REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal No.  21858  OF 2017  (Arising out of Special Leave Petition (Civil) No.22055 of 2017)

M/s Sam Built Well Pvt. Ltd.          … Appellant

Versus  

Deepak Builders & Ors. … Respondents

J U D G M E N T  

R.F. Nariman, J.

1. Leave granted.

2. The  present  appeal  involves  a  notice  inviting  tenders

(NIT)  dated  16th March,  2017  by  which  the  director  of  the

Institute  of  Nano  Science  and  Technology,  Mohali,  invited

percentage rate composite bids from eligible firms/contractors

in a two bid system for  construction of  the Institute of  Nano

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Science and Technology Campus at Knowledge City, Sector 81,

Mohali,  consisting  of  research,  academic  and  administrative

buildings  together  with  hostel,  residential,  amenity  and  utility

buildings. The estimated cost of the said project was Rs.162.18

crores, with earnest money payable being Rs.1.72 crores.   The

period of completion was stated to be 20 months and the last

date for submission of tender was 10th April, 2017.   Clause 8 of

the said NIT is important and states as under:

“8. Contractors/bidders  who  fulfill  the  following minimum  criteria  shall  be  eligible  to  apply.  Joint ventures/consortium are not accepted.

(a) Should  have  satisfactorily  completed  the works as mentioned below during the last date of submission of bids.

(i) Three  similar completed works each costing not less than Rs.64.9 crores, or

(ii)   Two similar completed works each costing not less than Rs.97.3 crores,

(iii)  One similar completed work of aggregate cost not less than Rs.129.7 crores.

Similar  work  shall  mean  work  of  “construction  of institutional/educational  buildings  campus  with minimum five storeys RCC framed structure building including  electrical,  plumbing,  fire  fighting,  HVAC

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works under composite contract executed in India in a single contract.”

3. Several  persons  submitted  their  bids,  including

Respondent No.1, who claimed that it had done “similar work”

as follows:

Sr. No.

Name of  work

Completion date

Current cost  after addition of  7% per annum

Remarks

1 Construction  of District  Administrative complex at  Sector-76,  SAS Nagar,  Mohali

31.03.2016 Rs. 97.76 Cr.  Current  enhanced value  as per clause  2.2.4  

Rs. 97.76 cr x  107% =  Rs.104.60 Cr.

It has  basement  plus 5  storeys RCC framed  structure

2. Construction  of Office  Building of  Punjab Mandi Board,  Phase-11, SA Nagar, Mohali

05.10.2011 Rs.62.65 cr.  Current  enhanced value  as per clause  2.2.4  

Rs. 62.25cr x  114% =70.96cr.

It has  basement  plus six  storeys RCC framed  structure

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3 Construction  of Jang-e-  Azadi  Memorial  Project at  Kartarpur,  Jalandhar  (Phase-1)  

16.03.2015 Rs.172.32 cr It has height  of 42 meters i.e. more  than 8  storeys RCC framed  structure

4 Construction  of Judicial  Court    Complex at  Sector 76,  SAS Nagar,  Mohali

23.12.2015: 14 courts out of  25  courts were inaugurated on 23rd Dec., 2015 and are functioning from  the building. Work  of Phase  2  for remaining courts  in progress.

Work of Phase 2  for remaining  courts in  progress. Work of Rs. 75.28 cr. was completed upto  31.03.2017 and  balance work in  progress

It has  basement  plus 5  storeys RCC framed  structure

5 Total  Value Rs.423.16 Cr.

4. Pre-bid  meetings  were  conducted  in  March,  2017  and

ultimately  Respondent  No.1 submitted its  tender  on 7 th April,

2017.   5  out  of  16  bidders,  who  initially  came  forward,

participated  in  the  tender  process.   Admittedly,  a  technical 4

evaluation report dated 24th April, 2017 stated that the eligibility

criteria  contained  in  Clause  8  of  the  NIT  was  not  met  by

Respondent  No.1.   This  was  reiterated  by  two  other  expert

bodies,  namely,  Tata  Consultancy  Services  and  the  Building

Works  Committee  of  the  Institute.   Respondent  No.2  then

addressed a letter  to  Respondent  No.1 informing it  about  its

ineligibility.  On 3rd May, 2017, Respondent No.1 filed a Writ

Petition  which  was  dismissed  by  the  learned  Single  Judge

stating  that  “similar  work”,  which  requires  to  be  considered

under Clause 8 of the NIT, would be work which involves not

only  construction  of  administrative  blocks,  but  also  several

other buildings.  Looking at the four projects, the last of which

was admittedly kept out of consideration, it was found that none

of the work could be said to be “similar” in nature and referring

to the fact  that  three specialists  had stated that  Respondent

No.1 was ineligible, the Court adopted the hands-off posture,

considering the limited parameters of judicial review.   However,

by the impugned judgment dated 4th August, 2017, the Division

Bench of  the  High  Court  allowed  the  appeal  of  Respondent 5

No.1 and set aside the judgment of the learned Single Judge

stating that though there was no malafides in the present case,

the judgment  of  the learned Single Judge was incorrect  and

that,  therefore,  Respondent  No.1  was  clearly  eligible.    The

appeal was then disposed of by directing Respondent No. 2 to

consider Respondent No.1’s bid, along with other eligible bids,

and  award  the  contract  after  assessing  the  bids  on  all

permissible criteria.  

5. Pursuant to the said judgment,  we have been informed

that the tender was ultimately awarded on 20th August, 2017 to

Respondent  No.1,  inter  alia,  for  the reason that  Respondent

No.1 quoted a figure of roughly 4 to 5 crores less than that of

the  Appellant.    Further,  even  though  we  are  in  December,

2017,  the  Appellant  has,  admittedly,  not  yet  left  the  site  of

construction  and  resultantly  Respondent  No.1  has  not  yet

commenced work.    

6. Dr.  A.M.  Singhvi,  learned  senior  counsel  appearing  on

behalf  of  the  Appellant,  has  taken  us  through  three  expert

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committee  reports  in  the  present  case.    According  to  the

learned senior counsel, it is incorrect to state that the National

Building Code of India, 2016, which is framed by the Bureau of

Industrial Costs and Prices, does not apply to the facts of the

present case inasmuch as the special conditions of the tender

specifically make the said Code applicable and that, therefore,

the expert committee reports based, inter alia, on the provisions

of the Code, cannot be interfered with.   Also, according to the

learned  senior  counsel,  the  learned  Single  Judge  correctly

appreciated that in tender matters, judicial review is very limited

and argued before  us  that  the  Division  Bench,  while  setting

aside the judgment of the learned Single Judge, has not kept in

view the parameters  of  judicial  review of  tenders.    Equally,

according to the learned senior counsel, it being clear that there

are no malafides or perversity involved, it would not be possible

for a Writ Court, sitting in judicial review, to interfere with the

tender process as has been done by the Division Bench.

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7. Per  contra,  Shri  Mukul  Rohatgi,  learned senior  counsel

appearing  for  Respondent  No.1,  supported  the  impugned

judgment and stated that the National Building Code of India

was only made applicable in so far  as safety aspects of  the

buildings are concerned.   This being the case, according to

him,  all  the  expert  committee  reports  in  relying  upon  the

provisions of  the said Code could not have done so.    Also,

according to him, one look at the three projects that have been

carried out by Respondent No.1 would show that they are all

projects consisting of buildings which have basement plus 5 or

more  storeys  and  that,  therefore,  it  is  clear  that  they  were

“similar works” within the meaning of the expression contained

in  Clause  8  of  the  NIT,  as  these  were  nothing  other  than

institutional  buildings  that  were  constructed  by  Respondent

No.1.

8. Dr.  Singhvi,  in  rejoinder,  stated  that  none  of  the  three

works could possibly be called “similar work” because an entire

complex  had  to  be  constructed,  and  similar  work  was  also

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defined  to  mean,  “construction  of  institutional/educational

buildings  campus with  minimum  five  storeys  RCC  framed

structure building…”.    According to the learned senior counsel,

one building, albeit of 5 storeys or more, would not suffice.     

9. Having  heard  learned  counsel  for  both  parties,  it  is

important to set out the parameters for judicial review in cases

like  the  present  one.    In  a  similar  case,  namely,  Afcons

Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016)

16 SCC 818 at 825-26, paragraph 4.2(a) of Section III of the

tender conditions in that case again spoke of a certain minimum

number  of  “similar  contracts”  as  previous  work  experience.

The question before this Court was whether an inter-state high

speed railway project could be similar to metro civil construction

work.  After laying down the parameters of judicial review and

referring to various judgments for the same, this Court held:

“15.    We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements  and  interpret  its  documents.  The constitutional  courts  must  defer  to  this

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understanding  and  appreciation  of  the  tender documents, unless there is mala fide or perversity in the  understanding  or  appreciation  or  in  the application of the terms of the tender conditions. It is possible  that  the  owner  or  employer  of  a  project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given.

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

10. In Montecarlo Ltd. v. NTPC Ltd., (2016) 15 SCC 272 at

288,  this  Court  referred  to  various  judgments,  including  the

judgment in Afcons Infrastructure Ltd. (supra), and concluded

as follows:

“26. We  respectfully  concur  with  the  aforesaid statement of law. We have reasons to do so. In the present scenario, tenders are floated and offers are invited  for  highly  complex  technical  subjects.  It requires  understanding  and  appreciation  of  the nature of work and the purpose it is going to serve.

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It  is  common  knowledge  in  the  competitive commercial field that technical bids pursuant to the notice  inviting  tenders  are  scrutinised  by  the technical  experts  and  sometimes  third-party assistance  from  those  unconnected  with  the owner's  organisation  is  taken.  This  ensures objectivity.  Bidder's  expertise  and  technical capability  and  capacity  must  be  assessed by  the experts.  In  the  matters  of  financial  assessment, consultants are appointed.  It  is  because to check and ascertain that technical ability and the financial feasibility  have  sanguinity  and  are  workable  and realistic. There is a multi-prong complex approach; highly technical in nature. The tenders where public largesse  is  put  to  auction  stand  on  a  different compartment. Tender with which we are concerned, is not comparable to any scheme for allotment. This arena  which  we  have  referred  requires  technical expertise. Parameters applied are different. Its aim is to achieve high degree of perfection in execution and adherence to the time schedule. But, that does not  mean,  these  tenders  will  escape  scrutiny  of judicial review. Exercise of power of judicial review would be called for  if  the approach is arbitrary or mala fide or procedure adopted is meant to favour one.  The  decision-making  process  should  clearly show that  the said maladies are kept  at  bay. But where  a  decision  is  taken  that  is  manifestly  in consonance  with  the  language  of  the  tender document or subserves the purpose for which the tender  is  floated,  the  court  should  follow  the principle  of  restraint.  Technical  evaluation  or comparison  by  the  court  would  be  impermissible. The principle that is applied to scan and understand an ordinary instrument relatable to contract in other spheres  has  to  be  treated  differently  than interpreting  and  appreciating  tender  documents

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relating  to  technical  works  and  projects  requiring special skills. The owner should be allowed to carry out the purpose and there has to be allowance of free play in the joints.”

11. We have  already  noticed  that  three  expert  committees

have  scrutinized  Respondent  No.1’s  tender  and  found

Respondent No.1 to be ineligible.   The impugned judgment of

the Division Bench of the High Court expressly states that no

malafides  are  involved  in  the  present  case.    Equally,  while

setting  aside  the  judgment  of  the  learned Single  Judge,  the

Division Bench does not state that the three expert committees

have arrived at a perverse conclusion.   To merely set aside the

judgment  of  the learned Single  Judge and then jump to  the

conclusion that Respondent No.1’s tender was clearly eligible,

would  be  directly  contrary  to  the  judgments  aforestated.  Not

having  found  malafides  or  perversity  in  the  technical  expert

reports,  the  principle  of  judicial  restraint  kicks  in,  and  any

appreciation by the Court itself of technical evaluation, best left

to technical experts, would be outside its ken.  As a result, we

find that the learned Single Judge was correct in his reliance on

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the  three  expert  committee  reports.   The  Division  Bench,  in

setting aside the aforesaid judgment, has clearly gone outside

the  bounds  of  judicial  review.   We,  therefore,  set  aside  the

judgment of the Division Bench and restore that of the learned

Single Judge.  

12. Dr.  Singhvi,  learned  senior  counsel  appearing  for  the

Appellant, has stated that the Appellant is willing to match the

offer of Respondent No.1.   We record the aforesaid statement

and order that the tender awarded to Respondent No.1 dated

20th August,  2017, based upon the Division Bench judgment,

must be set aside, and the award of the tender to the Appellant

must be restored.   We hasten to add that it  will  be open to

Respondent No.2 to accept Dr. Singhvi’s offer that the project

will be executed at the amount indicated by Respondent No.1.

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13. The appeal is allowed in the aforesaid terms with no order

as to costs.   

…………………………..J. (R.F. Nariman)

…………………………..J. (Navin Sinha)

New Delhi; December 14, 2017.

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