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REPORTABLE  

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 10143 OF 2016 (@ S.L.P. (C) No. 29297 of 2016)

Montecarlo Ltd.              …Appellant(s)

VERSUS

NTPC Ltd.      …Respondent(s)

J U D G M E N T

Dipak Misra, J.

The  respondent,  NTPC  Limited,  had  issued  separate

invitation for bids for development and operation of three coal

mines, viz., Dulanga Coal Block, Chatti Bariatu and Talaipalli

in  the  State  of  Odisha.   Online  bids  were  invited  on Single

Stage  Two  Envelope  Bidding  basis  (Envelope-I:

Techno-Commercial Bid and Envelope-II: Price Bid). There was

stipulation for Reverse Auction from the eligible bidders. It was

also  stated  in  the  Invitation  For  Bids  (IFB)  issued  on

22.01.2016 that the bids shall be received on 17.03.2016 and

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Envelope-I, that is, Techno-Commercial Bid will be opened on

17.03.2016. The date of opening of Envelope-II, that is, Price

Proposal  shall  be  intimated  separately.  Clause  5  of  the  IFB

stipulated  Qualifying  Requirements  (QR).   Clauses  5.1  and

5.1.2 dealt with technical criteria.    

2. The respondent had also issued “Instructions To Bidders”

(ITB) which contain clauses as to how the proposal  shall  be

conducted.  Clause  6.3.1  of  ITB  deals  with  Preliminary

Examination  of  Techno-Commercial  Proposals.  We  think  it

appropriate to reproduce the same:-

“6.3.1  Preliminary  Examination  of Techno-Commercial Proposals:

(a)  OWNER will  examine  the  Project  Proposals  to determine  whether  they  are  complete,  whether required  securities  have  been  furnished,  whether the  documents  have  been  properly  signed  and whether the bids are generally in order.

(b)  Prior  to  the  detailed  evaluation,  OWNER  will initially  determine  whether  each  Techno Commercial  Proposal  is  of  acceptable  quality,  is generally  complete and is substantially responsive to  the  bidding  documents.   For  purposes  of  this determination,  a substantially  responsive Proposal is one that conforms to all the terms, conditions and specifications  of  the  bidding  documents  without material  deviations,  objections,  conditionalities  or reservations.  A  material  deviation,  objection, conditionality or reservation is one (i) that affects in any  substantial  way  the  scope,  quality  or

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performance of the contract; (ii)  that limits in any substantial  way,  inconsistent  with  the  bidding documents,  the  Owner’s  rights  or  the  successful Bidder’s  obligations  under  the  contract;  or  (iii) whose  rectification  would  unfairly  affect  the competitive  position  of  other  Bidders  who  are presenting substantially responsive Proposals.

(c) OWNER’s determination of a Techno Commercial Proposal’s  responsiveness  is  to  be  based  on  the contents of the Techno Commercial Proposal itself without recourse to extrinsic evidence.  If a Techno Commercial  Proposal  is  not  substantially responsive, it will be rejected by OWNER, and may not subsequently be made responsive by the Bidder by correction of the nonconformity.”

3. Clauses  6.3.2  6.3.2.1,  6.3.2.2  and  6.3.4  provide  for

Evaluation  of  Responsive  Techno-Commercial  Proposal,

Evaluation of Qualification Proposals, Evaluation of Technical

Proposals  and Clarification Meeting.  Clause  6.3.5 deals  with

the  steps  where the  responsive Techno-Commercial  Proposal

which  meets  the  QR  specified  in  Chapter  7  and  Technical

Requirements specified in Chapter 8 of REF Documents and

stipulates  that  they  shall  be  considered  for  Price  Proposal

Phase of the Bidding Process. It has also been provided therein

that  the  bidders  who  meet  QR  specified  in  Chapter  7  and

Technical  Requirements  specified  in  Chapter  8  of  REP

documents shall be terms as “shortlisted bidders”.   Chapter 7

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of ITB deals with technical criteria. Clauses 7.1.1 and 7.1.2,

being significant, are extracted below:-

“7.1.1 The Bidder should have, in the preceding 7 (seven) years reckoned from the date of opening of the Techno-commercial Bids developed & operated single coal/lignite mine having coal/lignite reserves of at least 150 million tonnes & annual capacity of at  least  6  MTPA and produced  at  least  2  million tonnes of coal/lignite from such mine.

                                 OR

7.1.2 The Bidder should have, in the preceding 7 (seven) years reckoned from the date of opening of the  Techno-commercial  Bids,  operated  and produced:

a) At least 23 Million SCM of aggregated volume of overburden and/or coal/lignite from a maximum of seven open cast mines of Coal/Lignite, in any year.

b) At least 11.5 Million SCM of composite volume of overburden and coal/lignite from single open cast mine in any year,  out  of  which at least 3 million tonnes shall be coal/lignite.

The qualifying works at clause 7.1.2(a) can be from same mine  or  different  mines  including  the  mine considered to meet qualifying requirement at clause 7.1.2(b).”

4. At this stage, it is necessary to refer to Notes appended to

Clause 7.3.3 that deals with route-3.   Notes are as under:-

“i.  The  word  “operated”  means  that  the  Bidder should  have  performed the  necessary  activities  of drilling,  excavation,  hauling  etc.  on  its  own  or through sub-contracting.

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ii.  The  word  “developed”  means  that  the  Bidder should  have  performed the  necessary  activities  of Land  Acquisition/assisted  in  Land  Acquisition, Statutory  clearances/assisted  in  Statutory clearances  and  carried  out  ‘Infrastructure development’  on  its  own  or  through sub-contracting.”

5. Chapter 9 of the ITB deals with Evaluation Methodology

for Techno- Commercial Proposal  (Qualification Proposal  and

Technical  Proposal).   Clause  9.1  deals  with  Evaluation  of

Qualification Proposal and Clause 9.2 deals with Evaluation of

Technical Proposal.  They read as under:-

“9. Evaluation Methodology for Techno Commercial Proposal  (Qualification  Proposal  and  Technical Proposal)

9.1 Evaluation of Qualification Proposal:

The  Techno-Commercial  Proposal  shall  be scrutinized  to  establish  “responsiveness”  as  per Clause 6.3.1.

The Responsive Techno-Commercial Proposal shall be evaluated in detail to determine their fulfillment of Qualifying requirements specified in Chapter 7 of this RFP document.

During  the  bid  evaluation,  NTPC  may,  at  its discretion, ask the Bidder for a clarification of its Qualification  Proposal  including  documentary evidence  pertaining  to  only  the  reference  mines declared  in  the  Qualification  Proposal  for  the purpose  of  meeting  Qualifying  Requirement specified in Chapter 7 of this RFP document.  The request for clarification and the response shall be in

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writing  and  no  change  in  the  substance  of  the TECHNO-COMMERCIAL  Proposal  including substitution of reference mines in the Qualification Proposal by new/additional mines for conforming to Qualifying Requirement shall be sought, offered or permitted.

The  Qualification  Proposals  which  meets  the qualification  criteria  shall  be  considered  for Technical Proposal Evaluation Phase of the Bidding Process.  The  Bidders  who  meet  the  qualification criteria shall be termed as Qualified Bidders.

9.2 Evaluation of Technical Proposal:

The  Technical  Proposals  shall  be  evaluated  to determine  their  compliance  with  the  Technical Proposal  Requirements.   For  this  purpose,  NTPC shall  use  the  supporting  documents  and/or information available with or obtained by NTPC.

9.2.1 During evaluation NTPC may seek clarification from the Bidders, may conduct discussions with the Bidders, and may ask the bidder to make Technical presentation.

Technical proposal shall include details as has been sought vide Chapter 8.

9.2.2  The  Technical  Proposals  without  sufficient information as per the terms of Chapter 8 of this document  shall  be  deemed  “Non  Responsive Technical Proposal”.

9.2.3 The Responsive Technical  Proposals meeting the requirements to the satisfaction of Owner shall be  considered  for  further  detailed  Technical Evaluation.”

[emphasis added]

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6. Clause 9.3 provides how detailed evaluation of technical

proposals  submitted by the bidder  shall  take place.  Clauses

9.3.1 and 9.3.2 which are relevant for the present purpose are

reproduced below:-

“9.3.1  The  purpose  of  technical  evaluation  is  to check responsive and assess  the  compliance  with the requirements of NTPC.

9.3.2  To  ensure  effective  evaluation  of  Technical Proposals  the Bidders shall  provide the necessary details  as  specified  in  Clause  8.4.  The  Technical evaluation  will  be  for  evaluating  whether  the Technical Proposal of the Bidder meets the following criteria.  

(a)  Time  Schedule  to  Achieve  First  Year  Coal Production Target – NTPC shall evaluate the PERT chart  submitted  by  the  Bidder,  to  determine  its completeness; reasonableness; and achievability.  

(b)  Adequacy of the Equipment Plan – The Bidder shall submit an equipment plan giving details of the equipment that shall be used by the Mine Operator to provide Mining Services which shall be not less than  the  Minimum Equipment  to  be  deployed  as specified  by  NTPC  at  Schedule  6  of  Project Agreement.  NTPC  shall  evaluate  the  adequacy  of equipment to meet the criteria imposed by NTPC in terms  of  quantity  of  production,  quality  of  coal produced etc.”  

[emphasis supplied]

7. The controversy in the instant case basically pertains to

whether  the  appellant  meets  the  qualification  criteria  as

provided under the heading Technical Criteria that occurs in

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Clauses  7.1  and  7.2  of  QR.  To  appreciate  the  same,  it  is

essential to have a look at the bid submitted by the appellant.

The  appellant  had  uploaded  the  proposal  on  26.4.2016  by

referring to three mines in support of its stand to meet the QR.

The three mines that have been referred to in the proposal are

(i)  Mata No Madh,  Lignite  Mine,  Kutch,  GMDC (Mine 1);  (ii)

June Kundada OCP of Western Coalfield Limited (Mine 2) and

(iii)  Khadia  OCP,  Northern  Coalfield  Limited  (Mine  3).  As

regards the Mine No. 1, the appellant declaring the scope of

work in the aforesaid Mine had furnished the following details:-

“Sl . No.

Particulars Mine  1  (Lignite  Project, Mata No Madh, Kutch)

10. Brief description of scope of work

Turnkey  mining  Contract involving overburden/inter burden  removal, excavation and/or loading of lignite from mines face and ancillary activities

11. Drilling Yes/No Carried out Drilling on  our  own  or through subcontracting

Our own/subcontracting

Excavation  Yes/No Carried  out Excavation  on  our own  or  through subcontracting

Our own/subcontracting

Hauling Yes/No.

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Carried  out Excavation  on  our own  or  through subcontracting  

Our own/subcontracting”

8. As  the  proposal  would  reflect,  the  appellant  had  not

provided the information that it had carried out the drilling in

the  aforesaid  Mine,  namely,  Mata  No  Madh.  The

respondent-owner sent a communication on 17.5.2016 seeking

certain clarification pertaining  to  the  QR and other  aspects.

The High Court has referred to the said communication and we

think it necessary to reproduce the same:-

“Ref:01/CS-7014-602(R1)-9-PAA Dated: 17.05.2016

To,  

M/s. Montecarlo Limited,  706, Ship Building, Near Municipal Market,  C.G. Road, Navrangpura, Ahmedabad-380 009, Gujarat, India   Kind  Attn.  Sh.  Shekhar  Shanna,  Sr.  General Manager  

Sub: Development and Operation of Dulanga Coal Block  as  per  IFB  No.  40051319;  Bid  Doc. No.CS-7014-802(R1)-9

Dear Sir,  

1.0  This  has  reference  to  your  Project  Proposal (Techno-Commercial Bid) against IFB No.40051319 for  the  subject  package.  You  are  requested  to

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furnish the following information with respect to the details/documents  furnished  in  the  bid  for qualification requirement data:  

(i)  Against  QR  requirement  of  Clause  7.1.2  of ITB: It is observed in the Contract Agreement dtd. 11.02.2014 submitted by the bidder in support of meeting  qualifying  requirement  for  Lignite  project Mata No Madh,  Kutch,  Gujrat  that  the  necessary activity of drilling as per stipulations of QR (sr.no. i of Notes) is not mentioned. The same may please be clarified with supporting documents.  

(ii) Against QR requirement of Clause 7.2 of ITB: Details  of  Other non cash expenses in Million for calculating Annual Cash Accrual for three year viz. 2013-14, 2014-15 & 2015-16  

2.0  It  is  requested  that  the  requisite  information along with necessary documents be furnished to us at the earliest, preferably by 24.05.2016.  

3.0 It may please be noted that seeking the above clarifications should not be construed that the bid submitted by you is considered techno commercially responsive  and/or  meeting  the  Qualification requirements (QR).”  

9. The  response  that  was  given  by  the  appellant  on

21.5.2016 is to the following effect:-

“A) Para 1.0 (i)  of your above letter against QR of Clause 7.1.2 of ITB: We are attaching the followings:

a)  A  certificate  from GMDC (client  of  our  Lignite Project  at  Mata  No  Math)  Vide No.GMDC/MMLG/298/2016-17  dated  18.05.2016 mentioning our scope on this Turnkey Project which includes  activities  of  Mine  Planning,  Quality Control,  Drilling,  Ripping,  Dust  suppression,  Nala

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Diversion, preparation of Garland drain, dewatering of  Monsoon  and  seepage  water,  preparation  and monitoring  of  haul  road  for  better  hauling  as required to complete the mining process.  

b)  Certificates from Northern Coalfields Ltd.  (NCL) and Western Coalfields Ltd. (WCL) are also attached herewith mentioning drilling as part of the Mining Process of these projects as ready reference:  

i)  NCL  Certificate  No.GM/KSL/2016/460  dated 31.03.2016  ii) NCL Certificate No.GM/KSL/25 dated 24.04.2016 iii)NCL Certificate No.GM/KHD/OS/2016/43 dated 23.04.2015 iv)WCL  Certificate  No. WCL/MA/MGR/JKOC/2015/400 dated 04.12.2015 v)  WCL  Certificate  No. WCL/MA/MGR/JKOC/2015/27 dated 14.04.2016  

Further, as you are kindly aware that Indian Lignite deposits occur in the Tertiary sediments in southern and western parts of peninsular shield particularly in  Tamilnadu,  Rajasthan  and  Gujarat.  The Overburden  and  interburden  comprises  of  Clay, Claystone,  mudstone  and  as  well  as  lignite [Geologically  younger  sediments  (Formations)  then occurrences  of  Coal]  which  can  be  excavated  by hydraulic Shovel dumper combination. As such, in lignite  deposits  of  Tamilnadu,  Gujarat  and Rajasthan,  Blast  hole  drilling  is  normally  not required.  

B) Para 1.0 (ii) of your above letter against QR of Clause 7.2 of ITB:  

We are attaching the following:  

a) Financial certificate of last 3 years  

We hope that  the above submission clarifies your points on QR requirement;

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If  your  require  further  clarification/information in this regard, kindly inform us. We shall be pleased to provide the same at your convenience.”

10. To  the  said  letter,  a  document  issued  by  the  Gujarat

Mineral Development Corporation Ltd (GMDC) dated 18.5.2016

was enclosed. The said certificate reads as follows:-

“GMDC/MMLG/298/2016-17   Dated:18.05.2016

To Whom It May Concern

This is to certify that the Turnkey Mining Contract involving  Overburden/Inter  burden  removal, Excavation and/or Loading of  Lignite from mining face and ancillary activities at Lignite project, Mata No Madh Vide Tender Notice No. (R1)/LP/01/13-14 dated  30.08.2013,  has  been  awarded  to  M/s. Montecarlo  Limited,  having  registered office  at  7th

Floor,  Shilp  Building,  Nr.  Municipal  Market,  C.G. Road, Navrangpura, Ahmedabad – 380009, Gujarat, India.

Name of Work: Turnkey Mining Contract involving Overburden/Inter  burden  removal,  Excavation and/or  loading  of  Lignite  from  mines  face  and ancillary activities at Lignite project, Mata No Madh.

Name of Contractor : M/s. Montecarlo Limited

LOI No. : GMDC/LP/13306/13-14    Dated: 15/01/2014

Estimated Cost/ Contract Value : 663.04 Cr. Awarded Quantity : Over Burden (1109.00)  

   Lac CUM       Lignite (148.00) Lac MT

Contract Period : 28.01.2014 to 27.01.2019

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The scope of Project is to carry out mining operation on  Turnkey  basis  comprising  of  removal  of  over burden,  inter  burden  and  lignite  and/or  loading from  mines  faces  using  hydraulic  showel  and dumper combination and other activities like Mine Planning,  Quality  control,  Drilling,  Ripping,  Dust suppression, Nala Diversion, preparation of Garland drain,  dewatering of  Monsoon and seepage water, preparation and monitoring of haul road for better hauling  etc.  as  required  to  complete  the  mining process.

Quantities Executed (year-wise) by M/s. Montecarlo Limited are shown below:

Sr. No

Period Over  Burden Removal (cum)

Lignite Dispatched (MT)

Total  Work Done Amount (Rs.)

1 28.01.2014 To 31.03.2014

18,24,674.03 7,64,791.18 33,59,23,240. 00

2 01.04.2014 To 31.03.2015

1,37,54,520.7 6

32,10,961.46 135,57,06,36 4.00

3 01.04.2015 To 31.03.2016

1,45,66,445.2 2

13,68,861.67 55,38,02.,253 .00

M/s.  Montecarlo  Limited  successfully  carried  out Dewatering of Mine. Yearwise details are shown for dewatering  by  deploying  high  capacities  of  Diesel and Electrical operated pump:

Sr. No. Period Dewatering in Lac m3

1. 01.04.2015 To 31.03.2016

65.0

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This  certificate  is  issued  as  per  their  request  vide letter  no.  ML(P)/mn/4190/clt/2016-17/020  date: 18.05.16 for applying tender.”

11. On the basis of the said communications, the respondent

formed an opinion that the bid of the appellant was technically

non-responsive.  The reason for arriving at the said conclusion

by  the  respondent  was  that  the  appellant  did  not  have

necessary experience of drilling for blasting purposes.  As the

appellant  was  regarded  as  technically  non-responsive,  it

invoked the jurisdiction of the High Court challenging the said

determination  made  by  the  respondent.  It  was  contended

before  the  High  Court  that  the  tender  documents  that

contained QR was of the experience of a bidder in only drilling,

excavation and hauling,  etc.  and not  blasting  or  drilling  for

blasting purposes.  It was further urged that the scope of work

for Dulanga Mines projects which was taken into consideration

by the respondent in evaluating the technical proposal of the

petitioner  as  being  non-responsive  had  been  wrongly

understood.  The stand of NTPC before the High Court was that

the  assessment  by  the  Technical  Committee  was  absolutely

justified and the writ petitioner therein did not meet the QR

and, therefore, was treated as non-responsive.   

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12. The High Court referred to how tender documents that

reflected  the  nature  of  mine  operations,  how  blasting  is  an

inherent part and drilling is differently understood in the sense

that the appellant had understood.  Thereafter, placing reliance

on Tata Cellular v. Union of India1  and Michigan Rubber

(India) Ltd. v. State of Karnataka and Ors.2, it came to hold

that the decision taken by the owner was correct and did not

adversely  affect  public  interest  but  subserved  the  public

purpose. Being of this view, the High Court dismissed the writ

petition. Hence, the present appeal by special leave.  

13. We  have  heard  Mr.  P.  Chidambram  and  Mr.  Harin  P.

Raval, learned senior counsel with Mr. Sandeep Singh, learned

counsel for the appellant and Mr. Vikas Singh, learned senior

counsel  with  Mr.  Ankit  Jain,  learned  counsel  for  the

respondent.

14. The dispute and the dissention between the parties rest

on how the Chapter 7 (QR) of ITB that contains Clause 7.2 that

deals with technical criteria is to be understood.   We are not

1

(1994) 6 SCC 651 2

(2012) 8 SCC 216

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really concerned with Clause 7.1.  The centrality of controversy

hinges on the interpretation to be placed on Clause 7.1.2.  It is

submitted  by  Mr.  Chidambram,  learned  senior  counsel

appearing  for  the  appellant  that  the  appellant  satisfied  the

condition as postulated in the QR under Clause 7.1.2 (a) and

Clause 7.1.2 (a) stipulates that 23 Million BCM of aggregated

volume of overburden and/or coal/lignite from a maximum of

seven open cast mines of coal/Lignite, in any year and clause

7.1.2. (b) lays down that at least 11.5 Million BCM of composite

volume of  overburden and coal/lignite from single open cast

mine in any year, out of which at least 3 million tones shall  be

coal/lignite.   Learned senior counsel would lay emphasis on

the documents which the appellant had filed to show that it

had operated and produced from single mine 11.5 Million BCM

of composite volume of overburden and coal/lignite from single

open cast mine in a year.  Mr. Singh, learned senior counsel

resisting the said stance would urge that the appellant does not

satisfy the condition of  drilling as is  required under  the QR

regard being had to the nature of work. In this context, we may

usefully  take  note  of  the  definition  of  “operated”.   The  said

term, as defined,  means activities of  drilling and excavation.

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The documents produced by the appellant indicate the scope of

work including activities  of  operation of  coal/lignite  mine.  It

reads as follows:-

“10. The scope of work includes the following activities of  operation of the Coal/Lignite Mine Drilling Yes/No Yes/No Yes/No Carried out  Drilling on  our own  or through  sub  contracting

Our own/sub  contracting

Our own/ sub  contracting

Our  own/sub  contracting

Excavation Yes/No Yes/No Yes/No Carried out  Excavation  on our own  or through  sub  contracting

Our own/ sub  contracting  

Our own/sub  contracting  

Our own/  sub  contracting

Hauling Yes/No Yes/No Yes/No Carried out  Hauling on  our own or  through  sub  contracting

Our own/sub  contracting  

Our own/  sub  contracting

Our own/ sub  contracting

S. No.

Particulars Mine 1 Mine 2 Mine 3

11 Annual  Production in Million  Bank  Cubic  

Year (From  01.04.2014  to  31.03.2015)

Year (From  01.04.2014  to  31.03.2015)

Year (From  01.04.2014  to  31.03.2015)

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Meters. Bidder to  refer Note (vii) of the Qualifyin g  Requirem ents of  Chapter 7

Coal/ Lignite (in  MT)

Overburden (in  Million  BCM)   

Coal/ Lignite (in MT)

Overb urden (in  Million BCM)

Coal /Lig nite (in  MT)           

Over burden (in  Million BCM)

3.210  Million Tonne

13.754 1.221  Million Tonne

3.386 - 12.707”

15. We have already analysed what is  covered by the word

“operated”  as  per  ITB.  In  this  regard,  the  High  Court  has

referred to Schedule II  that deals with description of mining

services.  Clause 5 deals with the Mine Operations.  We think it

appropriate  to  reproduce  Clauses  5.1,  5.9  and  5.10  of  the

same:-

“5.1. The Mine Operator shall construct and operate the Site in accordance with the following scope:

(a)  Plan  the  mine  (Site),  its  development  and construction

(b) Strip OB and store such OB on dumps

(c)  Mine  and  extract  coal  in  accordance  with  the requirements of Owner

(d)  Make  provisions  for  HEMM,  other  mining machinery and its effective maintenance

(e)  Implement,  and  comply  with  EMP  and environmental clearances;

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(f) Construction, maintenance and operation of mine dewatering  plant,  sump,  and garland  drains  with de-silting provisions

(g) Construct and maintain all access ways and haul roads

(h)  Arrangement  and  use  of  explosives,  as  per Indian Explosives Act

(i) Drilling and blasting

(j)  Construction  and  maintenance  of  wokshops, stores etc as per the requirement.

(k)  Construction,  Operation  and  maintenance  of complete power supply system.

(l) Mine illumination as per prevalent laws

(m) Arrangement of petrol/diesel, oil and lubricants.

(n)  (if  applicable)  control  any  spontaneous combustion on Site

(o) Conduct advance infill drilling.

(p) OB dump management including rehandling of internal dump as per  Environmental Clearance.

(q)  Progressive  mine  closure  with  effective  land reclamation plan in accordance with approved mine closure plan.   The Mine Operator shall  submit to the  Owner the  annual  financial  statement of  cost incurred towards progressive mine closure activities duly  certified  by  National  Environmental Engineering Research Institute (NEERI)  or  Central Mine Planning & Design Institute Limited (CMPDIL) or  any  other  institute  as  may  be  notified  by  the Government for these purpose to an acceptable level by the Coal Controller.

(r) POL Store shed

(s)  Development  of  Power  Supply  Distribution System beyond 33KV switchgear breaker terminals

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of Darlipalli STPP for various equipments/facilities included in Mine Operator’s scope.

x x x

5.9 Blasting:

Blasting shall be required for coal and selectively for overburden  with  the  objective  of  achieving  good fragmentation so that the excavators can operate at high levels of efficiency.  

5.10 Overburden and Inter burden Removal:

The  terms  overburden  and  interburden  are  each included in the term overburden below unless noted otherwise.   The  Mine  Operator  shall  ensure  the following in respect of Overburden removal:

(a) The Mine Operator shall assess the admissibility of  accommodation  of  OB  volume  in  the  external dump/in-pit-dump  and  accordingly  if  warranted, notify or seek necessary clearances/ approvals from appropriate  authority,  keeping  in  view  the stipulation of MoEF, contained in Forest Clearance Stage – 1, dated 10.01.2014.

(b) The Mine Operator’s daily and weekly scheduling shall  be  consistent  with  the  AAPP.  All  levels, benches,  haul  roads,  and  highwalls  shall  be consistent with the Monthly Production Plans and the statutory requirements.

(c) Weekly digging plans shall contain recommended methods for excavation and removal of overburden including blasting plans if needed.

(d) The Owner shall not be responsible for any costs associated  with  the  Mine  Operator  inefficiently scheduling daily and weekly activities.

(e) The Mine Operator considers itself fully aware of conditions of the Overburden in the mining area. No claim for lack of  knowledge of  the site conditions shall be allowed.

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(f)  Reasonable  efforts  shall  be  made  to  keep  coal clean  and  free  from  soil,  overburden,  rock,  clay, parting  bands,  steel,  stones,  timber,  rags, equipment parts or any other deleterious material.

(g) The Mine Operator shall ensure the quality of the coal  is  not  affected  by  its  mining  methods  which cause  coal  ash  to  rise  above  the  target  levels presented in AAPP.

(h) Water in the pit shall be kept to a minimum.

(i)  Fires or hot spots in the coal shall be handled expeditiously  and not  transported to  the  crusher. The  Owner  shall  be  notified  of  any  significant occurrence.  Oxidized  coal  shall  be  treated  as Overburden for compensation purposes.

(j) Any equipment repairs on the coal bench shall be cleaned after use to prevent contamination.

(k) All equipment shall undergo pre shift inspections including loose bucket teeth or other parts.

(l) The Mine Operator shall be responsible to provide equipment  to  suit  the  varying  thickness  of  the seams and partings which must be mined.

(m) The Owner may instruct the Mine Operator to maintain an overburden or inter burden cover over in-pit coal inventory prior to mining.

(n) If, during the excavation or overburden, any coal is found, the Mine Operator shall inform the Owner and  seek  instructions  before  proceeding. Overburden shall be hauled and placed in areas as shown in the Mining Plan.

(o) Reject coal placed in overburden or interburden dumps  shall  be  buried  in  5  meter  lifts  and compacted to ensure no ingress of air which could cause spontaneous combustion.  The Mine Operator shall  be required,  at  its  own expense,  to dig out, compact and replace any smouldering dump area.

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(p)  Placement  of  overburden  shall  be  carried  out with due regard to water run off, final topography, and long term ground stabilization.

(q)  Any  erosion  or  land  slip  in  areas  of  placed materials shall be rectified by the Mine Operator at its own expense.”  

16. Clause  5.7.2.  deals  with  drilling  and  blasting.  It  is  as

follows:-

“5.7.2. Drilling & Blasting

Crawler-mounted pneumatically operated down the hold  drilling  rigs  are  capable  to  meet  the  future requirement  of  8  m/hr  will  be  deployed  for  OB. R.B.H. drills will be used for drilling about 160 mm dia. holes in coal.

After shot holes are drilled into the horizontal bench cut  by  the  shovel,  the  faces  are  blasted  using explosives  and  detonators.  Coal  is  also  extracted after blasting off the coal faces.

Drilling & Blasting would be required both in OB and  Coal,  benches,  before  excavation  by  shovel. Except  for  coal  benched  which  will  be  mined  by CSMs  Heavy  ANFO  type/Slurry  Emulsion  is proposed  to  be  used  based  on  the  daily requirement.  However,  flexibility  may  have  to  be provided for usage of suitable alternative/available explosives as per the requirement.”

17. We have referred to these clauses which are technical but

they  are  fundamental  to  understand  the  QR.   They  clearly

demonstrate  that  drilling  is  imperative.  Mr.  Chidambram,

learned senior counsel for the appellant would argue with all

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the conviction at his command that the appellant is engaged in

drilling in Lignite and the tender requirement was coal/lignite.

According  to  the  learned  senior  counsel,  drilling  in  lignite

would  meet  the  requirement  but  the  owner  has  travelled

beyond the postulates of  the QR to insist on drilling for the

purpose of blasting.  We have already referred to the certificate

issued by GMDC in favour of the appellant and the documents

filed  by  the  appellant.   The  High  Court  has  considered  the

documents and opined that the documents filed in support of

the QR are substantially inadequate. Adverting to the facet of

drilling, the writ court has opined that there is specific use of

the words “drilling for the purposes of blasting”. It is urged by

Mr. Chidambram and Mr. Raval, learned senior counsel that in

the absence of a definitive prescription, the court cannot add

an attribute or quality component to the qualifying clause. In

this  regard,  we  may  usefully  refer  to  certain  authorities.  In

Sterling  Computers  Limited  v.  M/s  M  &  N  Publications

Limited & Ors3, the Court has held that under some special

circumstances  a  discretion  has  to  be  conceded  to  the

authorities who have to enter into contract giving them liberty

3

(1993) 1 SCC 445

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to assess the overall situation for purpose of taking a decision

as to whom the contract be awarded and at what terms. It has

also  been observed  that  by  way of  judicial  review the  court

cannot examine the details of the terms of the contract which

have  been  entered  into  by  the  public  bodies  or  the  State.

Courts  have  inherent  limitations  on  the  scope  of  any  such

enquiry.

18. In  Tata  Cellular (supra)  a  three-Judge  Bench  after

referring  to  earlier  decisions  culled  out  certain  principles,

namely,  (a)  the  modern  trend  points  to  judicial  restraint  in

administrative action, (b) the court does not sit as a court of

appeal but merely reviews the manner in which the decision

was made, (c) the court does not have the expertise to correct

the administrative decision.  If  a review of  the administrative

decision is permitted it  will  be substituting its own decision,

without  the  necessary  expertise  which itself  may be  fallible,

and (d)  the  Government must have freedom of  contract  and

that  permits  a  fair  play  in  the  joints  as  a  necessary

concomitant  for  an  administrative  body  functioning  in  an

administrative  sphere or  quasi-administrative  sphere.  Hence,

the Court has laid down that the decision must not only be

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tested  by  the  application  of  Wednesbury  principle  of

reasonableness (including its other facts pointed out above) but

must be free from arbitrariness not affected by bias or actuated

by mala fides.  

19. In  Jagdish Mandal  v.  State  of  Orissa and Ors4 the

Court  has held that  a contract  is  a commercial  transaction.

Evaluating  tenders  and  awarding  contracts  are  essentially

commercial functions. Principles of equity and natural justice

stay at a distance. If the decision relating to award of contract

is bona fide and is in public interest, courts will not, in exercise

of  power  of  judicial  review,  interfere  even  if  a  procedural

aberration or error in assessment or prejudice to a tenderer, is

made out.

20. In  Master  Marine  Services  (P)  Ltd.  v.  Metcalfe  &

Hodgkinson (P) Ltd and Anr5, it has been ruled that the State

can choose its own method to arrive at a decision and it is free

to  grant  any  relaxation  for  bona  fide  reasons,  if  the  tender

conditions permit such a relaxation. It has been further held

that the State, its corporations, instrumentalities and agencies

4

(2007) 14 SCC 517 5

(2005) 6 SCC 138

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have the public duty to be fair  to all  concerned. Even when

some defect is found in the decision-making process, the court

must exercise its discretionary powers under Article 226 with

great  caution  and  should  exercise  it  only  in  furtherance  of

public interest and not merely on the making out of  a legal

point.  

21. In  B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd.

and  Ors.6 a  two-Judge  Bench,  after  referring  to  series  of

judgments has culled out certain principles which include the

one that  where  a decision has been taken purely  on public

interest, the court ordinarily should apply judicial restraint.  

22. In  Michigan  Rubber  (India)  Ltd. (supra)  the  Court

referred to the earlier judgments and opined that before a court

interferes in tender or contractual matters, in exercise of power

of judicial review should pose to itself the question whether the

process adopted or decision made by the authority is mala fide

or intended to favour someone or whether the process adopted

or decision made is so arbitrary and irrational that the judicial

conscience  cannot  countenance.   Emphasis  was  laid  on the

6

(2006) 11 SCC 548

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test,  that  is,  whether  award  of  contract  is  against  public

interest.  

23. Recently in Afcons Infrastructure Ltd. v. Nagpur Metro

Rail  Corporation  Ltd.7 a  two-Judge  Bench  eloquently

exposited the test which is to the following effect:-

“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 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.”

24. 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.  It  is

common knowledge  in  the  competitive  commercial  field  that

technical  bids  pursuant  to  the  notice  inviting  tenders  are

7

2016 (8) SCALE 765

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scrutinized by the technical experts and sometimes third party

assistance  from  those  unconnected  with  the  owner’s

organization  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  malafide 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

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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 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.

25. In view of the aforesaid analysis, we do not perceive any

infirmity in the judgment and order passed by the High Court

and,  accordingly,  the appeal  stands dismissed.   In the facts

and circumstances of the case, there shall be no order as to

costs.

..............................J. (Dipak Misra)

..............................J.                            (Uday Umesh Lalit)

New Delhi; October 18, 2016.