercise of its power of

judicial review, interfere even if procedural abrasion or error in

assessment or prejudice to a tenderer is made out. The Court while

exercising the power of judicial review is also required to bear in mind

the public interest. If any process initiated by the State or its

instrumentality is not transparent, fair and open and if the decision

making process is vitiated by arbitrariness in action or unreasonable or

malafide, such decision making process can no doubt be interfered

with by the High Court in exercise of the power of judicial review.

The State or its instrumentalities or agencies are bound to adhere to

the norms, standards and the procedures laid down by them, in the

matter of distribution of State largesse and cannot be allowed to

depart therefrom arbitrarily. However, the Court should be slow in

interfering with the decision making process in exercise of its

discretionary power under Article 226 of the Constitution, unless it

requires in furtherance of public interest. This view has been taken by

me in Sterlite Technologies Ltd. (supra) placing reliance on various

judicial pronouncements of the Apex Court including in Air India Ltd.

(supra), Monarch Infrastructure (P) Ltd. (supra) and Siemens Public

Communication Networks Pvt. Ltd. (supra).

[65] The State or its instrumentalities though has freedom of

contract, its decision can be tested by the application of the

Wednesbury’s principle of reasonableness and if such decision is not

free from arbitrariness or affected by the bias or actuated by malafide,

such decision can no doubt be interfered with by the Court in exercise

of the power of judicial review.

[66] The Apex Court in a recent judgment in Michigan Rubber

(India) Ltd. -Vs- State of Karnataka & Ors. reported in (2012) 8 SCC

216, taking into account its earlier decisions including the decisions in

WP(C) No.154 of 2013 Page 46 of 69

Tata Cellular (supra); Raunaq International Ltd. (supra) and

Jagdish Mandal (supra) has restated the nature and scope of judicial

review of the contractual matter awarding the contract by the

Government or its instrumentalities. It has been held that the basic

requirement of Article 14 of the Constitution being fairness in action

by the State or its instrumentalities and the non arbitrariness being in

essence and substance of the heartbeat of fairplay, these actions are

amenable to judicial review only to the extent that the State or its

instrumentalities must act validly for a discernible reason and not

whimsically for any ulterior purpose. If the State acts within the

bounds of reasonableness, it would be legitimate to take into

consideration the national priorities. It has further been held that if the

State or its instrumentalities act reasonably, fairly and in public interest

in awarding contract, interference by the Court is very restrictive since

no person can claim a fundamental right to carry on business with the

Government. In paragraph 24 of the said report, the Apex Court has

laid down the following test, in the matter of interfering in tender or

contractual matter, in exercise of the power of judicial review-

(i) whether the process adopted or made by the authority is malafide 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 reasonable authority acting reasonably and in accordance with the relevant law could have reach? and

(ii) whether the public interest is affected.

If the answers to the aforesaid test are in negative then

there should be no interference under Article 226 of the Constitution

of India.

[67] The Apex Court, in the said case, referring to the

limitations relating to the scope of judicial review of administrative

WP(C) No.154 of 2013 Page 47 of 69

decision and the exercise of the power of awarding contract and the

need to find out a right balance between the administrative discretion

to decide the matters onto the one hand and the need to remedy any

unfairness on the other hand, reiterates that:-

(1) The modern 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 action. 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. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fairplay 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 facets 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.

It has also been observed that the duty to act fairly will

vary in extent, depending upon the nature of cases, to which the said

principle is sought to be applied.

[68] In Centre for Public Interest Litigation (supra), the Apex

Court has held that in a matter when, while accepting the bid offered,

the authority is required to take into consideration various factors like

WP(C) No.154 of 2013 Page 48 of 69

commercial/technical aspect, prevailing market condition, both

national and international and immediate needs of the country etc.,

the Court should not interfere unless it is satisfied that the allegations

levelled are unassailable and there could be no doubt as to the

unreasonableness, malafide, collateral considerations. The same view

has been reiterated by the Apex Court in Arun Kumar Agarwal

(supra) by observing that in the matters relating to the economic

issues, there being always an element of trial and error, so long as the

trial and error bonafide and with best intention, such decision cannot

be questioned as arbitrary, capricious and illegal.

[69] In Larsen and Toubro Ltd. (supra) the Apex Court

reiterating its earlier view expressed in Ramana Dayaram Shetty -Vs-

International Airport Authority of India & Ors. [reported in (1979) 3

SCC 489], has opined that the standard of eligibility laid down in the

notice for tenders cannot be changed arbitrarily as that would be hit

by the provisions of Article 14 of the Constitution and the executive

authority has to rigorously held to the standards by which it professes

its actions to be judged and it must scrupulously observe those

standards on pain of invalidation. In the said case the issue was

whether a bidder could amend its bid by withdrawing a condition of

the bid document, whereby the bid was considered to be non-

responsive. The second issue was whether a bidder would be entitled

to contend that a non-responsive bid be treated as responsive since

the offending condition was withdrawn after the bid documents had

been opened. The Apex Court having regard to the opinion expressed

in Ramana Dayaram Shetty (supra) has answered those issues in

negative.

[70] The Apex Court in Gursharan Singh (supra) has held that

equality before law as guaranteed by Article 14, is a positive concept

WP(C) No.154 of 2013 Page 49 of 69

and it cannot be enforced by a citizen or court in a negative manner.

It has been observed that if an illegality or irregularity has been

committed in favour of any individual or a group of individuals,

others cannot invoke the jurisdiction of the High Court or of the

Supreme Court, that the same irregularity or illegality be committed

by the State or an authority which can be held to be a State within the

meaning of Article 12 of the Constitution, so far such petitioners are

concerned, on the reasoning that they have been denied the benefits

which have been extended to others although in an irregular or illegal

manner. In S.N. Dhingra (supra), the same view has been taken by the

Apex Court observing that the mistake committed by the authority

does not confer any right to any party, which mistake can be

corrected subsequently.

[71] In Indian Railway Catering & Tourism Corporation Ltd.

(supra), the Apex Court placing reliance in Tata Cellular (supra) and

following the decision in West Bengal State Electricity Board as well

as referring to the decision in Jagdish Mandal (supra) has held that a

tender cannot be rejected on a ground, in the absence of any express

stipulation in the instruction to the bidders or special terms and

conditions that the tender can be rejected for breach of such essential

terms.

[72] In Meerut Development Authority (supra), the Apex Court

following its earlier decisions including the decision in Tata Cellular

(supra); Air India Ltd. (supra) well as Directorate of Education

(supra) has held that the bidders participating in the tender process has

no right, except the right to equality and fair treatment in the matter

of evaluation of competitive bids offered by the interested persons in

response to Notice Inviting Tender in a transparent manner and free

from hidden agenda. It has further been held that the terms and

WP(C) No.154 of 2013 Page 50 of 69

conditions of the tender, except for the aforesaid ground, the reason

being the terms of the invitation to tender are in the realm of the

contract, cannot be challenged. The Apex Court further held that no

bidder is entitled as a matter of right to insist the authority inviting

tenders to enter into further negotiations unless the terms and

conditions of the notice so provided for such negotiation. It has also

been held that the method to be adopted for disposal of the public

property must be fair and transparent, providing all the opportunities

to the person participated in the said process. Relating to the scope of

judicial review in contractual matters, it has been held that while the

Court cannot sit over the decision of the authority as appellate

authority, it can certainly examine whether the decision making

process was reasonable, rational, not arbitrary and violative of Article

14 of the Constitution of India. The same view has also been

reiterated in Rajasthan Housing Board (supra).

[73] Having noticed the aforesaid judicial pronouncements on

the scope of judicial review, in exercise of the jurisdiction under Article

226 of the Constitution of India, in contractual matter, I shall now

proceed to deal with the grounds on which the bid of the petitioner

has been rejected and whether the decision making process of the

respondent OIL is in conformity with the terms and conditions of the

bid document as well as the equality clause enshrined in Article 14 of

the Constitution.

[74] The petitioner’s bid, as disclosed by the respondent OIL in

the affidavit-in-opposition filed on 24th January, 2013, has been

rejected on the following 3(three) grounds:-

(i) Insertion of the clause- Drillmec reserved the right to manufacture and test the rigs, or part of them, in any of its facilities, which belong to us as per their availability at the time

WP(C) No.154 of 2013 Page 51 of 69

of contract awarding- in the fresh price bid, in violation of Clause-1 of Bid Rejection Criteria (Commercial); (ii) Disclosure of composite price of only 19 major rig components against the tender requirement of 63 major rig components, in the format Annexure-A4 and as prescribed in the price bid format, thereby contravening the mandate of the bid documents; and (iii) Inability of the respondent OIL to determine whether or not the API license with specification 4F submitted by petitioner alongwith the tender document covers the other facilities of the petitioner, where it reserves the right of manufacture and test the rigs.

[75] The respondent OIL, in the global tender notice issued in

the month of August, 2010, has informed all the intending bidders that

the tender would be governed by the general terms and conditions for

e-procurement as per the OIL’s Booklet. The bidders were also

informed by the said notice, about the details of the technical

requirements, apart from the general instructions/notes to the bidders

in Section 20 thereof. Bid Rejection Criteria and Bid Evaluation

Criteria have also been spelt out in Annexure-B to the said tender

notice, detailing when and under what circumstances, the bid of a

bidder can be rejected and also the parameters of bid evaluation. The

respondent OIL having stipulated the criteria for rejection and

evaluation of bids, the rejection of bids has to be only on the

ground(s) stipulated therein.

[76] The Bid Rejection Criteria stipulates that the bids must

conform generally to the specification and terms as well as the

conditions laid down in the tender. Bids, which do not conform to

the required parameters stipulated in the technical specifications, will

be rejected. It is also stipulated that the requirements, stipulated in the

Bid Rejection Criteria, both technical and commercial, will have to be

met by the bidders, without which the same shall be considered as

WP(C) No.154 of 2013 Page 52 of 69

non responsive and would be rejected. Clause-14 of the Bid Rejection

Criteria (Technical) provides for submission of bids by the

manufacturers of the rig package or their duly authorized distributors/

dealers/supply houses. Clause-15 stipulates that the manufacturer must

be a valid licensee of API Specification 4F for a period not less than

10(ten) years continuously, without any break, preceding the bid

(technical) opening date. The bidders have also been informed by the

said clause that the bids from the bidders having API Specification 4F

license (of manufacturer) less than 10(ten) years or having a break in

between, preceding the opening date, will not be considered. It also

requires the bidders to forward copies of API certificate for all the

10(ten) years with technical bid.

[77] The petitioner as well as the respondent No.4 and the

respondent No.5 having submitted the licenses of API specification 4F,

for a continuous period of 10(ten) years without any break, they were

found to be technically responsive and accordingly, the decision was

taken by the CBC in its 425th meeting held on 2nd March, 2012, to

open the first price bid of 2(two) bidders, namely, the petitioner and

the respondent No.4, by refusing to open the price bid of the

respondent No.5, it having failed to revalidate the bid. The CBC,

however, in its subsequent meeting (427th) held on 9th August, 2012

decided to re-invite the fresh price bid from all the 3(three) technically

responsive bidders, based on the recommendation of IEMs dated 19th

July, 2012 and accordingly fresh price bids were submitted by them.

[78] One of the grounds (second ground) on which the

petitioner’s bid has been rejected by the respondent OIL is non

disclosure of price of all the 63 major rig components, in terms of

annexure-A4 to the bid documents. Admittedly, the petitioner has

disclosed the composite price of 19 major rig components and not the

WP(C) No.154 of 2013 Page 53 of 69

breakup of 63 major rig components, as stipulated in Annexure-A4 to

the bid documents. As against the contention of the petitioner that

such condition is non essential and the respondent OIL took a

conscious decision to waive such condition, the contention of the

respondents is that the said condition is an essential condition of the

bid and never waived by the respondent OIL at any point of time,

hence, such non compliance would entail rejection of the petitioner’s

bid and, therefore, rejection of the petitioner’s bid by the respondent

OIL was not arbitrary.

[79] To appreciate the said contention, I have perused the

pleadings of the parties as well as the materials available on records

produced by the respondent OIL. Clause-3 of the special note

appended to the global notice inviting bid, which is a 2(two) bids

system, i.e. the technical bid and commercial bid, provides for

submission of the technical checklist and commercial checklist, in the

format given in Annexure-A3 and Annexure-C, respectively, alongwith

the technical bid.

[80] Under the terms and conditions of the bid, the bidders are

required to indicate the price of major rig components, as specified

under different sections, for drilling rig packages in the format given in

Annexure-A4, which contains the list of 63 major rig components.

Admittedly, while the respondent No.4 has submitted the price of all

63 major rig components in the format Annexure-A4, the petitioner as

well as the respondent No.5 did not disclose the price of the said 63

major rig components in the first commercial bid. The petitioner and

the respondent No.5 in the commercial checklist enclosed to the

technical bid, have informed the respondent OIL that they would not

disclose the price of the individual 63 major rig components, that

being against the company’s policy. The petitioner has also informed

WP(C) No.154 of 2013 Page 54 of 69

the respondent OIL that they, however, would disclose the cost of

individual 63 major rig components after awarding the contract.

[81] Records produced by the respondent OIL reveals that

despite such stipulation by the petitioner in the commercial checklist

furnished alongwith the technical bid, decision was taken by the

respondent OIL to accept the technical bid of the petitioner and

accordingly made its offer technically responsive. The Head-Materials

of the respondent OIL on 20th January, 2012 has submitted a note to

the approving authority indicating the various deviations, which have

been accepted by the user department of the respondent OIL, while

evaluating the offers of 3(three) bidders, namely, the petitioner,

respondent No.4 and the respondent No.5. Deviations found in

respect of all the 3(three) bidders have been mentioned in Annexure-

IIIA thereto, wherefrom it appears that the deviations in respect of

non disclosure of the cost of major 63 components in the format

Annexure-A4 and the offer of the petitioner to disclose the same in

case the contract is awarded, has been accepted by the user

department of the respondent OIL. Certain other deviations in respect

of the respondent Nos.4 and 5 were also accepted by the user

department, as indicated in the said Annexure-IIIA. By the said note,

the proposal seeking recommendation from the CBC for opening the

first price bids of the aforesaid 3(three) bidders was submitted, which

was approved by the Tender Committee-cum-Approving Authority.

The LMC in its proceeding dated 7th February, 2012 has also approved

the aforesaid proposal for opening of the price bid of the aforesaid

3(three) bidders and decided to place the note before the CBC to

recommend opening of the price bid of 2(two) bidders, namely, the

petitioner and the respondent No.4, the respondent No.5 having

failed to confirm the extension of validity of the offer.

WP(C) No.154 of 2013 Page 55 of 69

[82] The General Manager (Services) on 16th February, 2012,

based on the aforesaid note dated 20th January, 2012 and the

proceeding of the LMC dated 7th February, 2012, submitted a note to

the CBC of the respondent OIL indicating, apart from others, the

aforesaid deviations relating to the non disclosure of 63 major rig

components and recommending opening of the price bid of 2(two)

technically acceptable bidders, namely, the petitioner and the

respondent No.4. The CBC in its 425th Meeting held on 2nd March,

2012 accepted the said proposal dated 16th February, 2012 and

decided to open the price bid of the aforesaid 2(two) bidders, namely,

the petitioner and the respondent No.4, and consequently the first

price bids of both the bidders were opened. It, therefore, appears that

the decision was taken by the CBC of the respondent OIL to accept

the deviation relating to the non disclosure of the price of 63 major

rig components, apart from the deviations of the respondent No.4.

Relevant portion of the decision taken by the CBC in its 425th meeting

held on 2nd March, 2013 is quoted below:-

“CBC after due deliberations, accorded approval to open Price Bids of the following 2(two) technically acceptable bidders considering the deviations mentioned in the Note No.CMM/CBC/ 980/12 dated 16.02.2012 at a predetermined date: (i) M/s. China Petroleum Technology & Development

corporation, China.

(ii) M/s. Drillmec Spa, Italy (on behalf of consortium of M/s.

Drillmec and M/s. KMOC).”

[83] The respondent OIL, as already noticed above, after

opening of the commercial bid of the 2(two) aforesaid bidders,

namely, the petitioner and the respondent No.4, however, on the

recommendation of the IEM decided to ask for fresh price bid in the

new price bid format from all the 3(three) bidders, namely, the

petitioner, the respondent No.4 and the respondent No.5.

Accordingly, all those 3(three) bidders submitted their new price bids.

WP(C) No.154 of 2013 Page 56 of 69

While the petitioner and the respondent No.5 did not disclose the

price of all the 63 major rig components, the respondent No.4,

however, has disclosed the price of the same, as per the Annexure-A4

format. The petitioner though did not disclose the price of the major

rig components in the first price bid, however, has disclosed the

composite price of 19 major rig components without disclosing the

individual price of 63 major rig components, in the fresh price bid.

[84] It is apparent from the proceeding of the LMC dated 1st

November, 2012 that despite waiving of the requirement of disclosure

of the price of 63 major rig components, 3(three) unsolicited

communications were received from the respondent No.4 for

rejection of the petitioner’s bid on 3(three) grounds, which includes

non disclosure of the price of 63 major rig components. It also

appears from the said proceeding of the LMC dated 1st November,

2012 that the respondent OIL took the decision to accept the said

deviation of the petitioner and to open the price bid. Paragraph 5.0

(c) of the said proceeding is quoted below:- “c) PROVIDING OF BREAKUP OF COST OF MAJOR COMPONENTS OF

THE RIG PACKAGES: This requirement was included in the tender for accounting purpose to comply with IFRS. Both M/s Drillmec and M/s BHEL had indicated before opening of Original Priced bid that the cost of major components of the Rig Packages will be provided by them after placement of order and the same was also indicated in the CBC Note CMM/CBC/980/12 dated 16.02.12 for opening of Priced bids (Refer Para 26.0 of the Note). The priced bid was opened on receipt of approval from CBC. It is also observed that in the fresh price bid, M/s Drillmec have shown cost of some of the major components and cost of the remaining major components has been shown as ‘Miscellaneous Equipment’. Since total price of rig package has already been indicated clearly, the individual price has no bearing on arriving at inter-se ranking of the bid. It may also be noted that decision to accept the Drillmec’s bid in the CBC meeting against Note No.CMM/CBC/980/12 dated 16.02.2012 was taken with the knowledge that break-up for these components were not available. In such deviation, the decision of Supreme Court of India in the case between M/s Poddar Steel Corporation v/s Ganesh Engineering Works and others (1991) have a bearing.

WP(C) No.154 of 2013 Page 57 of 69

‘As a matter of general proposition it cannot be hold that an authority inviting tender is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender can be classified into two categories – those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In other case it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases’

It is also observed that none of the three bidders (M/s BHEL, M/s CPTDC and M/s Drillmec) has indicated complete break-up of cost of spares. In the note under BRC, the following clause was incorporate in respect of Commissioning spares.

‘The Commissioning spares should be quoted separately indicating the unit price and quantity quoted.’

While BHEL and Drillmec gave the prices of commissioning spares, CPTDC did not indicate the unit price and quantity as per aforesaid clause.”

[85] The respondent OIL having once taken a conscious

decision to accept such deviation and to open the first price bid,

cannot subsequently turn around and reject the petitioner’s bid for

non disclosure of the price of 63 major rig components in format

Annexure-A4. The CBC, as discussed above, in its 430th meeting held

on 27th December, 2012 took the same into consideration while

refusing to exercise the discretion to seek clarification.

[86] That apart, it also appears from Clause-5.1 of the

commercial bid evaluation criteria set by the respondent OIL that the

comparison of the bid was decided to be done on the basis of the

grand total value as is estimated and not on the basis of the individual

price of 63 major rig components. The requirement of disclosure of

the price of 63 major rig components was stipulated in the bid

documents, only for accounting purpose to comply with IFRS. The

said position has been indicated in the various proceedings of the LMC

including the proceeding dated 1st November, 2012. The price of

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individual 63 major rig components, therefore, is not relevant

consideration for the purpose of ascertaining the highest bid and for

awarding the contract. The petitioner has also informed the

respondent OIL that they will provide the price of individual 63 major

rig components in case the contract is awarded, which is required for

accounting purpose only, as is evident from the aforesaid proceedings

of the LMC as well as the stand taken by the respondent Nos.1 to 3 in

the affidavit-in-opposition filed. The said condition, therefore, cannot

be termed as essential condition of eligibility, entailing rejection of the

bid for such deviation. The requirement of furnishing the price of 63

major rig components in format Annexure-A4, being a non essential

condition, the respondent OIL has approved the said deviation in

respect of the bid submitted by the petitioner.

[87] In Poddar Steel Corporation (supra), the Apex Court has

held that as a matter of general proposition it cannot be held that an

authority inviting tender is bound to give effect to every term

mentioned in the notice in meticulous details, and is not entitled to

waive even the technical irregularity of little or no significance. It has

further been held that the conditions in the NIT, which are essential

conditions of eligibility must be strictly adhered to and in respect of

other non essential and ancillary conditions, the authority is

empowered to deviate from and not to insist upon the strict literal

compliance in appropriate cases. Similar view has also been taken in

B.S.N. Joshi & Sons (supra), wherein the Apex Court has opined that

the variation from the tender condition, if made in public interest, is

permissible. It has also been held that while essential tender condition

must be adhered to, for non adherence of non essential condition, the

tender cannot be rejected.

WP(C) No.154 of 2013 Page 59 of 69

[88] Hence, the second ground on which the bid of the

petitioner has been rejected cannot be sustained in law being arbitrary

and influenced by the unsolicited communication issued by the

respondent No.4, though the respondent OIL in the earlier stage by

accepting such deviation decided to make the petitioner technically

responsive as well as to open the price bid.

[89] The first and the third grounds of rejection, which are

based on the clause put by the petitioner in the fresh price bid, would

now be considered. Clause-1.0 of the Bid Rejection Criteria

(Commercial), which, according to the respondent OIL, is the basis for

rejection of the petitioner’s fresh price bid, provides that the price bid

of a bidder must contain the price schedule and the bidder’s

commercial terms and conditions. It also provides that no price details

should be furnished in the technical bid, which shall contain all techno-

commercial details except the price, which shall be kept blank. It

further stipulates that the bid not complying with the said submission

procedure will be rejected. For better appreciation, Clause-1.0 is

quoted below:-

“1.0 Bids are invited under Single Stage Two Bid System. Bidders shall quote accordingly under Single Stage Two Bid System. Please note that no price details should be furnished in the Technical (i.e. Unpriced) bid. The “Unpriced Bid” shall contain all techno-commercial details except the prices which shall be kept blank. The “Priced Bid” must contain the price schedule and the bidder’s commercial terms and conditions. Bidder not complying with above submission procedure will be rejected.”

[90] Clause-1.2 of the OIL’s Booklet, relating to e-Procurement

ICB Tenders, provides that failure to furnish all information required

as per the bid or submission of offers not substantially responsive to

the bid in every respect will be at the bidders risk and may result in

rejection of its offer without seeking any clarification. Clause-8.0 of

Section-A (instructions to bidders) of the General Terms and

Conditions, notified in the OIL’s booklet, also provides that the bids

WP(C) No.154 of 2013 Page 60 of 69

not complying with the OIL’s requirement may be rejected without

seeking any clarification. Clause-14.0 thereof stipulates the power of

the authority to seek clarification from the bidders in respect of the

bids. Clause-14.1 provides that the respondent OIL shall not take

cognizance of or respond to any unsolicited correspondence after

submission of the offer. Clause-14.2 provides that after the opening of

the bid, the respondent OIL may at its discretion ask the bidder for

clarification of its bids, which shall be in writing, but no change in the

price or the substance of the bid shall be accepted. It also provides

that the reply of the bidders is to be restricted to the clarification

sought. Clause-14.0 is reproduced below in its entirety:-

“14.0 Clarifications of Bids :

14.1 No unsolicited correspondence after submission of the offer will be taken cognizance of or responded to.

14.2 After the opening of the bid, OIL may at its discretion ask the bidder for clarification of its bids. The request for clarification and response shall be in writing and no change in the price or substance of the Bid shall be accepted. The reply of the bidder should be restricted to the clarifications sought.”

[91] Clause-1.0 of the Bid Rejection Criteria (Commercial),

which has already been quoted above, and which is one of the basis

for rejection of the petitioner’s fresh price bid, does not contain a

negative clause that the bid of a bidder would be rejected if any

technical conditions is put in the price bid. On the other hand, there is

clear stipulation for keeping the price in the unpriced bid blank.

Hence, if in the technical bid any price is quoted by a bidder then it

may entail rejection. The price bid of a bidder, however, cannot be

rejected on the ground that a clause has been put in such price bid,

which, had the bidder put in the technical bid, would have render him

technically non responsive. The bid of the petitioner, therefore,

cannot be rejected, by taking recourse to Clause-1.0 of the Bid

Rejection Criteria (Commercial), on the ground that the price bid of

WP(C) No.154 of 2013 Page 61 of 69

the petitioner contains a clause concerning the technical qualification,

more so, when the petitioner was found to be technically responsive.

[92] From the aforementioned clauses in the bid document as

well as the terms and conditions of the bid, it appears that a discretion

has been vested on the respondent OIL to seek clarification from the

bidders of its bid, in writing, but such clarification cannot be relating

to the price or the substance of the bid. Clauses-4.2 and 8.0 of the bid

document do not impose a bar on the respondent OIL to seek

clarification. Discretion, conferred on a public authority, must be

exercised reasonably. A person entrusted with a discretion must, for

the purpose of reasonable exercise of such discretion, direct himself

properly in law taking into account all the matters, which he is bound

to consider by excluding from consideration those matters which are

irrelevant to what he has to consider.

[93] Stroud’s Judicial Dictionary (Fifth Edition) defines how a

discretion is to be exercised by the authority. It says that where

something is left to be done according to the discretion of the

authority on whom the power of doing it is conferred, the discretion

must be exercised honestly and in the spirit of the statute, otherwise

the act done would not fall within the statue. It also says that such

exercise of the discretion is not to be arbitrary, vague and fanciful, but

legal and regular; to be exercised not capriciously but on judicial

grounds and for substantial reasons. It must be exercised within the

limits to which an honest man competent to discharge of his office

ought to confine himself, i.e. within the limit and for the objects

intended by the legislature. There, however, cannot be hard and fast

rule as to the exercise of the discretion.

WP(C) No.154 of 2013 Page 62 of 69

[94] In Black’s Law Dictionary (Seventh Edition) the meaning

of the word ‘discretion’ is given as- a public official’s power or right to

act in certain circumstances according to personal judgment and

conscience. ‘Administrative discretion’ has been defined as a public

official’s or agency’s power to exercise its judgment in discharge of its

duties. ‘Discretionary act’ is defined as a deed involving an exercise of

personal judgment and conscience. The term ‘abuse of discretion’ has

been defined as an adjudicator’s failure to exercise sound, reasonable

and legal discretion making.

[95] ‘Discretion’, in its ordinary meaning, signifies unrestrained

exercise of choice or will; freedom to act according to ones own

judgment; unrestrained exercise of will; the liberty of power of acting

without other control then one’s own judgment. The discretion,

when it applies to public functionaries, it means a power or right

conferred upon them by law, of acting officially in certain

circumstances according to the dictates of their own judgment and

conscience, uncontrolled by the judgment or conscience of others.

Discretion is to discern between right and wrong. Whoever has

power to act at discretion, is bound by the rule of reason and law.

[Tomlin’s Law Dictionary as referred to in the Law Lexicon by P.

Ramanatha Aiyar (1997 Edition) at page 565].

[96] The Apex Court in G.B. Mahajan (supra) while dealing

with reasonableness of action, within the meaning of Article 14 of the

Constitution of India, has held that in administrative law, ‘test of

reasonableness’, must distinguish between proper use and improper

use of power. It is opined that the test is not the Court’s own

standard of ‘reasonableness’ as it might conceive it in a given situation.

The Apex Court in that connection has referred to the following

observation of Lord Greene in Associated Provincial Picture Houses

WP(C) No.154 of 2013 Page 63 of 69

Ltd. -Vs- Wednesbury Corporation [(1948) 1KB 223:1947 2 ALL ER

680 (CA)], which is now referred to as the ‘Wednesbury

unreasonableness’:-

“It is true that discretion must be exercised reasonably. Now what does that mean? Lawyers familiar with the phraseology used in relation to exercise of statutory discretions often use the word ‘unreasonable’ in a rather comprehensive sense. It has frequently been used and is frequently used as a general description of the things that must not be done. For instance, a person entrusted with a discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said, to be acting ‘unreasonably’. Similarly, there may be something so absurd that no sensible person could ever dream that it lay within the powers of the authority. Warrington L.J. in Short v. Poole Corporation gave the example of the red-haired teacher, dismissed because she had red hair. This is unreasonable in one sense. In another it is taking into consideration extraneous matters. It is so unreasonable that it might almost be described as being done in bad faith; and, in fact, all these things run into one another.”

[97] In Khudiram Das (supra), the Apex Court while dealing

with the scope of judicial review on the exercise of the discretion

vested on the authority has held as under:-

“11. This discussion is sufficient to show that there is nothing like unfettered discretion immune from judicial reviewability. The truth is that in a Government under law, there can be no such thing as unreviewable discretion. ‘Law has reached its finest moments’, said Justice Douglas, ‘when it has freed man from the unlimited discretion of some ruler, some…official, some bureaucrat…. Absolutely discretion is a ruthless master. It is more destructive of freedom than any of man’s other inventions”. United States v. Wunderlick. And this is much more so in a case where personal liberty is involved. That is why the courts have devised various methods of judicial control so that power in the hands of an individual officer or authority is not misused or abused or exercised arbitrarily or without any justifiable grounds.”

[98] A person in whom is vested a discretion must exercise his

discretion upon reasonable grounds. A discretion does not empower

a man to do what he likes merely because he is minded to do so- he

must in the exercise of his discretion do, not what he likes, but what

he ought. In other words, he must, by the use of his reason, ascertain

WP(C) No.154 of 2013 Page 64 of 69

and follow the course which reason directs. He must act reasonably.

(Wade’s Administrative Law- 7th Edition).

[99] The discretion, to seek clarification from the bidder in case

of any doubt, vested on the respondent OIL, which is a public

authority within the meaning of Article 12 of the Constitution, by

virtue of the terms and conditions of the bid document must be

exercised by taking into account all relevant facts. Exercise of

discretion must be guided by relevant considerations and not by

irrelevant ones. If the decision is influenced by extraneous

consideration which it ought not to have taken into consideration or

such decision is taken without taking into consideration all relevant

facts, the same cannot stand in scrutiny of law, as it would then be

arbitrary and unreasonable, which in turn would amount to

infringement of equality clause in Article 14 of the Constitution.

[100] It appears from the proceeding of the LMC dated 9th

October, 2012 that, in view of the aforesaid clause in the fresh price

bid reserving the right to manufacture the rig component in any of the

facility belonging to the petitioner, and not on the ground of non

furnishing the price of 63 major rig components, a decision was taken

to seek clarification from the petitioner of complying with all the

points agreed by it in their technical bid and during technical

clarification sought by the OIL, which was also approved by the

Tender Committee-cum-Approving Authority. It is, therefore, evident

that the said decision was taken to exercise the discretion of seeking

clarification from the petitioner, there being a doubt in the mind of

the respondent. But before seeking the clarification it was decided to

obtain the CBC’s approval/concurrence, which authority, however,

solely based on the learned Attorney General’s opinion decided to

invite the respondent No.4 for price negotiation, thereby refusing to

WP(C) No.154 of 2013 Page 65 of 69

seek clarification from the petitioner, though such power is coupled

with a duty. The decision taken by the CBC in its 430th Proceeding

dated 27th December, 2012 was not based on the independent

evaluation of the relevant materials available on record, though the

power of discretion to have the clarification is required to be exercised

by the respondent OIL upon consideration of all the relevant

materials, which, amongst others, naturally includes the price as the

contract involves public money. It also appears from the opinion of

the learned Attorney General that the same is based not only on the

clause put by the petitioner in the fresh price bid but also on the

question whether the bid of the petitioner is to be rejected for non

disclosure of price of all 63 major rig components, though the said

requirement, as discussed above, has been waived by the respondent

OIL. The decision not to exercise the discretion to seek clarification

from the petitioner is based on the matter which no longer remains

relevant because of the aforesaid waiver. The CBC has taken the

decision without bothering to look into the relevant facts and hence,

such decision is unreasonable.

[101] The General Terms and Condition of the bid also provides

for inspection and test, right from the stage of manufacture till the

delivery. It also provides for the inspection at the stage of

manufacture under Clause-22 of the General Terms and Conditions of

the tender, pre-dispatch inspection at the manufactures yard by the

OIL’s team, inspection by Third Party Inspection Agencies during the

manufacturing process, as well as right of the respondent OIL even to

reject the rig system after deliver at site, in case of any fault on the

part of the supplier. That apart there is provision for forfeiture of

security money. It also appears from the materials available on record

that during the consideration of the technical bid and on the basis of

the clarification sought by the respondent OIL, the petitioner had

WP(C) No.154 of 2013 Page 66 of 69

reconfirmed that it would abide by its stipulation in the technical bid,

meaning thereby the manufacture of Crown Block Assembly and Mast

and Sub-Structure in a licensed API specification 4F manufacturing unit,

which components of the rig system are required to be manufactured

only in such manufacturing unit and in no other unit. That apart, the

petitioner in their tender has clearly stipulated that the port of origin

would be Italy and hence the manufacture of the rig components

naturally would be in the manufacturing unit in Italy, as the petitioner

would not manufacture the same in Houston in USA and carry it to

Italy for transhipment to Calcutta incurring heavy cost. The factum of

requirement of having API monogram die stamped on the body of the

components, demonstrating manufacture of those components in API

licensed manufacturing unit with specification 4F is also a relevant

factor in the matter of exercise of discretion to seek clarification of any

doubt by the respondent OIL. All these relevant factors have also not

been considered by the CBC while refusing to seek clarification from

the petitioner and before taking a decision to invite the respondent

No.4 for price negotiation, though those are the relevant

consideration.

[102] Admittedly, the petitioner’s fresh bid is substantially less

than the bid of the respondent No.4. The petitioner was also found

to be technically responsive, meaning thereby the rig system proposed

to be supplied was found to be technically suitable. Hence, there is no

complaint relating to the quality of the rig system offered by the

petitioner.

[103] As noticed above, though the process for acquisition of

2(two) rig systems was initiated by the respondent OIL by issuing a

global tender notice in the month of August, 2010, no decision,

however, could be taken in that respect for about 2½ years and the

WP(C) No.154 of 2013 Page 67 of 69

CBC only on 27th December, 2012 took a decision in that regard.

Since the process has already consumed more than 2(two) years of

time, the same would not have further delayed in exercising the

discretion of seeking clarification from the petitioner, the same being

not related to the change of the price or the substance of the bid, as

stipulated in Clause-14.2 of the General Terms and Conditions of the

tender. The submission made by the respondents that such clarification

if asked for would amount to treating the respondent No.4 unfairly,

cannot also be accepted, as, in the terms and conditions of the bid, the

respondent OIL reserved the right of having clarification from any

bidder relating to its bid without, however, change in the price and

the substance of the bid.

[104] However, the submission of the learned senior counsel for

the petitioner that there being no stipulation in the terms and

conditions of the bid for manufacture of the 2(two) major rig

components, namely, Crown Block Assembly and Mast and Sub-

structure only in the manufacturing unit in respect of which the API

license with specification 4F was furnished with the bid, the aforesaid

clause put in the fresh price bid would not violate any terms and

conditions of the bid, as the petitioner is free to manufacture those

2(two) components in any of its manufacturing unit having API license

with specification 4F, cannot be accepted, in view of specific

stipulation in Clause-15 of the terms and conditions of the Bid

Rejection Criteria (Technical) that the manufacturer must have a valid

license of API specification 4F for a continuous period of 10(ten) years

and all the copies of such API license are required to be furnished

alongwith the technical bid. From the said condition it, therefore,

appears that the aforesaid 2(two) rig components have to be

manufactured in the manufacturing unit of the bidder in respect of

which the license of API specification 4F for a continuous period of

WP(C) No.154 of 2013 Page 68 of 69

10(ten) years have been furnished alongwith the technical bid,

otherwise the respondent OIL would not have put such condition.

That apart non submission of such license being a ground for rejection

of the technical bid, the petitioner cannot contend that it can

manufacture the said components in any other API licensed factory

with specification 4F, other than the manufacturing unit in respect of

which license of API specification 4F has been furnished alongwith the

technical bid.

[105] The further contention of the petitioner that its bid has

been rejected solely on the basis of the unsolicited communications

issued by the respondent No.4, also cannot be accepted, in view of

the fact that the LMC, as noticed above, even prior to receipt of the

unsolicited communications of the respondent No.4 dated 12th

October, 2012; 16th October, 2012 and 19th October, 2012, in its

meeting dated 9th October, 2012 decided to seek the approval of the

CBC on its decision to obtain the clarification from the petitioner on

the clause put by it in the price bid reserving the right to manufacture

the rig components in any of its unit available at the time of awarding

the contract. As discussed above, it, however, appears that the

respondent OIL was influenced by the said unsolicited communications

of the respondent No.4, in rejecting the bid of the petitioner on the

second ground, i.e. non disclosure of the price of 63 major rig

components, despite waiving such requirement earlier.

[106] In view of the aforesaid discussion, as the respondent OIL,

which is vested with the right coupled with duty to exercise discretion

did not exercise the same, by not taking into account all the matters

which they are bound to consider by excluding from consideration

those matters which are irrelevant to what they have to consider,

which vitiates the decision making process being arbitrary and

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unreasonable, amounting to infringement of the right of the petitioner

under Article 14 of the Constitution, the decision taken by the CBC in

its 430th Meeting held on 27th December, 2012 is set aside. The matter

is remitted to the respondent OIL to take a fresh decision upon taking

into consideration all the relevant materials, as discussed above, and

also having regard to the findings recorded in this judgment.

[107] The writ petition is accordingly allowed. No costs.

JUDGE M. Sharma