# LTD. & ANR v. U.0.1 & ORS - **Citation:** [2008] 15 S.C.R. 585 - **Court:** Supreme Court of India - **Decided:** 2008-11-06 - **Case number:** Civil Appeal No. 6515 of 2008 - **Bench:** Dr. Arijit Pasayat, C.K. Thakker, Lokeshwar Singh Panta - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ltd-anr-v-u-0-1-ors-23956 - **Pages:** 37 ## Headnote Constitution of India, 1950; Article 226: c Government contracts - Tender - Award of contract - Administrative decision, judicial review of - Held: Evaluating tenders and awarding contracts are essentially commercial functions - When the decision relating to award of contract D found bonafide and in public interest, Courts should not exercise the power of judicial review to interfere with such administrative decision even if there was procedural lacunae - In the instant case, the contract was for sensitive army equipments needed on urgent basis - Expert Committee E rightly determined price of requisite quantity of goods by multiplying with unit price quoted in the bid documents submitted by all the tenderers - There was no scope for the authority to read into the tender documents suggestion by the appellant, which did not exist in the bid documents ..r. F Moreover, no personal allegation of malafideslfavouritism levelled against the authority- Hence, no fault could be found with the decision taken by the authority/process adopted in awarding the contract - Indian Contract Act, 1872 - Government contracts - Administrative decision - Power of Judicial Review - Exercise of. G Respondent No. 2, a Public Sector Undertaking of '-+ Government of India, floated a Request for Proposal (RFP)/Tender for procurement of Digital Radio Trunking 585 H 586 SUPREME .COURT REPORTS [2008] 15 S.C.R. A System (DRTS)/Terrestrial Trunked Radio (TETRA), a pa.rt of, Technical Communication· System for lndi.an Army/ M•nistry of Defence, Government of India, respondent No. f. In terms of. the tender ·document, the evaluation,· trials and completion of the contract was proposed to be B carried out in five phases. In each phase committees of, experts have been entrusted the task of evaluation of bids and short listing the ~ld~ers by eliminating "those not qualified in terms of ev~luation criteria. In all, eight bidders submitted their bids. After the end of phase Ill, c three bidders viz. appellant No.1, respondent Nos. 3 & 4 have been declared qualified for evaluation in phase IV. In Phase~IVj commercial· bids were opened in the presence of the representatives of all .three bidders and the prices of the main items as per their commercial bids 0 were read out. The total price of appellant No.1, as worked out, was lowest. However, as the proposals of the bidders comprised various details contained in the en.closures to the bid, they.·were informed that a comprehensive evaluation would be.carried out by the Expert Committee E for arriving at L 1 bidder and that any further interaction would only be held with L 1 bidders. The Evaluation Committee asked for certain clarifications in the form of queries from all the three bidders including appellant No. · 1. The bidders gave their clarifications. The Committee, after completion of evaluation of the bids, finalized the F total package cost for each of the bidders. Since name of L-1 lenderer was not announced by the respondents, · appellants filed a representation. Respondents ailegedly did not declare outcome of tenders after Phase IV but negotiated with them. Appellants, one of the bidders, filed G a writ petition praying for issuance of directions to respondent Nos. 1 & 2 to award the contract in their favour as they being the lowest bidders and not to negotiate with other bidders. The other two bidders were also impleaded as. parties; The petition was dismissed by H , __ L .;:, \ . I 'I SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 587 - LTD. & ANR. v. U.0.1 & ORS. the High Court. Hence the present appeal. A .. >- Appellants, inter alia, contended that the bid of appellant No.1 was the lowest of the three technically qualified bidders; that appellant No. 1 was being ousted by adding an imaginary price to its bid, which the B appellants never quoted and such an addition to the bid was unwarranted and amounted to artificially loading the bid; and that a confusion was being created about the ~ nature of the bid. I ## Text _Characters 0–39,876 of 70,924. This is a partial read: ask again with offset=39876 for what follows._ [2008] 15 S.C.R. 585 SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. A .... >-- LTD. & ANR. II. UNION OF INDIA & ORS. (Civil Appeal No. 6515 6f 2008) NOVEMBER 6, 2008 B [DR. ARIJIT PASAYAT, C.K. THAKKER AND LOKESHWAR SINGH PANTA, JJ.] Constitution of India, 1950; Article 226: c Government contracts - Tender - Award of contract - Administrative decision, judicial review of - Held: Evaluating tenders and awarding contracts are essentially commercial functions - When the decision relating to award of contract D found bonafide and in public interest, Courts should not exercise the power of judicial review to interfere with such administrative decision even if there was procedural lacunae - In the instant case, the contract was for sensitive army equipments needed on urgent basis - Expert Committee E rightly determined price of requisite quantity of goods by multiplying with unit price quoted in the bid documents submitted by all the tenderers - There was no scope for the authority to read into the tender documents suggestion by the appellant, which did not exist in the bid documents ..r. F Moreover, no personal allegation of malafideslfavouritism levelled against the authority- Hence, no fault could be found with the decision taken by the authority/process adopted in awarding the contract - Indian Contract Act, 1872 - Government contracts - Administrative decision - Power of Judicial Review - Exercise of. G Respondent No. 2, a Public Sector Undertaking of '-+ Government of India, floated a Request for Proposal (RFP)/Tender for procurement of Digital Radio Trunking 585 H 586 SUPREME .COURT REPORTS [2008] 15 S.C.R. A System (DRTS)/Terrestrial Trunked Radio (TETRA), a pa.rt of, Technical Communication· System for lndi.an Army/ M•nistry of Defence, Government of India, respondent No. f. In terms of. the tender ·document, the evaluation,· trials and completion of the contract was proposed to be B carried out in five phases. In each phase committees of, experts have been entrusted the task of evaluation of bids and short listing the ~ld~ers by eliminating "those not qualified in terms of ev~luation criteria. In all, eight bidders submitted their bids. After the end of phase Ill, c three bidders viz. appellant No.1, respondent Nos. 3 & 4 have been declared qualified for evaluation in phase IV. In Phase~IVj commercial· bids were opened in the presence of the representatives of all .three bidders and the prices of the main items as per their commercial bids 0 were read out. The total price of appellant No.1, as worked out, was lowest. However, as the proposals of the bidders comprised various details contained in the en.closures to the bid, they.·were informed that a comprehensive evaluation would be.carried out by the Expert Committee E for arriving at L 1 bidder and that any further interaction would only be held with L 1 bidders. The Evaluation Committee asked for certain clarifications in the form of queries from all the three bidders including appellant No. · 1. The bidders gave their clarifications. The Committee, after completion of evaluation of the bids, finalized the F total package cost for each of the bidders. Since name of L-1 lenderer was not announced by the respondents, · appellants filed a representation. Respondents ailegedly did not declare outcome of tenders after Phase IV but negotiated with them. Appellants, one of the bidders, filed G a writ petition praying for issuance of directions to respondent Nos. 1 & 2 to award the contract in their favour as they being the lowest bidders and not to negotiate with other bidders. The other two bidders were also impleaded as. parties; The petition was dismissed by H , __ L .;:, \ . I 'I SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 587 - LTD. & ANR. v. U.0.1 & ORS. the High Court. Hence the present appeal. A .. >- Appellants, inter alia, contended that the bid of appellant No.1 was the lowest of the three technically qualified bidders; that appellant No. 1 was being ousted by adding an imaginary price to its bid, which the B appellants never quoted and such an addition to the bid was unwarranted and amounted to artificially loading the bid; and that a confusion was being created about the ~ nature of the bid. It was clearly the intention of the appellants to indicate the price for 100 units. The unit c base is 1 for 100 and that is how the appellants have understood the matter and had accordingly put the figure. Respondents, inter alia, submitted that the appellants with their eyes open had quoted the figures and at different points of time have taken totally varying stands; D that they had stated the quantity to be "as required" and indicating the unit price. However, the total price was left blank. At that point of time the quantity was not known and that a similar indication was made by each of the bidders; that all the bidders understood the required E quantity to be 1200 units but the appellants had indicated the quantity to be 1 and had quoted the price; that nothing could have precluded the appellants from turning around later on, and seeking to bind respondent No. 2 down to the rates as offered by it for a single unit in the F' .. original, the same being part of the original tender documents. Dismissing the appeal, the Court HELD: 1.1. hi the composite price schedule in G respect of Item No.11 of the bid document, appellant No. 1 endorsed the figure "1" in the column of "Quantity", an·d ~ while filling in the price in the column of "Unit Price Euro" as also "Total Price Euro", inserted the figure, "8,977.34". The said composite price statement was at variance with H 588 SUPREME COURT REPORTS [2008] 15 S.C.R. A the original Bill of Materials submitted by the appellant . No. 1 in respect of item No.11 for the reason that in the ...... .. original Bill of Materials, in the column of "Quantity" the appellant had indicated nAs required" and the' column of "Totaf Price Euro" was left blank by it. [Para 23l [615-H; B 616-A, B] 1.2. The appellants have placed heavy reliance on the composite price schedule to state that there was no correlation of the quantity of 1200 given for Vehicular 1 c Mobile Stations, as specified in Item No4.1, with item No.11 to state that the quantity against item No.11 was never declared and further, that at best the respondent No.2 could have bound the appellant No.1 down to the price indicated in the column "Total Price Euro" indicated D in the composite price schedule, but it could not have multiplied the rate given in the "Unit Price" with the figure of 1200 which had resulted in absurdity. [Para 23] [616c, DJ ... 1.3. The High Court rightly noted that any reference E to or reliance upon the composite price schedule submitted by the appellants after opening of the commercial bids of all the vendors on an earlier date, is impermissible. Had respondent No.2 taken the composite price schedule into consideration in respect of item F No.11, it would have created justifiable doubts in the minds of respondents No. 3 and 4 and defeated the rule ~· of transparency and fairness on the part of respondent \ ; No. 2, as it would have amounted to improving the bid made originally by appellant No. 1, by supplying details G upon ascertaining the rates quoted by the others. [Para 24] [616-E, F, G] 1.4. Specific queries were put forward by respondent . No. 2 to each of the three bidders wherever clarifications y were required qua particular items in the Bill of Materials H submitted and other aspects of the bid. No query was SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 589 • LTD. & ANR. v. U.0.1 & ORS . > raised by the respondent No. 2 on the appellant No. 1 in ( A " respect of item No.11. Hence, the question of taking into --- consideration the clarifications given thereon by appellant No. 1 did not arise. [Para 24] [616-G, H; 617-A] 1.5. While taking note of the changes made by B appellant No. 1 in respect of item No.11 in the composite price schedule, as against the original Bill of Materials submitted, the former was not taken into consideration by the Committee. Instead, the Committee made a point to observe in its analysis that no technical explanation c was given by the appellant as to why the quantity had been changed by appellant No. 1 from "As required" to "1" while the "Unit Price" and "Total Price" was kept as the same in the composite price schedule. Thus the Committee multiplied the unit price furnished by appellant No. 1 with the figure 1200 to arrive at the total price, and D the same method was uniformly adopted for the other two bidders. Looking at it from another angle, respondent No. 2 cannot be faulted for strictly adhering to the rates furnished by appellant No. 1 in its original bid documents. [Para 25] (617-B-E] E 1.6. It is the common case of all the parties that commercial offers were to be made by all the bidders for quantities of 80 systems as per the Bill of Materials enclosed with the RFA. As no quantity was disclosed for F item No.11 in the Bill of Materials, none of the bidders quoted rates for any spe~ific quantity, but did so only for a single unit. Thus the unit rate quote remained the deciding factor for the Committee, while finally analyzing the bids. [Para 26] [618-B, C] G 1.7. The contention ·of the appellants that they had a J license for the software under which one software unit would serve 100 units of Vehicular Mobile Terminals and as a result, the total requirement of software unit was H 590 SUPREME COURT REPORTS [2008] 15 S.C.R. A only 12{12x100 = 1200) and ,not 1200 (1x1200=1200), is misconceived and without any basis for the reason that a perusal ·of item No. 11 of the Bill of Materials submitted by the appellants does not show that any such remarks were made therefor. In fact, the remarks column in the B said Bill of Materials was left 'blank. [Para 27] [618-C, D] 1.8. There is nothing on re.cord by way of any remarks in the bid document to effect that the said price of a single unit was to hold good for 100 units on the ground that appellant No. 1 was granted a software C license which catered to 100 users at one time. [Para 28] [619-C] 1.9. A basic distinction has to be drawn between a case where against an item, no rates or prices or o quantities are quoted, and those where some rate is quoted. Appellant No.1 having quoted a rate on a unit basis ill respect of item No.11, respondent No. 2 had no option but to make the said rate the basis for arriving at the total price. Accepting the interpretation as sought to E be given by the appellants would amount to re-writing the entries in the bid document and reading into the bid document, terms that did not exist therein. [Paras 28 and 29] [619-C, D, E] .F . _2.~. R.e~pondent No. 2 was under an obligati~n to not only maintain a great degree of transparency· and fair dealing on its part, but was also expected to maintain the sanctity and integrity of the entire process. Thus it was incumbent upon respondent No. 2 to ensure that no different yardstick were adopted for any of the vendors G and at the same time, to ensure that there was not the ·remotest possibility of discrimination, arbitrariness or favouritism. There was no scope for respondent No. 2 to read into the documents, terms and conditions which did not exist in the bid documents. The appellants have also H not levelled any personal allegations of malafides or SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 591 • LTD. & ANR. v. U.0.1 & ORS . ~ favouritism against respondent No. 2. The approach of A the High Court is in the right direction a·nd the factual _..,,,, position obtaining has also been noted in detail and the conclusions have been arrived at. [Paras 29, 30 and 31] ~ [619-F, G, H; 620-A, B] I Reliance Airport Developers (P) Ltd. vs. Airports Authority B of India and Others, (2006) 10 SCC 1 and Asia Foundation ~ & Construction Ltd. vs. Trafalgar House Construction (I) Ltd. ~ And Others, (1997) 1 SCC 738, referred to. 2.2. On examining the 1acts and circumstances of the c present case, this Court is of the view that none of the criteria has been satisfied justifying Court's interference in the grant of contract in favour of the appellants. When the power of judicial review is invoked in the matters relating to tenders or award of contracts, certain special D features- have to be considered. A contract is a commercial transaction and evaluating tenders and awarding contracts are essentially commercial functions. In such cases principles of equity and natural justice stay at a distance. If the decision relating to award of contracts E is bonafide and is in public interest, Courts will not exercise the power of judicial review and interfere even if it is accepted for the sake of argument that there is a procedural lacuna. [Para 34] [620-F, G, H; 621-A] ~ Master Marine Services (P) Ltd. vs. Hodgkinson (P) Ltd. F and Another, (2005) 3 SCC 138; Sterling Computers Ltd. vs. M.N. Publications Ltd. (1993) 1 SCC 445; Raunaq International Ltd. vs. I. V.R. Construction Ltd., (1999) 1 SCC 492; Mis. B.S.N. Joshi and Sons-Ltd. vs. NairCoal Services Ltd., AIR 2007 SC 437; Reliance Airport Developers (P) Ltd. G, vs. Airports Authority of India and Others, (2006) 10 SCC 1; Tata Cellular vs. Union of India, (1994) 6 SCC 651; Asia Foundation & Construction Ltd. vs. Trafalgar House Construction(/) Ltd. and Others (1997) 1 SCC 738; W.B. State Electricity Board vs. Patel Engineering Co. Ltd. And Others H 592 SUPREME COURT REPORTS (2008] 15 S.C.R. . tA (2001) 2 sec 451 and Jagdish Manda/ vs. State of Orissa .,J & Ors., (2006) 14 SCALE 224, referred to. -- 2.3. In the instant case, the contract is in respect of • sensitive Army equipments which are urgently needed. B It cannot be held that the process adopted or decision made is so arbitrary or irrational that no responsible authority acting reasonably or in accordance with the relevant law could have taken such a decision. [Para 35] ~ (621-A, B] ,._ c Case Law Reference: (ZOOS) 3 sec 138 Referred to Para 11 (1993) 1 sec 445 Referred to Para 12 D (1999) 1 sec 492 Referred to Para 13 AIR 2007 SC 437 Referred to Para 15 (2006) 1 o sec 1 Referred to Para 16 (1994) 6 sec 651 Referred to Para 17 E (1997) 1 sec 738 Referred to Para 18 • (2001) 2 sec 451 Referred to Para 18 (2006) 14 SCALE 224 Referred to Para 21 F + CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6515 of 2008. From the final Judgment and Order dated 10.8.2007 of the · High Court of Delhi at New Delhi in W.P.(C) No. 1768 of 2007. G Shyam Diwan; Sr. Adv., Pradeep Kumar Bakshi, Rajat Navet and Madhur Yadav for the Appellants. 8. Datta, ASG., Dr. A.M. Singhvi, Vinay 8hasin, Dushyant Dave, Sr. Advs., Rahul Gupta, Reema Sharma, 8hargava V. H Desai, Ashok K Srivast~va, 8. Krishna Prasad, N. Ganapathy, SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 593 LTD. & ANR. v. U.0.1 & ORS. ~~ > Tasneem Ahmadi, Gaurab Joshi, Sharifa Chaudhary and A ........_ Sudhir Kumar Gupta for the Respondents . The Judgment of the Court was delivered by DR. ARIJIT PASAYAT, J. 1. Leave granted. 2. Challenge in this appeal is to the judgment of a Division B Bench of the Delhi High Court dismissing the writ petition filed by the appellants. In the writ petition they had inter a/ia prayed for issuance of directions to the respondents 1 and 2 to award the contract in respect of tender No. DRTS/AREN/Jan-2005 floated by Bharat Electronics Limited-respondent No. 2 on c behalf of Union of India-respondent No. 1 in favour of appellant No.1. They further prayed for directions to restrain respondents 1 and 2 from negotiating with any other bidder except appellant No.1 on the ground that it is the lowest bidder of the said tender. D 3. The factual position in a nutshell is as follows. Respondent No. 2, Bharat Electronics Ltd. was nominated by respondent No. 1, Ministry of Defence, Government of India, as the prime contractor for Indian Army's modernization plan E for Technical Communication System (in short the 'TCS'). Respondent No. 2 floated a Request for Proposal (RFP) for procurement of Digital Radio Trunking System (in short the 'ORTS'), also popularly known as Terrestrial Trunked Radio (in + short the 'TETRA') which is a major component in the TCS Programme of the Indian Army, vide Tender No. DRTS/AREN/ F Jan--2005. In 2 the RFP floated by respondent No. 2 for the ORTS, the vendors were called upon to make firm technical and commercial proposals for the supply and transfer of technology of ORTS to respondent No. 2 for incorporating in their solution to Indian Army. It was specified that the G' ' commercial offers should be for quantities of 80 systems as ___,.--: '+- per Bill of Material enclosed with RFP. The technical specifications detailed the components of the --' ORTS by splitting them into 9 sub-systems. The tender also H 594 SUPREME COURT REPORTS [2008) 15 S.C.R. A stipulated that the licensed manufacture of ORTS shall be - came into play after placement of order when the successful A -. tenderer was required to supply the three·systems. On 8th February, 2005, a pre-bid meeting was held by respondent No. 2 where the prospective bidders were apprised ' of the contents and basic requirements of the tender. ln March B 2005, eight bidders, including appellant No.1 submitted their ' bids in response to the RFP. Phase-I evaluation was carried out by the TEC which shortlisted six bidders for Phase-II evaluation. Phase-II evaluation was carried by the Empowered Technical Committee (in short the 'ETC'), which after visiting ~ the factory sites of the six qualified bidders, including appellant No.1 recommended three vendors, namely, petitioner No. 1, respondent No. 3 (/M/s. Selex Communications SpA (Mis. Selex) and M/s. Thales Land & Joint Systems (M/s. Thales) for Phase-Ill evaluation. In P~ase-111 evaluation, field trials, D maintainability evaluation trials, EMl/EMC testing and discussions on feasibility etc. were held and further evaluation trials were carried out.· After approval of the Technical Committee's report, all the three bidders as referred to hereinabove, qualified for Phase-IV evaluation and clearance lE was accorded for the next phase of evaluation. In Phase-IV, 5 commercial bids wer~ opened on 23rd January, 2007 in the presence of the representatives of all three bidders and the prices of the main items as per their commercial bids were read i out. The total price of the three bidders worked out as under : (i) M/s. Siemens (appellant No. 1) 16, 100,969 Euros F (ii) M/s. Selex (Respondent No. 3) 25.775,048 Euros (iii) M/s. Thales (Respondent No .4) 22.781.769 Euros However, as the proposals of the bidders comprised G ...,.. various details contained in the enclosures to the bid, they were informed that a comprehensive evaluation would be carried out by the Expert Committee for arriving at L 1 bidder and that any further interaction would only be held with L 1 bidders. An H 596 SUPREME COURT REPORTS [2008] 15 S.C.R. A Evaluation Committee was constituted and the bids of the said . ..(_ " three bidders were analyzed. By letter dated 1st February, 2007, :#' the Evaluation. Committee asked for certain clarifications in the form· of queries from all the three bidders including appellant No. 1. In the meeting dated 7th February, 2007 with the .said B three bidders they gave their clarifications to the queries raised by respondents No. 1 and 2. As a result, the Evaluation Committee completed its evaluation of the bids of the said three bidders and on 10th February, 2007 finalized the total package cost 6 for each of the three bidders working out a comparative c statement contai.ning the details as per the scope of the RFP. According to appellants, since respondent No.2 was not announcing the name of L-1 tenderer, they wrote to the respondents on 16.2.2007 inter alia stating that though the price D bid had been opened more than three weeks back the name of L-1 had not yet been announced. On the basis of read out price of all the three bidders on 23.1 .2007, the appellant No. 1 had emerged as the lowest bidder and was, therefore, entitled to be intimated the results of the tender. Grievance was made that they did not get any response from the respondent No. 2 E and, therefore, they sent a reminder on 22.2.2007. Finally, by letter dated 23.2.2007 a response was received from respondent No. 2 acknowledging their representation but the outcome of the tender was not intimated. Therefore, the writ petition was filed. The prayers, as set out in the writ petition + F have been noted above. In essence the appellants wanted respondent No. 2 to award the tender in their favour being the lowest bidder. Counter-affidavits were filed. During the course of the hearing of the writ petition, a preliminary objection was raised regarding non-impleadment of two other bidders and G they were impleaded on the oral request of the appellants. Stand of respondent No. 2 was that the writ petitioner's • price is not based on the actual package cost to meet the -y complete requirement of RFP, in view of the short falls while H working out the actual package cost based on the assumption I \ • ' """" _, -t ' ' • ..... ..... SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 597 LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.] of number of quantities and items which the writ petitioners had A >- ignored and the details were given in Annexure R-5. -t- ""f" It was stated ttfat the Evaluation Committee has not violated any norms while preparing the report and holding M/s. Seiex as L-1 bidders . 8 It was further stated that conditions of the tender were not violated and all the guidelines as per eve were followed scrupulously while arriving at a package price considering the complete requirement of RFP and there is no genuine grievance of the writ petitioners giving rise to any cause of C action in their favour. The writ petitioner has indulged in deliberate distortion and contortion of facts and misrepresented the settled law in this regard. 5. The appellants disputed the above position and it was 0 stated that the appellant No. 1 's bid was the lowest of the 3 technical qualified bidders whose commercial bids were opened and appellant No. 1 was being ousted by adding an imaginary price of EU 11 billion to its bid, which the appellants never quoted and addition to its bid was unwarranted and amounted to artificially loading the bid. It was in essence stated. E that so far as Item No. 11 is concerned, a wrong view was taken on the basis of absurd reasoning. The addition of EU 11 billion to the bid of the appellants on account of Item No. 11 has resulted in increasing its total bid to EU 28 billion which, on the face of it, is absurd. F 6. Further the stand of respondent No. 2 was that the appellants could have sought necessary clarification in this regard, as was done by them in the case of other issues raised on 7.2.2007. 7. In the course of arguments the appellants stated that they were willing to provide software for 1200 users for the price quoted in the bid, i.e., for EU 8977.34. The respondents, as noted above, disputed the factual scenario as narrated by the G H 598 SUPREME COURT REPORTS [2008] 15 S.C.R. A appellants and they specifically stated that different stands have been taken at different points of time by the writ petitioners to .4.. .. suit their own .purpose. Therefore, there was no scope for L interfer~nce considering the limited scope of judicial review, ... particularly when, no malafides have been alleged or pleaded. B The High Court by the impugned judgment dismissed the.writ petition. 8. In support of the appeal, stands taken before the High Court were reiterated. With reference to the figures indicated ,..\ c in the bid documents, it was submitted that a confusion was being created about the nature of the bid. It was clearly the intention of the appellants to indicate the price for too units. The unit base is 1 for tqo anq that is how the appellants have understood the matter and had accordingly put the figure. It was submitted that there is a great price variation and in the greater D public interest the bid offered by the appellants should be accepted and even they are willing to supply 1200 units at the price quoted for 1 unit, i.e., EU 8977.34. ~ 9. Learne,d counsel for the respondents on the other hand E submitted that the appellants with their eyes open had quoted the figures and. at different points of time have taken totally varying stands.'lnitially, they had stated the qu.antity to be "as required" and the unit price in EU.to be 8977.34.The total price was left blank. At that point of time the quantity was not known I F and that a similar indication was made by each of the bidders. I_ All the bidders understood the required quantity to be 1200~ + ' Interestingly the appellants had indicated the quantity to be 1 and had. quoted the total price at EU 8977.34. They further submitted that the High Court rightly noted that had the G respondent No. 2 proceeded on the basis of the rates furnished by the appellants in the composite bid schedule in the column (total price EU). Nothing could have precluded the appellants ·from turning around later on, and seeking to bind respondent No. 2 down to the rates as offered by it for a single unit in the i" H original, the same being part of the original tender documents. SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 599 LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.] ·· 1t is also submitted that the variation in figures is not exorbitantly A ,.. high, as is being projected by the appellants. 1 10. It would be appropriate to first deal with the scope of power of judicial review, more particularly, in the matter of tenders before we take note of various conclusions arrived at. B by the High Court. 11. In Master Marine Services (P) Ltd. vs. Hodgkinson (P) . Ltd. and Another (2005) 3 SCC, 138, it was observed as follows: . c "11. The principles which have to be applied in judicial review of administrative decisions, especially those relating to acceptance of tender and award of contract, have been considered in great detail by a three-Judge Bench in Tata Cellular vs. Union of India (1994) 6 SCC, D 651. It was observed that the principles of judicial review would apply to the exercise of contractual powers by ""'\' Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial E review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in F view while accepting or refusing a tender. There can be -+ no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised of that power will be struck down. G After an exhaustive consideration of a large number of decisions and standard books on Administrative Law, the Court enunciated the principle that the modern trend points to judicial restraint in administrative action. The Court H A B c D E F 600 SUPREME COURT REPORTS [2008] 15 S.C.R. does not sit as a court of appeal but merely reviews the manner in which the decision was made. 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 m·ay be fallible. 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 principles of reasonableness but must be free from arbitrariness not affected by bias or actuated by mala tides. It was also pointed out that quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. 12. In Sterling Computers Ltd. Vs. M.N.Publications Ltd. (1993) 1 sec 445 it was held as under : "18. While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the "decision making process." 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. Court have inherent limitations on the scope of any such enquiry. But at the same time the Courts can certainly examine whether "decision making process" was reasonable rational, not arbitrary and violative of Article 14 of the Constitution. G 19. If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the State and the public, then Court cannot act as an appellate authority H by substituting its opinion in respect of selection made for +- ' SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 601 LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.] entering into such contract." A. A. ., 13. In Raunaq International Ltd. v. I. V.R. Construction Ltd. (1999 (1) sec 492) it was observed that the award of a contract, w~ether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at B a commercial decision, considerations which are of paramount importance are commercial considerations, which would include, inter alia, the price at which the party is willing to work, ~ whether the goods or services offered are of the requisite specifications and whether the person tendering is of ability to c deliver the goods or services as per specifications. 14. The law relating to award of contract by State and public sector corporations was discussed in Air India Ltd. v. Cochin International Airport Ltd. [2000 (2) SCC 617] and it was held that the award of a contract, whether by a private party or D by a State, is essentially a commercial transaction. It can ~ choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender · conditions permit such a relaxation. It was further held that the State, its corporations, instrumentalities and agencies have the E public duty to be fair to all concerned. Even when some defect is found in the decision making process, the Court must exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The F ' .... Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should interfere. 15. In Mls.B.S.N. Joshi and Sons Ltd. Vs. Nair Coal G' Services Ltd. AIR 2007 SC 437, while summarizing the scope of judicial review and the interference of superior Courts in the ~- award of contracts, it was observed as under: "67. We are not oblivious of the expansive role of the H, SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 603 LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.] same, their bids are considered and they are given an offer A .... to match with the rates quoted by the lowest tenderer, public interest would be given priority. (vii) Where a decision has been taken purely on public interest, the Court ordinarily should exercise judicial B restraint." 16. In Reliance Airport Developers (P) Ltd. vs. Airports )c Authority of India and Others, (2006) 10 SCC 1, at paragraphs 56, 57 and 77, it was observed as follows :- c "56. One of the points that falls for determination is the scope for judicial interference in matters of administrative decisions. Administrative action is stated to be referable to bro2d area of Governmental activities in which the repositories of power may exercise every class of statutory D function of executive, quasi-legislative and quasi-judicial -· nature. It is trite law that exercise of power, whether legislative or administrative, will be set aside if there is manifest error in the exercise of such power or the exercise of the power is manifestly arbitrary (See State of UP. and E Ors. v. Renusagar Power Co. and Ors. (Al R 1988 SC 1737). At one time, the traditional view in England was that the executive was not answerable where its action was attributable to the exercise of prerogative power. Professor De Smith in his classical work 'Judicial Review of Administrative Action' 4th Edition at pages 285-287 states F the legal position in his own terse language that the relevant principles formulated by the Courts may be broadly summarized as follows. The authority in which a discretion is vested oan be compelled to exercise that discretion, but not to exercise it in any particular manner. In general, a G discretion must be exercised only by the authority to which it is committed. That authority must genuinely address itself to the matter before it; it must not act under the dictates of another body or disable itself from exercising a discretion H 604. SU.PREME COURT REPORTS [2008] 15 S.C.R. '· A in. each __ individ~al case .. In the purported exercise of its , .. .,;... . , qjscretion, jt must not do what it has-been forbidden to do, nor must it do what it has not been authorized to do: It must act in good faith, must have regard to all relevant }:= ·GOnSideratfons and mi.Jst not be influenced _by ·irrelevant B · · considerations·; must hot· seek to :promote purposes alien I to the letter or to the spirit of the legislation that gives it )- power to act; and must not act arbitrarily or capriciously. ' Th~se several principles can conveniently be grouped in _;,._ } two main ·categories: (i) failure to exercise a discretion, and c (ii) excess or abuse of discretionary power. The two classes are not, however, mutually exclusive. Thus, discretion may be improperly fettered beca_use irrelevant considerations have been taken into account, and where an authority hands over its discretion to another body it D acts ultra vires. 57. The present trend ofjudicial opinion is to restrict the -.... doctrine of immunity from judicial review to those class of cases which relate to deployment of troupes, entering into E international treaties, etc. The distinctive features of some of these recent cases signify the wil,lingness of the Courts to assert their power to scrutinize the factual basis upon which discretionary powers have been exercised. One can conveniently classify under three heads the grounds on F which administrative action is subject to control by judicial review. The first ground is illegality the second irrationality, + and the thirq procedural impropriety. These principles were highlighted by Lord Diplock in Council of Civil Service Unions v. Minister for the Civil Service (1984 (3) G All.ER.935), (commonly known as ccsu Case). If the power has been exercised on a non-consideration or nonapplication of mind to relevant factors, the exercise of power will be regarded as manifestly erroneous. If a power (whether legislative or administrative) is exercised on the basis of facts which ~o not exist and which are patently y1 H SIEMENS PUBLIC COMMUN.ICATION NETWORKS PVT. 605 LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.] erroneous, such exercise of power will stand vitiated. (See A Commissioner of Income-tax v. Mahindra and Mahindra Ltd. (AIR 1984 SC 1182). The effect of several decisions on the question of jurisdiction have been summed up by Grahame Aldous and John Alder in their book Applications for Judicial Review, Law and Practice thus: B "There is a general presumption against ousting the .,.L jurisdiction of the Courts, so that statutory provisions which purport to exclude judicial review are construed restrictively. There are, however, certain areas of governmental activity, c national security being the paradigm, which the Courts regard themselves as incompetent to investigate, beyond an initial decision as to whether the Government's claim is bona fide. In this kind of non-justiciable area judicial review is not entirely excluded, but very limited. It has also been said that powers conferred by the Royal Prerogative D are inherently unreviewable but since the speeches of the House of Lords in Council of Civil Service Unions v. Minister for the Civil Service this is doubtful. Lo.rds Diplock, Scaman and Roskili appeared to agree that there is no general distinction between powers, based upon E whether their source is statutory or prerogative but that judicial review can be limited by the subject matter of a particular power, in that case national security. May prerogative powers are in fact concerned with sensitive, non-justiciable areas, for example, foreign affairs, but F . some are reviewable in principle, including the prerogatives relating to the civil service where national security is not involved. Another non-justiciable power is the Attorney General's prerogative to decide whether to institute legal proceedings on behalf of the public interest. G 77. Expression of different views and discussions in r ._,. different meetings really lead to a transparent process and transparency in the decision-making process. In the realms of contract, various choices were available.