# RATNAGIRI GAS & POWER PVT. LTD v. RDS PROJECTS LTD. & ORS

- **Citation:** [2012] 9 S.C.R. 690
- **Court:** Supreme Court of India
- **Decided:** 2012-10-18
- **Case number:** Civil Appeal No. 7593 of 2012
- **Bench:** Civil Appeal No. 7593 o( 2012) OCTOBER 18, 2012 rr.s. THAKUR, Gyan Sudha Misra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ratnagiri-gas-power-pvt-ltd-v-rds-projects-ltd-ors-28539
- **Pages:** 43

## Headnote

CONSTITUTION OF /NOIA, 1950:
c
Art. 226 - Second writ petition - Maintainability -
Breakwater contract - Successful bidder (respondent)
subsequently found ineligible as it did not meet the basic
qualifying conditions of offshore breakwater - Fresh tenders
invited - Writ petition by respondent challenging annulment
0
of tender process and rejection of its bid - Dismissed as not
pressed, with liberty to seek redress if respondent was
excluded from consideration in fresh tender - Second writ
petition involving the same issues as in earlier writ petition,
as also challenging the fresh tender notice - Allowed by High
E
Court - Held: Liberty granted to file a fresh petition was limited
to any such fresh challenge being laid by the respondent to
its exclusion in terms of any fresh tender notice - The order
passed by the High Court did not permit the respondent to
re-open and re-agitate issues regarding rejection of its bid
pursuant to the earlier tender notice and the annulment of the
F
entire tender process, even if the second tender notice sought
to disqualify it from competition by altering the conditions of
eligibility to its disadvantage - To that extent, the subsequent
writ petition was not maintainable - There is no finding by the
High Court on the eligibility of the respondent - The question
G regarding eligibility of respondent cannot be resolved in the
absence of any conclusive evidence, and in the absence of
a specific finding from the High Court, on the question - Matter
remanded to High Court for decision afresh in accordance
H
690
RATNAGIRI GAS & POWER PVT. LTD. v. RDS
691
PROJECTS LTD. & ORS.
with the directions given in the judgment - Contract -
A
Administrative Law - Malice in law and malice in fact.
ADMIN/STRA TIVE LAW:
Malice in fact - Administrative action - Findings recorded 8
by High Court as regards malafides - Held: The law casts a
heavy burden on the person alleging ma/a tides to prove the
same on the basis of facts that are either admitted or
satisfactorily established and/or logical inferences deducible
from the same - This is particularly so when the petitioner
alleges malice in fact in which event it is obligatory for the C
person making any such a/legation to furnish particulars that
would prove ma/a tides on the part of the decision maker -
Vague and general allegations unsupported by requisite
particulars do not provide a sound basis for the court to
conduct an inquiry into their veracity - Further, as and when D
allegations of ma/a tides are made, the persons against whom
the same are levelled need to be imp/eaded as parties to the
proceedings to enable them to answer the charge - In the case
at hand, there was no a/legation of "malice in fact" against any
individual, nor was any individual accused of bias, spite or E
ulterior motive, impleaded as a party to the writ petition - High
Court named the officers concerned and concluded that the
integrity of the entire process was suspect, which was wholly
unjustified in the circumstances of the case.
F
Malice in law - Held: If on an interpretation of a clause in
the tender notice by the legal department concerned, the
officers review their decision or reverse the recommendations
· made earlier, the same does not tantamount to malice in law
so as to affect the purity of the entire process or render it
suspect even assuming that the opinion is on a more G
thorough and seasoned consideration found to be wrong -
Nothing in the instant case was done without a reasonable or
probable cause which is the very essence of the doctrine of
malice in law vitiating administrative actions.
H
692
SUPREME COURT REPORTS
[2012] 9 S.C.R.
A
The appellant, a joint venture company of Gas
Authority of India Ltd. (GAIL) and National Thermal Power
Corporation (NTPC), was entrusted the project of
completing the balance work at LNG Terminal of Dabhol
Power Project and of commissioning and operating the
B same. The appellant engaged GAIL, as its engineer and
the latter appointed Engin

## Text

_Characters 0–39,379 of 85,446. This is a partial read: ask again with offset=39379 for what follows._

A
B
[2012] 9 S.C.R. 690
RATNAGIRI GAS & POWER PVT. LTD.
v.
RDS PROJECTS LTD. & ORS.
(Civil Appeal No. 7593 o( 2012)
OCTOBER 18, 2012
rr.s. THAKUR AND GYAN SUDHA MISRA, JJ.)
CONSTITUTION OF /NOIA, 1950:
c
Art. 226 - Second writ petition - Maintainability -
Breakwater contract - Successful bidder (respondent)
subsequently found ineligible as it did not meet the basic
qualifying conditions of offshore breakwater - Fresh tenders
invited - Writ petition by respondent challenging annulment
0
of tender process and rejection of its bid - Dismissed as not
pressed, with liberty to seek redress if respondent was
excluded from consideration in fresh tender - Second writ
petition involving the same issues as in earlier writ petition,
as also challenging the fresh tender notice - Allowed by High
E
Court - Held: Liberty granted to file a fresh petition was limited
to any such fresh challenge being laid by the respondent to
its exclusion in terms of any fresh tender notice - The order
passed by the High Court did not permit the respondent to
re-open and re-agitate issues regarding rejection of its bid
pursuant to the earlier tender notice and the annulment of the
F
entire tender process, even if the second tender notice sought
to disqualify it from competition by altering the conditions of
eligibility to its disadvantage - To that extent, the subsequent
writ petition was not maintainable - There is no finding by the
High Court on the eligibility of the respondent - The question
G regarding eligibility of respondent cannot be resolved in the
absence of any conclusive evidence, and in the absence of
a specific finding from the High Court, on the question - Matter
remanded to High Court for decision afresh in accordance
H
690
RATNAGIRI GAS & POWER PVT. LTD. v. RDS
691
PROJECTS LTD. & ORS.
with the directions given in the judgment - Contract -
A
Administrative Law - Malice in law and malice in fact.
ADMIN/STRA TIVE LAW:
Malice in fact - Administrative action - Findings recorded 8
by High Court as regards malafides - Held: The law casts a
heavy burden on the person alleging ma/a tides to prove the
same on the basis of facts that are either admitted or
satisfactorily established and/or logical inferences deducible
from the same - This is particularly so when the petitioner
alleges malice in fact in which event it is obligatory for the C
person making any such a/legation to furnish particulars that
would prove ma/a tides on the part of the decision maker -
Vague and general allegations unsupported by requisite
particulars do not provide a sound basis for the court to
conduct an inquiry into their veracity - Further, as and when D
allegations of ma/a tides are made, the persons against whom
the same are levelled need to be imp/eaded as parties to the
proceedings to enable them to answer the charge - In the case
at hand, there was no a/legation of "malice in fact" against any
individual, nor was any individual accused of bias, spite or E
ulterior motive, impleaded as a party to the writ petition - High
Court named the officers concerned and concluded that the
integrity of the entire process was suspect, which was wholly
unjustified in the circumstances of the case.
F
Malice in law - Held: If on an interpretation of a clause in
the tender notice by the legal department concerned, the
officers review their decision or reverse the recommendations
· made earlier, the same does not tantamount to malice in law
so as to affect the purity of the entire process or render it
suspect even assuming that the opinion is on a more G
thorough and seasoned consideration found to be wrong -
Nothing in the instant case was done without a reasonable or
probable cause which is the very essence of the doctrine of
malice in law vitiating administrative actions.
H
692
SUPREME COURT REPORTS
[2012] 9 S.C.R.
A
The appellant, a joint venture company of Gas
Authority of India Ltd. (GAIL) and National Thermal Power
Corporation (NTPC), was entrusted the project of
completing the balance work at LNG Terminal of Dabhol
Power Project and of commissioning and operating the
B same. The appellant engaged GAIL, as its engineer and
the latter appointed Engineers India Ltd. (EIL) as their
Project Management Consultant. EIL, in terms of
international competitive bidding notice dated 26.6.2009
invited tenders for completion of "Breakwater" at LNG
c Terminal which had been left incomplete by a previous
contractor. The price bid of the respondent (RDS) having
been found to be lowest, it was recommended by GAIL,
with certain reservations, to the appellant for award of the
contract. Meanwhile one of the bidders, namely 'HRB'
0
filed a writ petition before the High Court contending that
'RDS' did not satisfy the qualified criteria and the writ
petitioner had been wrongly disqualified. CAG also
forwarded to the appellant a report containing adverse
observations regarding the completion of break-water in
Andaman and Nicobar project. Certain documents under
E RTI Act regarding Andaman Project were also received.
On the basis of the documents so received, EIL reexamined the matter and submitted its observations by
letter dated 18.9.2010 stating that 'RDS' did not meet the
basic qualifying conditions of offshore break-water of a
F
minimum length of 400 meters. Accordingly, a resolution
was passed by the Board of Directors of the appellantcompany on 4.10.2010 whereby it decided to annul the
Breakwater tender on the ground that 'RDS' did not
qualify the BQC criteria, and opted to go for fresh tenders.
G By communication dated 6.10.2010, 'RDS' was conveyed
the reasons for rejection of its tender. Consequently, the
writ petition of 'HRB' was dismissed as not pressed, as
the tender process had been scrapped and a decision to
invite fresh tenders had been taken. Subsequently, W.P.
H No. 8252 of 2010 was filed by 'RDS' challenging the order
RATNAGIRI GAS & POWER PVT. LTD. v. RDS
693
PROJECTS LTD. & ORS.
of annulment dated 4.10.2010 and the letter dated
A
6.10.2010 rejecting its bid. However, the said writ petition
was also dismissed as withdrawn reserving liberty to
'RDS' to seek redrei:;s in accordance with law if it was
excluded from consideration in the fresh tender. 'RDS'
filed another writ petition (W.P. No. 534 of 2011), which
B
was assailed by the appellant on the ·ground that the
second writ petition was not maintainable as it sought to
question the validity of the decision of the Board of
Directors of the appellant company taken on 4.10.2010
cancelling the tender process, and the consequent c
communication dated 6.10.2010. The High Court allowed
the writ petition and directed the appellant-company to
take a fresh decision on the subject.
In the instant appeal, the questions for consideration
before the Court were: (i) Whether Writ Petition No.534 of D
2011 filed by RDS challenging the rejection of its tender
and annulment of the entire· tender process was
maintainable in the light of the withdrawal of Writ Petition
No.8252 of 2010 previously filed by it?; (ii) Whether the
rejection of .the tender submitted by 'RDS' and the
E
decision to annul the entire tender process was vitiated
by mala tides?; (iii)Whether the condition of eligibility
stipulated in the second tender notice issued by the
appellant unfairly excluded 'RDS' from bidding for the
allotment of the work in question? and; (iv) Whether
F
'RDS' was eligible in terms of the first tender notice to
compete for the works in question having executed a
minimum breakwater length of 400 meters in a single
project required vide Clause 8.1.1.1?
Allowing the appeals, the Court
G
HELD:
Question No.1:
1.1 The order dismissing W.P. 8252 of 2010 as
H
694
SUPREME COURT REPORTS
[2012] 9 S.C.R.
A withdrawn has two distinct features: (a) The writ petition
specially questioned the validity of the Board resolution
dated 4.10.2010 and the rejection of the bid offered by
RDS, by letter dated 6.10.2010 meaning thereby that the
same squarely related to the issues that were sought to
B be agitated in subsequently filed Writ Petition No.534 of
2011 in which too RDS had prayed for quashing of the
resolution dated 4.10.201 O and communication dated
6.10.2010 rejecting the bid offered by it. There is, thus,
almost complete identity of the subject matter and the
c issues raised in the two writ petitions and the grounds
urged in support of the same; and (b) The challenge to
the Board resolution dated 4.10.2010 and communication
dated 6.10.2010 was withdrawn in toto, with liberty
reserved to RDS to file a fresh petition for redress only
0 in case the fresh tender to be floated by the appellant for
allotment of the works in any manner sought to exclude
it from participating in the same. This necessarily implies
that if RDS was allowed to participate in the fresh tender
process it would have had no quarrel with the annulment
of the entire ten<ter process based on the first tender
E notice. Conversely, if the fresh tender notice sought to
_disqualify RDS from bidding for the works, it could seek
redress ag"inst such exclusion. Thus, the liberty granted
by the High Court to file a fresh petition was limited to
any such fresh challenge being laid by RDS to its
F exclusion in terms of any fresh tender notice. The order
passed by the High Court did not permit RDS to re-open
and re-agitate issues regarding rejection of its bid
pursuant to the earlier tender notice and the annulment
of the entire tender process, even if the second tender
G notice sought to disqualify it from competition by altering
the conditions of eligibility to its disadvantage. [Para 22)
[711-C-H; 712-A-B)
1.2 In subsequent Writ Petition No.534 of 2011 filed
H by RDS not only were the amended conditions of the
RATNAGIRI GAS & POWER PVT. LTD. v. RDS
695
PROJECTS LTD. & ORS.
tender notice assailed but the validity of the resolution
A
dated 4.10.2010 and letter dated 6.10.2010 was also
sought to be re-opened no matter the same was already
concluded with the withdrawal of Writ Petition No.8252
of 2010. RDS sought to use the liberty to challenge the
amended terms of eligibility to re-open what it could and
B
indeed ought to have taken to a logical conclusion in Writ
Petition No.8252 of 2010. Besides, the withdrawal of the
earlier writ petition was a clear acknowledgment of the
fact that the grievance made by RDS regarding the
rejection of its bid had been rendered infructuous as the c
works in question remained available for allotment in a
fresh tender process with everyone otherwise eligible to
compete for the same being at liberty to do so. Inasmuch
as and to the extent Writ Petition No.534 of 2011 filed by
RDS challenged the rejection of the tender and the D
annulment process in a second round despite withdrawal
of the earlier writ petition filed for the same relief, it was
not maintainable. The scope of Writ Petition no.534 of
2011 was and had to be limited to the validity of the
amendment in the conditions of eligibility introduced by
E
the appellant in the second tender notice issued by it.
[Para 22] [712-B-G]
,
Question No. 2
2.1 Since Writ Petition No. 534 of 2011 could not have
F
re-agitated issues touching the validity of annulment of
the tender process, there was no occasion for the High
Court to go into the question whether or not the decision
to refer to the bid and annul the process was vitiated by
malice in law or fact. The findings recorded by the High
G
Court on the question of mala tides are, therefore, liable
to be set aside on that ground alone. tPara 23] [713-A-B]
2.2 Even otherwise, the findings recorded by the High
Court on the question of mala fides do not appear to be
factually or legally sustainable. The law casts a heavy
H
696
SUPREME COURT REPORTS
[2012] 9 S.C.R.
A burden on the person alleging mala tides to prove the
same on the basis of facts that are either admitted or
satisfactorily established and/or logical inferences
deducible from the same. This is particularly so when the
petitioner alleges malice in fact in which event it is
B obligatory for the person making any such allegation to
furnish particulars that .would prove mala tides on the
part of the decision maker. Vague and general allegations
unsupported by the requisite particulars do not provide
a sound basis for the court to conduct an inquiry into
c their veracity. [Para 24] [713-C-E]
D
State of Bihar v. P.P. Sharma 1991 ( 2) SCR 1 =1992
Supp. (1) SCC 222; Ajit Kumar Nag v. General Manager (PJ),
Indian Oil Corpn. ·Ltd., Haldia and Ors. 2005 (3 ) Suppl. SCR
314 = (2005) 7 sec 764 - referred to
2.3 Further, as and when allegations of mala fides are
made, the persons against whom the same are levelled
need to be impleaded as parties to the proceedings to
enable them to answer the charge. In the case at hand,
E there was no allegation of "malice in fact" against any
individual nor was any individual accused of bias, spite
or ulterior motive impleaded as a party to the writ petition.
What was stated to have been alleged was malice in law.
But the High Court had in the absence of any assertion
F in the writ petition and in the absence of the officers
concerned recorded a finding suggesting that the officers
had acted mala fide. The High Court named the officers
concerned and concluded that the integrity of the entire
process was suspect, which was wholly unjustified in
G the circumstances of the case. [Para 26 and 29] [715-B;
717-E, G-H; 718-A]
State of M.P. and Ors. v. Nandlal Jaiswal and Ors. 1987
(1) SCR 1 (1986) 4 SCC 566; Smt. Swaran Lata v. Union of
India & Ors. (1979) 3 SCC 165; Nirmal Jeet Singh Hoon v.
H /rtiza Hussain & Ors. 2010 (14 ) SCR 109 = (2010) 14 ~cc
RATNAGIRI GAS & POWER PVT. LTD. v. RDS
697
PROJECTS LTD. & ORS.
564 and A// India State Bank Officers' Federation v. Union of A
India 1996 ( 6) Suppl. SCR 255 = (1997) 9 SCC 151- relied
on.
2.4 In cases involving malice in law, the
administrative action is unsupportable on the touchstone
8
of an acknowledged or acceptable principle and can be
avoided even when the decision maker may have had no
real or actual malice at work in his mind. In the case at
hand, the final decision to reject the tender submitted by
RDS was taken by the appellant in its capacity as the
C
owner of the project. GAIL and Ell performed only an
advisory role whose opinions were recommendatory and
meant to assist the owner to take a final call. From the
correspondence exchanged between the appellant and
GAIL and Ell, it i.s evident that the appellant had from the
D
date of receipt of the recommendations made to it by Ell
and GAIL till the end maintained a consistent stand and
expressed reservations about the capacity of RDS to
undertake the work. In the earlier Writ Petition No. 8252
of 2010, the appellant had no doubt filed a short affidavit
supporting its decision holding RDS eligible but in view
E
of the discovery of material in proceedings under the RTI
Act and an adverse CAG report, the appellant, as owner
of the project·tlfat was being executed at a colossal cost
running into hundreds of crores of rupees, was perfectly
justified in adopting a careful approach to ensure that
F
those found eligible by its technical experts and
consultants were indeed so qualified and possessed the
necessary wherewithal, experience and expertise to
execute the project. It was also well within its right to
demand documentary proof from RDS to support its G
claim. In the course of the hearing before this Court, the
records produced on behalf of ROS did not show that it
had indeed executed the breakwater Project of 400
meters length in Car Nicobar. More importantly, there is
nothing to disclose the basis on which the certificates,
H
698
SUPREl\4E COURT REPORTS
[2012) 9 S.C.R.
A which RDS had produced to prove its eligibility, were
issued by the engineers concerned. The files that were
produced did not bear any testimony to issuing of any
such certificates or the basis on which the same were
issued. There .was, therefore, no justification for either
B RDS or the High Court to raise an accusing finger against
the appellant simply because it had demanded proof
regarding the claim of eligibility from RDS or collected
relevant information under RTI Act and referred the
material so collected to GAIL and Ell for evaluation and
c opinion. The final decision to scrap the project being
within appellant's powers under the terms of the tender
notice, invocation of that power was not in the facts and
circumstances vulnerable to challenge on the ground of
malice in fact or law, on the grounds set out by the High
0 Court even assuming that Writ Petition No.534/2011 was
maintainable notwithstanding the withdrawal of Writ
Petition No. 8252 of 2010. [Para 30 and 33) [718-C-D; 720D-H; 721-A-E; 722-A-C]
Shearer v. Shields (1914) A.C. 808; Additional District
E Magistrate, Jabalpur v. Shivkant Shukla 1976 Suppl. SCR
172 = (1976) 2 SCC 521; State of AP & Ors. v. Goverdhanlal
Pitti 2003 (2) SCR 908 = (2003) 4 SCC 739; Ravi Yashwarit
Bhoir v. District Collector, Raigad and Ors (2012) 2 SCC 407
- referred to
F
2.5. Besides, the High Court erred In recording its
finding on mala fides on the sole basis that Ell had
reviewed its earlier opinion regarding eligibility of RDS.
If on an interpretation of a clause in the tender notice by
G the legal department concerned, the officers review their
decision or reverse the recommendations made earlier,
the same does not tantamount to malice in law so as to
affect the purity of the entire process or render it suspect
even assuming that the opinion is on a more thorough
and seasoned consideration found to be wrong. In the
H
RATNAGIRI GAS & POWER PVT. LTD. v. RDS
699
PROJECTS LTD. & ORS.
absence of any other circumstances suggesting that the
A
process was indeed vitiated by consideration of any
inadmissible material or non-consideration of material
that was admissible or misdirection on issues of vital
importance, fresh recommendations made in tune with
the legal opinion could not be held to have been vitiated
B
by malice in law. Nothing in the instant case was done
without a reasonable or probable cause which is the very
essence of the doctrine of malice in law vitiating
administrative actions. [Para 35] [723-E, G-H; 724-A-B-E-
~
c
2.6. Therefore, the findings recorded by the High
Court to the effect that the process of annulment of the
tender process or the rejection of the tender submitted
by RDS was vitiated by mala tides is unsustainable and
is set aside. [Para 35] [724-F-H]
D
Question No.3:
3.1. A statement has been made on behalf of the
appellant that in order to show its bona tides and to prove
E
that it had no intention to deliberately target or exclude
RDS, Clause 8.1.1.1 of the second tender notice shall not
be enforced and the corresponding clause as it appeared
in the first tender notice shall govern matters stipulated
therein. [Para 39] [726-E-H; 727-A]
Air India Ltd. v. Cochin lntemational Airport Ltd. and Ors.
2000 (1) SCR 505 = (2000) 2 sec 617 - cited
Question No.4:
F
4.1. It is true that RDS cannot be excluded from
G
competition based on Clause 8.1.1.1 in the second tender
notice. But that does not automatically make RDS eligible
for allotment of the works even under the first tender
notice. The appellant's case is that RDS was techno
H
700
SUPREME COURT REPORTS
[2012] 9 S.C.R.
A commercially ineligible for allotment, and in its
communication dated 6.10.2010, it had given the reasons
for that view. A careful reading of the communication
dated 06.10.2010 would show that the rejection of the bid
offered by RDS was based on three distinct grounds
B namely: (i) RDS had claimed the qualifying project to
have been awarded in its favour in November, 2000. The
length of the project so allotted was 290 meters only as
against 400 meters required under the BQC; (ii) The
breakwater at Mus (chainage 22m to 200m and 200
c meters to 330/490 meters) were awarded and executed as
two separate Projects, whereas Clause 8.1.1.1 required
that the single bidder should have executed the required
length of Breakwater in a Single Project; (iii) The award
of the above project was made on EHL or Mis Reacon
0 International, for different phases and RDS was not
responsible for the execution of the total scope of the
work in any one of the two projects. [Para 40 and 42) [727D-E; 728-F-H; 729-A-B]
4.2. On the question whether the Breakwater
E constructed at Mus in Car Nicobar comprised one or two
projects, a fair and unqualified concession has been
made on behalf of the appellant that for purposes of
determining the eligibility. of RDS the breakwater at Mus
Car Nicobar could be treated as a single project. With that
F concession, what remains to be determined is whether
RDS had limited its claim to eligibility only on the award
made in its favour in November, 2000. If so, whether it is
debarred or stopped from claiming that it had executed
the project from chainage 22 meters to 200 meters also.
G More importantly, whether RDS had actually executed the
Breakwater Project at Mus Car Nicobar with a length of
400 meters. However, there is no finding on these
questions in the impugned judgment. The question
regarding eligibility of RDS cannot be resolved in the
H absence of any conclusive evidence, and in the absence
RATNAGIRI· GAS & POWER PVT. LTD. v. RDS
701
PROJECTS LTD. & ORS.
A remand to the High Court, therefore, became inevitable
A
which part was conceded on behalf of both the parties.
[Para 45, 48] [729-H; 730-A-B; 731-F-G]
5. The judgment and order passed by the High Court
is set aside and the matter is remanded back for decision
in accordance with the directions contained in the instant
B
judgment. [para 49] [731-H; 732-A]
Case Law Reference:
1991 (2) SCR ~
referred to
Para 24
c
2005 (3) Suppl. SCR 314 referred to
Para 25
1987 (1) SCR 1
relied on
Para 26
(1979) 3 sec 165
relied on
Para 27
D
2010 (14) SCR 109
relied on
Para 28
1996 (6) Suppl. SCR 255 relied on
Para 28
(1914) A.C. 808;
referred to
Para 30
1976(0) Suppl. SCR 1J2 referred to
Para 30
E
2003 (2) SCR 908
referred to
Para 31
(2012) 2 sec 407
referred to
Para 32
2000 (1) SCR 505
cited
Para 38
F
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
7593 of 2012.
From the Judgment & Order dated 17.10.2011 of the High
Court of Delhi at New Delhi in Writ Petition (Civil) No. 534 of G
2011.
WITH
C. A. No. 7594 and 7595 of 2012
H
702
SUPREME COURT REPORTS
[2012] 9 S.C.R.
A
R.F. Nariman, SG, Indira Jaisingh, Sidharth Luthra, ASG's,
Sudhir Chandra, Jagdeep Dhankar, Bindu Saxena, Shailendra
Swarup, Aparjita Swarup, K.K. Patra, Neha Khattar, Kanika
Singh, Ashok Mathur, Ajit Pudussery, Joanne Pudussery, K.
Vijayan, Dinesh Khurana, Asha Jain Madan, Bhagbati Prasad,
B R.K. Rathore, Kavin Gulati, Gargi Khanna, Devina Saghal, S.
c
Sinha for the Appearing Parties.
The Judgment of the Court was delivered by
T.S. THAKUR, J. 1. Leave granted.
2. These appeals arise out of a common judgment and
order dated 17th October, 2011 passed by the High Court of
Delhi whereby Writ Petition (C) No.534 of 2011 filed by the
respondent has been allowed and the rejection of the tender
D submitted by it quashed with a mandamus to the appellantcompany to take a fresh decision on the subject in the light of
the observations made by the High Court.
3. The factual matrix leading to the filing of the writ petition
by RDS Project Ltd. (hereinafter referred to as 'RDS' for short)
E has been set out at considerable length in the order passed
by the High Court. We do not, therefore, consider it necessary
to re-count the same all over again except to the extent the
same is absolutely necessary for the disposal of these appeals.
Suffice it to say that Government of India has entrusted the task
F of reviving and restructuring of the Dabhol Project to Gas
Authority of India Ltd. (GAIL) and National Thermal Power
Corporation ('NTPC' for short) both Government of India
undertakings who have in turn formed a joint venture company
in the name and style of Ratnagiri Gas & Power Pvt. Ltd., the
G appellant in this appeal, for short referred to as 'RGPPL'. The
appellant-RGPPL is charged with the duty of completing the
balance work at LNG Terminal of the Dabhol Power project and
of commissioning and operating the same. The appellant has,
for that purpose, engaged GAIL as its Engineer who has in turn
H appointed Engineers India Limited (Ell) as their Primary
RATNAGIRI GAS & POWER PVT. LTD. v. RDS
703
PROJECTS LTD. & ORS. [T.S: THAKUR, J.]
Project Management Consultant. Scott Wilson a U.K. based
A
entity was also kept in the loop as a backup consultant for
marine works.
4. In terms of an international competitive bidding notice,
issued by it on 26th June, 2009, Ell invited tenders from
B
eligible parties for completion of, what is called "Breakwater''
at LNG Terminal at RGPPL site, Dabhol, Maharashtra. The
construction of the breakwater was left incomplete by a
previously employed contractor appointed for the purpose on
account of the stoppage of the work by the Dabhol Power
C
Company. The earlier contractor had, according to the
appellant, constructed only 500 meters of breakwater length
leaving the balance of nearly 1800 meters incomplete and a
certain length thereof untouched.
5. Apart from stipulating other terms and conditions,
D
Clause 8.1.1.1 of the tender required that Single Bidders
responding to the invitation should have experience of
successfully completing as a single bidder or "as a lead of a
Consortium/Joint Venture", at least one project of a breakwater
in an offshore location with a minimum length of 400 meters.
E
Clause 8.1.1.1 of the Tender document was in the following
words:
"The bidder shall have experience of having successfully
completed,· as a single bidder or as a lead of a
Consortium/Joint Venture, at least one project of a
breakwater in an offshore location (as defined at Clause
No.8.1.2.5 below) of minimum length of 400m during the
F
last 20 (twenty) years to be reckoned from the last date of
submission of bids. The scope of work of the proposed
qualifying project work should comprise of the design,
G
engineering, project management and construction of the
breakwater."
6. In response to the notice inviting tenders, Ell received
five tenders from five different entities viz. RDS the respondent
H
704
SUPREME COURT REPORTS
[2012] 9 S.C.R.
A in this appeal, M/s ESSAR Construction Ltd., M/s Afcons
Infrastructure Ltd., joint venture of M/s Higgard Punj Lloyd Ltd.
and joint venture of M/s Hung-Hua/Ranjit Buildcon Ltd.
7. With the tender submitted by it RDS enclosed the
8 requisite documents such as Form-B in which details of specific
work experience, on the basis whereof it claimed to be
satisfying the Bid Qualification Criteria ('BQC' for short), were
also given. It also. enclosed along with its tender, completion
certificate dated 5th April, 2008 issued by Deputy Chief
Engineer-IV, Andaman Harbour Works under the Ministry of
C Shipping, Road Tran~port and Highway, Government of India
certifying that RDS had completed breakwater of 500 meters
against a tender dated 26th May, 1999. Completion certificate
dated 30th June, 2003 issued by the Senior Executive Manager
of Ellen Hinengo Ltd. a Tribal Society (EHL) and letter dated
D 10th November, 2000 addressed by the said Ellen Hinengo
Ltd. to RDS asking it to commence work for construction of
breakwater at Mus in Car Nicobar Island pursuant to tender
dated 3rd November, 2000 were also produced by RDS apart
from a certificate issued by EHL about the offshore location of
E the breakwater.
8. Tenders received from different parties were techno
commercially evaluated by Ell all of whom were found to be
technically qualified except Hung-Hua & Ranjit Buildcon Ltd.
F who went out of the reckoning at that stage itself. Names of only
four bidders found techno commercially eligible were
recommended by Ell for the approval of GAIL the owner's
engineer. The price bids of the four bidders were pursuant to
the said recommendation opened on 11th February, 2010 in
G which RDS was found to be the lowest bidder having quoted a
price of Rs.390 crores only, which was less than the estimated
cost of the project by Rs.160 crores. GAIL accordingly
recommended RDS to the appellant-company for award of the
contract. Recommendation received from GAIL notwithstanding
H the appellant-company appears .to have expressed
RATNAGIRI GAS & POWER PVT. LTD. v. RDS
705
PROJECTS LTD. & ORS. [T.S. THAKUR, J.]
apprehensions about the capability of RDS to complete the
A
project in time having regard to the fact that RDS had taken
three years to complete a breakwater with a length of mere 500
meters whereas the appella,nt-company's breakwater project
stretched over a length of 1800 meters and had to be
completed within a period of 33 months only. Reservations
B
about the viability of the rates quoted by RDS which were found
to be abnormally low were also expressed.
9. While a final decision regarding award of the contract
had yet to be taken, Hung-Hua/Ranjit Buildcon Ltd. who was
C
one of the bidders and whose bid was not found to be technocommercially qualified, filed a writ petition in the Delhi High
Court, inter alia, alleging that while they had been wrongly
disqualified, RDS who did not satisfy the qualifying criteria had
been wrongly held to be qualified. Questions regarding validity
of certificates submitted by RDS were also raised in the writ
D
petition.
10. In response to the above writ petition filed by HungHua, the appellant company filed a short affidavit in which it
disputed t~e averments made in the writ petition and took the
E
stand that the documents filed by RDS along with its bid showed
that breakwater at Mus in Car Nicobar Island was built at an
offshore location and that RDS had completed the entire work
as a single entity on behalf of Mis Ellen Hinengo Ltd.
F
11. While the writ petition filed by Hung-Hua was pending
before the High Court, the appellant sought from GAIL the work
order issued to RDS in respect of the qualifying project at Car
Nicobar to verify the credentials of the RDS. RDS was
accordingly asked by Ell to produce the documents in support
of its qualification such as the work order for the Andaman
G
Harbour works. The appellant-company also sought the details
about the contracts to verify the correctness of the certificates
submitted by RDS along with its bid in response to the tender
notice.
H
706
SUPREME COURT REPORTS
[2012] 9 S.C.R.
A
12. A further development in the meantime took place in
the form of the CAG forwarding a report in which certain
adverse observations regarding the completion of the
breakwater at chainage 22M to chainage 200 M in the
Andaman and Nicobar Project were made. The report revealed
B that in January, 1998 the contractor had completed only 15 to
47 percent of the work and that in April, 19_98 the Executive
Engineer had taken out a part of the unexecuted work for
awarding it to another contractor. The CAG found that due to
delay in the construction of a portion of the breakwater coupled
c with non-compliance of contractual terms, the department had
suffered a loss of Rs.2.61 crores, apart from increase in cost
of the work by Rs.3.55 crores.
13. The report of the CAG was forwarded by the appellant
to GAIL with the request to arrange copies of work order, and
D satisfactory evidence of the credentials of RDS. GAIL was also
informed that in the absence of satisfactory evidence furnished
by RDS, the appellant was not in a position to place the matter
for award of contract before the Board of Directors.
E
14. While correspondence between RGPPL, GAIL and Ell
was being exchanged on the subject the appellant received
certain documents under RTI Act including the work order
placed by Andaman H.arbour Works on EHL and those placed
on Mis Recon International for a part of the Andaman Project
F for chainage 22-200 meters. These documents were quickly
sent to Ell for review who examined the matter again and
submitted its observations in terms of letter dated 18th
September, 2010 stating that RDS did not meet the basic
qualifying conditions of offshore breakwater of a minimum
G length of 400 meters. GAIL then forwarded that opinion to the
appellant to take appropriate action on the subject.
15. On receipt of the letters aforementioned, the appellant
requested GAIL to forward its own recommendations. GAIL,
however, reiterated that since all the relevant information on the
H subject was available with the appellant, it could take an
RATNAGIRI GAS & POWER PVT. LTD. v. RDS
707
PROJECTS LTD. & ORS. [T.S. THAKUR, J.]
appropriate decision in the matter in its capacity as the owner
A
of the project.
16. A resolution was accordingly passed by the Board of
Directors of the appellant company on 4th October, 2010,
whereby it decided to annul the Breakwater tender in exercise
B
of its power under Clause 28.1 of the Bidding Document on
the ground that RDS did not qualify the BQC criteria which fact
had, according to the appellant, come to light only after the
opening of the price bids. From the minutes of the meeting of
the Board of Directors it is further evident that the Board had
C
taken note of the eve guidelines and declined to award the
contract to the next lowest tenderer in view of the huge price
difference between L 1 & L2 and opted to go for fresh tenders.
By a separate communication dated 6th October, 2010 the
appellant-company conveyed to RDS the reasons for rejection
of its tender.
D
17. With the annulment of the entire tender process Writ
Petition No.2142 of 2010 filed by Hung-Hua/Ranjit Buildcon Ltd.
inter alia challenging the acceptance of the technical bid
submitted by RDS was dismissed as withdrawn by the High
E
Court in terms of order dated 30th November, 2010. That order
came to be passed on an application filed by the appellantRGPPL stating that the entire tender process having been
scrapped with a decision to invite fresh tenders Writ Petition
No.2142 of 2010 did not survive for consideration. The High
F
Court took note of the subsequent events and dismissed the
writ petition as not pressed in view of the fact that the tender
process had been scrapped and a decision to invite fresh
tenders had been taken.
18. In Writ Petition (C) No.8252 of 2010 which was filed
G
by RDS to challenge the annulment of the tender process and
the rejection of its techno commercial bid as non-responsive a
similar order was made by which the writ petition was
dismissed as withdrawn reserving liberty to the respondentRDS to take recourse to seek redress in accordance with law
H
708
SUPREME COURT REPORTS
[2012] 9 S.C.R.
A if it was excluded from consideration in the fresh tender which
RGPPL had decided to issue. We shall presently refer to the
writ petition and the effect of its withdrawal in greater detail.
Suffice it to say that the maintainability of Writ Petition No.534
of 2011 filed by RDS out of which the appeal arises was
B assailed by the appellant herein on the ground that the earlier
petition filed by it having been withdrawn the second petition
filed by RDS was not according to the appellant maintainable
insofar as the same sought to question the validity of the
decision taken by the Board of Directors on 4th October, 2010
C cancelling the tender process and the communication of the
said decision with reasons for rejection of the bid submitted
by RDS on 6th October, 2010. The High Court has in the
judgment under appeal rejected that contention and not only
held that the writ petition filed by RDS was maintainable but
D also that the decision to reject the tender submitted by it was
not legally valid nor was the annulment of the entire tender
process. The High Court found that the action taken by the
appellant on both counts was vitiated by mala tides especially
when the fresh tender notice issued by the appellant made an
attempt to exclude RDS from competing for the works in
E question.
F
G
19. We have heard learned counsel for the parties at
considerable length. The following questions, in our opinion, fall
for our determination:
(1) Whether Writ Petition No.534 of 2011 filed by RDS
challenging the rejection of its tender and annulment of the
entire tender process was maintainable in the light of the
withdrawal of writ petition No.8252 of 2010 previously filed
by it?
(2) Whether the rejection of the tender submitted by RDS
and the decision to annul the entire tender process was
vitiated by mala tides?
H
(3) Whether the condition of eligibility stipulated in the
RATNAGIRI GAS & POWER PVT. LTD. v. RDS
709
PROJECTS LTD. & ORS. [T.S. THAKUR, J.]
second tender notice issued by the appellant-RGPPL
A
unfairly excluded the appellant from bidding for the
allotment of the work in question? and;
(4) Whether respondent-RDS was eligible in terms of the
first tender notice to compete for the works in question
B
having executed a minimum breakwater length of 400
meters in a single project required vide Clause 8.1.1.1.
We propose to deal with the questions ad-seriatim.
In Re: Question No.1
20. Writ Petition (C) No.8252 of 2010 questioned the
validity of the appellant-Board's decision dated 4th October,
2010 reg~rding rejection of the bid submitted by RDS in terms
c
of the former's letter dated 6th October, 201 O as also the
annulment of the entire tender process for the completion of the
D
"Breakwater" at LNG Terminal at RGPPL site, Dabhol,
Maharashtra. It also prayed for a mandamus directing the
appellant to formalise the award of contract for the Dabhol
project to RDS. For the sake of clarity it is useful to extract the
prayer made by RDS in the said writ petition:
E
"In the premises mentioned above it is most respectfully
prayed that this Hon'ble Court be pleased to:-
(A)
(B)
Issue an appropriate writ, order or direction,
quashing the action of the Respondents, and in
particular the decision dated 4.10.2010 of the
Respondent No.1, as communicated to the
Petitioner vide letter dated 6.10.2010 whereby bid
F
of the Petitioner has been rejected and the entire
G
bidding process for the completion of the
breakwater of LNG Terminal of Dabhol Power
Project, Maharashtra, has been annulled; and
Issue a Writ of Mandamus or any other appropriate
writ, order or direction, directing the Respondent
H
A
B
710
SUPREME COURT REPORTS
[2012] 9 S.C.R.
No.1 to formalise the awarding of the contract for
the DABHOL PROJECT to the Petitioner; and
(C)
Issue any other appropriate writ, order or direction,
as this Hon'ble Court may deem fit and proper in
the facts and circumstances of the case."
21. When the above petition came up before the High
Court on the 14th December, 2010 learned counsel for RDS
withdrew the writ petition and the accompanying application
reserving liberty to seek redress in case the tender which is
C floated sought to exclude RDS in any manner from competing
for the allotment of the work in question. Since the answer to
question No.1 above depends on the interpretation of the said
order we may extract the same in extenso:
D
E
F
G
H
"Learned senior counsel for the petitioner submits
that though the tender process has been scrapped on
4.10.2010, the same was followed up by a letter dated
6.10.2010 of the respondents setting out the reasons why
the petitioner was held not to meet the BQC requirements
of having completed at least one project of breakwater in
an offshore location of a minimum length of 400 mtrs; which
was a stipulation in the contract.