in Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd.[7] a two-Judge Bench eloquently exposited the test which is to the following effect:- “We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional Courts but that by itself is not a reason for interfering with the interpretation given.”- tenders are floated and offers are invited for highly complex technical subjects. It requires understanding and appreciation of the nature of work and the purpose it is going to serve. It is common knowledge in the competitive commercial field that technical bids pursuant to the notice inviting tenders are scrutinized by the technical experts and sometimes third party assistance from those unconnected with the owner’s organization is taken. This ensures objectivity. Bidder’s expertise and technical capability and capacity must be assessed by the experts. In the matters of financial assessment, consultants are appointed. It is because to check and ascertain that technical ability and the financial feasibility have sanguinity and are workable and realistic. There is a multi-prong complex approach; highly technical in nature. The tenders where public largesse is put to auction stand on a different compartment. Tender with which we are concerned, is not comparable to any scheme for allotment. This arena which we have referred requires technical expertise. Parameters applied are different. Its aim is to achieve high degree of perfection in execution and adherence to the time schedule. But, that does not mean, these tenders will escape scrutiny of judicial review. Exercise of power of judicial review would be called for if the approach is arbitrary or malafide or procedure adopted is meant to favour one. The decision making process should clearly show that the said maladies are kept at bay. But where a decision is taken that is manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the court should follow the principle of restraint. Technical evaluation or comparison by the court would be impermissible. The principle that is applied to scan and understand an ordinary instrument relatable to contract in other spheres has to be treated differently than interpreting and appreciating tender documents relating to technical works and projects requiring special skills. The owner should be allowed to carry out the purpose and there has to be allowance of free play in the joints.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 10143 OF 2016
(@ S.L.P. (C) No. 29297 of 2016)
Montecarlo Ltd. …Appellant(s)

VERSUS

NTPC Ltd. …Respondent(s)
J U D G M E N T

Dipak Misra, J.

The respondent, NTPC Limited, had issued separate invitation for bids
for development and operation of three coal mines, viz., Dulanga Coal
Block, Chatti Bariatu and Talaipalli in the State of Odisha. Online bids
were invited on Single Stage Two Envelope Bidding basis (Envelope-I: Techno-
Commercial Bid and Envelope-II: Price Bid). There was stipulation for
Reverse Auction from the eligible bidders. It was also stated in the
Invitation For Bids (IFB) issued on 22.01.2016 that the bids shall be
received on 17.03.2016 and Envelope-I, that is, Techno-Commercial Bid will
be opened on 17.03.2016. The date of opening of Envelope-II, that is, Price
Proposal shall be intimated separately. Clause 5 of the IFB stipulated
Qualifying Requirements (QR). Clauses 5.1 and 5.1.2 dealt with technical
criteria.

2. The respondent had also issued “Instructions To Bidders” (ITB) which
contain clauses as to how the proposal shall be conducted. Clause 6.3.1 of
ITB deals with Preliminary Examination of Techno-Commercial Proposals. We
think it appropriate to reproduce the same:-

“6.3.1 Preliminary Examination of Techno-Commercial Proposals:

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

(b) Prior to the detailed evaluation, OWNER will initially determine
whether each Techno Commercial Proposal is of acceptable quality, is
generally complete and is substantially responsive to the bidding
documents. For purposes of this determination, a substantially responsive
Proposal is one that conforms to all the terms, conditions and
specifications of the bidding documents without material deviations,
objections, conditionalities or reservations. A material deviation,
objection, conditionality or reservation is one (i) that affects in any
substantial way the scope, quality or performance of the contract; (ii)
that limits in any substantial way, inconsistent with the bidding
documents, the Owner’s rights or the successful Bidder’s obligations under
the contract; or (iii) whose rectification would unfairly affect the
competitive position of other Bidders who are presenting substantially
responsive Proposals.

(c) OWNER’s determination of a Techno Commercial Proposal’s responsiveness
is to be based on the contents of the Techno Commercial Proposal itself
without recourse to extrinsic evidence. If a Techno Commercial Proposal is
not substantially responsive, it will be rejected by OWNER, and may not
subsequently be made responsive by the Bidder by correction of the
nonconformity.”
3. Clauses 6.3.2 6.3.2.1, 6.3.2.2 and 6.3.4 provide for Evaluation of
Responsive Techno-Commercial Proposal, Evaluation of Qualification
Proposals, Evaluation of Technical Proposals and Clarification Meeting.
Clause 6.3.5 deals with the steps where the responsive Techno-Commercial
Proposal which meets the QR specified in Chapter 7 and Technical
Requirements specified in Chapter 8 of REF Documents and stipulates that
they shall be considered for Price Proposal Phase of the Bidding Process.
It has also been provided therein that the bidders who meet QR specified in
Chapter 7 and Technical Requirements specified in Chapter 8 of REP
documents shall be terms as “shortlisted bidders”. Chapter 7 of ITB deals
with technical criteria. Clauses 7.1.1 and 7.1.2, being significant, are
extracted below:-

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

OR

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

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

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

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

4. At this stage, it is necessary to refer to Notes appended to Clause
7.3.3 that deals with route-3. Notes are as under:-

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

5. Chapter 9 of the ITB deals with Evaluation Methodology for Techno-
Commercial Proposal (Qualification Proposal and Technical Proposal).
Clause 9.1 deals with Evaluation of Qualification Proposal and Clause 9.2
deals with Evaluation of Technical Proposal. They read as under:-

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

9.1 Evaluation of Qualification Proposal:

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

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

During the bid evaluation, NTPC may, at its discretion, ask the Bidder for
a clarification of its Qualification Proposal including documentary
evidence pertaining to only the reference mines declared in the
Qualification Proposal for the purpose of meeting Qualifying Requirement
specified in Chapter 7 of this RFP document. The request for clarification
and the response shall be in writing and no change in the substance of the
TECHNO-COMMERCIAL Proposal including substitution of reference mines in the
Qualification Proposal by new/additional mines for conforming to Qualifying
Requirement shall be sought, offered or permitted.

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

9.2 Evaluation of Technical Proposal:

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

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

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

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

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

6. Clause 9.3 provides how detailed evaluation of technical proposals
submitted by the bidder shall take place. Clauses 9.3.1 and 9.3.2 which are
relevant for the present purpose are reproduced below:-

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

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

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

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

7. The controversy in the instant case basically pertains to whether the
appellant meets the qualification criteria as provided under the heading
Technical Criteria that occurs in Clauses 7.1 and 7.2 of QR. To appreciate
the same, it is essential to have a look at the bid submitted by the
appellant. The appellant had uploaded the proposal on 26.4.2016 by
referring to three mines in support of its stand to meet the QR. The three
mines that have been referred to in the proposal are (i) Mata No Madh,
Lignite Mine, Kutch, GMDC (Mine 1); (ii) June Kundada OCP of Western
Coalfield Limited (Mine 2) and (iii) Khadia OCP, Northern Coalfield Limited
(Mine 3). As regards the Mine No. 1, the appellant declaring the scope of
work in the aforesaid Mine had furnished the following details:-

|“Sl.|Particulars |Mine 1 (Lignite Project, Mata|
|No. | |No Madh, Kutch) |
|10. |Brief description of |Turnkey mining Contract |
| |scope of work |involving overburden/inter |
| | |burden removal, excavation |
| | |and/or loading of lignite |
| | |from mines face and ancillary|
| | |activities |
|11. |Drilling |Yes/No |
| |Carried out Drilling |Our own/subcontracting |
| |on our own or through | |
| |subcontracting | |
| |Excavation | Yes/No |
| |Carried out Excavation|Our own/subcontracting |
| |on our own or through | |
| |subcontracting | |
| |Hauling |Yes/No. |
| |Carried out Excavation|Our own/subcontracting” |
| |on our own or through | |
| |subcontracting | |
8. As the proposal would reflect, the appellant had not provided the
information that it had carried out the drilling in the aforesaid Mine,
namely, Mata No Madh. The respondent-owner sent a communication on
17.5.2016 seeking certain clarification pertaining to the QR and other
aspects. The High Court has referred to the said communication and we think
it necessary to reproduce the same:-

“Ref:01/CS-7014-602(R1)-9-PAA Dated: 17.05.2016
To,
M/s. Montecarlo Limited,
706, Ship Building, Near Municipal Market,
C.G. Road, Navrangpura, Ahmedabad-380 009,
Gujarat, India

Kind Attn. Sh. Shekhar Shanna, Sr. General Manager

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

Dear Sir,

1.0 This has reference to your Project Proposal (Techno-Commercial Bid)
against IFB No.40051319 for the subject package. You are requested to
furnish the following information with respect to the details/documents
furnished in the bid for qualification requirement data:

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

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

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

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

9. The response that was given by the appellant on 21.5.2016 is to the
following effect:-

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

a) A certificate from GMDC (client of our Lignite Project at Mata No Math)
Vide No.GMDC/MMLG/298/2016-17 dated 18.05.2016 mentioning our scope on this
Turnkey Project which includes activities of Mine Planning, Quality
Control, Drilling, Ripping, Dust suppression, Nala Diversion, preparation
of Garland drain, dewatering of Monsoon and seepage water, preparation and
monitoring of haul road for better hauling as required to complete the
mining process.

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

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

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

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

We are attaching the following:

a) Financial certificate of last 3 years

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

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

10. To the said letter, a document issued by the Gujarat Mineral
Development Corporation Ltd (GMDC) dated 18.5.2016 was enclosed. The said
certificate reads as follows:-

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

To Whom It May Concern

This is to certify that the Turnkey Mining Contract involving
Overburden/Inter burden removal, Excavation and/or Loading of Lignite from
mining face and ancillary activities at Lignite project, Mata No Madh Vide
Tender Notice No. (R1)/LP/01/13-14 dated 30.08.2013, has been awarded to
M/s. Montecarlo Limited, having registered office at 7th Floor, Shilp
Building, Nr. Municipal Market, C.G. Road, Navrangpura, Ahmedabad – 380009,
Gujarat, India.

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

Name of Contractor : M/s. Montecarlo Limited

LOI No. : GMDC/LP/13306/13-14
Dated: 15/01/2014
Estimated Cost/
Contract Value : 663.04 Cr.
Awarded Quantity : Over Burden (1109.00)
Lac CUM
Lignite (148.00) Lac MT
Contract Period : 28.01.2014 to 27.01.2019

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

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

|Sr. |Period |Over Burden |Lignite |Total Work |
|No | |Removal (cum)|Dispatched |Done Amount |
| | | |(MT) |(Rs.) |
|1 |28.01.2014 |18,24,674.03 |7,64,791.18 |33,59,23,240.|
| |To | | |00 |
| |31.03.2014 | | | |
|2 |01.04.2014 |1,37,54,520.7|32,10,961.46 |135,57,06,364|
| |To |6 | |.00 |
| |31.03.2015 | | | |
|3 |01.04.2015 |1,45,66,445.2|13,68,861.67 |55,38,02.,253|
| |To |2 | |.00 |
| |31.03.2016 | | | |
M/s. Montecarlo Limited successfully carried out Dewatering of Mine.
Yearwise details are shown for dewatering by deploying high capacities of
Diesel and Electrical operated pump:

|Sr. No. |Period |Dewatering in Lac m3 |
|1. |01.04.2015 |65.0 |
| |To | |
| |31.03.2016 | |
This certificate is issued as per their request vide letter no.
ML(P)/mn/4190/clt/2016-17/020 date: 18.05.16 for applying tender.”

11. On the basis of the said communications, the respondent formed an
opinion that the bid of the appellant was technically non-responsive. The
reason for arriving at the said conclusion by the respondent was that the
appellant did not have necessary experience of drilling for blasting
purposes. As the appellant was regarded as technically non-responsive, it
invoked the jurisdiction of the High Court challenging the said
determination made by the respondent. It was contended before the High
Court that the tender documents that contained QR was of the experience of
a bidder in only drilling, excavation and hauling, etc. and not blasting or
drilling for blasting purposes. It was further urged that the scope of
work for Dulanga Mines projects which was taken into consideration by the
respondent in evaluating the technical proposal of the petitioner as being
non-responsive had been wrongly understood. The stand of NTPC before the
High Court was that the assessment by the Technical Committee was
absolutely justified and the writ petitioner therein did not meet the QR
and, therefore, was treated as non-responsive.

12. The High Court referred to how tender documents that reflected the
nature of mine operations, how blasting is an inherent part and drilling is
differently understood in the sense that the appellant had understood.
Thereafter, placing reliance on Tata Cellular v. Union of India[1] and
Michigan Rubber (India) Ltd. v. State of Karnataka and Ors.[2], it came to
hold that the decision taken by the owner was correct and did not adversely
affect public interest but subserved the public purpose. Being of this
view, the High Court dismissed the writ petition. Hence, the present appeal
by special leave.

13. We have heard Mr. P. Chidambram and Mr. Harin P. Raval, learned
senior counsel with Mr. Sandeep Singh, learned counsel for the appellant
and Mr. Vikas Singh, learned senior counsel with Mr. Ankit Jain, learned
counsel for the respondent.

14. The dispute and the dissention between the parties rest on how the
Chapter 7 (QR) of ITB that contains Clause 7.2 that deals with technical
criteria is to be understood. We are not really concerned with Clause
7.1. The centrality of controversy hinges on the interpretation to be
placed on Clause 7.1.2. It is submitted by Mr. Chidambram, learned senior
counsel appearing for the appellant that the appellant satisfied the
condition as postulated in the QR under Clause 7.1.2 (a) and Clause 7.1.2
(a) stipulates that 23 Million BCM of aggregated volume of overburden
and/or coal/lignite from a maximum of seven open cast mines of
coal/Lignite, in any year and clause 7.1.2. (b) lays down that at least
11.5 Million BCM of composite volume of overburden and coal/lignite from
single open cast mine in any year, out of which at least 3 million tones
shall be coal/lignite. Learned senior counsel would lay emphasis on the
documents which the appellant had filed to show that it had operated and
produced from single mine 11.5 Million BCM of composite volume of
overburden and coal/lignite from single open cast mine in a year. Mr.
Singh, learned senior counsel resisting the said stance would urge that the
appellant does not satisfy the condition of drilling as is required under
the QR regard being had to the nature of work. In this context, we may
usefully take note of the definition of “operated”. The said term, as
defined, means activities of drilling and excavation. The documents
produced by the appellant indicate the scope of work including activities
of operation of coal/lignite mine. It reads as follows:-

|“10.|The scope of work includes the following activities of operation |
| |of the Coal/Lignite Mine |
| |Drilling |Yes/No |Yes/No |Yes/No |
| |Carried out |Our own/sub |Our own/ |Our own/sub |
| |Drilling on |contracting |sub contracting |contracting |
| |our own or | | | |
| |through sub | | | |
| |contracting | | | |
| |Excavation |Yes/No |Yes/No |Yes/No |
| |Carried out |Our own/ sub |Our own/sub |Our own/ sub |
| |Excavation on |contracting |contracting |contracting |
| |our own or | | | |
| |through sub | | | |
| |contracting | | | |
| |Hauling |Yes/No |Yes/No |Yes/No |
| |Carried out |Our own/sub |Our own/ |Our own/ |
| |Hauling on our|contracting |sub contracting |sub |
| |own or through| | |contracting |
| |sub | | | |
| |contracting | | | |
|S.No|Particulars|Mine 1 |Mine 2 |Mine 3 |
|. | | | | |
|11 |Annual |Year (From |Year (From |Year (From |
| |Production |01.04.2014 |01.04.2014 |01.04.2014 to |
| |in Million |to |to |31.03.2015) |
| |Bank Cubic |31.03.2015) |31.03.2015) | |
| |Meters. | | | |
| |Bidder to | | | |
| |refer Note | | | |
| |(vii) of | | | |
| |the | | | |
| |Qualifying | | | |
| |Requirement| | | |
| |s of | | | |
| |Chapter 7 | | | |
| | |Coal/ |Overburden |Coal/ |Overbur|Coal/L|Over |
| | |Lignite |(in Million|Lignite |den (in|ignite|burden |
| | |(in MT) |BCM) |(in MT) |Million|(in |(in |
| | | | | |BCM) |MT) |Million|
| | | | | | | |BCM) |
| | |3.210 |13.754 |1.221 |3.386 |- |12.707”|
| | |Million | |Million | | | |
| | |Tonne | |Tonne | | | |
15. We have already analysed what is covered by the word “operated” as
per ITB. In this regard, the High Court has referred to Schedule II that
deals with description of mining services. Clause 5 deals with the Mine
Operations. We think it appropriate to reproduce Clauses 5.1, 5.9 and 5.10
of the same:-

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

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

(b) Strip OB and store such OB on dumps

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

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

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

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

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

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

(i) Drilling and blasting

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

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

(l) Mine illumination as per prevalent laws

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

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

(o) Conduct advance infill drilling.

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

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

(r) POL Store shed

(s) Development of Power Supply Distribution System beyond 33KV switchgear
breaker terminals of Darlipalli STPP for various equipments/facilities
included in Mine Operator’s scope.

x x x

5.9 Blasting:

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

5.10 Overburden and Inter burden Removal:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“5.7.2. Drilling & Blasting

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

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

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

17. We have referred to these clauses which are technical but they are
fundamental to understand the QR. They clearly demonstrate that drilling
is imperative. Mr. Chidambram, learned senior counsel for the appellant
would argue with all the conviction at his command that the appellant is
engaged in drilling in Lignite and the tender requirement was coal/lignite.
According to the learned senior counsel, drilling in lignite would meet
the requirement but the owner has travelled beyond the postulates of the QR
to insist on drilling for the purpose of blasting. We have already
referred to the certificate issued by GMDC in favour of the appellant and
the documents filed by the appellant. The High Court has considered the
documents and opined that the documents filed in support of the QR are
substantially inadequate. Adverting to the facet of drilling, the writ
court has opined that there is specific use of the words “drilling for the
purposes of blasting”. It is urged by Mr. Chidambram and Mr. Raval, learned
senior counsel that in the absence of a definitive prescription, the court
cannot add an attribute or quality component to the qualifying clause. In
this regard, we may usefully refer to certain authorities. In Sterling
Computers Limited v. M/s M & N Publications Limited & Ors[3], the Court has
held that under some special circumstances a discretion has to be conceded
to the authorities who have to enter into contract giving them liberty to
assess the overall situation for purpose of taking a decision as to whom
the contract be awarded and at what terms. It has also been observed that
by way of judicial review the court cannot examine the details of the terms
of the contract which have been entered into by the public bodies or the
State. Courts have inherent limitations on the scope of any such enquiry.

18. In Tata Cellular (supra) a three-Judge Bench after referring to
earlier decisions culled out certain principles, namely, (a) the modern
trend points to judicial restraint in administrative action, (b) the court
does not sit as a court of appeal but merely reviews the manner in which
the decision was made, (c) the court does not have the expertise to correct
the administrative decision. If a review of the administrative decision is
permitted it will be substituting its own decision, without the necessary
expertise which itself may be fallible, and (d) the Government must have
freedom of contract and that permits a fair play in the joints as a
necessary concomitant for an administrative body functioning in an
administrative sphere or quasi-administrative sphere. Hence, the Court has
laid down that the decision must not only be tested by the application of
Wednesbury principle of reasonableness (including its other facts pointed
out above) but must be free from arbitrariness not affected by bias or
actuated by mala fides.
19. In Jagdish Mandal v. State of Orissa and Ors[4] the Court has held
that a contract is a commercial transaction. Evaluating tenders and
awarding contracts are essentially commercial functions. Principles of
equity and natural justice stay at a distance. If the decision relating to
award of contract is bona fide and is in public interest, courts will not,
in exercise of power of judicial review, interfere even if a procedural
aberration or error in assessment or prejudice to a tenderer, is made out.
20. In Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd
and Anr[5], it has been ruled that the State can choose its own method to
arrive at a decision and it is free to grant any relaxation for bona fide
reasons, if the tender conditions permit such a relaxation. It has been
further held that the State, its corporations, instrumentalities and
agencies have the public duty to be fair to all concerned. Even when some
defect is found in the decision-making process, the court must exercise its
discretionary powers under Article 226 with great caution and should
exercise it only in furtherance of public interest and not merely on the
making out of a legal point.

21. In B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. and Ors.[6] a
two-Judge Bench, after referring to series of judgments has culled out
certain principles which include the one that where a decision has been
taken purely on public interest, the court ordinarily should apply judicial
restraint.
22. In Michigan Rubber (India) Ltd. (supra) the Court referred to the
earlier judgments and opined that before a court interferes in tender or
contractual matters, in exercise of power of judicial review should pose to
itself the question whether the process adopted or decision made by the
authority is mala fide or intended to favour someone or whether the process
adopted or decision made is so arbitrary and irrational that the judicial
conscience cannot countenance. Emphasis was laid on the test, that is,
whether award of contract is against public interest.
23. Recently in Afcons Infrastructure Ltd. v. Nagpur Metro Rail
Corporation Ltd.[7] a two-Judge Bench eloquently exposited the test which
is to the following effect:-
“We may add that the owner or the employer of a project, having authored
the tender documents, is the best person to understand and appreciate its
requirements and interpret its documents. The constitutional Courts must
defer to this understanding and appreciation of the tender documents,
unless there is mala fide or perversity in the understanding or
appreciation or in the application of the terms of the tender conditions.
It is possible that the owner or employer of a project may give an
interpretation to the tender documents that is not acceptable to the
constitutional Courts but that by itself is not a reason for interfering
with the interpretation given.”

24. We respectfully concur with the aforesaid statement of law. We have
reasons to do so. In the present scenario, tenders are floated and offers
are invited for highly complex technical subjects. It requires
understanding and appreciation of the nature of work and the purpose it is
going to serve. It is common knowledge in the competitive commercial field
that technical bids pursuant to the notice inviting tenders are scrutinized
by the technical experts and sometimes third party assistance from those
unconnected with the owner’s organization is taken. This ensures
objectivity. Bidder’s expertise and technical capability and capacity must
be assessed by the experts. In the matters of financial assessment,
consultants are appointed. It is because to check and ascertain that
technical ability and the financial feasibility have sanguinity and are
workable and realistic. There is a multi-prong complex approach; highly
technical in nature. The tenders where public largesse is put to auction
stand on a different compartment. Tender with which we are concerned, is
not comparable to any scheme for allotment. This arena which we have
referred requires technical expertise. Parameters applied are different.
Its aim is to achieve high degree of perfection in execution and adherence
to the time schedule. But, that does not mean, these tenders will escape
scrutiny of judicial review. Exercise of power of judicial review would be
called for if the approach is arbitrary or malafide or procedure adopted is
meant to favour one. The decision making process should clearly show that
the said maladies are kept at bay. But where a decision is taken that is
manifestly in consonance with the language of the tender document or
subserves the purpose for which the tender is floated, the court should
follow the principle of restraint. Technical evaluation or comparison by
the court would be impermissible. The principle that is applied to scan
and understand an ordinary instrument relatable to contract in other
spheres has to be treated differently than interpreting and appreciating
tender documents relating to technical works and projects requiring special
skills. The owner should be allowed to carry out the purpose and there has
to be allowance of free play in the joints.
25. In view of the aforesaid analysis, we do not perceive any infirmity
in the judgment and order passed by the High Court and, accordingly, the
appeal stands dismissed. In the facts and circumstances of the case, there
shall be no order as to costs.

…………………………J.
(Dipak Misra)

…………………………J.
(Uday Umesh Lalit)
New Delhi;
October 18, 2016.
———————–
[1]

[2] (1994) 6 SCC 651
[3]
[4] (2012) 8 SCC 216
[5]
[6] (1993) 1 SCC 445
[7]
[8] (2007) 14 SCC 517
[9]
[10] (2005) 6 SCC 138
[11]
[12] (2006) 11 SCC 548
[13]
[14] 2016 (8) SCALE 765

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