# TATA CELLULAR v. U.0.1

- **Citation:** [1994] Supp. 2 S.C.R. 122
- **Court:** Supreme Court of India
- **Decided:** 1994-07-26
- **Case number:** Civil Appeal Nos. 4947-50 of 1994
- **Bench:** M.N. Venkatachaliah Cj, M.M. Punchhi, S. Mohan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/tata-cellular-v-u-0-1-12391
- **Pages:** 95

## Headnote

Administrative Law-Judicial Review-Scope of-Merits of the decision
cannot be reviewed-Only process of decision making can be reviewedC Grounds for review of administrative action-l"ationality-Meaning of-'Wednesbury resonableness-Modern trend-Government contracts-Can be
reviewed on the ground of violation of Anicle 14 of the Constitution of India--
Terms of invitation to tender not open to review-Limitations of coults in
review of administrative decisions-Constitution of India-Articles 14 and
D 226.
Administrative law-Natural Justice-Bias-meaning of test of likelihood
of bias-When there can be-<Jovemment tende,-Son of one of the person
involved in selection process employed with one of the bidders-The bidder
ultimately selected-Held, in the facts and circumstances of the case selection
E is not vitiated by bias-Doctrine of necessity-Applicability of
Constitution of India-Articles 14 and 299 Government contract-Arbitrariness-Govemment invited tenders for operation of cellular mobile
phone service-Cenain criteria not in the tender introduced to eliminate
F tenders-Held, it does not vitiate award of contract as all criteria could not
have postulated at the beginning itself
Constitution of India-Article 14 and 299-Government contract:-Whether technical i"egularity can be condoned without violation Article 14-Govemment invited tenders for operation of cellular mobile phone
G service-Terms prohibiting change in the proposed foreign collaborator-One
tenderer dropping name of one collaborator out of three-Held, does not
amount to change in collaborator.
Constitution of India-Article 14 and 299-Government conH tract:-Govemment inviting tenders for operation of Cellular mobile phone
122
TATA CELLULAR v. U.0.1.
123
service-One tenderer initially selected was later on dropped without assigning A
any reasons therefore or hearing-Held, not hearing the tenders violates
Natural Justice-Administrative Law.
The Department of Telecommunication, Government oflndia invited
tenders from India Companies for grant. of licence for the operation of B
cellular mobile telephone service in Delhi, Bombay, Calcutta and Madras.
The tender process consisted of two stages- (i) technical evaluation and
(ii) financial evaluation. The companies short-listed at the first stage were
to be invited at the second stage.
For the purpose of evaluation of tenders and grant of licence, three C
committees were constituted-(i) Tender Evaluation Committee (TEC) consisting of officials of Department of Telecommunication; (ii) Telecom
Commission consisting of a Chairman and four members; and (iii) selection Committee or Apex/High Powered Committee. Consisting of the Principal Secretary to the Prime Minister and there other secretaries of the D
Government of India.
After the first stage of the tender, 14 companies were short listed and
on 30. 7 .92, financial tenders were issued. The financial tender contained
seven criteria for selection for which no marks had been earmarked. The
financial bid of the 14 short- listed companies were opened on 17.8.1992 E
i.e., the cut off date for the financial bid. A second Tender Evaluation
Committee examined the bids after devising a marking system for the
criteria indicated in the financial tender. Ultimately names of four
operators were recommended. Bharti Cellular was the first choice for all
the four cities. BPL System and Projects was the second choice for Delhi F
and Bombay and Tata Cellular and Skycell were the second chance for
Calcutta and Madras. On 10.9.1992, the Chairman of the Telecom Commission directed that all the documents alongwith the recommendation of
the Tender Evaluation Committee be sent to the Selection Committee for
making final recommendations to the Government. On 10.9.1992 itself, the
Tender Evaluation Committee's report alongwith the other documents G
were sent to the High Power Committee. However, a D.O. was issued
dissolving the High Power Committee.
On 9.10.1992 the concerned Minister made a noting on the tile

## Text

_Characters 0–39,961 of 198,106. This is a partial read: ask again with offset=39961 for what follows._

A
B
TATA CELLULAR
v:
UNION OF INDIA
JULY 26, 1994
[M.N. VENKATACHALIAH CJ., M.M. PUNCHHI AND
S. MOHAN JJ.)
Administrative Law-Judicial Review-Scope of-Merits of the decision
cannot be reviewed-Only process of decision making can be reviewedC Grounds for review of administrative action-l"ationality-Meaning of-'Wednesbury resonableness-Modern trend-Government contracts-Can be
reviewed on the ground of violation of Anicle 14 of the Constitution of India--
Terms of invitation to tender not open to review-Limitations of coults in
review of administrative decisions-Constitution of India-Articles 14 and
D 226.
Administrative law-Natural Justice-Bias-meaning of test of likelihood
of bias-When there can be-<Jovemment tende,-Son of one of the person
involved in selection process employed with one of the bidders-The bidder
ultimately selected-Held, in the facts and circumstances of the case selection
E is not vitiated by bias-Doctrine of necessity-Applicability of
Constitution of India-Articles 14 and 299 Government contract-Arbitrariness-Govemment invited tenders for operation of cellular mobile
phone service-Cenain criteria not in the tender introduced to eliminate
F tenders-Held, it does not vitiate award of contract as all criteria could not
have postulated at the beginning itself
Constitution of India-Article 14 and 299-Government contract:-Whether technical i"egularity can be condoned without violation Article 14-Govemment invited tenders for operation of cellular mobile phone
G service-Terms prohibiting change in the proposed foreign collaborator-One
tenderer dropping name of one collaborator out of three-Held, does not
amount to change in collaborator.
Constitution of India-Article 14 and 299-Government conH tract:-Govemment inviting tenders for operation of Cellular mobile phone
122
TATA CELLULAR v. U.0.1.
123
service-One tenderer initially selected was later on dropped without assigning A
any reasons therefore or hearing-Held, not hearing the tenders violates
Natural Justice-Administrative Law.
The Department of Telecommunication, Government oflndia invited
tenders from India Companies for grant. of licence for the operation of B
cellular mobile telephone service in Delhi, Bombay, Calcutta and Madras.
The tender process consisted of two stages- (i) technical evaluation and
(ii) financial evaluation. The companies short-listed at the first stage were
to be invited at the second stage.
For the purpose of evaluation of tenders and grant of licence, three C
committees were constituted-(i) Tender Evaluation Committee (TEC) consisting of officials of Department of Telecommunication; (ii) Telecom
Commission consisting of a Chairman and four members; and (iii) selection Committee or Apex/High Powered Committee. Consisting of the Principal Secretary to the Prime Minister and there other secretaries of the D
Government of India.
After the first stage of the tender, 14 companies were short listed and
on 30. 7 .92, financial tenders were issued. The financial tender contained
seven criteria for selection for which no marks had been earmarked. The
financial bid of the 14 short- listed companies were opened on 17.8.1992 E
i.e., the cut off date for the financial bid. A second Tender Evaluation
Committee examined the bids after devising a marking system for the
criteria indicated in the financial tender. Ultimately names of four
operators were recommended. Bharti Cellular was the first choice for all
the four cities. BPL System and Projects was the second choice for Delhi F
and Bombay and Tata Cellular and Skycell were the second chance for
Calcutta and Madras. On 10.9.1992, the Chairman of the Telecom Commission directed that all the documents alongwith the recommendation of
the Tender Evaluation Committee be sent to the Selection Committee for
making final recommendations to the Government. On 10.9.1992 itself, the
Tender Evaluation Committee's report alongwith the other documents G
were sent to the High Power Committee. However, a D.O. was issued
dissolving the High Power Committee.
On 9.10.1992 the concerned Minister made a noting on the tile that
the selection process may be completed by the Department of Telecom- H
124
SUPREME COURT REPOR'rs (1994] SUPP. 2 S.C.R.
A
munication itself as the High power Committee was taking much time.
B
Accordingly, a final list of 8 companies was prepared. In this final recommendation, the Chairman noted that Bharti Cellular, Modi Telecom and
Mobile Telecom did not fulfil the condition laid down in clause 2.4.7 of the
financial bid which required that the foreign exchange requirement be met
by the foreign collaborator of the operator company. In the final recommendation, Sterling CelluI:ir was rejected because a C.B.I. investigation
was pending against it. Hutchinson Max was rejected on the ground that
it had not complied with the operative and technical conditions of the bid.
Hutchinson Max had sent a letter explaining that the non- compliance was
merely a typographical error and agreeing to comply with all technical,
C commercial and general conditions of the bid. The Minister reviewed the
final recommendation and reversed the decisions regarding exclusion of
Sterling Cellular and one Indian Telecom Ltd. Accordingly, the list of
selected operations was recast on 10.10.1992 and the final list prepared
was as follows :
D
Bombay
1.
Bharti Cellular
2.
B.P.L. Projects and Systems
Delhi
1.
Indian Telecom Ltd.
2.
Tata Cellular Pvt. Ltd.
E
Calcutta
1.
Mobile Telecom Ltd.
2.
Usha Martin Telecom
Madras
1.
Skycell
2.
Sterling Cellular Ltd.
F
Four Writ Petitions came to be filed by the rejected companies before
G
H
the High Court challenging the final list. The writ petitions were disposed
off by the High Court by its judgment and order dated 26.2.1993 with
certain directions to the Government In pursuance .of the Judgment of the
High Court, the final list was recasted on 27.8.1993 and following companies were selected :
Bombay·
1.
Hutchinson Max
2.
Bharti Cellular
Delhi
1.
B.P.L. Projects and Systems
2.
Sterling Cellular Ltd.
. )
TATA CELLULAR v. U.O.l.
125
Calcutta
1.
India Telecom Ltd.
A
2 .. Usha Martin Telecom
Madras
1.
Mobile Telecom Ltd.
2.
Skycell
The companies aggrieved by the judgment and order of the High B
Court, approached this Court in appeal. The main arguments advanced
by the appellants before this Court were :
1. The Conditions laid down in clause 2.4,7 of the financial bid was
ignored despite there being a clear noting of the chairman in his final C
recommendations that few companies did not fulfil the conditions of clause
2.4.7. Although Bharti Cellular and mobile Telecom did not fulfil condition
2.4.7, they were selected.
2. One Mrs. Nair, who was the member of the Telecom Commission.
and later on appointed as Member (Service), had partkipated in selection D
proceedings although his son was an employee of BPL Projects and
Systems which was one of the Parties to the bid. Mr. Nair had agreed with
the recommendation of the Technical Evaluation committee to the effect
that names of four firms should be included in the short list condoning
their defeciency. One of the firms in respect of which condonation was E
recommended was B.P.L. Projects and systems itself. The appellants ar·
gued that the selection was vitiated by bias.
3. The apex committee was by-passed and the selection process was
entrusted to a committee which did not follows the norms.
4. Certain hidden criteria, which were not disclosed earlier, were
applied not as parameters, but for elimination. These hidden criterias
were:
(a) the foreign collaborator of the bidder must have an experience
F
of handling on lakh Cellular phones or 80000 cellular phones G
with Global System for Mobile Communication (GSM) License.
(b) if two bidders have the same collaborator in relation to foreign
exchange, that bid will not be consider.
5. For granting license to Bharti Cellular the experience of Talkland H
126
SUPREME COURT REPORTS [1994] SUPP. 2 S.C.R.
A or U.K. was considered although Talkland was not a collaborator or Bharti
Cellular.
6. B.P.L. Projects and systems was all~wed to drop the name or Mc.
Caw Cellular communications Inc. USA as 'its foreign collaborator at the
second stage or financial bid, although Mc. Caw was originally proposed as
B a collaborator. This was in violation or clause 7 or Chapter II or the bid
document which prohibited change in collaborator stated in the first stage
bid.
c
D
7. B.P.L. System and Projects submitted its application for foreign
collaborator on 22.4.1992 to SIA beyond the cut off date or 31.3.1992.
-
8. Sterling Cellular was selected despite there being an filed by CBI
against it.
9. Tall\ Cellular was rejected, without assigning any reasons or giving
them opportunity of hearing although it was originally selected for Delhi.
10. Hutchison Max was selected although it had not sent the com·
pliance report in respect of operative and financial conditions alongwith its
offer.
On the basis of arguments advanced, this court framed the following
E points for determination :
1. What is the scope of judicial review in matters of the present kind?
2. Whether the selection is vitiated by arbitrariness?
F
3. Whether the contention regarding bias can be upheld?
4. Whether the apex committee has been bypassed?
5. Whether evolving the hidden criteria is valid?
G
Disposing of the appeals, this Court
HELD: 1. SCOPE OF JUDICIAL REVIEW
1.1. Judicial quest in administrative matters has been to find that
right balance between the administrative discretion to decide matters
H whether contractual or political in nature or issues of social policy; thus
TATA CELLULAR v. U.0.1.
127
they are not essentially justiciable and the need to remedy any unfairness. A
Such an unfairness is set right by judicial review. [158-DJ
Nottinghamshire County Council v. Secretary of State for the Environment, (1986) AC 240; Judicial Review by Michael Supperstone and Janes
Goudie, (1992) edn., p.16, relied on.
1.2. Judicial review is concerned with reviewing not the merits of the
decisions in support of which the application for judicial review is made,
but the decision making process itself. The duty of the court is to confine
itself to the question of legality. Its concerned should be: [159-B)
Whether a decision-making authority
(a) exceeded its powers
(b) committed an error of law
(c) committed a breach of rules of natural justice
(d) reached a decisions which no reasonable Tribunal would have
reached, or
(e) abused its powers? [160-E-F)
Therefore, it is not for the court to determine whether a particular
policy or particular decisions taken in fulOIIment of that policy is fair. It is
only concerned with the manner in which those decisions have been taken.
The extent of the duty to act fairly will vary from case to case. The grounds
upon which an ad~inistrative action is subject to control by judicial review
can be classified as under: [160-G)
(a) Illegality : this means the decisions-maker must understand
correctly the law that regulates his decision-making power and
must give effect to it.
B
c
D
E
F
(b) Irrationality: the court is entitled to investigate the action of the G
local authority with a view to seeing whether or not they have
taken into account, and conversely, have refused to take into
account or neglected to take into account matter which they
ought to take into account and further to see whether the local
authority has come to a conclusion so unreasonable that no H
A
B
c
128
SUPREME COURT REPORTS [1994) SUPP. 2 S.C.R.
reasonable authority could ever have come to it.
(c) Procedural Impropriety [160-H, 161-A-B]
The above are only broad grounds but it does not rule out addition
of further grounds in the course of time. [161-B)
Chief Constable of North wales Police v. Evans, (1992) 3 All E R 141;
R v. panel on Take-overs and Mergers, ex P Gunness Pie, (1990) 1 QB 146;
R. v. Secretary of State for the Home Department ex pane Brind, (1991) 1 AC
696; R. v. Askew, (1768) 4 Burr 2168; Judicial Review by Michael Suppers/one
and James Goude, 1992 edn., The Supreme Court Practice 1993 edn., Vol. l
P. 849, relied on.
13. Two other facets ofirrationality are:-
(a) It is open to the court to review the decision-maker's evaluation
of facts. The Court will not interview where the facts taken as a whole could
D not logically warrant the conclusion of the decision maker. Ir the weight of
facts pointing to one course of action Is overwhelming, then a decision the
other way, cannot be upheld. (163-H, 164-A-B)
E
F
Emma Hotels Ltd. v. Secretary of the State of Environment, (1980) 41
p. and CR 255, relied on.
(b) A decision would be regarded as unreasonable if it is impartial
and unequal in its operation as between different classes. (164-D)
R v. Barnet Landon Borough Council Ex P. Johnson, (1989) 88 L G R
73, relied on.
1.4. The trend points to judicial restraint in administrative action.
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.
G
1.5. Quashing decisions may impose heavy administrative burden on
the administration and lead to increased and unbudgeted expenditure.
(167-H, 168-A]
Administrative law by Bernard Schwartz, 2nd edn.; Administrative
Law: Rethinking judicial Control of Bureaucracy by Christopher F Edley Jr.
H 1990 edn; Universal Camera Corp. v. N.L. R.B. 340 US 474; Judicial Review
TATA CELLULAR v. U.0.1.
129
i11 Public Law by Clive Lewis, (1992] edn; R v. Monopolies commission, A
Ex.p. Arqyll Plc(C.A) (1986] 1 WLR 736; Associated Provincial Picture
Houses Ltd. v. Wednesbwy Corporation, (1948] 1 KB 223; Fasih Choudhary
v. Director General, Doordarshan,, (1989] l SCC 89; G.B. Mahajan v.Jalgaon
Municipal Council, (1991] 3 SCC 91; Administrative Law by prof. Wade;
F.C.I. v. Kamdhe11u Callie Feed Industries, (1993] 1 SCC 71; Sterli11g ComB
puters Limited v. Mis. M.N. Publications Limited, (1993] 1 SCC 445 and
U11io11 Of India v. Hi11dustan Developme11t Corporation, (1993] 3 SCC 499,
referred to and relied on. ·
1.6 The Government must have freedom of contract. In other words,
a fairplay in the joints is a necessary concomitant for an administrative C
body functioning in an administrative sphere or quasi-administrative
sphere. However, the decision must not only be tested by the application of
Wednesbury principle of reasonableness but must be free from arbitrariness, not effected by bias of actuated by malafides. (173-H]
1.7 It cannot be denied that the principles of judicial review would D
apply to the exercise of contractual powers by government bodies In order
to prevent arbitrariness or favoritism. However, it must be clearly stated
that there are inherent limitations in the exercise of that power of judicial
review. Government is the guardian of finances of the State. It is expected
to protect the financial interest of the State. The right to refuse the lowest E
or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution of India have to be kept
in view while accepting or refusing a tender. There can be no question or
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, is the said power is exercised for any collateral
F
purpose the exercise of that power will be struck down. (158-A-C]
1.8 The terms of invitation to tendor cannot be open to judicial
scrutiny because the invitation to tender is not the realm of contract.
Normally speaking, the decision to accept the tender or award the contract G
is reached by process of negotiations through several tiers. More often
than not, such decisions are made qualitatively by experts. (173-G]
2. WHETHER SELECTION IS ARBITRARY
2.1. The bid proforma of Bharti Cellular, Mobile Telecom, Sterling H
130
SUPREME COURT REPORTS 11994] SUPP. 2 S.C.R.
A
Cellular and Skycell indicates minimum reliance on financial institutions.
B
c
It has also made distinction between loans from public financial institutions and banks. In the case of India Telecom while awarding marks care
was taken to exclude the open market projects and foreign exchange from
the evaluation process. As regards skycell, they had projected their operation in Madras for initial years which would be below profitable levels.
Therefore, no dividend would have been paid to their foreign collaborations participating in the equality of company. The markings came to be
awarded on the same basis as in the case of all the bidders. The foreign
collaborations of skycell, B.P.L. Systems and Projects, Usha Martin, Bharti Cellular and Tata Cellular specifically undertook to cover the foreign
exchange finding by equity and loans. '[175-H, 176-A·D]
2.2. International roaming has been correctly taken into consideration. The roaming can be easily extended internationally and is already
being done in part of Europe. Since the systems are compatible, all that is
D required is an agreement between the operators for revenue ~haring etc.
(176-D, 177-F)
23. The argument that paragraph 2.4.7. namely, the financial projection of the proposed cellular mobile service and the 7th criterion having
been left out of consideration cannot be accepted. (177-G)
E
3. BIAS-OF MR NAIR
F
3.1. The rule of bias is founded on the well known maxim Nemo Judex
non causa sua; no persons can be a judge in· his omi cause. Firstly an
adjudicator must not have any direct financial, or proprietory interest in
the outcome of the proceedings. Secondly, he must be reasonably
suspected, or show a real likelihood of bias. (178-C-D)
Black's Law Dictionary, 6th edn; De Smith's Constitutional and Adn1inistrative law New edn., relied on and referred to.
G
3.2 Whenever a decision maker becomes personally involved with one
of the parties there arises the suspicion that a determination may be
reached exclusively on the merits of the case. The most obvious group of
cases calling for scrutiny are those in which one of the parties has close
ties of kinship with the decision maker. (179-D-F)
H
3.3 It is not necessary to establish bias but it is sufficient to in·
TAT/\ CELLULAR , .. U.0.1.
131
validate the selection process if it could be sho"·n that there ·was rt:asonable A
likelihood of bias. The likelihood of bias may arise on account of
proprietory interest or on account of personal reasons, such as, hostility
to one party or personal friendship or family relationship "'ith the other.
Where reasonable likelihood of !Jias is alleged on the ground of relationship, the question would always be as to how close is the degree of B
relationship is. It has to be seen whether it is so great as to give rise to
reasonable apprehension of bias on the part of the authority making the
selection. Vague suspicion of whimsical, capricious and unreasonable
people should not be made a standard to regulate the court's action.
Flimsy, elusive, morbid suspicions should not be permitted to form a
ground of decision. [185-E-F, 187-CJ
C
Natural Justice (Principles and Practical Application) [1979] edu by
Geoffrey A Flick; R v. Cambome Justices Ex parte Pearce, [1954) 2 All ER
850; Metropolitan Properties Co. (F.G.C.)Ltd., v. Lennon and others, [1968]
3 All E.R. 304; R v. Liverpool City Justices, Ex parte Topping, [1983) 1 All ER
490; University College of Swansea v. Cornelius, (1988) I.C.R. 735; Manak Lal D
v. Dr. Prem Chand, [1955] SCR 575; !. Mahapatra & Co., v. State of Orissa,
(1985] 1 SCR 322; Ashok Kumar Yadav v. State of Haryana, [1985) 4 SCC
417; Ranjit 7hakur v. Union of India, [1988) 1 SCR 512, Public Utilities
Commission of District of Columbia v. Pollack, 343 US 451; lntemational
Airport Authority of India v. K. D. Bali, [1988] 2 SCC 360 and Union Carbide
E
Corporation v. Union of India, [1991) 4 SCC 584, referred to and relied on.
3.4 Mr. Nair's son was only one of the officers in B.P.L. Systems and
projects, which has about 5500 employees in 27 offices all over India. There
were 89 officers of his rank. [190-C)
3.5. Mr. B.R. Nair was not the decision-maker at all. He was one of
the recommending authorities. As Director General of Communications as
well as Telecom Authority his involvement in the approval and selection of
tender was indispensable. In these circumstances the doctrine of necessity
is applicable. Therefore Mr. B.R. Nair's involvement did not vitiate the
F
selection on the ground of bias. [190-D-F, 191·D]
G
Charan la/ Sahu v. Union of India, [1990) 1 SCC 613, relied on.
4. BYPASSING OF APEX COMMITTEE
4.1. The note prepared by the Adviser (Operations) dated 8.9.1992 H
132
SUPREME COURT REPORTS [1994) SUPP. 2 S.C.R.
A had been sent to the High Power Committee for its consideration and final
recommendation. However, a D.O. came to be issued dissolving the Apex
Committee. Therefore, it is not correct to contend that the Apex Commit·
tee had been bypassed. (194-F, 195-C, 196-H]
B
5. ENTRY OF HIDDEN CRITERIA
5.1 In a technical matter like this where the Government of India is
embarking. upon new communication scheme with advance technology all
the criteria cannot be postulated in the beginning itself. Where the com·
mittee of experts thought certain criteria have to be evolved in order to
C subserve the interest of the scheme it is not necessary to have all of them
set out in the beginning itself. (199-H, 200-A]
5.2 T~lkland never figured as a collaborator for Bharti Cellular and
therefore Bharti Cellular's claim based on Talkland is incorrect.
Talkland's experience has to be excluded. The claim of Bharti Cellnlar
D should be reconsidered an a factual basis as on 20th January 1992, after
excluding the experience of Talkland and it should be examined as to
whether still Bharti Cellular could fulfil. The requisite qualification, name·
ly, 80000 GSM lines and whether its collaborators SFR France and
EMTEL Mauritius bad that experience. [204-B-D]
E
6.1 As a matter of general proposition it cannot be held that an
authority inviting tenders is bound to give effect to every term mentioned
in the notice in meticulous detail, and is not entitled to waive even a
technical irregularity of little or no significance. The reqnirements in a
tender notice can be classified into two categories-those which lay down
F
the essential conditions of eligibility and the others which are merely
ancialliary or subsidiary with the main object to be achieved by the
cor.dition. In the first case the authority issning the tender may be required
to enforce them rigidly; in the other cases it must be open to the authority
to deviate from and not to insist npon the strict literal compliance of the
G condition in appropriate cases. [207-E-F]
G.J. Fema11des v. State of Kamataka, [1990] 2 SCC 488 and Poddar
Steel Corporation v. Ganesh Engineering Works, [1991] 3 SCC 273, relied
on.
H
6.2 Clause 7 of Chapter II forbids only change. On 17.8.92 when BPL
TATA CELLULAR v. U.0.1.
133
Systems and Projects submitted its second stage of financial, Mc. Caw A
Cellular Communications Inc. USA had been dropped out as foreign col·
laborator from its list of three foreign collaborators. This does not amount
to a change in foreign collaborator. The original two still remained. There
is no change in joint venture. This does not violate clause 7 of Chapter II.
[205·E·G]
B
7. BPL Systems and Projects did submit its application for foreign
collaboration on 31.3.1992 to the Reserve Bank oflndia. When that application was returned on 20th April 1992 it came to be sent to SIA on 22.4.92.
Therefore, BPL Systems and Projects cannot be faulted for submitting its
application for foreign collaborator on 22.4.1992 to SIA beyond the cut off
date of31.3.1992. (208-D-E)
C
8. On the date of selection there was no adverse report against Ster·
ling Computers. It was only after 10th of June, 1993 an FIR was filed by the
CBI. On the date of consideration by the Technical Evaluation Committee
its position was even better. If therefore, this aspect had been borne in mind D
it is not for the court to reweigh the claims and come to one conclusion or
another. (213-G-H, 214-A)
9. From the letter dated 27.8.1993 sent to Tata Cellular cancelling
the tender in its favour, the reason for its omission cannot be fathomed.
Tata Cellular was originally selected for Delhi. By implementation of the E
Judgment of the High Court it was left out. Before doing so, Tata Cellular
ought to have been heard. Therefore, there is a clear violation of the
principle of nature Justice. The claim of Tata Cellular will have to be
reconsidered. (215-A-B)
10. Although there was no reference to operating conditions of Finan· F
cial conditions in the Compliance statement of Hutchinson Max, on 11.9.92,
that is, prior to the last date of filing tender document for the second stage,
Hutchinson Max wrote a letter to the Minister of State for Communication
about the inadvertant error due to a typographical/clerical mistake in not
referring to operating conditions and financial conditions. The proper G
compliance statement come to be filed later. This mistake of Hutchinson
Max is in relation to peripheral or collateral matter. There has been every
intention to comply with the terms of the bid. For an accidental omission
it cannot be punished. [210·D·G, 211-G)
Moffett, Hodgkins and Clarke Company v. City of Rochester, 178 US H
134
SUPREME COURT REPORTS [1994] SUPP. 2 S.C.R.
A Supreme Court Reports 1108; referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 4947-50
of 1994.
From the Judgment and Order dated 26.2.93 of the Delhi High Court
B in C.W. Nos. 4030-32/92, 4302/91 & 163 of 1993.
Soli J. Sorabjee, M.H. Baig,· Ashok Sen, Harish N. Salve, Gulam
Vahanvati, Mrs. P.S. Shroff, Ms. Ritu Bhalla, Mrs. Nilina Chaterjee, Ms.
Smitha Inna, S.S. Shroff, for Suresh A. Shroff & Co., Shirish Kumar Misra,
N.D.B. Raju, Shalendra Swaroop, Mrs. Kum Kum Sen, Mrs. Anjali Verma
C for Khaitan & Co., R.J. Gagrat, U.A. Rana and Anand Parasad for Gagrat
& Co. for the Appellants.
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F.S. Nariman for the Respondent in B.P.L. Sanyo Systems & Project
Ltd.
P. Chidambram for the Respondent in Usha Martin & BPL Sanyo.
D.P. Gupta, Solicitor General, A.B. Divan, K. Para:saran, K.K.
Venugopal, G.Ramaswamy, N.N. Goswamy, Ravinder Narain, Ashok
Sagar, Sumeet kachwah, Ms. Punita Singh, D.N. Mishra for JB.D.& Co.,
V.N. Koura, Ashok Grover, M.G. Ramachandran, S.Fazl, Nagesh Rao,
P.H. Parekh, Sanjeev Puri, Sanjeev Malhotra, N.Ganapathy, Hemani Sharma, Mrs. Anil Katiyar and T.V. Ratanam for the Respondents. in Mobile
Telecom Service.
The Judgment of the Court was delivered by
MOHAN, J. Leave granted.
All these appeals can be dealt with under a common. judgment since
one and same issue requires to be decided. The brief facts are as under :
The Department of Telecommunications, Government of India, inG viled tenders from Indian Companies with a view to license the operation
of Cellular Mobile Telephone Service' in four metropolitan cities of India,
namely, Delhi, Bombay, Calcutta and Madras. Cellular mobile telephone
means a telecommunication system \vhich allows two ways telecommunicaR
tion between a mobile or stationary telephone to another mobile or staH tionary unit at a location. It may be within or outside the city including
TATACELLULAR v. U.0.1.(MOHAN,J.]
135
subscriber-cum-dialing and international subscriber-cum-dialing calls. The A
last date for submission of tender was 31.3.92. The tender process was in
two stages. First stage involved technical evaluation and the second involved financial evaluation. Those who were short-listed at the first stage
were invited for the second stage.
30 bidders participated initially at the first stage. The first tender
Evaluation Committee was constituted consisting of senior officers of the
Department of Telecommunication.
A Telecom Commission was constituted on 6.4.89 comprising of a
Chairman and four full-time Members :
1. Member (Production)
2. Member (Service)
3. Member (Technology)
4. Member (Finance)
It short-listed 16 companies, 12 of which were eligible without any
defect. However, in the case of 4 the Committee recommended condonation of certain defects. Those four were :
1. BPL Systems and Projects Limited
2. Mobile Telecommunication Limited
3. Mobile Telecom Services
4. Indian Telecom Limited
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Between 19th of May, 1992 and 27 of May, 1992 the recommendations were submitted to the Telecom Commission. the matter came up for
discussion among the members of the Commission. On 27.5.92 the Telecom G
Commission accepted the recommendations of the Technical Evaluation
Committee. The Chairman recommended that the short-list of bidders, the
·recommendations ·of the Tender Evaluation Committee and the proposal
for financial bids be placed before the selection Committee at the earliest.
It requires to be noted, at this stage, that a Selection Committee also H
136
SUPREME COURT REPORTS [1994] SUPP. 2 S.C.R.
A described as Apex/High-powered Committee comprising ol the Principal
Secretary to the Prime Minister and three other Secretaries to the Government of India had been set up by the Minister for final evaluation of the
bid.
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Mr. B.R. Nair, a Member (Budget) of Telecom Commission came to
be appointed as Member (Services) on 29.5.92. It appears the Selection
Committee met a number of times and discussed the matter with the
Minister. He submitted an interim report on 16th July, 1992. During this
time the Committee not only de novo exercised but also modified the
short-list prepared by the Technical Evaluation Committee and approved
14 companies. The Selection Committee also met the representatives of
equipment manufacturers for the selection of the licensees. On 20th July,
1992, the revised financial bid and the short-list approved by the Telecom
Commission were put up before the· Minister for approval. On 24.7.92,
further meetings of the Selection Committee were held and the financial
D bid document was revised. On 28.7.92, the Selection Committee submitted
its final report. Two bidders, namely, M/s. Ashok Leyland Ltd. and Mis.
Varn Organics Ltd. were dropped from out of the short-list of 16 bidders.
On 29.7.92, Mr. Nair was appointed as Director General of Telecommunications. He was authorised to exercise all powers of Telecom
Authority under Section 3 of the Telegraph Act. The Minister approved
E the issue of financial bids with modification to the short-listed companies
as recommencied by the Selection Committee on 29.7.92. The approval took
place on 30.7.92.
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On 30.7.92, the financial tenders were issued. It contained seven
criteria which had been approved by the. Selection Committee. However,
no marks were earmarked for any of the criteria. 17.8.92 was the cut-off
date for financial bid document. On this date the bids received from 14
companies were opened and read out to the bidders, who were present.
As per the conditions, the quoted rental ceiling and the cities for which
the bids were made, was read out.
Another Departmental Tender Evaluation Committee consisting of
senior officers examined the financial bids of the 14 short-listed companies.
It adopted some parameter and devised the marking system which was not
done by the Selection Committee. On 2.9.92 the second Tender Evaluation
H Committee submitted its recommendations. However, the matter was
TATACELLULAR v. U.0.1.[MOHAN,J.]
137
referred back to it for a fresh gradation on the basis of 21. 75 per cent A
interest rate in respect of 13 per cent rate which it had earlier adopted.
On 7.9.92 the recommendations were re-submitted. The Adviser (Operation) recommended only 4 operators based on the evaluation and fmancial
bids. Bharti Cellular was recommended as a first choice for all the four
cities. BPL as the second choice for botb Delhi and Bombay, Tata Cellular B
and Skycell as second choice for Calcutta and Madras. This was done
since in his view no other bidder qualified· for licence. On 10.9.92 the
Chairman of the Tender Evaluation Committee directed that all the documents and recommendations be sent to the Selection Committee for its
consideration and for making final recommendations to the Government.
When the file was put up to the Minister on 9.10.92 he made three C
important notings:
1. In view of the time taken by the High powered Committee the
selection process be completed by Dot internally;
2. Only one party may be granted licence for one city; and
3. The actual selection of the licensee should be made primarily on
the consideration of rentals and the marks obtained in respect of foreign
exchange inflow and outflow criterion and experience of the licensee.
On 9.10.92, in accordance with this note, a list of 8 short- listed
companies was prepared. The reasons for rejection of the 6 companies
were recorded. The Chairman, in his final recommendation, made on
9.10.92 noted that Bharti Cellular, Modi Telecom· and Mobile Telecom did
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not fulfill the conditions provided in clause 2.4.7 of Chapter II of the
financial bid which requires that foreign exchange requirement be met by
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foreign collaborator. With regard to rejection of 6 bidders Sterling Cellular
was rejected because some investigation against them was pending because
some investigation against them was pending before the C.B.I. However,
the Minister reversed that decision as to the exclusion of.Sterling Cellular
and Indian Telecom limited from the list. of finally approved bidders and G
directed that the same be considered.
On 10.10.92, the list was recast. Sterling Cellular was provisionally
selected for the city of Madras. On 12.10.92, the selected bidders were
notified of their provisional selection subject to the acceptance of rentals
and other terms as might be advised.
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138
SUPREME COURT REPORTS (1994] SUPP. 2 S.C.R.
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It is under these circumstances, four writ petitions were preferred
bearing C.W.P. Nos. 403Q, 4031, 4032 and 163 of 1992. The petitioners
were:
1. India Telecomp (Petitioner in C.W.P. No. 4030 of 1992)
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2. Adino Telecom Limited (Petitioner in C.W.P. No. 4031 of 1992)
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3. Kanazia Digital System (Petitioner in C.W.P. No. 4032 of 1992)
4. Hutchison Max Telecom Private Limited (Petitioner in C.W.P. No.
163/92)
It Was urged before the High Court of Delhi that the decision of the
Government in selecting eight parties, two for each of the cities, was bad
on the following grounds:
(i) bias
(ii) invoking certain hidden criteria
(iii) irrelevant considerations
(iv) by-passing the Selection Committee
( v) selecting otherwise underqualified parties.
(vi) marketing system which was evaluated by the second Technical
Evaluation Committee for grading various bidders.
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So manipulated thereby a criterion was evolved which was tailormade to knock out the petitioners before the High Court or resulting in
knocking out of the petitioner in the case of India Telecomp Limited and
Adino Telecom Limited. Hutchison Max Telecom Private Limited urged
that it wa~ that highest in the gradation. Its bid was not considered for a
G technical and flimsy reason; in that, the compliance statement required to
be furnished with the bids was not complete. Kanazia Digital System
contended that its technical bid was left out on certain wrong premise.
Lengthy arguments were advanced before the High Court. On a
consideration of those arguments the writ petitions of Adino Telecom and
H Kanazia Digital System were dismissed. C.W.P. 4030 of 1992 filed by India
TATACELLULAR v. U.0.1.(MOHAN.J.)
139
Telecomp was allowed. A ma11dam11s was issued to consider afresh the A
grant of licence to the petitioner therein, after evaluating marks for the
rental on the basis the figures of deposits from subscribers given for Delhi
and Bombay were accumulated. Similarly, C.W.P. 163 of 1992 in which the
petitioner was Mis Hutchison Max Telecom Private Limited, was allowed.
A direction was issued to reconsider the case of the petitioner, on the basis B
the compliance filed by it, as it was in order. To that extent, the order,
granting licence to 8 parties (2 for each of the cities) was set aside. This
judgment was pronounced on 26.2.93.
After the judgment of the Delhi Court, the matter was reconsidered
in the light of the said judgment. A revised list of Provisionally selected C
bidders was prepared on 27.8.93. That is as follows :
Position as on 12.10.92
Bombay
Bharti Cellular
BPL Projects & Systems
Delhi
India Telecomp Ltd.
Tata Cellular Pvt. Ltd.
Calculla
Mobile Telecom Ltd.
Usha Matin Telecom
Madras
Sky cell
Sterling Cellular Ltd.
Position as on 27.8.93
Bombay
Hutchison Max
Bharti Cellular
Delhi
BPL Projects & Systems
Sterling Celluler Ltd.
Calculla
India Telecomp Ltd.
Usha Martin Telecom
Madras
Mobile Telecom Ltd.
Skycell
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It could be seen from the above that Tata Cellular which was
originally selected for Delhi has been left out. Therefore, it has preferred G
SLP (Civil) Nos. 14191-94 of 1993.
Mis. Hutchison Max Private Limited has apprehended that if the
judgment of the Delhi High Court is not accepted it is likely to be displaced
from the provisional selection list for Delhi.
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SUPREME COURT REPORTS [1994) SUPP. 2 S.C.R.
Indian Telecom Private Limited preferred SLP (C) No. 17809/93.
India Telecomp preferred SLP (C) No. 14266 of 1993.
Mr. Soli J. Sorabjee, learned counsel for the appellant, Tata Cellular,
argues that this is a two staged tender. In the first stage, the evaruation had
to be made on the basis of technical and commercial considerations. The
bidders short-listed at the first stage would then compete in the second
stage, namely, ttie financial bid. Chapter II contains general conditions
framed into the bid. In paragraph 2.4.7 the financial projection of the
proposed cellular mobile service was prescribed. The notes mentioned
three criteria:
(i) Entire foreign exchange requirement shall be met by the foreign
collaborator.
(ii) Minimum reliance of Indian public financial institutions will be
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(iii) Debt equity ratio should not be more than 2:1.
It is borne out by records that out of the seven criteria in evaluating
the financial bid, six parameters alone were taken into consideration. For
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rental parameter the evaluation committee took into account the equity
rental ceiling, security deposits installation and other charges indicated in
the bid which were the same in the case of all the bidders. This was done
in order to arrive at an equated or effective figure of monthly rental for
each bidder. It is not open to the Committee to totally ignore this criterion
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when the Chairman's note dated 9.10.92 specifically states that the companies would be asked to comply with the conditions of financial bid in
clause 2.4.7 of Chapter II while granting licences.
When this is the position, strangely, the appellant is informed as
G follows:
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No./92-TM
"Ministry of Communication
(Telecom Commission)
New Delhi-110001
Dated : 27.8.93
TATACELLULAR V. u.o.i.[MOHAN,J.J
141
To
Kind attenion :
Subject : Tender No. 44-21/91-MMC(FIN) for franchise for cellular mobile telephone service for Bombay, Delhi, Calcutta and
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Madras.
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Sir,
Kindly refer letter of even No. dated 12.10.92 informing you
that you have provisionally selected for franchise for providing
cellular mobile telephones service at on a non- exclusive basis.
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2. The matter has been reconsidered in the light of the judgment
delivered by the High Court of Delhi in this case. M/s. have now
been provisionally selected for franchise for providing cellular
mobile telephone service at in place of on a non- exclusive basis.
The other franchise selected for is M/s. with M/s. of as their foreign D
partner.
3. The details of the rental, deposits and other terms fixed for the .
franchise wilt be intimated to you shortly.
4. Kindly get necessary formalities completed by 30.9.93.
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Your faithfully'
{S.K. Garg)
DOG (TM)" .