Cellular Vs. Union of India  INSC 401 (26 July 1994)
S. (J) Mohan, S. (J) Venkatachalliah, M.N.(Cj) Punchhi, M.M.
1996 AIR 11 1994 SCC (6) 651 JT 1994 (4) 532 1994 SCALE (3)477
Judgment of the Court was delivered by MOHAN ,J.-- Leave granted.
these appeals can be dealt with under a common judgment since one and same
issue requires to be decided.
brief facts are as under.
Department of Telecommunications, Government of India, invited 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 which allows two-ways tele- communication between a
mobile or stationary telephone to another mobile or stationary unit at a
location. It may be within or outside the city including subscriber-cum-dialling
and international subscriber-cum-dialling calls. The last date for submission
of tender was 31-3-1992. The tender process was in two
stages. First stage involved technical evaluation and the second involved
who were short-listed at the first stage were invited for the second stage.
bidders participated initially at the first stage.
first Tender Evaluation Committee was constituted consisting of senior officers
of the Department of Telecommunications.
Telecom Commission was constituted on 6-4-1989 comprising a Chairman and four
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 :
Systems and Projects Limited
Mobile Telecommunication Limited
Mobile Telecom Services
Indian Telecom Limited Between 19-5-1992 and 27-5-1992 the recommendations were submitted to the Telecom
Commission. The matter came up for discussion among the members of the
Commission. On 27-5- 1992 the Telecom 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
requires to be noted, at this stage, that a Selection Committee also described
as Apex/High-Powered Committee comprising 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.
B.R. Nair, a Member (Budget) of Telecom Commission came to be appointed as Member
(Services) on 29-5-1992. It appears the Selection Committee
met a number of times and discussed the matter with the Minister. He submitted
an interim report on 16-7-1992. 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 20-7-1992, the
revised financial bid and the short-list approved by the Telecom Commission
were put up before the Minister for approval. On 24-7-1992, further meetings of the Selection Committee were held and
the financial bid document was revised. On 28-7-1992, the Selection Committee submitted
its final report. Two bidders, namely, M/s Ashok Leyland Ltd. and M/s Vam
Organics Ltd. were dropped from the short-list of 16 bidders. On 29- 7-1992, 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 the issue of financial bids with modification to the
short-listed companies as recommended by the Selection Committee on 29-7-1992.
The approval took place on 30-7-1992.
30-7-1992, 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. 17-8-1992 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
ceilings and the cities for which the bids were made, were read out.
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 2-9-1992, the second Tender Evaluation
Committee submitted its recommendations.
the matter was referred back to it for a fresh gradation on the basis of 21.75
per cent interest rate in respect of 13 per cent rate which it had earlier
On 7-9-1992 the recommendations were re-submitte. The Adviser
operations recommended only 4 operators based on the evaluation and financial
bids. Bharati Cellular was recommended as a first choice for all the four
cities, BPL as the second choice for both Delhi and Bombay, TATA Cellular and Skycell as
second choice for Calcutta and Madras. This was done since in his view no other bidder qualified
for licence. On 10-9-1992 the Chairman of the Tender
Evaluation Committee directed that all the documents and recommendations be
sent to the Selection Committee for its consideration 660 and for making final
recommendations to the Government.
the file was put up to the Minister on 9-10-1992 he made three important notings :
view of the time taken by the High- Powered Committee the selection process be
completed by DoT internally;
Only one party may be granted licence for one city; and
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.
9-10-1992, 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 9-10-1992, noted that Bharati Cellular, Modi Telecom and
Mobile Telecom did not fulfil the conditions provided in clause 2.4.7 of
Chapter 11 of the financial bid which requires that foreign exchange
requirement be met by foreign collaborator. With regard to rejection of 6
bidders Sterling Cellular was rejected because some investigation against them
was pending before the CBI. 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 directed that the same be considered.
11.On 10-10-1992, the list was recast. Sterling Cellular was
provisionally selected for the city of Madras. On 12-10-1992, the selected bidders were notified
of their provisional selection subject to the acceptance of rentals and other
terms as might be advised.
is under these circumstances, four writ petitions were preferred bearing CWP
Nos. 4030, 4031, 4032 and 163 of 1992. The petitioners were
1. India Telecomp (Petitioner in CWP No.
4030 of 1992)
Telecom Limited (Petitioner in CWP No. 4031 of 1992)
Digital System (Petitioner in CWP No. 4032 of 1992)
Hutchison Max Telecom Private Limited (Petitioner in CWP No. 163 of 1992) 13.It
was urged before the High Court of Delhi that the decision of the Government in
selecting 8 parties, two for each of the cities, was bad on the following
grounds- (i) bias (ii)invoking certain hidden criteria (iii)irrelevant
considerations (iv)bypassing the Selection Committee (v) selecting otherwise underqualified
parties (vi)marketing system which was evaluated by the second Technical
Evaluation Committee for grading various bidders.
manipulated thereby a criterion was evolved which was tailormade to knock out
the petitioners before the High Court or resulting in 661 knocking out of the
petitioner in the case of India Telecomp Limited and Adino Telecom Limited.
Hutchison Max Telecom Private Limited urged that it was the highest in the
gradation. Its bid was not considered for a 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.
arguments were advanced before the High Court.
consideration of those arguments the writ petitions of Adino Telecom and Kanazia
Digital System were dismissed.
No. 4030 of 1992 filed by India Telecomp was allowed. A mandamus was issued to
consider afresh the 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, CWP No. 163 of 1992 in which
the petitioner was M/s Hutchison Max Telecom Private Limited, was allowed. A
direction was issued to reconsider the case of the petitioner, on the basis 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
the judgment of the Delhi High Court, the matter was reconsidered in the light
of the said judgment. A revised list of provisionally selected bidders was
prepared on 27-8-1993. That is as follows :
as on 12-10-1992Position as on 27-8-1993
Bombay Bombay Bharati Cellular Hutchison Max BPL Projects & Systems Bharati
Cellular Delhi Delhi India Telecomp Ltd. BPL Projects & Systems TATA
Cellular Pvt. Ltd. Sterling Cellular Ltd. Calcutta Calcutta Mobile Telecom Ltd.
India Telecomp Ltd. Usha Martin Telecom Usha Martin Telecom Madras Madras Skycell
Mobile Telecom Ltd. Sterling Cellular Ltd. Skycell It could be seen from the
above that TATACellular which was originally selected for Delhi has been left out.
it has preferred SLP (Civil) Nos. 14191-94 of 1993. M/s 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. Indian Telecom Private Limited
preferred SLP (C) No. 17809 of 1993. India Telecomp preferred SLP (C) No. 14266
Soli J. Sorabjee, learned counsel for the appellant, TATA Cellular, argues that
this is a two-staged tender. In the first stage, the evaluation 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, 662
namely, the financial bid. Chapter 11 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 :
Entire foreign exchange requirement shall be met by the foreign collaborator.
Minimum reliance on Indian public financial institutions will be preferred.
Debt equity ratio should not be more than 2 : 1.
is borne out by records that out of the seven criteria in evaluating the
financial bid, six parameters alone were taken into consideration. For 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 when the Chairman's note
dated 9-10-1992 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 follows :
of Communication (Telecom Commission) New Delhi - 11 000 1 No. /92-TM Dated: 27-8-1993 To, (Kind attention Subject:Tender
No. 44-21/9 1 -MMC (FIN) for franchise for Cellular Mobile Telephone Service
for Bombay, Delhi, Calcutta and Madras.
Kindly refer letter of even No. dated 12-10- 1992 informing you that you have
been provisionally selected for franchise for providing cellular mobile
telephone service at .... on a nonexclusive basis.
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 partner.
details of the rental, deposits and other terms fixed for the franchise will be
intimated to you shortly.
get necessary formalities completed by 30-9-1993. Yours faithfully, (S.K. Garg) DDG
(TM)" 19. The second ground of attack is bias.
that, Mr B.R. Nair, Member of Production in the Telecom Commission, who was appointed
as Member (Service) on 29-5-1992, participated. From the Adviser the
file went to Member (Service). The note of Mr Nair is dated 21-5-1992. He agreed with the recommendation of TEC that four
firms which had some deficiencies should be included in the short-list.
were BPL Systems and Projects, Mobile Telecom, Mobile Communications and Indian
Cellular. Therefore, BPL was approved by Mr Nair. Admittedly, Mr Nair's son is
employed in BPL Systems and Projects.
The High Court in dealing with the allegations of bias made against Mr Nair
of father and son in the chain of decision-making process is too remote to be
of any consequence. It is quite interesting to note that of the four companies
which were having some deficiencies in their tender documents in the first
stage and were recommended for consideration by the first TEC, three companies
including BPL made it to the final list of eight. Plea of bias is not alleged
in the selection of other two companies. In the circumstances it is not
possible for us to hold any allegation of bias made against Nair." The
High Court concluded:
do not think in a case like this the mere fact that Nair was part of the
machinery to make selection was enough to show that there could be reasonable
suspicion or real likelihood of bias in favour of BPL." This finding is
wrong. Mr Nair's participation from the beginning would constitute bias. In
support of this submission, the learned counsel relies on Manak Lal v. Prem
Chand1 (and particularly the passage occurring at SCR p.587), J. Mohapatra
& Co. v. State of Orissa2 (SCR at p. 334: SCC p. 112) and Ashok
Kumar Yadav v. State of Haryana3 (SCC paragraph 16 at p. 440 and
441). The English decision on this aspect which will support the contention is:
Properties Co. (EG. C.) Ltd. v. Lannon4.
law, there is no degree of bias. Even otherwise in the implementation of the
judgment of the High Court of Delhi, if this appellant is to be eliminated, it
ought to have been afforded an opportunity. Had that been done it would have
pointed out several factors, namely, the omission to consider relevant
material, namely, parameter seven, the prejudice caused by the award of marks
after the bids were opened. The DoT was obliged to disclose the maximum marks
for each criterion at the threshold of the 1 1957 SCR 575: AIR 1957 SC 425 2
(1984) 4 SCC 103, 112: (1985) 1 SCR 322 3 (1985) 4 SCC 417: 1986 SCC (L&S)
88 4 (1968) 3 All ER 304, 310: (1969) 1 QB 577: (1968) 3 WLR 694 664 financial
bid in the interest of transparency and to ensure a non-arbitrary selection.
the case of most of the bidders the foreign exchange is not met by the foreign
collaborator. In the case of India Telecomp the debt equity ratio is 1 : 1.
Their total project cost is stated to be Rs 101 crones. This means Rs 50.50 crores
represent equity and the other Rs 50.50 crores represent external commercial
borrowing. In this case, the entire foreign exchange is not met by the foreign
collaborator. Therefore, there is a breach of the fundamental condition of the
bid. This would constitute a disqualification which is a bar at the threshold.
Had this condition been strictly applied Bharati Cellular, Modi Telecom, Mobile
Communications, Hutchison Max, Skycell Communication would have been eliminated.
Likewise, Sterling Cellular also did not fulfil this condition.
was a mandatory condition that a foreign collaborator indicated at the first
stage-of tender, could not be changed thereafter. Inter alia on the strength of
credentials of foreign collaborators the bid is considered. If a change is
allowed it would amount to technical violation of the bid.
the case of BPL one of its foreign collaborators, namely, McCaw Cellular
withdrew from the collaboration. In spite of this, the breach was disregarded.
The bidder had to famish proof that he had obtained the approval of foreign
collaboration or filed application before the competent authority. BPL had not
even filed an application before the competent authority yet its tender was considered
and approved. On the very same ground, while Ashok Leyland had been
disqualified, equally it should have been applied to BPL.
Sterling Cellular had been rejected at various stages of consideration on the
ground that there was criminal complaint/investigation pending against it. The
Minister had also agreed but reversed that decision on the last day and
directed its consideration for inclusion in Madras on the purported ground that Madras was the least popular of the stations and that if any delay is caused
due to complications on account of CBI investigation would have the least
adverse effect for lack of competition. The High Court noted that no material
had been brought on record to show that there was any complaint against
factually, to the knowledge of the DoT, a criminal case stood registered
against Sterling Cellular in June 1993, before making the final selection. The DoT,
instead of rejecting Sterling Cellular on that ground, upgraded it from Madras to Delhi in disregard of the decision of the Minister.
Any foreign collaboration has to be approved by an inter-ministerial committee
called FIPB. No proposal for foreign collaboration could be evaluated by the
TEC without receiving the approval from the FIPB. Even under the tender
documents the bidders were required to show that they had applied for such
regard to all these, the selection is vitiated by arbitrariness or unfairness.
Harish Salve, learned counsel, appearing for India Telecomp attacks the
selection as arbitrary on the following three grounds :
Bypassing the Apex Committee and entrusting to a Committee which did not follow
Certain hidden criteria which were not disclosed earlier, were applied not as parameters,
but for elimination.
There are five glaring errors in the selection. One such error is in the case
of Sterling Cellular. It supports its bid on the strength of the foreign
exchange that may be obtained from foreign tourists. This is something
these points it is urged that after short- listing, the selection committee did
not select at all. The counter-affidavit filed on behalf of the Government of
India does not mention that there was a delay by Apex Committee, as held by the
High Court. On the contrary, the facts disclose there was no delay whatever.
Two hidden criteria were postulated. (i) Persons having less than one lakh
experience will not be considered. (ii) If two bidders have the same
collaborator in relation to foreign exchange that bid will not be considered.
These criteria were evolved after 18-8-1992. When one looks at the conditions
of tender, paragraph 2.2.1 talks of subscriber's capacity. That does not
mention about the nature of experience. Equally, paragraph 2.4.5 makes no
mention about one foreign collaborator for each bidder. In the case of Bharati
Cellular it was having only eighty-one thousand lines. The criterion of 80
thousand GSM was prescribed only to favour Bharati Cellular.
no change of foreign collaborator is allowed at the stage of financial
assessment after the technical committee has passed its bid, in the case to
permit such a change to BPL, is clearly arbitrary.
Indian Telecom was excluded because it has the same foreign collaborator,
namely, Telecom Malaysia. However, in the case of Bharati
Cellular, that test was not applied.
collaborator is Talkland Vodaphone. The same Vodaphone has been the
collaborator with Mobile Telecom. This would amount to adopting double
against BPL the attack is as under:
did not apply to SIA/FIPB but to Reserve Bank of India (RBI).
foreign collaborator was changed in the middle, as submitted above, inasmuch as
McCaw Cellular withdrew. The joint venture is gone when McCaw was given up.
Nair was biased in favour of BPL.
Total marks awarded are five. The idea is indigenous equipment whereas what has
been done by BPL is to quote higher customs duty.
Insofar as Sterling Cellular is preferred for Delhi that again is arbitrary. There is a CBI inquiry pending
against it. Secondly, the foreign 666 exchange is sought to be procured by
international roaming and it is awarded 10 marks out of 10.
Ashoke Sen, learned counsel, appearing for the Indian Telecom submits, firstly,
the limits of judicial review in the matter of this kind will have to be
limits could be gathered from Sterling Computers Ltd. v. M & N Publications
Ltd.5 and Union of India v. Hindustan Development Corpn.6 which lay down the
methods of reaching conclusion.
Generally speaking, in entering into contracts, the public authority is not
like a private person. The question to be asked is, have the guidelines been
laid down, if so laid down, have they been observed? In this case, Indian
Telecom was originally allotted Delhi. By reason of reconsideration pursuant to the judgment of the High
Court of Delhi, it has now been allotted Calcutta. This is wrong.
clause 7 of the General Conditions it is stipulated that there can be no change
of foreign collaborator. In clause 13, a certificate requires to be produced.
In a number of cases no such certificate has been produced.
2.4.5 of Chapter 11 of General Conditions lays down one of the parameters is
the experience of foreign operating partner. In the case of Bharati Cellular,
SFR France Company has no experience. Talkland's sole function is service.
Therefore, its experience should not have been added. In paragraph 1.4 the
nature of services is listed.
are not the services offered by Talkland. Hutchison Max did not produce any
certificate likewise Bharati Cellular.
The argument on behalf of Ashok Leyland, petitioner in Transferred Case No. 49
of 1993 is that it was an eligible bidder but has never been communicated the
reason as to why it came to be rejected. On 29-9-1992, the Committee records that reasons must be given. Yet no
reasons are furnished to the petitioner. Even though the Tender Evaluation
Committee held the petitioner to be qualified yet its bid had been rejected
without communicating any reason whatever. In Mahabir Auto Stores v. Indian Oil
Corpn.7 (SCC at p. 763, paragraph 18) this Court has held that there is an
obligation to communicate the reasons.
Koura, learned counsel appearing for Bharati Cellular, in opposing the
arguments advanced on behalf of the appellants, submits that service operation
should not be read in a narrow sense. In telephone industry there could be
operation as well as service. While defining the service, relying on paragraph
2.1 is wrong because services are defined in paragraph 1.4 whereas paragraph 21
refers only to obligations of licensee. Besides, the services are also
essential, they should be regarded as a part of operation.
G. Ramaswamy, learned counsel, appearing for Skycell states that his client has
been awarded Madras city. It is submitted that in the
absence of mala fides the individual marking system should not have been 5
(1993) 1 SCC 445 6 (1993) 3 SCC 499 7 (1990) 3 SCC 752 667 interfered with as
far as foreign exchange is concerned. In the case of his client regarding the
foreign exchange sourcing, inflow is more than the out flow.
Anil B. Divan, learned counsel appearing for Mobile Telecom Services submits
that though this respondent supports the judgment of the High Court, insofar as
it is allowed the writ petition filed by Hutchison Max, the same ought to be
reconsidered. The bid of Hutchison Max was rejected since it had filed an
incomplete compliance report.
High Court has chosen to accept the bid of Hutchison Max on four grounds :
approach of the Department was hyper-technical.
Compliance statement is akin to verification in a pleading. It cannot be placed
on a higher pedestal than verification.
Department ought to have allowed rectification since it was purely a mistake
Inasmuch as the Department had allowed a favourable treatment in the case of
Indian Telecom Private Limited and TATA Cellular the same treatment ought to
have been accorded to Hutchison Max as well.
findings are attacked on the following grounds. The tender documents both
technical and commercial bid as well as the financial bid clearly lay down the
manner of compliance. Clause 3 of the technical bid states, in the event of the
compliance report not being enclosed with the offer, the offer shall not be
considered. Equally, in relation to financial bid, Chapter I states that any
offer received after the due date and time shall be rejected. The various other
clauses also postulate a strict compliance.
therefore, the bid is incomplete the offer ought to have been rejected. Hence,
there is no question of the Department of Telecommunication condoning the
defect. If the view of the High Court is to prevail it would amount to allowing
a post tender modification on a select basis, that is, on the basis whether the
mistake was intentional or unintentional. Where the Department has chosen to
reject, the High Court cannot sit in judgment. To state it is like verification
of pleading is to overlook that the pleadings are governed by the verification.
That is not the case here. The comparison with Indian Telecom and TATA Cellular
is also incorrect. In the case of Indian Telecom there is an unconditional
compliance. Only in the covering letter a view has been expressed about the
economic viability of the services and the bidders' preference. Hence, it
cannot be contended that the bid was conditional, in any manner.
TATA Cellular was not accompanied in this regard.
The allegation against this respondent that the foreign exchange requirement
has not been met is incorrect. The documents filed by the respondent clearly
show that there is a surplus of approximately three crore rupees, available
from the foreign collaborator, in the first year. The allegation of India Telecomp
that the bidder was responding on the basis of one party per city and the
proposal for licence for a period of 20 to 25 years is factually incorrect.
Equally, to state that this respondent quoted a lower 668 customs duty and
thereby got higher marks is incorrect. The financial bid of the respondent
shows that this had taken customs duty at 95 per cent for the first year when
the backlog of the equipment is to be imported. For the subsequent years, the
projection was made on a reduced customs duty in view of the announced policy
of the Government to reduce customs duty and to bring them in line with
The argument that there is a common collaborator of Bharati Cellular and Mobile
Telecom Services proceeds on the footing that Bharati Cellular is collaborating
with Talkland. That Talkland has a service privately in agreement with Vodaphone
Group. Thus, Vodaphone is the common foreign collaborator of Bharati Cellular
and Mobile Telecom. This is not correct. Mobile Telecom has its foreign partner
for the purpose of setting up a leading cellular network cooperator of U.K., namely, Vodaphone.
as network operator is the owner of Vodaphone Cellular Network. It is
responsible for the setting up of the network in U.K. where cellular network operator can also be a service
provider. Vodaphone has been issued a licence as the cellular network operator
under Section 7 of the U.K. Telecommunications Act of 1984. It
is known as a public telecommunication operator. Vodaphone has about 30 service
providers in U.K. including Talkland. It has no
equity in Talkland. There are no common directors on the boards of two
companies. Vodaphone is the foreign collaborator of Mobile Telecom. It has no
collaboration agreement with Bharati Cellular. In regard to Bharati Cellular it
has only a collaboration agreement with Talkland which is a mere service
Arguing on behalf of Sterling Cellular Mr K. Parasaran, learned counsel submits
that the technical competency and capacity to execute the contract by this
respondent with its joint venture partner is not in doubt. Sterling Cellular
was short-listed by Technical Evaluation Committee itself.
amongst the 12 tenderer short-listed in the first list. The joint venture
collaborator of Sterling, namely, Cellular Communication is
a reputed international company having large-scale operation in U.S.A. As regards the foreign exchange
inflow and outflow it is submitted that Sterling Cellular has projected its
stand that the foreign exchange inflow will be from foreign tourists and
business travelers visiting the city of Delhi. The expression "international roaming" has been used in
relation to such foreign tourists and business travellers. Internationally,
cellular phones are used by two categories of persons, (1) subscribers residing
in the city who would use the phone on a permanent basis, (2) the tourists and
business travellers visiting the city who would use the phone on a temporary
basis. Inasmuch as the foreign tourists and foreign business travellers make
the payment in foreign currency it will be a source of foreign exchange. What
is required under the tender condition is the projection of foreign exchange
inflow and outflow relating to the cellular phone contract. This means inflow
in foreign exchange as a result of the operation of cellular phone system.
Hence, the bearing from tourists and business travellers is a very relevant
consideration. Like this respondent, Hutchison Max selected for the Bombay city also 669 projected for the
foreign exchange openings by the use of cellular phone by tourists and business
travellers. The argument that the foreign tourists and business travellers are
not likely to use cellular telephone is not correct since the calls made
through the cellular telephones are not only cheaper but also available as a 24
of course, is a greater facility. In the note made by the Minister it has been
mentioned that the respondent has undertaken to be bound by conditions
contained in the tender documents to the effect that the entire foreign
exchange requirement shall be met by the foreign collaborator. In fact, the
foreign collaborator has also confirmed this.
regards the allegation of CBI inquiry, it is submitted that the learned Judges
of the High Court perused the note of the Chairman, Telecom Commission. It was
only after this the Court held that there were no strictures against holding
company of SCL by the name Sterling Computers Limited, in M&N Publication
Ltd. v. MTNL8. It was further held that it appears to have been punished for no
sin of it. There was no CBI inquiry on the date of the above judgment. It was
after the judgment dated 10-7-1993, the FIR was filed which has been
allowed to be proceeded with by way of directions in petition under Section 482
of the Criminal Procedure Code. This Court in Erusian Equipment & Chemicals
Ltd. v. State of WB.9 has laid down that pending
investigation blacklisting cannot be permitted.
said 1 ratio will apply to this case.
K.K. Venugopal, learned counsel appearing for Hutchison Max submits that this
respondent was rejected by the committee. That was questioned in the writ
High Court directed reconsideration of its bid. With regard to compliance
statement it was stated that the company agrees to fully comply with all
paragraphs of Chapter II of the General Conditions and Chapter V : Tariffs of
Document No. 44-21/91-MMC(FIN) without any deviation and reservation. No doubt,
there is a failure, in the first instance, to state about compliance with
Chapters 11 and IV This is an accidental omission. It amounts to a clerical
error as laid down in Moffett, Hodgkins & Clarke Co. v. City of Rochester10. If it is a mistake in relation to
non- essential or collateral matter it could always be condoned.
Privy Council in Mohd. Ejaz Husain v. Mohd. Iftikhar Husain11 has held that it
is always a matter of form and not of substance. Other argument is advanced
that there is a defect in the compliance statement.
The alternate submission is, the question of error does not arise since the
compliance statement was filed on 11-9- 1992 while the contract came to be
awarded only on 12-10- 1992. In such a case the question would be what is the
scope of judicial review? The court could interfere in the following three
categories of cases
Quasi-judicial 8 (1992) 4 DLT 24 9 (1975) 1 SCC 70: (1975) 2 SCR 674 10 44 L Ed
373 : 178 US 1108 (1899) 11 AIR 1932 PC 76: 59 IA 92: ILR 7 Luck 1 670
Administrative, for example, price fixing
Award of contracts Here, the matter is technical in relation to award of
contract. Judicial review does not mean the court should take over the
contracting powers. The parameters for interference in such matters would be (i)
Mala fide (ii) Bias (iii) Arbitrariness to the extent of perversity.
none of these is present, the court should not interfere.
must be left to the authorities. The contrary arguments advanced on behalf of
the appellants against this respondent are not tenable.
F.S. Nariman, learned counsel appearing for BPL in the foremost argues by way
of preliminary submissions that three questions will arise at the threshold.
The scope and ambit of judicial review with regard to decisions bona fide
arrived at in tender cases (pre- contract).
The applicability of judicial review in these cases.
The interference under Article 136 of the Constitution where the power of
judicial review has been exercised by the High Court under Article 226.
is submitted that the reasonableness in administrative law means to distinguish
between proper use or improper use of power. The test is not the court's own
standard of reasonableness. This Court has reiterated this proposition in G.B. Mahajan
v. Jalgaon Municipal Council12.
is a possibility of fallibility inherent in all fact- findings. To insist upon
a strict compliance with each and every tender document is not the law. This
Court upheld the waiver of technical, literal compliance of the tender
conditions in Poddar Steel Corn. v. Ganesh Engineering Works 1 3. In the
present case, the short-listing at the first stage, the allotment of cities at
the second stage and the selection of franchisees qua cities at the third stage
were after evaluating the financial bid by a collectivity of persons at
different level. Therefore, possibility of elimination of arbitrariness is
conceived in the system itself. Further, the High Court has analysed properly
and come to the proper conclusion. That being so, this Court will not interfere
by exercising its powers under Article 136 of the Constitution of India. The
argument about hidden criteria would not affect or benefit this respondent
directly or indirectly. Even otherwise, the hidden criteria cannot be impugned.
There is no mention of any particular criterion on the basis of which the
selection was to be made. At the second stage what was required to be kept in
mind were the parameters mentioned in paragraph 2.4. The criteria for selection
to each of the four cities had to be provided inter alia because the tenderer
did not tender for one city alone but for more than one. The allegation of bias
on the 12 (1991) 3 SCC 91 (para 43-46) 13 (1991) 3 SCC 273 671 part of Mr Nair
is without substance. It is submitted, whenever disqualification on the ground
of personal involvement is alleged :
person involved (for example related) must be the decision-maker;
must be sufficient nexus between the decision- maker and the party complaining
in order to justify the real likelihood of bias.
After a decision is reached the standard of proof of bias is higher as laid
down in Vassiliades v. Vassiliades14.
decision has been referred to by this Court in Ranjit Thakur v. Union of India
15. The learned counsel after referring to the relevant case law submits that
cases of bias and ostensible bias had to be regarded in the light of their own
circumstances. In this case Mr Subhash Nair is only one of the officers in BPL,
which has over 5500 employees and 89 officers of his rank in 27 offices all
over India. Mr Nair was not the decision-maker
at all. He was one of the recommending authorities. His involvement in the
approval and selection of the tender was indispensable. He was originally the
Member (Services) on 29-5-1992.
he became Director General, Telecommunications by a notification issued by 28-7-1992 by the President of India. As such, he was to
exercise all powers of Telegraph Authority under Section 3(6) of the Act.
Therefore, the High Court was right in applying the doctrine of necessity.
doctrine has come up for discussion in Charan Lal Sahu v. Union of India 16.
Whatever it may be, Indian Telecom cannot take the point of bias. It took the
chance and benefit of being short-listed despite the knowledge of Mr Nair's
TATA Cellular did not raise the allegation of bias in the High Court. In fact,
it opposed the plea of bias.
doubt, this respondent dropped McCaw as a foreign collaborator. That does not
amount to change where one out of two or three collaborators is dropped. This
foreign collaborator was required as Condition No. 7 only in financial bid
documents not in tender documents. This respondent submitted financial bid on 17-8-1992 showing only two of the collaborators. McCaw was not
shown as that was already dropped out. Therefore, the High Court rightly held
that McCaw was not taken into consideration in awarding marks for foreign
partners' experience. The object of the first stage was not to allot the
franchise but to short-list the parties.
The learned Solicitor General produced the copies of the relevant documents in
the file and took us through the same. It is submitted, after outlining the process
of evaluation in the second stage six parameters were adopted by the Committee
consisting of Telecom experts who are none other than the senior officers of
the Department of Telecommunications. The parameters are as follows :
Quoted rental ceiling 14 AIR 1945 PC 38: 221 IC 603: 1945 All LJ 34 15 (1987) 4
SCC 611: 1988 SCC (L&S) 1: (1987) 5 ATC 11 3: (1988) 1 SCR 512 16 (1990) 1
SCC 613 672
Project financing plan
Foreign Exchange inflow and outflow
Project's plan for cellular equipment within the country including the tie-up
with the proposed Indian manufacturers.
Experience of foreign operating partner and
Financial strength of parameters/partner companies.
parameters were assigned marks. The evaluation report including the ranking
arrived at by the tender evaluation committee was then put up to the Telecom
Commission for further consideration and selection. Due to technical
considerations not more than two bidders per city could be accommodated.
Paragraph 14 of the bid conditions provided that each bidder must furnish a
declaration in a specified form to the bid documents. The declaration given by
Hutchison Max was complete. However, its bid had to be rejected on merits in
spite of securing high marks.
M/s India Telecomp secured the second place for Calcutta. Inasmuch as they had the same foreign partner as Usha
Martin which secured a higher place than India Telecomp, it was rejected and
the choice went to the next bidder in the marking list. After the above
considerations were taken into account, the remaining companies were selected
which led to the writ petition. Pursuant to the High Court directions the
matter was reconsidered and selections have been made as was done earlier.
The principal objection of the Union of India is that the High Court was not
justified in scrutinising the tendering process in such detail. The minute
examination is unwarranted because the High Court cannot constitute itself the
selecting authority. However, no appeal is preferred, as otherwise, it would
have further delayed the introduction of very valuable communication facility
in this country.
that, it has no particular interest as to who is selected. However, it becomes
necessary to answer the allegations made about the actual selection and whether
there was any bias on the part of the selection committee.
selection process was dictated by the, exigencies of the situation. It is a
question, as to what one could settle for, in the given circumstances. The
Government was embarking upon a totally new technology project, for the first
time. At that stage, it was impossible to predict what kind of response will
there be. Therefore, it is impossible to predicate the cut-off limits which
could be set or which conditions have to be relaxed or softened. The allegation
of bias, it is held, must be a case of reasonable possibility or likelihood of
bias. In this case, there is no such reasonable likelihood. Mr B.R. Nair was
not influenced directly, or, in any other manner, subtle or otherwise. He did
not, in fact, participate in any of the significant or crucial stages in the
otherwise, the relationship is not such as to give reasonable apprehension of
bias. In support of this argument reliance is placed on Manak Lal and Ashok
Kumar Yadav v. State of Haryana3 (SCC p. 441, para 16). As regards
the parameter in relation to project financing it was kept in view by taking
into account the estimated number of subscribers, installation charges, monthly
rental, any 673 other charges etc. They were included in the competition.
other parameters of the bidders were treated on the same footing as regards
this parameter is concerned. Concerning rental, it was specifically averred in
the counter before the High Court that the other charges had also been included
while calculating quoted rental.
is not correct to contend that Talkland's experience is not relevant. In the United Kingdom the operation of Mobile Cellular
System is handled by the network cooperator and a proper service provider,
acting together. The licensee is required to perform the combined functions of
a network operator as well as service provider. The duties and functions of a
licensee are not limited to making available the services as defined. In fact,
the principal obligation of the licensee is expressed generally in paragraph 2.
1. 1. A reading of the other clauses makes it clear that it is incumbent upon
the licensee to provide services. Therefore, the experiences of a network
operator and the service provider are both important and relevant.
the case of Bharati Cellular the attack is that the cut-off came to be reduced
to 80,000 subscribers to accommodate it. Bharati Cellular mentioned in its
tender, as on 31-12-1991, the name of SFR France which had
80,000 subscribers. By 31-12-1991, it would have got increased to
more than one lakh. In August 1992 when the bids were submitted SFR's line of
experience could reasonably be expected to be more than one lakh. SFR France
had a GSM licence. Having regard to these facts, it would not be an
unreasonable estimate, for the experts, to conclude that Bharati Cellular was
having experience of over one lakh lines.
is alleged that the debt/equity ratio of Skycell has not been properly taken. Skycell
ratio was 1.5 and was correctly assigned 3 marks.
Cellular alleges that Bharati Cellular, Mobile Telecom, Sterling and Skycell have breached note (ii)
under para 2.4 which provides that minimum reliance on Indian Public Financial
Institutions will be preferred. The bid profess made distinction between loans
from Public Financial Institutions and Banks. The criticism of TATA confuses
this requirement with loan from Banks. The criterion, it is submitted, was
the evaluation of process open market purchase was left out of consideration.
Since Skycell bid for Madras showed that they had projected
their operations in Madras for initial years, would be below
profitable levels. In such a case, no dividend would have to be paid to the
it was concluded that the foreign exchange inflow position was better.
International roaming is a relevant consideration.
the tender document it will be clear that it provides for facility of roaming
to visitors. Roaming facility for a tourist is available in the GSM system.
Even if this 674 condition has been relaxed in favour of certain bidders, there
is nothing wrong. Reliance is placed on G.J. Fernandez v. State of Kamatakal7.
With regard to the foreign collaborator of BPL there was no change. French
Telecom is one of the foremost in the world in this technology. It remained as
foreign collaborator of BPL. Dropping out of McCaw did not violate the bid
conditions which were really aimed at preventing a new and, therefore, unknown
collaborator being introduced at the financial bid stage. The second Technical
Evaluation Committee did not see this as a violation. In any event, where the
judgment of the High Court had been given effect to and a proper evaluation has
been done, no interference is warranted.
Soli J. Sorabjee, learned counsel, in his reply, would submit that as regards
the scope of judicial review the American cases cited by Mr K.K. Venugopal
would not apply. As laid down in State of U.P
v. Maharaja Dharmander Prasad Singh18 judicial review is confined to decision-
making process. This being an administrative action the scope of judicial
review could be gathered from Council of Civil Service Unions v. Minister for
Civil Service19. In Secy. of State for Education and Science v. Tameside
Metropolitan Borough Council2O the law has been stated as to when subjective
satisfaction could be interfered with under judicial review. This Court also
had occasion to deal with similar contracts and stated the law relating to
judicial review in Sterling Computers Ltd. v. M&N Publications Ltd.5 (SCC
pp. 455 and 458, para 19) and then again, in Union of India v. Hindustan
The point against Hutchison Max is, the defect in its tender, came to be
pointed out, requiring it to comply with the same. In view of the defect
Hutchison Max came to be excluded.
Nair's participation from the beginning would constitute bias in law.
Ashoke Sen, in his reply, would state that in the case of Hutchison Max the
mistake was committed in the offer with regard to compliance statement. The
principle of bias as laid down in R. v. Essex Justices (Sizer), ex p Perkins21
would apply. Similar passage occurs in de Smith's Constitutional and
Administrative Law (4th Edn.) p. 268.
Harish Salve, in reply, would urge that the hidden criteria were evolved in
relation to common foreign collaborator. This shows that there was lack of candour
on the part of the Union. It is mentioned that Talkland was
taken into consideration. It is not so, as seen from the file. The conditions
were tailor-made to suit Bharati Cellular and BPL.
(1990) 2 SCC 488 (para 18) 18 (1989) 2 SCC 505, 524: (1989) 1 SCR 176, 202 19
(1985) 1 AC 374: (1984) 3 All ER 935: (1984) 3 WLR 1174 20 1977 AC 1014: (1976)
3 All ER 665: (1976) 3 WLR 641 21 (1927) 2 KB 475: 1927 All ER Rep 393: 96 UKB
K.K. Venugopal would urge that the rule relating to judicial review should not
be applied here because it is one of selection by an a administrative process.
Having regard to the above arguments we propose to deal with the matter from
the following five aspects :
scope of judicial review in matters of this kind.
Whether the selection is vitiated by arbitrariness? (a) regarding financial
projection and (b) regarding rental.
Bias of Mr Nair whether affected the selection ?
Whether the Apex Committee has been bypassed?
Evolving of hidden criteria whether valid?
Scope of Judicial Review
tender is an offer. It is something which invites and is communicated to notify
acceptance. Broadly stated, the following are the requisites of a valid tender
must be unconditional.
Must be made at the proper place.
Must conform to the terms of obligation.
Must be made at the proper time.
Must be made in the proper form.
person by whom the tender is made must be able and willing to perform his
There must be reasonable opportunity for inspection.
Tender must be made to the proper person.
must be of full amount.
cannot be denied that the principles of judicial review would 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 exercise of that power of judicial review. Government
is the guardian of the finances of the State. It is expected to protect the
financial interest of the State. The right to refuse the lowest or any other
tender is always available to the Government.
the principles laid down in Article 14 of the Constitution have to be kept in
view while accepting or refusing a tender. There can be no question of
infringement of Article 14 if the Government tries to get the best person or
the best quotation. The right to choose cannot be considered to be an arbitrary
power. Of course, if the said power is exercised for any collateral purpose the
exercise of that power will be struck down.
Judicial quest in administrative matters has been to find the right balance
between the administrative discretion to decide matters whether contractual or
political in nature or issues of social policy; thus they are not essentially
justifiable and the need to remedy any unfairness. Such an unfairness is set
right by judicial review.
Lord Scarman in Nottinghamshire County Council v. Secretary of State for the
Environment22 proclaimed :
'Judicial review' is a great weapon in the hands of the judges; but the judges
must observe the constitutional limits set by our parliamentary system upon the
exercise of this beneficial power." Commenting upon this Michael Supperstone
and James Goudie in their work Judicial Review (1992 Edn.) at p. 16 say :
anyone were prompted to dismiss this sage warning as a mere obiter dictum from
the most radical member of the higher judiciary of recent times, and therefore
to be treated as an idiosyncratic aberration, it has received the endorsement
of the Law Lords generally.
words of Lord Scarman were echoed by Lord Bridge of Harwich, speaking on behalf
of the Board when reversing an interventionist decision of the New Zealand
Court of Appeal in Butcher v. Petrocorp Exploration Ltd. 18-3- 1991."
Observance of judicial restraint is currently the mood in England. The judicial power of review is
exercised to rein in any unbridled executive functioning. The restraint has two
contemporary manifestations. One is the ambit of judicial intervention; the
other covers the scope of the court's ability to quash an administrative
decision on its merits. These restraints bear the hallmarks of judicial control
over administrative action.
Judicial review is concerned with reviewing not the merits of the decision in
support of which the application for judicial review is made, but the
decision-making process itself.
Chief Constable of the North Wales Police v. Evans23 Lord Brightman said :
review, as the words imply, is not an appeal from a decision, but a review of
the manner in which the decision was made.
review is concerned, not with the decision, but with the decision-making
process. Unless that restriction on the power of the court is observed, the
court will in my view, under the guise of preventing the abuse of power, be
itself guilty of usurping power." In the same case Lord Hailsham commented
on the purpose of the remedy by way of judicial review under RSC, Ord. 53 in
the following terms :
remedy, vastly increased in extent, and rendered, over a long period in recent
years, of infinitely more convenient access than that provided by the old
prerogative writs and actions for a declaration, is intended to protect the
individual against the abuse of power by a wide range of authorities, judicial,
quasi-judicial, and, as would originally have been thought when I first
practiced at the Bar, administrative. It is not intended to take away from
those authorities the powers and 22 1986 AC 240, 251: (1986) 1 All ER 199 23
(1982) 3 All ER 141, 154 677 discretions properly vested in them by law and to
substitute the courts as the bodies making the decisions. It is intended to see
that the relevant authorities use their powers in a proper manner (p.
1160)." In R. v. Panel on Takeovers and Mergers, ex p Datafin plc24, Sir
John Donaldson, M.R. commented:
application for judicial review is not an appeal." In Lonrho plc v.
Secretary of State for Trade and Industry25, Lord Keith said: "Judicial
review is a protection and not a weapon." It is thus different from an
appeal. When hearing an appeal the Court is concerned with the merits of the
decision under appeal. In Amin, Re26, Lord Fraser observed that :
review is concerned not with the merits of a decision but with the manner in
which the decision was made.... Judicial review is entirely different from an
ordinary appeal. It is made effective by the court quashing the administrative
decision without substituting its own decision, and is to be contrasted with an
appeal where the appellate tribunal substitutes its own decision on the merits
for that of the administrative officer."
R. v. Panel on Take-overs and Mergers, ex p in Guinness plc27, Lord Donaldson,
M.R. referred to the judicial review jurisdiction as being supervisory or
'longstop' jurisdiction. Unless that restriction on the power of the court is
observed, the court will, under the guise of preventing the abuse of power, be
itself guilty of usurping power.
The duty of the court is to confine itself to the question of legality. Its
concern should be :
Whether a decision-making authority exceeded its powers?
an error of law,
committed a breach of the rules of natural justice,
a decision which no reasonable tribunal would have reached or, 5. abused its
it is not for the court to determine whether a particular policy or particular
decision taken in the fulfillment of that policy is fair. It is only concerned
with the manner in which those decisions have been taken.
extent of the duty to act fairly will vary from case to case. Shortly put, the
grounds upon which an administrative action is subject to control by judicial
review can be classified as under:
(1987) 1 All ER 564 25 (1989) 2 All ER 609 26 Amin v. Entry Clearance Officer,
(1983) 2 All ER 864 27 (1990) 1 QB 146: (1989) 1 All ER 509 678
: This means the decision- maker must understand correctly the law that
regulates his decision-making power and must give effect to it.
Irrationality, namely, Wednesday unreasonableness.
above are only the broad grounds but it does not rule out addition of further
grounds in course of time. As a matter of fact, in R. v. Secretary of State for
the Home Department, ex Brind28, Lord Diplock refers specifically to one
development, namely, the possible recognition of the principle of
proportionality. In all these cases the test to be adopted is that the court
should, "consider whether something has gone wrong of a nature and degree
which requires its intervention".
What is this charming principle of Wednesday unreasonableness? Is it a magical
formula? In R. v. Askew29, Lord Mansfield considered the question whether
mandamus should be granted against the College of Physicians. He expressed the relevant
principles in two eloquent sentences. They gained greater value two centuries later
is true, that the judgment and discretion of determining upon this skill,
ability, learning and sufficiency to exercise and practise this profession is
trusted to the College of Physicians and this Court will not take it from them,
nor interrupt them in the due and proper exercise of it. But their conduct in
the exercise of this trust thus committed to them ought to be fair, candid and
unprejudiced; not arbitrary, capricious, or biased; much less, warped by
resentment, or personal dislike."
quote again, Michael Supperstone and James Goudie; in their work Judicial
Review (1992 Edn.) it is observed at pp. 119 to 121 as under :
assertion of a claim to examine the reasonableness been done by a public
authority inevitably led to differences of judicial opinion as to the
circumstances in which the court should intervene. These differences of opinion
were resolved in two landmark cases which confined the circumstances for
intervention to narrow limits.
Kruse v. Johnson3O a specially constituted divisional court had to consider the
validity of a bye- law made by a local authority. In the leading judgment of
Lord Russell of Killowen, C.J., the approach to be adopted by the court was set
out. Such bye-laws ought to be 'benevolently' interpreted, and credit ought to
be given to those who have to administer them that they would be reasonably
administered. They could be held invalid if unreasonable : Where for instance
bye-laws were found to be partial and unequal in their operation as between
different classes, if they were manifestly unjust, if they disclosed bad faith,
or if they involved such oppressive or gratuitous interference with the rights
of citizens as could find no justification in the minds of reasonable men. Lord
Russell 28 (1991) 1 AC 696 29 (1768) 4 Burr 2186 : 98 ER 139 30 (1898) 2 QB 91:
(1895-9) All ER Rep 105 679 emphasised that a bye-law is not unreasonable just
because particular judges might think it went further than was prudent or
necessary or convenient.
1947 the Court of Appeal confirmed a similar approach for the review of
executive discretion generally in Associated Provincial Picture Houses Ltd. v. Wednesbury
Corpn31. This case was concerned with a complaint by the owners of a cinema in Wednesbury
that it was unreasonable of the local authority to licence performances on
Sunday only subject to a condition that 'no children under the age of 15 years
shall be admitted to any entertainment whether accompanied by an adult or not'.
In an extempore judgment, Lord Greene, M.R. drew attention to the fact that the
word 'unreasonable' had often been used in a sense which comprehended different
grounds of review. (At p. 229, where it was said that the dismissal of a
teacher for having red hair (cited by Warrington, L.J. in Short v. Poole
Corpn.32, as an example of a 'frivolous and foolish reason') was, in another
sense, taking into consideration extraneous matters, and might be so
unreasonable that it could almost be described as being done in bad faith; see
also R. v. Tower Hamlets London Borough Council, ex p Chetnik Developments
Ltd.33 (Chapter 4, p. 73, supra). He summarised the principles as follows:
Court is entitled to investigate the action of the local authority with a view
to seeing whether or not they have taken into account matters which they ought
not to have taken into account, or, conversely, have refused to take into
account or neglected to take into account matter which they ought to take into
account. Once that question is answered in favour of the local authority, it
may still be possible to say that, although the local authority had kept within
the four comers of the matters which they ought to consider, they have
nevertheless come to a conclusion so unreasonable that no reasonable authority
could ever have come to it. In such a case, again, I think the court can
interfere. The power of the court to interfere in each case is not as an appellate
authority to override a decision of the local authority, but as a judicial
authority which is concerned, and concerned only, to see whether the local
authority has contravened the law by acting in excess of the power which
Parliament has confided in them.' This summary by Lord Greene has been applied
in countless subsequent cases.
modem statement of the principle is found in a passage in the speech of Lord Diplock
in Council of Civil Service Unions v. Minister for Civil Service19:
(1948) 1 KB 223: (1947) 2 All ER 680 32 (1926) 1 Ch 66, 91: 1925 All ER Rep 74
33 1988 AC 858, 873: (1988) 2 WLR 654: (1988) 1 All ER 961 680 'By
"irrationality" I mean what can now be succinctly referred to as
"Wednesbury unreasonableness". (Associated Provincial Picture Houses
Ltd. v. Wednesbury Corpn.31) It applies to a decision which is so outrageous in
its defiance of logic or of accepted moral standards that no sensible person
who had applied his mind to the question to be decided could have arrived at.'
" 80. At this stage, The Supreme Court Practice, 1993, Vol. 1, pp. 849850,
may be quoted :
Wednesbury principle.- A decision of a public authority will be liable to be
quashed or otherwise dealt with by an appropriate order in judicial review
proceedings where the court concludes that the decision is such that no
authority properly directing itself on the relevant law and acting reasonably
could have reached it. (Associated Provincial Picture Houses Ltd. v. Wednesbury
Corpn. 3 1, per Lord Greene, M.R.)" 81. Two other facets of irrationality
may be mentioned.
is open to the court to review the decision-maker's evaluation of the facts.
The court will intervene where the facts taken as a whole could not logically
warrant the conclusion of the decision-maker. If the weight of facts pointing
to one course of action is overwhelming, then a decision the other way, cannot
be upheld. Thus, in Emma Hotels Ltd. v. Secretary of State for Environment34,
the Secretary of State referred to a number of factors which led him to the
conclusion that a non-resident's bar in a hotel was operated in such a way that
the bar was not an incident of the hotel use for planning purposes, but
constituted a separate use. The Divisional Court analysed the factors which led
the Secretary of State to that conclusion and, having done so, set it aside.
Donaldson, L.J. said that he could not see on what basis the Secretary of State
had reached his conclusion.
decision would be regarded as unreasonable if it is impartial and unequal in its
operation as between different classes. On this basis in R. v. Bernet London
Borough Council, ex p Johnson35 the condition imposed by a local authority
prohibiting participation by those affiliated with political parties at events
to be held in the authority's parks was struck down.
Bernard Schwartz in Administrative Law, 2nd Edn., p. 584 has this to say :
If the scope of review is too broad, agencies are turned into little more than
media for the transmission of cases to the courts. That would destroy the
values of agencies created to secure the benefit of special knowledge acquired
through continuous administration in complicated fields. At the same time, the
scope of judicial inquiry must not be so restricted that it prevents full
inquiry into the question of legality. If that question cannot be properly
explored by the judge, the right to review becomes meaningless. 'It makes
judicial review of administrative orders 34 (1980) 41 P & CR 255 35 (1989)
88 LGR 73 681 a hopeless formality for the litigant.... It reduces the judicial
process in such cases to a mere feint.' Two overriding considerations have
combined to narrow the scope of review. The first is that of deference to the
administrative expert. In Chief Justice Neely's words :
have very few illusions about my own limitations as a judge and from those
limitations I generalize to the inherent limitations of all appellate courts
reviewing rate cases. It must be remembered that this Court sees approximately
1262 cases a year with five judges. I am not an accountant, electrical
engineer, financier, banker, stock broker, or systems management analyst. It is
the height of folly to expect judges intelligently to review a 5000 page record
addressing the intricacies of public utility operation.' It is not the function
of a judge to act as a superboard, or with the zeal of a pedantic schoolmaster
substituting its judgment for that of the administrator.
result is a theory of review that limits the extent to which the discretion of
the expert may be scrutinised by the non-expert judge. The alternative is for
the court to overrule the agency on technical matters where all the advantages
of expertise lie with the agencies, If a court were to review fully the
decision of a body such as state board of medical examiners 'it would find
itself wandering amid the maze of therapeutics or boggling at the mysteries of
the Pharmacopoeia'. Such a situation as a state court expressed it many years
ago 'is not a case of the blind leading the blind but of one who has always
been deaf and blind insisting that he can see and hear better than one who has
always had his eyesight and hearing and has always used them to the utmost
advantage in ascertaining the truth in regard to the matter in question'.
second consideration leading to narrow review is that of calendar pressure. In
practical terms it may be the more important consideration. More than any
theory of limited review it is the pressure of the judicial calendar combined
with the elephantine bulk of the record in so many review proceedings which
leads to perfunctory affirmably of the vast majority of agency decisions."
modem comprehensive statement about judicial review by Lord Denning is very
apposite; it is perhaps worthwhile noting that he stresses the supervisory
nature of the jurisdiction :
often entrusts the decision of a matter to a specified person or body, without
providing for any appeal. It may be a judicial decision, or a quasi-judicial
decision, or an administrative decision.
Parliament says its decision is to be final. At other times it says nothing
about it. In all these cases the courts will not themselves take the place of
the body to whom Parliament has entrusted the decision.
courts will not themselves embark on a rehearing of the 682 matter. See Healey
v. Minister of Health36.
nevertheless, the courts will, if called upon, act in a supervisory capacity.
They will see that the decision-making body acts fairly. See H.K. (an infant),
Re37, and R. V. Gaming Board for Great Britain, ex p Benaim and Khaida38. The courts will ensure that the
body acts in accordance with the law. If a question arises on the
interpretation of words, the courts will decide it by declaring what is the
correct interpretation. See Punton v. Ministry of Pensions and National
Insurance39. And if the decision-making body has gone wrong in its
interpretation they can set its order aside. See Ashbridge Investments Ltd. v.
Minister of Housing and Local Government40. I know of some expressions to the
contrary but they are not correct). If the decision-making body is influenced
by considerations which ought not to influence it; or fails to take into
account matters which it ought to take into account, the court will interfere.
See Padfield v. Minister of Agriculture, Fisheries and Food41. If the
decision-making body comes to its decision on no evidence or comes to an
unreasonable finding so unreasonable that a reasonable person would not have
come to it then again the courts will interfere. See Associated Provincial
Picture Houses Ltd. v. Wednesbury Corpn.31 If the decision making body goes
outside its powers or misconstrues the extent of its powers, then, too the
courts can interfere. See Anisminic Ltd. v. Foreign Compensation Commission42.
And, of course, if the body acts in bad faith or for an ulterior object, which
is not authofised by law, its decision will be set aside. See Sydney Municipal
Council v. Campbell43. In exercising these powers, the courts will take into
account any reasons which the body may give for its decisions. If it gives no
reasons in a case when it may reasonably be expected to do so, the courts may
infer that it has no good reason for reaching its conclusion, and act
accordingly. See Padfield case (as AC pp. 1007, 1061)41."
may usefully refer to Administrative Law Rethinking Judicial Control of
Bureaucracy by Christopher F. Edley, JR (1990 Edn.). At p. 96 it is stated thus
great deal of administrative law boils down to the scope of review problem;
defining what degree of deference a court will accord to an agency's findings,
conclusions, and choices, including choice of procedures. It is misleading to
speak of a 'doctrine', or 'the law', of scope of review. It is instead just a
big problem, that is addressed 36 (1955) 1 QB 221: (1954) 3 All ER 449: (1954)
3 WLR 815 37 (1967) 2 QB 617,630: (1967) 1 All ER 226: (1967) 2 WLR 692 38
(1970) 2 QB 417: (1970) 2 All ER 528: (1970) 2 WLR 1009 39 (1963) 1 WLR 186:
(1963) 1 All ER 275 40 (1965) 1 WLR 1320: (1965) 3 All ER 371 41 1968 AC 997:
(1968) 1 All ER 694 42 (1969) 2 AC 147: (1969) 1 All ER 208: (1969) 2 WLR 163
43 1925 AC 338: 1924 All ER Rep 930 683 piecemeal by a large collection of
Culp Davis has offered a condensed summary of the subject:
usually substitute (their own) judgment on the kind of questions of law that
are within their special competence, but on other question they limit
themselves to deciding reasonableness; they do not clarify the meaning of
reasonableness but retain full discretion in each case to stretch it in either
Universal Camera Corpn. v. National Labor Relations Board44 Justice Frankfurter
formula for judicial review of administrative action may afford grounds for
certitude but cannot assure certainty of application. Some scope for judicial
discretion in applying the formula can be avoided only by falsifying the actual
process of judging or by using the formula as an instrument of futile
casuistry. It cannot be too often repeated that judges are not automata. The
ultimate reliance for the fair operation of any standard is a judiciary of high
competence and character and the constant play of an informed professional
critique upon its work. Since the precise way in which courts interfere with
agency findings cannot be imprisoned within any form of words, new formulas
attempting to rephrase the old are not likely to be more helpful than the old.
There are no talismanic words that can avoid the process of judgment. The
difficulty is that we cannot escape, in relation to this problem, the use of
undefined defining terms."
innovative approach is made by Clive Lewis as to why the courts should be slow
in quashing administrative decisions (in his Judicial Remedies in Public Law 1992
Edn. at pp. 294-95). The illuminating passage reads as under :
courts now recognise that the impact on the administration is relevant in the
exercise of their remedial jurisdiction.
decisions may impose heavy administrative burdens on the administration, divert
resources towards reopening decisions, and lead to increased and unbudgeted
expenditure. Earlier cases took the robust line that the law had to be
observed, and the decision invalidated whatever the administrative
inconvenience caused. The courts nowadays recognise that such an approach is
not always appropriate and may not be in the wider public interest. The effect
on the administrative, process is relevant to the courts' remedial discretion
and may prove decisive. This is particularly the case when the challenge is
procedural rather than substantive, or if the courts can be certain that the
administrator would not reach a different decision even if the original
decisions were quash ed.
may differ in the importance they attach to the disruption that quashing a
decision will cause. They may also be influenced by the extent to which the
illegality arises from the conduct of the administrative body itself, and their
view of that conduct.
US 474, 488-89: 95 L Ed 456 (1950) 684
The current approach is best exemplified by R. v. Monopolies and Mergers
Commission, ex p Argyll Group plc45. "
Sir John Donaldson, M.R. in R. v. Monopolies and Mergers Commission, ex p
Argyll Group plc45 observed thus :
are sitting as a public law court concerned to review an administrative
decision, albeit one which has to be reached by the application of judicial or
quasi- judicial principles. We have to approach our duties with a proper
awareness of the needs of public administration. I cannot catalogue them all
but, in the present context, would draw attention to a few which are relevant.
public administration is concerned with substance rather than form. of
decision, particularly in the financial field. consideration of the public
interest. In this context, the Secretary of State is the guardian of the public
of the legitimate interests of individual citizens, however rich and powerful
they may be and whether they are natural or juridical persons. But in judging
the relevance of an interest, however legitimate, regard has to be had to the
purpose of the administrative process concerned. and finality, unless there are
compelling reasons to the contrary."
may now look at some of the pronouncements of this Court including the
authorities cited by Mr Ashoke Sen.
v. Director General, Doordarshan46 was a case in which the Court was concerned
with the award of a contract for show of sponsored TV serial. At p. 92 in
paragraphs 5 and 6 it was held thus :
is well settled that there should be fair play in action in a situation like
the present one, as was observed by this Court in Ram & Shyam Co. v. State
of Haryana47. It is also well settled that the authorities like Doordarshan
should act fairly and their action should be legitimate and fair and
transaction should be without any aversion, malice or affection. Nothing should
be done which gives the impression of favoritism or nepotism. See the
observations of this Court in Haji TM. Hassan Rawther v. Kerala Financial
Corpn.48 While, as mentioned herein before, fair play in action in matters like
the present one is an essential requirement, similarly, however, 'free play in
the joints' is also a necessary concomitant for an administrative body 45
(1986) 1 WLR 736, 774: (1986) 2 All ER 257, CA 46 (1989) 1 SCC 89 47 (1985) 3
SCC 267, 268-69 48 (1988) 1 SCC 166, 173 (para 14) 685 functioning in an
administrative sphere or quasi-administrative sphere as the present one. Judged
from that standpoint of view, though all the proposals might not have been
considered strictly in accordance with order of precedence, it appears that
these were considered fairly, reasonably, objectively and without any malice or
G.B. Mahajan v. Jalgaon Municipal Council12 the concept of reasonableness in
administrative law came to be dealt with elaborately by one of us, Venkatachaliah,
J. (as he then was). In paragraphs 37 to 41 the Court observed thus :
was urged that the basic concept of the manner of the development of the real
estate and disposal of occupancy rights were vitiated by unreasonableness. It
is a truism, doctrinally, that powers must be exercised reasonably. But as
Prof. Wade points out :
doctrine that powers must be exercised reasonably has to be reconciled with the
no less important doctrine that the court must not usurp the discretion of the
public authority which Parliament appointed to take the decision. Within the
bounds of legal reasonableness is the area in which the deciding authority has
genuinely free discretion. If it passes those bounds, it acts ultra vires. The
court must therefore resist the temptation to draw the bounds too tightly,
merely according to its own opinion.
must strive to apply an objective standard which leaves to the deciding
authority the full range of choices which the legislature is presumed to have
intended. Decisions which are extravagant or capricious cannot be legitimate, But
if the decision is within the confines of reasonableness, it is no part of the
court's function to look further into its merits. "With the question
whether a particular policy is wise or foolish the court is not concerned; it
can only interfere if to pursue it is beyond the powers of the
arguments there is some general misapprehension of the scope of the
'reasonableness' test in administrative law. By whose standards of
reasonableness that a matter is to be decided? Some phrases which pass from one
branch of law to another as did the expressions 'void' and ,voidable' from
private law areas to public law situations carry over with them meanings that
may be inapposite in the changed context. Some such thing has happened to the
words "reasonable', ,reasonableness' etc. In Tiller v. Atlantic Coast Line
Rail Road Co.49, Justice Frankfurter said :
phrase begins life as a literary expression; its felicity leads to its lazy
repetition; and repetition soon establishes it as a legal formula, undiscriminatingly
used to express different and sometimes contradictory ideas.' Different
contexts in which the operation of 'reasonableness' as test of validity
operates must be kept distinguished. For instance as the 49 318 US 54: 87 L Ed
610 (1942) 686 arguments in the present case invoke, the administrative law
test of ,reasonableness' as the touchstone of validity of the impugned
resolutions is different from the test of the 'reasonable man' familiar to the
law of torts, whom English law figuratively identifies as the 'man on the Clapham
omnibus'. In the latter case the standards of the 'reasonable man', to the
extent such a 'reasonable man' is court's creation, is in a manner of saying, a
mere transferred epithet. Lord Radcliffe observed (All ER p. 160) .lm15 'By
this time, it might seem that the parties themselves have become so far
disembodied spirits that their actual persons should be allowed to rest in
peace. In their place there rises the figure of the fair and reasonable man.
And the spokesman of the fair and reasonable man, who represents after all no
more than the anthropomorphic conception of justice, is, and must be, the court
itself....' (emphasis supplied) See Davis Contractors Ltd. v. Fareham U.D. C.50
Yet another area of reasonableness which must be distinguished is the
constitutional standards of 'reasonableness' of the restrictions on the
fundamental rights of which the court of judicial review is the arbiter.
administrative law test of reasonableness is not by the standards of the
'reasonable man' of the torts law. Prof. Wade says :
is not therefore the standard of "the man on the Clapham omnibus". It
is the standard indicated by a true construction of the Act which distinguishes
between what the statutory authority may or may not be authorised to do. It
distinguishes between proper use and improper abuse of power. It is often
expressed by saying that the decision is unlawful if it is one to which no
reasonable authority could have come. This is the essence of what is now
commonly called "Wednesbury unreasonableness", after the now famous
case in which Lord Greene, MR. expounded it."' (emphasis supplied) 90.
Referring to the doctrine of unreasonableness, Prof. Wade says in
Administrative Law (supra) :
point to note is that a thing is not unreasonable in the legal sense merely
because the court thinks it is unwise."
Food Corpn. of India v. Kamdhenu Cattle Feed
Industries51 it was observed thus : (SCC p. 76, para 7) "In contractual
sphere as in all other State actions, the State and all its instrumentalities
have to conform to Article 14 of the Constitution of which non- arbitrariness
is a significant facet. There is no unfettered discretion in public law : A
public authority possesses powers only to use them for public good. This
imposes the duty to act fairly and to adopt a procedure which is 'fairplay in
action'." 50 (1956) 2 All ER 145, 160: 1956 AC 696: (1956) 3 WLR 37 51
(1993) 1 SCC 71 687
Sterling Computers Limited v. M&N Publications Ltd.5 this Court observed thus
: (SCC p. 455, para 12) "In contracts having commercial element, some more
discretion has to be conceded to the authorities so that they may enter into
contracts with persons, keeping an eye on the augmentation of the revenue. But
even in such matters they have to follow the norms recognised by courts while
dealing with public property. It is not possible for courts to question and
adjudicate every decision taken by an authority, because many of the Government
Undertakings which in due course have acquired the monopolist position in
matters of sale and purchase of products and with so many ventures in hand,
they can come out with a plea that it is not always possible to act like a
quasi-judicial authority while awarding contracts. 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. If the decisions have been taken in bona fide manner although not
strictly following the norms laid down by the courts, such decisions are upheld
on the principle laid down by Justice Holmes, that courts while judging the
constitutional validity of executive decisions must grant certain measure of
freedom of 'play in the joints' to the executive."
Union of India v. Hindustan Development Corpn.6 this Court held thus : (SCC p.
515, para 9) "... the Government had the right to either accept or reject
the lowest offer but that of course, if done on a policy, should be on some
rational and reasonable grounds. In Erusian Equipment & Chemicals Ltd. v.
State of W.B.9 this Court observed as under: (SCC
p. 75, para 17) 'When the Government is trading with the public, "the
democratic form of Government demands equality and absence of arbitrariness and
discrimination in such transactions". The activities of the Government
have a public element and, therefore, there should be fairness and equality.
The State need not enter into any contract with anyone, but if it does so, it
must do so fairly without discrimination and without unfair procedure.' 94. The
principles deducible from the above are :
The modem trend points to judicial restraint in administrative action.
The court does not sit as a court of appeal but merely reviews the manner in
which the decision was made.
The court does not have the expertise to correct the administrative decision.
If a review of the administrative decision is permitted it will be substituting
its own decision, without the necessary expertise which itself may be fallible.
The terms of the invitation to tender cannot be open to judicial scrutiny
because the invitation to tender is in the realm of contract.
Normally speaking, the decision to accept the tender or award the contract is
reached by process of negotiations through several tiers.
often than not, such decisions are made qualitatively by experts.
The Government must have freedom of contract. In other words, a fair play in
the joints is a necessary concomitant for an administrative body functioning in
an administrative sphere or quasi-administrative sphere. However, the decision
must not only be tested by the application of Wednesbury 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.
Quashing decisions may impose heavy administrative burden on the administration
and lead to increased and unbudgeted expenditure.
on these principles we will examine the facts of this case since they commend
to us as the correct principles.
Whether the selection is vitiated by arbitrariness?
Soli J. Sorabjee, learned counsel appearing for TATA Cellular argued that there
are clear instances of arbitrariness. Criterion No. 2.4.7 has been totally
ignored and excluded. This has been so admitted. No marks have been awarded on
this score under this criterion. Note II of the same General Conditions 2.4.7
says minimum reliance on Indian Public Financial Institutions will be preferred.
requirement has been breached by Bharati Cellular, Mobile Telecom, Sterling
Cellular and Skycell Communication.
have borrowed from commercial banks 4.87 per cent, 4.87 per cent, 43.48 per
cent and 34.41 per cent respectively.
criterion carries 8 marks. In spite of the borrowings they have been awarded 6,
8 (full marks), 5 and 7 respectively. The company, TATA Cellular, which had not
borrowed at all from the commercial banks, has been awarded only 4 marks. It
requires to be noted that borrowing from commercial banks was prohibited by
Reserve Bank of India.
Then again, one of the prescribed criterion is 2.4.6 which carries 12 marks,
namely, the financial strength of the partner company. The annual turnover from
TATA Cellular, from Indian parameters was 12,000 crores and annual turnover of
their foreign parameters was 5 1,000 crores yet what has been awarded is only 9
marks. As against this Hutchison Max has only an annual turnover of 75 crores
and Rupees 6600 crores of foreign parameters yet it has been awarded 12 marks.
Equally, Sterling Cellular whose turnover according to its bid document was 77 crores;
the foreign parameter is unknown, it has also been awarded 9 marks.
The cut-off date for financial bid document was fixed as 17-8-1992. To examine and evaluate the same a committee was
set up. The committee adopted some parameters and devised a marking system. It
is as under :
Parameter Total Marks Rental 50 Project Financing 8 Foreign Exchange
inflow/outflow 10 Purchase plan for Cellular equipment within the country
including tie-ups with the proposed Indian manufacturers 5 Experience 15
Financial strength 12 Note : No marks were allotted for the seventh criterion
of financial projections of Cellular Mobile Service.
report of the Tender Evaluation Committee on this aspect states as under :
of the parameters is about the financial projection. The Committee discussed
about the reliability of financial projections made by the bidders and came to
the conclusion that it is not possible for them to verify the reliability of
the projections which are based on individual postulations about the number of
subscribers, traffic, tariff, financial structure etc. For this purpose we have
to go by the data furnished by the bidders at its face value. In any case the
financial data, having relevance to evaluation of the tender have well been
covered under various parameters." Annexure 1 to the Report of the said
Committee shows the manner in which parameters and their weighers were given to
each criterion. The debt/equity ratio is 1.5 for city of Bombay. It has been rightly assigned 3
bid pro forma of Bharati Cellular, Mobile Telecom, Sterling Cellularand Skycell
indicates minimum reliance on financial institutions. It has alsomade
distinction between loans from public financial institutions and banks.
there is a confusion on the part of TATA Cellular about this requirement with
loans from the banks.
reveal that in the case of India Telecomp while awarding marks care was taken
to exclude the open market projects and foreign exchange from the evaluation
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 collaborators participating in the equity of company. The foreign
exchange inflow position in their case was considered to be better. The
markings came to be awarded on the same basis as in the case of all the
bidders. The foreign collaborators of Skycell, BPL Systems and Projects, Usha
Martin, Bharati Cellular and TATA Cellular specifically undertook to cover the
foreign exchange funding by equity and loans. International roaming has been
correctly taken into consideration. As submitted by the learned Solicitor
General roaming is defined in paragraph 184.108.40.206of NIT as follows :
This feature shall enable a subscriber to communicate in cellular system other
than its home registered one." 690 Paragraph 220.127.116.11 talks of home
location registered. Paragraph 18.104.22.168 deals with Visitor Location Register
(VLR) which says as follows :
Location Register (VLR). VLR shall be able to store the following information.
functions shall also include data retrieval, data collection, update of data
entry, once PLMNs are established.
IMSI - the Mobile Station International ISDN number - the Mobile Station
Roaming number, if allocated at location updating - the temporary Mobile
Station Identity, if applicable - the location area where the mobile station
has been registered - supplementary service parameters - any other information
needed for management of mobile station." All these paragraphs will
clearly establish that the system provides for facility of roaming to visitors.
International roaming in GSM is well-accepted technique.
GSM is defined as a Global System for Mobile communications. The GSM specifications are highly standardised. This
means that the systems that are designed as per GSM specifications will be
compatible with each other and, therefore, can be easily connected together
from day one.
in GSM cellular mobile systems means that a subscriber belonging to one
operator can use his telephone to receive and make calls while he is in the
area of another operator automatically. When a subscriber goes into the area of
another operator, who has a roaming agreement with his another operator, the
details of the subscriber available in the HLR (Home Location Register) of the home
MSC (Mobile Switching Centre) are obtained by the visitor MSC and placed in the
VLR (Visitor Location Register). The subscriber can originate and receive calls
without feeling any difference. The roaming can be easily extended
internationally and is already being done in parts of Europe. Since the systems are compatible,
all that is required is an agreement between the operators for revenue sharing
we find the argument that paragraph 2.4.7, namely, the financial projection of
the proposed Cellular Mobile Cellular and the 7th criterion having been left
out of consideration cannot be accepted.
Bias of Mr Nair Whether affects the selection? 104.In Black's Law Dictionary,
6th Edn. at page 162, bias is defined as under :
Inclination; bent; prepossession; a preconceived opinion; a predisposition to
decide a cause or an issue in a certain way, which does not leave the mind
perfectly open to conviction. To incline to one side.
of mind, which sways judgment and renders judge unable to exercise his
functions impartially in particular case. As used in law regarding
disqualification of judge, refers to mental attitude or 691 disposition of the
judge toward a party to the litigation, and not to any views that he may
entertain regarding the subject-matter involved. State ex rel Mitchell v. Sage
Stores Co. 52" The rule of bias is founded on the well-known maxim nemo debet
esse judex in propria causa : no person can be a judge in his own cause.
de Smith's Constitutional and Administrative Law, New Edn., at p. 583, states
as follows :
an adjudicator must not have any direct financial or proprietary interest in
the outcome of the proceedings. Secondly, he must not be reasonably suspected,
or show a real likelihood, of bias." 106.In the instant case, the first
aspect of the matter does not arise. As' regards the second, the law is as
stated by de Smith's Constitutional and Administrative Law, New Edn., at pp.
584-85 "If an adjudicator is likely to be biased he is also disqualified
from acting. Likelihood of bias may arise from a number of causes membership of
an organisation or authority that is a party to the proceedings;
expressed in extra judicial pronouncements; the fact of appearing as a witness
for a party to the proceedings;
animosity or friendship towards a party; family relationship with a party;
or commercial relationships with a party; and so on. The categories o f
situations potentially giving rise to a likelihood of bias are not closed.
should the test of disqualification for likelihood of bias be formulated?... A
more common formulation of the test is : Would a member of the public, looking
at the situation as a whole, reasonably suspect that a member of the
adjudicating body would be biased? Another common formulation is : Is there in
fact a real likelihood of bias? There is no need, on either formulation, to
prove actual bias; indeed, the courts may refuse to entertain submissions
designed to establish the actual bias of a member of an independent tribunal,
on the ground that such an inquiry would be unseemly. In practice the test of
,reasonable suspicion' and 'real likelihood' of bias will generally lead to the
same result. Seldom indeed will one find a situation in which reasonable
persons adequately apprised of the facts will reasonably suspect bias but a
court reviewing the facts will hold that there was no real likelihood of bias.
Neither formulation is concerned wholly with appearances or wholly with
objective reality. In ninety-nine cases out of a hundred it is enough for the
court to ask itself whether a reasonable person viewing the facts would think
that there was a substantial possibility of bias." 107. Geoffrey A. Flick
in his work on Natural Justice Principles and Practical Application, 1979 Edn.,
at pp. 11 8-120, states 52 157 Kan 622, 143 P 2d 652, 655 692 "Personal Involvement
: Whenever a decision- maker becomes personally involved with one of the
parties there arises the suspicion that a determination may not be reached
exclusively on the merits of the case as discussed at the hearing. Unlike
allegations of bias by reason of the pecuniary interest of the decision- maker
however, allegations of bias founded upon a personal involvement will only
result in disqualification where there is a real likelihood that a hearing will
not be fair. de Smith at pp. 232-37; David @ 12.02.
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. A chairman of
county commissioners, therefore, cannot hear a petition to build a new road
which was intended to pass over land belonging to his brother-in-law, nor can a
member of a zoning commission determine his wife's application for a change in
zoning from residential to business. Low v. Town of Madison53. In the last cited case the court
was concerned with both the family sentiment that was present and with the
opportunity for the wife to have what in reality a private hearing before the
board with her husband acting as advocate. See p. 778. But not all family
relationships will disqualify and, by way of contrast, on the circumstances of
one particular case it was said that a board of adjustment could decide an
application by a company for permission to develop a free parking area despite
the fact that an employee of the company was the wife of one board member and
the fact that a third or fourth cousin of another board member was the
president of the company. Moody v. City of University Park54.
on the basis of personal involvement is not, of course, limited to the above
two situations but may result whenever there is a sufficient nexus between the
decision-maker and a party to justify the appearance that this nexus may
influence the decision reached: of R. v. Altrincham Justices, ex p
Pennington55. Street, C.J. has stated the law in this respect in yet another New South Wales decision. Ex p Burnett, Re Wurth56.
The last cited case involved a former officer of the Department of Education who
later sat as a member of the Public Service Board inquiring into alleged false
and scandalous allegations made by a teacher against various persons, including
the officer in question, and during the course of his judgment Street, C.J. observed
bias arises not from (pecuniary) interest, the officer must have so conducted
himself that a high probability arises of a bias inconsistent with the fair
performance of his duties, with the result 53 60 A 2d 774 (Coun 1948) 54 278 SW
2d 912 (CT Civ App Tex 1955) 55 (1975) 1 QB 549: (1975) 2 All ER 78: (1975) 2
WLR 450 56 (1955) 72 WN (NSW) 457 693 that a substantial distrust of the result
must exist in the minds of reasonable persons.' Put in other words, the issue
is not merely whether justice has in fact been done, but whether it has
manifestly and undoubtedly been seen to be done. It may, therefore, be improper
for the clerk of the court to act as a solicitor for a party. Similarly, it may
be unwise for a headmaster to sit in judgment upon a case involving a former
pupil who had been adversely criticised in a detailed staff report signed by
the headmaster some three months previously even where the existence of the
report has been forgotten. R. v. Abingdon Justices, ex p CousinS57." 108.The
leading cases on bias may now be seen. In R. v. Camborne Justices,ex p Pearce58
it was held : (All ER p. 855) "In R. v. Essex Justices ex p PerkinS21 Avory,
J., said 'We have here to determine, however, whether or not there might appear
to be a reasonable likelihood of his being biased.' And Swift, J., said (ibid.,
essential that justice should be so administered as to satisfy reasonable
persons that the tribunal is impartial and unbiased.
Lord Hewart, C.J., said in R. v. Sussex JJ., ex p McCarthy59 : "Nothing is
to be done which creates even a suspicion that there has been an improper
interference with the course of justice." Might a reasonable man suppose
that there had here been such an interference with the course of justice?' In
R. v. Salford Assessment Committee, ex p Ogden6O, Slesser, L.J. and Luxmoore,
J. (ibid., 108) applied the 'reasonable likelihood' test, while Greene, L.J.
(ibid., 107) dissented only on the inference to be drawn from the facts. In Cottle
v. Cottle61 Sir Boyd Merriman, P. asked himself the question whether the party
complaining 'might reasonably have formed the impression that Mr Browning (the
Chairman of the Bench) could not give this case an unbiased hearing.' Bucknill,
J., said (ibid.) 'The test which we have to apply is whether or not a
reasonable man, in all the circumstances, might suppose that there was an
improper interference with the course of justice....' In the judgment of this
court the right test is that prescribed by Blackburn, J. in R. v. Rand62,
namely, that to disqualify a person from acting in a judicial or quasi-
judicial capacity on the ground of interest 57 (1964) 108 Sol Jo 840 58 (1954)
2 All ER 850: (1955) 1 QB 41: (1954) 3 WLR 415 59 (1924) 1 KB 256: 1923 All ER
Rep 233 60 (1937) 2 All ER 98: (1937) 2 KB 1 61 (1939) 2 All ER 535 62 (1866) 1
QB 230 694 (other than pecuniary or proprietary) in the subject-matter of the
proceeding, a real likelihood of bias must be shown.
court is, further, of opinion that a real likelihood of bias must be made to appear
not only from the materials in fact ascertained by the party complaining, but
from such further facts as he might readily have ascertained and easily
verified in the course of his inquiries. In the present case, for example, the
facts relied on in the applicant's statement, under R.S.C., Ord. 59, R. 3(2),
of the grounds of his application might create a more sinister impression than
the full facts as found by this court, all or most of which would have been
available to the applicant had he pursued his inquiries on learning that Mr
Thomas was a member of the Cornwall County Council, and none of these further
facts was disputed at the hearing of this motion.
frequency with which allegations of bias have come before the courts in recent
times seems to indicate that the reminder of Lord Hewart, C.J., in R. v. Sussex
JJ., ex p McCarthy59 that it is of fundamental importance that justice should
not only be done, but should manifestly and undoubtedly be seen to be done' is
being urged as a warrant for quashing convictions or invalidating orders on
quite unsubstantial grounds and, indeed in some cases, on the flimsiest
pretexts of bias." In Metropolitan Properties Co. (FG.C.) Ltd. v. Lannon4
it was held thus (All ER p. 3 1 0) "... in considering whether there was a
real likelihood of bias, the court does not look at the mind of the justice
himself or at the mind of the chairman of the tribunal, or whoever it may be,
who sits in a judicial capacity. It does not look to see if there was a real
likelihood that he would, or did, in fact favour one side at the expense of the
court looks at the impression which would be given to other people. Even if he
was as impartial as could be, nevertheless, if right- minded persons would
think that, in the circumstances, there was a real likelihood of bias on his
part, then he should not sit. And if he does sit, his decision cannot stand.
v. Huggins63; R. v. Sunderland Justices64, per Vaughan Williams, L.J. Nevertheless, there
must appear to be a real likelihood of bias. Surmise or conjecture is not
enough. See R. v. Camborne Justices, ex p Pearce58; R. v. Nailsworth Licensing
Justices, ex p Bird65. There must be circumstances from which a reasonable man
would think it likely or probable that the justice, or chairman, as the case
may be, would, or did, favour one side unfairly at the expense of the other.
court will not enquire whether he did, in fact, favour one side unfairly.
Suffice it that reasonable people might think he did.
reason is plain enough. Justice must be rooted in 63 (1895-99) All ER Rep 914:
(1895) 1 QB 563 64 (1901) 2 KB 357 65 (1953) 2 All ER 652: (1953) 1 WLR 1046
695 confidence; and confidence is destroyed when right-minded people go away
thinking: 'The judge was biased.' " In R. v. Liverpool City Justices, ex p
Topping66 it was observed : (All ER p. 494) "In the past there has also
been a conflict of view as to the way in which that test should be applied.
Must there appear to be a real likelihood of bias? Or is it enough if there
appears to be a reasonable suspicion of bias? (For a discussion on the cases,
see de Smith's Judicial Review of Administrative Action (4th Edn., 1980) pp.
262-264 and H.W.R. Wade, Administrative Law (5th Edn., 1982) pp. 430- 432.) We
accept the view of Cross, L.J., expressed in Hannam v. Bradford City Council67,
that there is really little, if any, difference between the two tests :
reasonable person who has no knowledge of the matter beyond knowledge of the
relationship which subsists between some members of the tribunal and one of the
parties would think that there might well be bias, then there is in his opinion
a real likelihood of bias. Of course, someone else with inside knowledge of the
character of the members in question might say : "Although things don't
look very well, in fact there is no real likelihood of bias." But that
would be beside the point, because the question is not whether the tribunal
will in fact be biased, but whether a reasonable man with no inside knowledge
might well think that it might be biased.' We conclude that the test to be
applied can conveniently be expressed by slightly adapting in words of Lord Widgery,
C.J. in a test which he laid down in R. v. Uxbridge Justices, ex p Burbridge68
and referred to by him in R. v. McLean, ex p Aikens69: would a reasonable and
fair-minded person sitting in court and knowing all the relevant facts have a
reasonable suspicion that a fair trial for the applicant was not
possible?" In University College of Swansea v. Cornelius70 holds "Cases
of bias and ostensible bias had to be regarded in the light of their own
circumstances. The circumstances of this case could have no relevance to other
cases." 109.The Indian Law can be gathered from the following rulings. In Manak
Lal v. Dr Prem Chandl it was held thus:
p. 58 1) "But where pecuniary interest is not attributed but instead a
bias is suggested, it often becomes necessary to consider whether there is a
reasonable ground for assuming the possibility of bias and whether it is 66
(1983) 1 All ER 490,494 67 (1970) 2 All ER 690, 700: (1970) 1 WLR 937, 949 68
(1972) Times, 21 June 69 (1974) 139 JP 261, 266 70 1988 ICR 735, 739 696 likely
to produce in the minds of the litigant or the public at large a reasonable
doubt about the fairness of the administration of justice. It would always be a
question of fact to be decided in each case. 'The principle', says Halsbury, 'nemo
debet esse judex in causa propria sua precludes a justice, who is interested in
the subject- matter of a dispute, from acting as a justice therein'. In our
opinion, there is and can be no doubt about the validity of this principle and
we are prepared to assume that this principle applies not only to the justices
as mentioned by Halsbury but to all tribunals and bodies which are given
jurisdiction to determine judicially the rights of parties." In J. Mohapatra
& Co. v. State of Orissa2 it was observed thus : (SCR p. 334: SCC p. 112, para
11) "It is no answer say that an author-member is only one of the members
of the Assessment Sub- Committee and that the ultimate decision rests with the
State Government which may reject any book out of the list of approved books. A
similar argument was rejected by this Court in Kraipak case71. The State
Government would normally be guided by the list approved by the Assessment
Sub-Committee. Further, to say that such author-member is only one of the
members of the Assessment Sub-Committee is to overlook the fact that the author
member can subtly influence the minds of the other members against selecting
books by other authors in preference to his own. It can also be that books by
some of the other members ma y also have been submitted for selection and there
can be between them a quid pro quo or, in other words, you see that my book is
selected and in return I will do the same for you. In either case, when a book
of an author-member comes up for consideration, the other members would feel
themselves embarrassed in frankly discussing its merits.
author-member may also be a person holding a high official position whom the
other members may not want to displease. It can be that the other members may
not be influenced by the fact that the book which they are considering for
approval was written by one of their members. Whether they were so influenced
or not is, however, a matter impossible to determine. It is not, therefore, the
actual bias in favour of the author-member that is material but the possibility
of such bias. All these considerations require that an author-member should not
be a member of any such committee or subcommittee." In Ashok Kumar Yadav
v. State of Haryana3 this Court emphasised the
reasonable likelihood of bias thus : (SCC p. 441, para 16) "This Court emphasised
that it was not necessary to establish bias but it was sufficient to invalidate
the selection process if it could be shown that there was reasonable likelihood
of bias. The likelihood of bias may arise on account of proprietary interest or
on account of personal reasons, such as, hostility to one party or personal friendship
or 71 A. K. Kraipak v. Union of India, (1969) 2 SCC 262 697 family relationship
with the other. Where reasonable likelihood of bias is alleged on the ground of
relationship, the question would always be as to how close is the degree of
relationship or in other words, is the nearness of relationship so great as to
give rise to reasonable apprehension of bias on the part of the authority
making the selection." In Ranjit Thakur v. Union of India15 the law was
stated by one of us, Venkatachaliah, J. (as he then was) as under :
p. 520: SCC p. 618, para 17) "As to the tests of the likelihood of bias
what is relevant is the reasonableness of the apprehension in that regard in
the mind of the party. The proper approach for the judge is not to look at his
own mind and ask himself, however, honestly, 'Am I biased?'; but to look at the
mind of the party before him." Reference was made therein to a dictum laid
down by Justice Frankfurter in Public Utilities Commission of the District of Columbia v. Pollak72 which is reproduced as
judicial process demands that a judge move within the framework of relevant
legal rules and the covenanted modes of thought for ascertaining them. He must
think dispassionately and submerge private feeling on every aspect of a case.
There is a good deal of shallow talk that the judicial robe does not change the
man within it. It does.
fact is that on the whole judges do lay aside private views in discharging
their judicial functions. This is achieved through training, professional
habits, self- discipline and that fortunate alchemy by which men are loyal to
the obligation with which they are entrusted. But it is also true that reason
cannot control the subconscious influence of feelings of which it is unaware.
When there is ground for believing that such unconscious feelings may operate
in the ultimate judgment, or may not unfairly lead others to believe they are
operating, judges rescue themselves. They do not sit in judgment." In
International Airports Authority of India v. K.D. Bali73 this Court observed thus
: (SCC p. 367, para 5) "Several points were taken in support of the
application for revocation. It was sought to be urged that the petitioner had
lost confidence in the sole arbitrator and was apprehensive that the arbitrator
was biased against the petitioner. It is necessary to reiterate before
proceeding further what are the parameters by which an appointed arbitrator on
the application of a party can be removed. It is well settled that there must
be purity in the administration of justice as well as in administration of
quasi- justice as are involved in the adjudicatory process before the
arbitrators. It is well said that once the arbitrator enters in an arbitration,
the arbitrator must not be guilty of any act which can possibly be construed as
indicative of partiality or unfairness. It is 72 343 US 451, 466: 96 L Ed 1068
(1961) 73 (1988) 2 SCC 360, 367 698 not a question of the effect which
misconduct on his part had in fact upon the result of the proceeding, but of
what effect it might possibly have produced. It is not enough to show that,
even if there was misconduct on his part, the award was unaffected by it, and
was in reality just; arbitrator must not do anything which is not in itself
fair and impartial. See Russel on Arbitration, 18th Edn., p. 378 and
observations of Justice Boyd in Brien and Brien, Re74. Lord O'Brien in King (De
Vosci) v. Justice of Queen's Country75 observed as follows :
bias I understand a real likelihood of an operative prejudice, whether
conscious or unconscious. There must in my opinion be reasonable evidence to
satisfy us that there was a real likelihood of bias. I do not think that their
vague suspicions of whimsical, capricious and unreasonable people should be
made a standard to regulate our action here.
might be a different matter if suspicion rested on reasonable grounds was
reasonably generated but certainly mere flimsy, elusive, morbid suspicions
should not be permitted to form a ground of decision."' (emphasis supplied)
In Union Carbide Corpn. v. Union of
India76 this Court observed thus (SCC p. 667, para 161) "But the effects
and consequences of non- compliance may alter with situational variations and
particularities, illustrating a 'flexible use of discretionary remedies to meet
novel legal situations'. 'One motive' says Prof. Wade 'for holding
administrative acts to be voidable where according to principle they are void
may be a desire to extend the discretionary powers of the Court'.
observed by Lord Reid in Wiseman v. Borneman77 natural justice should not
degenerate into a set of hard and fast rules.
should be a circumstantial flexibility." 110. In the light of this let us
find out whether bias has been established? The Report of the Tender Evaluation
Committee was made on 16-5-1992. In that Committee Mr B.R. Nair was
a party. As seen above, the offer of the four companies did not fully satisfy
the criteria. Their cases were recommended to be considered for condonation.
The four companies are
Systems and Projects,
Mobile Communication India Private Limited,
Mobile Telecom Services Limited, and
Indian Telecom Private Limited.
B.R. Nair, Member (Production) made the following note:
agree with the recommendations of the Evaluation Committee that the four firms
must be in paragraph 3 of page 1/N should be included in 74 (1910) 2 IR 84 75
(1908) 2 IR 285 76 (1991) 4 SCC 584, 667 77 1971 AC 297: (1969) 3 All ER 275:
(1969) 3 WLR 706 699 the short-list. Thus, there would be 14 companies in the
short-list instead of 16 recommended by Adviser (0)." 111. On 8-9-1992, Mr Nair, as Member of the Committee, agreed to a
noting that only three companies, Bharati Cellular, BPL Systems and Projects
and Skycell qualified for selection. After further discussion, 8 companies came
to be selected and the note was accordingly put up on 9-10-1992.
recommendation is agreed to by Mr Nair.
According to Mr Harish Salve, the very presence of Mr Nair itself will amount
this case, as noted above, the crucial test is whether there was a real
likelihood of bias. As to how Mr R. Satish Kumar, the son of Mr B.R, Nair, came
to be appointed in BPL Systems and Projects is explained in the additional
affidavit filed on behalf of BPL Systems & Projects Ltd., Respondent 10, by
Mr S. Sunder Rao, Corporate Personnel Manager of BPL Group of Companies,
including Respondent 10-Company. The relevant portion is extracted as under :
regard to the selection and appointment of Shri R. Satish Kumar, I state as follows
Respondent 10 Company desired to employ certain managers and executives as follows
Manager, (Push Button Telephone) for New Delhi, Bangalore and Bombay.
(Communications) for Madras, Calcutta and Bangalore.
Manager (Sales) for Delhi, Hyderabad and Madras.
Executives for Delhi, Madras, Kanpur, Chandigarh, Baroda, Kochi, Calcutta, Bhopal, Pune and Coimbatore.
posts were advertised for in several newspapers as follows
Times of India, Delhi and Bombay Edns.
Hindustan Times, Delhi Edn.
Hindu, All India Edn.
advertisements appeared between 26-8-1991 and 29-8- 1991. The eligibility conditions for the candidates was
specified and with regard to the post of Territory Manager (Sales) it was
mentioned that the candidates should be an Electronics/Electrical Engineer with
5/6 years' experience of office automation products, Computer, Telecom equipments,
response to advertisement Shri R. Satish Kumar applied for the post of
Territory Manager (Sales) vide his letter dated 28-8-1991 enclosing thereby his bio-data.
per practice of the Respondent-Company the bio-data of all the applicants were scrutinised
by the Personnel Department and thereafter by the Assistant General Manager of
the Respondent-Company. Thereafter the short- listed candidates were called for
interview on various dates. Shri Satish Kumar was called for an interview on
6-9 1991. Two other candidates were also interviewed for this post. Shri Satish
Kumar was interviewed by the Senior Officer of the company including myself. At
the conclusion of the interview as per practice, an internal assessment form
was filled by the interviewers.
basis of the said interview Shri Satish Kumar was selected and a letter dated
21-10- 1991 was addressed to him offering him the said post. Shri Satish Kumar
was required to report for duty on or before 2-12-1991 at Bangalore. Shri Satish Kumar however
requested for some time to enable him to handover the charge in his previous
company and this was agreed to by the company. Shri Satish Kumar accordingly
joined Respondent 10 on 6-1-1992.
state and submit that Shri Satish Kumar was selected by Respondent 10-Company
in the normal course and the selection was purely on merit." It is to be
seen that Mr Satish Nair is only one of the officers in BPL Systems and
Projects, which has over 5500 employees in 27 offices all over India. There are 89 officers of his rank.
B.R. Nair was not a decision-maker at all. He was one of the recommending
authorities. As Director General of Communication as well as Telecom Authority
his involvement in the approval and selection of tender was indispensable.
came to be appointed as Member (Services) on 29-5-1992.
virtue of the notification dated 28-7-1992 Mr B.R. Nair became the Director General of Telecommunication. As such,
he could exercise all the powers under Section 3(6) of the Indian Telegraphs
Act of 1885. Such a Telecom Authority has the right to grant cellular operating
licences to the successful party and also reject any bids without assigning any
reason. Registration fees, security deposit and other financial charges shall
be fixed by the licenser in consultation with the Telecom Authority. This is
what is stated in the financial bid. Therefore, Mr B.R. Nair could not
dissociate himself from the decision-making process. It is under these
circumstances the High Court rightly applied the doctrine of necessity. This
Court in Charan Lal Sahu v.
of India16 dealt with this doctrine which is stated as follows : (SCC p. 694, para
105) "The question whether there is scope for the Union of India being
responsible or liable as joint tort-feasor is a difficult and different
question. But even assuming that it was possible that the Central Government
might be liable in a case of this nature, the learned Attorney 701 General was
right in contending that it was only proper that the Central Government should
be able and authorised to represent the victims. In such a situation, there
will be no scope of the violation of the principles of natural justice. The
doctrine of necessity would be applicable in a situation of this nature. The
doctrine has been elaborated, in Halsbury's Laws of England, 4th Edn., p. 89,
paragraph 73, where it was reiterated that even if all the members of the
Tribunal competent to determine a matter were subject to disqualification, they
might be authorised and obliged to hear that matter by virtue of the operation
of the common law doctrine of necessity. An adjudicator who is subject to
disqualification on the ground of bias or interest in the matter which he has
to decide may in certain circumstances be required to adjudicate if there is no
other person who is competent or authorised to be adjudicator or if a quorum
cannot be formed without him or if no other competent tribunal can be
constituted." Therefore, we are unable to accept the contentions of Mr Soli
J. Sorabjee and Mr Hafish Salve.
hold Mr B.R. Nair's involvement did not vitiate the selection on the ground of
bias. Since we have reached this conclusion we are not going to the other
questions argued by Mr F.S. Nariman whether India Telecomp or TATA Cellular could
urge this point relating to bias.
Whether the Apex Committee has been bypassed? 116.After finding that only three
companies qualified for selection on 8-9-1992 the following note was made by Mr
G.T. Narayanan, Adviser (Operations) :
financial bid which was approved by the apex committee was given to the
short-listed bidders and these were received and opened on 17-8-1992. These were evaluated by the Tender Evaluation
Committee (TEC). The evaluation report is placed below. The financial evaluation
was done based upon the weightages of the various parameters namely, rental,
financing, foreign exchange inflow/outflow, financial strength, experience and
purchase plans. The rental was given the maximum weightage. The various
guidelines made for giving the marks are at Annexure 1 (page 11, Flag 'A').
as the rental and other allied parameters are concerned, there are wide
variations of rent, deposit, registration/connection fee. In some cases rent is
zero. It was considered by the TEC that these are to be equated to one
parameter as 'equated rental' and the method adopted was loading the basic
rental and other charges like deposit, interest rate @ 13% per annum.
upon these assumptions, the gradation for various bidders for each city is at
page 9 of the main report.
Chairman and Members of the Telecom Commission were consulted in this regard.
It was felt that the rate of interest adopted by the TEC was low, and the
maximum lending rate of the State Bank of India as on 1-8-1992 viz.
is more appropriate to adopt both for 702 refundable and non-refundable
deposits and nonreturnable charges. For the non-refundable charges the monthly
a mortised value over 5 years at the lending rate, viz., 21.75% should be used
for loading the rental, to get at the equivalent rental value which represents
the actual monthly burden on the subscribers. As per this guideline, the TEC
gave the fresh calculations on 7-9-1992 and a
new gradation list was prepared which is placed at Flag 'B'.
examining the TEC report the following points have come to light- (i) M/s
Hutchison Max India Ltd. in their bid document (Annexure D) have not given
proper and full compliance. The TEC has observed : 'Compliance to Chapter III
(Operative Conditions) and Chapter IV (Financial Conditions) has not been
indicated by the bidder.' Thus, it clearly shows that they have not complied
with these important conditions which form the very basis of the financial bid.
It is evident that the bidder has serious reservations about financial
conditions and operative conditions and if granted a licence, there is a
possibility of litigation.
we require good operators with experience the minimum of 10 marks out of 15 for
this parameter is considered a must and those bidders who have scored less than
10 for this parameter should be disqualified. This represents an experience of
handling of 1 lakh cellular phones or 80,000 with a GSM licence.
accordance with the policy of the Government for encouraging foreign exchange
investment only those who do foresee the inflow of foreign exchange should be
considered. For this parameter the TEC had allocated 5 marks to those bids
which were foreign exchange neutral. Those getting more than 5 indicate a net
foreign exchange inflow.
5 marks or above for this parameter is considered essential and those getting
below 5 marks deserve to be disqualified.
with the points listed above taken into account, the following companies
qualify city-wise as per the gradation- Delhi
Systems & Projects Ltd.
Cellular (on an exclusive basis) Bombay
Cellular 2. BPL Systems & Projects Ltd.
Cellular (on an exclusive basis) 703 While making the final selection, it
should be borne in mind that Sterling Cellular has got a problem which is
explained in the notes of DDG (Vig.) placed below. Sterling Computer which is
mentioned in the notes of DDG (Vig.) flag 'C' has a tie-up with Sterling
Cellular from the list of approved operators.
the following operators are recommended for giving the cellular licence-
------------------------------------------------------------ Name of the
Equated FE IN- Expe- Over- Collaborator Company rental flow rience all (1) (2)
(3) (4) (5) (6) -----------------------------------------------------------
Cellular 37.3 7 1578.3 SFR France
Systems & 33.2 6 1476.2France Projects Ltd. Telecom Delhi
41.0 8 1583.0SFR France Cellular
Systems 33.8 6 1476.8 France & Projects Ltd. Telecom Madras
38.5 8 1580.0SFR France Cellular
24.6 10 1571.6 Bell South Calcutta
Cellular 27.1 8 1569.1 SFR France There is no other bidder who qualifies for
giving the licence. Even though TATA Cellular fulfils all the conditions but in
bid document they have based their calculations on single operator concept.
However, we may, if approved by Telecom Commission and High-Power Committee,
make a counter-offer to operate on a non-exclusive basis.
the operators are selected, tariff fixation and other licensing terms can be
negotiated by the Telecom authorities.
separate note is being prepared for sending to the High- Power Committee based
upon the observations that are likely to be made on this note.
(Services) Member (Production) Member (Finance) Chairman (TC) sd/- (G.T.
Narayanan) Adviser (Operations) 8-9-1992 704 The proposal on pre-page with all
the relevant calculation sheets and TEC report, copy of the F.B. document, may
please be sent to the HighPower Committee nominated by NOS (C) for its
consideration and for making final recommendations to the Government Re
selection of the licensees.
sd/ 10-9-1992 Adv. (0) out of stn.
(TM) A brief note, copies of TEC report, financial tender document have been
sent to the High-Power Committee. The note was shown to Member (S) before
supplied) sd/ 10-9-1992 Adv. (O) sd/- G.T Narayanan 14-9-1992" 117.On 10-9-1992 the Chairman (TC) made the
pursuance of the orders of the MOS (C), a Committee consisting of Principal
Secretary to the Prime Minister, in his capacity as Chairman, Foreign
Investment Promotion Board, Secretary Finance, Secretary Electronics and
Chairman Telecom Commission was appointed to make recommendations regarding
selection of the franchisees to provide Cellular Mobile Telephone Service in
the four metro cities. This Committee examined the bids received against the
tenders floated on the basis of Tender Evaluation Committee report and made
recommendations to MOS (C) regarding short-listing of the bidders and the
financial bids document. The financial bids from the short-listed bidders have
now been received and examined in the Department. The recommendations of the
Evaluation Committee are being forwarded to the members of the High-Level
Committee appointed by MOS (C) for examination and making recommendations to
the Government regarding final selection of the franchisees.
spoke to Principal Secretary to the Hon'ble Prime Minister with the request to
expedite the process. He indicated that the Committee earlier appointed by MOS
(C) stands dissolved and a fresh Committee will have to be nominated,for
considering the financial bids etc. He also indicated that he proposes to put
up the case to the Hon'ble Prime Minister for his clearance. It is, therefore,
proposed to issue a letter to the members of the High-Level Committee as per
draft placed below. The same may please be seen by MOS (C) for approval before
draft letter it has been indicated that the same Committee will also examine
the bids received for provision of the Paging Service in 27 705 cities first
for short-listing and finalising the financial bids and later for selection of
documents relating to short-listing of Paging Service bidders have also been sent
separately to the members of the Committee.
(H.R Wagle) Chairman (TC) 10-9-1992 Mos (C) 11-9-1992 D.O. to Principal
Secretary with copies to ES./Electronics Secretary may issue sd/ 14/9 PS. -
D.O. issued pl. sd/14-9 DDG(TM)" However, the D.O. came to be issued in
accordance with the note of 10-9-1992 dissolving the apex committee. Therefore,
it is not correct to contend, as urged by Mr Harish Salve, that the apex
committee had been bypassed. The learned Solicitor General is right in his
Entry of Hidden Criteria - Whether valid? 118. In the original tender document,
paragraph 2.2.1 in relation to the Subscriber's Capacity states as follows :
Capacity: 1000 with modular expansion up to minimum 40,000 subscribers."
In Section 11 of General Condition, clause 1(d) states "Copy of the
agreement between the Indian and the foreign partner, if any foreign partner is
proposed." Chapter 11 of General Conditions in paragraph 2.4.5 states
"Experience of the Foreign operating partner;" On 8-9-1992 Mr G.T.
Narayanan, Adviser (Operations) in his note in the file inter alia stated as
we require good operators with experience the mini mum of 10 marks out of 15
for this parameter is considered a must and those bidders who have scored less
than 10 for this parameter should be disqualified. This represents an
experience of handling of 1 lakh cellular phones or 80,000 with a GSM licence."
These hidden criteria came to be evolved in the following context. The Apex
Committee indicated the parameters in which it stated that "... the
committee decided to consider foreign companies who have experience of
operating a 706 cellular system of at least five years and who have developed a
reasonable sized network (25,000 subscribers)." Inter alia it stated in
the report of the Selection Committee for the Cellular Mobile Telephone Service
The Committee, therefore, drew up the following criteria:
experience of the bidding company.- Since none of the Indian companies have any
experience of operating a cellular service, this would necessarily apply to the
foreign collaborator. Also since GSM technology is only now beginning to come
into commercial operation, the Committee decided to consider foreign companies
who have experience of operating a cellular system of at least 5 years and who
have developed a reasonable sized network (25,000 - 25,000 subscribers)."
119.On 2-9-1992 the Tender Evaluation Committee
made the recommendations. Upon these recommendations Bharati Cellular got three
cities, Delhi, Bombay and Madras. Even then BPL Systems and Projects
did not feature. Therefore, it was directed that an additional output of
gradation of different bidders for the four cities by adopting inter alia the
highest lending rate of State Bank of India for 5 years for lending of monthly rental with simple interest on
deposits. As per this revised gradation Bharati Cellular got Delhi, Calcutta and Madras. However, it was eliminated from Bombay.
8-9-1992, the criterion of one lakh lines
was introduced. It was suggested by Mr G.T. Narayanan, Adviser (Operations)
that those who have secured less than 10 marks for this parameter should be
disqualified. This is in relation to the experience of handling of one lakh
cellular phones or 80,000 with GSM line. It is submitted that criterion of
experience of one lakh lines helped elimination of Usha Martin in Bombay and
created place for BPL Systems and Projects.
criterion of experience was introduced as a ground of disqualification. If the
criterion of experience of one lakh lines as a principal condition to qualify
for consideration for Bombay and Delhi was introduced uniformly then Bharati Cellular could be
disqualified. Thus, a relaxation of 80,000 with the GSM line was introduced. It
is important to note the person who evolved this criterion did not consider Talkland
as Bharati Cellular's collaborator.
noted above, the learned Solicitor General would submit that as on 31-12-1991 Bharati Cellular had experience of 81,085 lines of
SFR France and 1982 lines EMTEL making a total of 83,067 lines. Added to this, Talkland
had an experience of 1,70,000 subscribers. The reference to the marks awarded
for comparative evaluation in this context is irrelevant. Besides, even
assuming that in comparative evaluation the holding of the licence may be given
some weight; cannot be made the governing factor in determining the experience
of a bidder for the purpose of its eligibility.
a result of 8-9-1992 recommendations, Bharati Cellular
got all the four cities. BPL Systems and Projects got two out of four cities.
Only 707 Skycell got Madras. No fourth party got any city.
Having realised that this decision will patently be unacceptable a relaxation
was made on 9-10-1992 one day before the final decision
whether those with less than one lakh lines experience could be considered for Calcutta and Madras.
on 9- 10- 1992, Bharati Cellular was evaluated vis-a- vis SRF France and EMTEL
Mauritius. There was no mention of Talkland. On 10-10-1992, Bharati Cellular was again evaluated vis-a-vis its
collaborators SFR France and EMTEL Mauritius. In the affidavit filed in the
High Court the Government urged that "one lakh lines carrying 10 points
was considered equivalent to 80,000 lines with GSM licence.
however, had no impact on Bharati Cellular. Bharati Cellular's collaborators
included Talkland which is one of the highest service providers in United Kingdom." 124.The learned Solicitor
General submits that the evaluation in the case of Bharati Cellular was correct
and in any event, including Talkland, Bharati Cellular was properly considered.
The parameter of experience had three components :
number of subscribers
number of countries 3. GSM experience.
true that during evaluation it was noted that any bidder with less than 10
marks out of 15 for experience would stand disqualified. The cut-off of one lakh
lines was in the context of minimum experience of 10 marks. Bharati Cellular
had a collaborator other than Talkland, namely, SFR France. It was mentioned in
Bharati Cellular's bid in its tender on 31-12-1991 that the number of SFR France was
over 80,000. By 31-12-1992 it was estimated to be 1,10,000. In
August 1992 when the bids were submitted SFR France line experience could
reasonably be expected to be above one lakh lines. In addition, SFR had a GSM licence.
In view of all, it would not be an unreasonable estimate on the part of experts
to consider Bharati Cellular as having one lakh lines' experience.
are not in a position to accept the contentions of Mr Harish Salve that these
criteria were evolved as tailor- made to suit some other bidders and knock off
others. 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 Committee of
Experts thought certain criteria have to be evolved in order to subserve the
interest of the scheme it is not necessary to have all of them set out in the
beginning itself. However, the important question remains after the evolution
of the criteria whether they have been uniformly and properly applied, as urged
by Mr Ashoke Sen.
careful perusal of the files shows that the Adviser (Operations) selectedBharati
Cellular for franchise, with its foreign collaborators SFR France,EMTEL
Mauritius. The same was approved by the Chairman in his final proposal which
was ultimately approved on 10-10-1992.
it is clear that at no point of time Talkland ever figured as Bharati Cellular's
708 collaborator. SFR France, the foreign collaborator of Bharati Cellular had
GSM Paris area (sic) 23-9-1992. As on 31-12-1991 it had 81,085 subscribers with no GSM experience.
number of subscribers was estimated to go up to 1,10,000 by 31-12-1992. On the
date of submission of the bid it was expected to cross the one lakh mark. The
other collaborator EMTEL Mauritius had only an experience of 1982 lines. In
order to make Bharati Cellular qualify Talkland is also included as a foreign
collaborator. This is factually wrong, as noted above, because at no point of
time Talkland was thought of as foreign collaborator for Bharati Cellular.
then, as seen from the file, Talkland is providing marketing, sales, customer
care, billing services to both Vodaphone and Cellnet under contracts with both
is evident from the material produced before us. It states :
sole function is to distribute radiotelephone services. Unlike SFR in France it neither sets up nor manages
networks. In the U.K. these two activities have been
separated by the 1984 Telecommunications Act.
two operators develop and manage the network some 20 marketing companies known
as 'service providers' deal with the end-user, undertaking marketing
after-sales service and billing. This original mode of organization has proved
beneficial and has helped to promote the rapid development of radiotelephone in
the UK. At the beginning of 1992 there
were already some 1.2 million subscribers. This corresponds to a penetration
rate of more than 2% of the population, against around 0.7% in France.
with a market share of about 13%, is one of the foremost service providers. It
has 1,65,000 subscribers and reports annual sales of some FRF 1.4
billion." (emphasis supplied) 127. In Annexure VII experience of foreign
collaborators Item 10 is Bharati Cellular. The number of subscribers that is
put against it is 2,53,067. This figure could be reached only by including Talkland.
It is necessary to point out that what is required is either experience of
handling one lakh cellular phones or 80,000 with the GSM lines. Both the
learned Solicitor General and Mr Koura would argue that service is relevant. But
the nature of service that is contemplated here as per the tender document is
found in Section III of Commercial Conditions at para 1.4. That reads as under:
refer to the scope of the services defined to be within the licence in para 4,
Section IV." Therefore, one has to obviously refer to para 4 of Section IV
which sets out the following :
the first instance the system should be capable of providing the following
services Tele-services Information type Services Speech Telephone Emergency
calls 709 Data Message handling system 300 bps access Short text Communication
of short Alphanumeric messages Graphics Grp. 3 Facsimile Bearer services Data
transmission in Asynchronous duplex circuit mode with PSTN 300 bps (V 21) 1200
bps (V 22) Data Transmission in Synchronous duplex circuit mode with PSTN 1200
bps 2400 bps Mobile access in the Asynchronous mode to the packet assembler/disassembler
of packet switching network 300 bps 1200 bps Mobile access in the synchronous
mode to the packet switching network 2400 bps 4800 bps Supplementary services
In the first instance the following supplementary services may be provided :
Calling Number Identification Presentation * Calling Number Identification
Restriction * Connected Number Identification Presentation * Connected Number
Identification Restriction * Malicious Call Identification * Call Forwarding
Unconditional * Call Forwarding on Mobile Subscriber Busy * Call Forwarding on
No Reply * Call Forwarding on Mobile Subscriber Not Reachable * Call Transfer *
Mobile Access Hunting * Call Waiting * Call Hold * Completion of Call to Busy
Subscriber * Three-Party Service * Conference Calling 710 * Closed User Group *
Advice of Charge * Freephone Service * Reverse Charging (Called or Calling MS)
* Barring of All Outgoing Calls * Barring of Outgoing International Call except
those directed to the Home PLMN Country.
Barring of All Incoming Calls * Barring of Incoming Calls when Roaming Outside
the Home PLMN Country." 128. The reliance placed by Mr Koura and learned
Solicitor General on paragraph 2. 1.1 of Section III of Commercial Conditions
to include services is not correct because that speaks of the obligations of
the licensee. That is obvious as seen under:
2.1 Obligations of the Licensee:
The licensee shall operate and provide the SERVICES. He will be solely
responsible for the installation, networking, operation, treatment of the
complaints, issue of bills to his subscribers, collection of his component of
the revenue, claims, damages arising out of this operation." 129. In the
judgment under appeal the High Court has observed "Thus, one lakh lines
carrying 10 marks was considered equivalent to 80,000 lines with GSM lines.
Even otherwise the respondents say that this had no impact in the case of Bharati
as its collaborators included Talkland who was one of the largest service
providers in U.K.
of providing service was an important consideration and experience of Talkland
in computing Bharati's foreign collaborators was correctly included in the
computations and, thus, its experience exceeded 2.51 lakh lines. The
respondents say that Bharati was treated on this basis and not on the basis of
80,000 lines. In support of this argument Mr Gupta, learned Solicitor General,
submitted that all services were to be provided by the licensee, and though Talkland
had no operating experience it was having service experience for rendering
service to subscribers which was an important factor. A subscriber is more
concerned with the service than as to how the Cellular Telephone operates. The
service would be of any type like billing, correction of defects in hand sets,
shifting of phones, etc. The operation and service though go hand in hand we do
not find anything wrong in taking into account the experience of Talkland which
has been done by the respondents." 130. We are unable to support this
finding as it clearly ignores that Talkland never figured as a collaborator for
Bharati Cellular. Further, ignoring the disjunctive clause, two qualifications
were sought to be subsumed to give an undue advantage to Bharati Cellular.
Besides, the nature 711 of service is as set out in para 4 of Section IV as
stated in Condition 1.4 of Section III. Thus, we hold, (borrowing the words of
Donaldson, L.J. Emma Hotels Ltd. v. Secretary of State for Environment34
"we could not see on what basis the Committee had reached its
If, after excluding the experience of Talkland, whether still Bharati Cellular
could fulfil the requisite qualification, namely, 80,000 GSM lines and whether
SFR France with EMTEL Mauritius had that experience are matters which require to
be factually analysed. The Committee may decide this factual aspect as on the
date on which the offer was made i.e. 20-1-1992. If the finding is rendered in favour
of Bharati Cellular it will qualify.
The other "hidden criteria" alleged is about the same foreign
collaborator. The Chairman, Telecom Commission, in relation to these criteria noted
: "The element of foreign partner were to be selected to provide the
service at the same location." 133. Concerning this criterion the attack
against BPL Systems and Projects, its foreign collaborator came to be changed
in the middle and yet in violation of the conditions laid down in Chapter 11,
clause 7 of the General Conditions. Originally, there were the following three
1. France Telecom Mobile International, France
Cellular Commns. Inc., USA
Inc., USA At the second stage of financial
bid, the name of the third partner has come to be omitted. This is the argument
of Mr Soli J. Sorabjee and Mr Harish Salve. The dropping of McCaw resulted in a
change of the joint venture which was not permissible. This is answered by Mr
F.S. Nariman, as noted above, that the deficiencies in tender conditions could
be condoned. This argument is supported by reference to G.J. Fernandez v. State
of Kamataka17 and Poddar Steel Corpn. v. Ganesh
Engineering Works13. The condition relating to change does not include the
dropping out one condition of 2 or 3 collaborators. Further, this condition is
not found in the tender documents but only financial bid documents.
BPL Systems and Projects submitted its financial bid on 17-8-1992. In that bid McCaw was never shown. Inasmuch as the
financial bid was received by BPL Systems and Projects only on 31-7-1992 Condition No. 7 was inapplicable or impossible of
compliance because the dropping was before Condition No. 7 was brought to the
notice of BPL Systems and Projects. Where, therefore, the financial bid came to
be submitted on 17-81992 no question of alteration would ever arise. After all
the object of the first stage was only to short-list and not to allot the
franchise. Therefore, there is nothing wrong in the same.
the financial bid clause 7 of Chapter II reads as follows "No change can
be made in the Indian or foreign partners already indicated in the first stage
bid." 712 It is common case between the parties that originally the
foreign collaborators of BPL Systems and Projects were three, as mentioned
above. So this is the position at the first stage, on 16-5-1992, when the evaluation took place.
7 of Chapter II, quoted above, forbids only change.
supplied) On 17-8-1992, when it submitted bid, McCaw had
been dropped out. It does not amount to a change of foreign collaborator.
Still, the original two remained.
is no change in joint venture. This does not violate clause 7 of Chapter 11. (emphasis
supplied) 136. Mr F.S. Nariman has rightly placed reliance on the abovesaid two
rulings; relevant passages are quoted as under. In G.J. Fernandez v. State of Karnataka17 this Court inter alia observed :
(SCC pp. 499-501, paras 13-15) "... In the first place, although, as we
have explained above, para V cannot but be read with para 1 and that the supply
of some of the documents referred to in para V is indispensable to assess
whether the applicant fulfils the pre-qualifying requirements set out in para
1, it will be too extreme to hold that the omission to supply every small
detail referred to in para V would affect the eligibility under para 1 and
disqualify the tenderer. The question how far the delayed supply, or omission
to supply, any one or more of the details referred to therein will affect any
of the pre-qualifying conditions is a matter which it is for the KPC to assess.
We have seen that the documents having a direct bearing on para 1 viz.
regarding output of concrete and brick work had been supplied in time. The
delay was only in supplying the details regarding 'hollow cement blocks' and to
what extent this lacuna affected the conditions in para 1 was for the KPC to
may place on the NIT, the way in which the tender documents issued by it has
been understood and implemented by the KPC is explained in its 'note', which
sets out the general procedure which the KPC was following in regard to NITs
issued by it from time to time. Para 2.00 of the 'note' makes it clear that the
KPC took the view that para 1 alone incorporated the 'minimum pre-
qualifying/eligibility conditions' and the data called for under para V was in
the nature of 'general requirements'. It further clarifies that while tenders
will be issued only to those who comply with the pre- qualifying conditions,
any deficiency in the general requirements will not disqualify the applicant
from receiving tender documents and that data regarding these requirements
could be supplied later. Right or wrong, this was the way they had understood
the standard stipulations and on the basis of which it had processed the
applications for contracts all along. The minutes show that they did not
deviate or want to deviate from this established procedure in regard to this
contract, but, on the contrary, decided to adhere to it even in regard to this
only decided, in view of the contentions raised by the appellant that para V
should als o be treated as part of the pre-qualifying conditions, that they
would make it specific and clear in their future NITs that only the fulfillment
of pre-qualifying conditions would be mandatory. If a party 713 has been
consistently and bona fide interpreting the standards prescribed by it in a
particular manner, we do not think this Court should interfere though it may be
inclined to read or construe the conditions differently. We are, therefore, of
opinion that the High Court was right in declining to interfere.
the conditions and stipulations in a tender notice like this have two types of
consequences. The first is that the party issuing the tender has the right to
punctiliously and rigidly enforce them. Thus, if a party does not strictly
comply with the requirements of para 111, V or VI of the NIT, it is open to the
KPC to decline to consider the party for the contract and if a party comes to
court saying that the KPC should be stopped from doing so, the court will
decline relief. The second consequence, indicated by this Court in earlier
decisions, is not that the KPC cannot deviate from these guidelines at all in
any situation but that any deviation, if made, should not result in arbitrariness
or discrimination." 137. In Poddar Steel Corpn. v. Ganesh Engineering
Works13 this Court observed : (SCC p. 276, para 6) "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
requirements in a tender notice can be classified into two categories those
which lay down the essential conditions of eligibility and the others which are
merely ancillary or subsidiary with the main object to be achieved by the
condition. In the first case the authority issuing 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 upon the strict literal compliance of the
condition in appropriate cases." 138. The High Court observed thus :
also do not find any error on the part of the respondents in treating the
financial bid of BPL in order if at that stage BPL dropped one of its three
foreign collaborators (which were named by it at the technical bid stage) as
otherwise financial bid satisfied all the criteria and dropping of one of the
collaborators made no difference." It further observed :
therefore, find that stand of the petitioner that any undue preference had been
given to some of the companies cannot be upheld. We even otherwise do not find
that deviation or relaxation in the standards prescribed has resulted in any arbitrariness
or discrimination. (See in this connection G.J. Femandez v. State of Kamataka17.) We do not think it is necessary
for us to go into each and every deficiency as alleged by the petitioner we
find that the action of the respondents had been bona fide. Motivation is
providing of best possible service to the consumers." 714 We are in
agreement with this finding.
Yet another attack that is made against BPL Systems and Projects is that it
submitted its application for foreign collaborator on 22-4-1992 to SIA beyond the cut-off date of 31-3-1992. It should not loom large because there was a
confusion as to who was competent authority to receive the application. As a
matter of fact BPL Systems and Projects did submit its application for foreign
collaboration on 31-3-1992 to the Reserve Bank of India. When that application was returned
on 20-4-1992 it came to be sent to SIA on 22-4-1992. We do not think BPL Systems and Projects could be
faulted on this score. Equally, the argument that the memorandum and articles
do not mean cellular business does not merit acceptance at our hand. In fact,
the High Court has correctly construed the main object, namely, to design,
develop, fabricate, manufacture, assemble, exporting from and importing into India by self or otherwise dealing and
act as consultants and render services in connection with all kinds of
telecommunication equipments as including cellular telephones.
Now we go on to Hutchison Max. It came to be rejected by the TEC. Relevant note
dated 9-10-1992 inter alia reads as follows :
Max : Non-compliance of operative and financial conditions laid down in Chapter
III at the time of opening of financial bids.
have accepted these conditions, through a letter, explaining their earlier non-
compliance as typographical error." Section 11, General Conditions, para 3
states as under :
Compliance. Point to point compliance report in respect of technical,
commercial and views on financial conditions must be submitted. Deviation, if
any, must be separately highlighted. In case compliance report is not enclosed
with the offer, the offer shall not be considered." The pro forma of the
compliance statement is in the following form "This company hereby agrees
to fully comply with all Technical, Commercial and General Conditions of Tender
Document No. 44-24/91MMC including amendments/clarifications issued by the
Department of Telecom without any deviations and reservations.
company also hereby agrees to fully comply with all paragraphs of Chapter II :
Conditions, Chapter III : Operating Conditions, Chapter IV : Financial
Conditions and Chapter V : Tariffs of Document No. 44-24/91-MMC (FINANCIAL)
without any deviations and reservations.
of the authorised signatory of the bidder/operating company For and on behalf
of the company)" 141. The compliance statement, as submitted by Hutchison
Max Telecom, is as under:
"Compliance Statement This Company hereby agrees to fully comply with all
Technical, Commercial and General conditions of Tender Document No. 44-24/91MMC
including amendments/clarifications issued by the Department of Telecom without
any deviations and reservations.
Company also hereby agrees to fully comply with all paragraphs of Chapter II :
General Conditions and Chapter V : Tariffs of Document No. 44-24/91-MMC
(FINANCIAL) without any deviations and reservations.
of the authorised signatory of the bidder/operating company.
and on behalf of HUTCHISON MAX TELECOM PRIVATE LIMITED sd/ (Ashwani Windlass)
Director" In all the four separate tender documents similar compliance
statements were filed.
Therefore, obviously, there is no reference to either Chapter III Operating
Conditions or Chapter IV : Financial Conditions. It has already been noted that
for the second stage the last date for filing tender document was 17-8- 1992.
On 11-9-1992, Hutchison Max wrote a letter to
the Minister of State for Communication about the inadvertent error due to a,
typographical/clerical mistake in not referring to Chapter III or Chapter IV.
It is relevant to note that in the concluding paragraph of that letter it is stated
reiterate and reconfirm our unequivocal compliance without any reservations and
deviations with the said tender conditions.
enclosed herewith is a confected Compliance Statement duly signed by the authorised
signatory of the Company which may kindly be taken on regard." 143. The
proper Compliance Statement came to be filed later.
it had not filed a proper Compliance Statement it had come to be excluded
(which knowledge was gained by it) it made representations to the Chairman,
Telecom Commission and the Prime Minister. According to Mr K.K. Venugopal it is
an accidental omission amounting to a clerical error. In support of this he
cites Moffett, Hodgkins & Clarke Co. v. City of Rochester1O. The headnote reads :
mistake in the proposals by a bidder for a contract with a city, which is
promptly declared by an agent of the bidder as soon as it is discovered and
before the city has done anything to alter its condition, will not bind the
bidder by reason of a provision in the city charter that a bid shall not be
withdrawn or cancelled until the board shall have let the contract." 716
At page 11 15 it reads :
complainant is not endeavoring 'to withdraw or cancel a bid or bond'. The bill
proceeds upon the theory that the bid upo n which the defendants acted was not
the complainant's bid; that the complainant was no more responsible for it than
if it had been the result of agrarian or the mistake of a copyist or printer.
In other words, that the proposal read at the meeting of the board was one
which the complainant never intended to make, and that the minds of the parties
never met upon a contract based thereon. If the defendants are correct in their
contention there is absolutely no redress for a bidder for public work, no
matter how aggravated or palpable his blunder. The moment his proposal is
opened by the executive board he is held as in a grasp of steel. There is no
remedy, no escape. If, through an error of his clerk, he has agreed to do work
worth $ 1 0,00,000 for $ 1 0, he must be held to the strict letter of his
contract, while equity stands by with folded hands and sees him driven into
bankruptcy. The defendants' position admits of no compromise, no exception, no
middle ground. (82 Fed Rep 256)"
The alternate submission is the question of even clerical error does not arise
here because one month before acceptance Hutchison Max had sent the compliance
the matter is purely technical the court should not exercise the power of
judicial review. We find great force in this submission. We are clearly of the
opinion that the mistake is in relation to a non-essential matter that 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. We concur with the High Court.
Regarding Sterling Cellular the note dated 9-10- 1992
inter alia states as under :
J.V has the Indian partner M/s Sterling Computers Ltd. which is under
investigation by CBI, in respect of their dealings with MTNL for publication of
directories. Delhi H.C. has in recent judgment passed
strictures on the deal. The Joint Venture has, therefore, been excluded from
consideration. CBI report is, however, yet to be received and formal
blacklisting proposal in respect of the first has not been initiated so far.
Exclusion has therefore to be justified." Note dated 10- 10- 1992 reads as
(C) further discussed the case with me today, when M(S) was present. He
indicated that after examining the reasons for elimination of 'He indicated
that after examining the reasons for elliminition of the six short-listed
parties from consideration for selection, he is of the opinion that M/s
Sterling Cellular need not be excluded outright, since CBI report has not yet
been received. The Company may be considered for selection and included in the
select list on a provisional basis, if found eligible otherwise. Similarly, M/s
Indian Telecom Ltd. (Partner OIC Australia) need not be eliminated just because
they have desired exclusive licence. We may offer them the licence on a
non-exclusive basis, if they are found eligible. It is up to 717 them to convey
acceptance to the offer.
of other four companies can stand for reasons indicated.' I have examined the
case again. I recommend that if M/s Sterling Cellular is to be selected on a provisional
basis, the company may be allotted Madras for following reasons :
Foreign exchange investment profile submitted by the company indicates that
there will be a heavy F.E. outflow over 3 years if the Company were to be
allotted Bombay or Delhi.
Madras is the least popular of the stations along with Calcutta. Rentals quoted
are high as pointed in our earlier note. M/s Usha Martin will help bring down
the rentals in Calcutta. Allotment of M/s Sterling to Madras will achieve the
Any delay in allotment of licence to M/s Sterling on account of the CBI
investigations will have the least adverse effect in Madras for lack of
competition to other licensee.
may kindly examine them again in the light of the observations of MOS (C) and
rework out the select list. The case may be put up for approval of MOS (C).
10- 10- 1992" Then it came to be selected on the approval of the Minister.
The High Court in upholding the selection observed thus "The case of
Sterling Cellular, however, appears to us to be rather strange. There were no
strictures against the holding of this company by the name Sterling Computers
Ltd. in M&N Publications Limited v. Mahanagar Telephones Nigam Limited8 by
this Court and the strictures were only against MTNL and United India
Periodicals Pvt. Ltd. (UPI) and United Database (India) Pvt. Ltd. (UDI). M/s Sterling Computers Ltd. had got
associated with UPI/UDI in getting a supplementary agreement for publication of
telephone directories for the cities of Bombay & Delhi. This supplementary
agreement was struck down. The Supreme Court in appeal Sterling Computers
Limited v. M&N Publications Limited5 against the judgment also did not
appear to have made any strictures. There was nothing on the record of the
respondents to suggest that any CBI enquiry was pending against this company.
There was no FIR and no preliminary report adverse to the company and we feel
the ghost of CBI has been unnecessarily brought into play. The company appears
to have been punished for no sin of its. However, since the company has not
complained we will leave the matter at that.', It is submitted by Mr Parasaran
that as on the date of the judgment no inquiry was pending. It was only after
10-6- 1993 an FIR was filed by CBI when the High Court of Madras was approached
for quashing the FIR under Section 482 CrPC.
order by consent was passed. CBI was allowed to 718 proceed with the
investigation and complete the same within one year. It was also ordered that
there would be no arrest or harassment. Therefore, as on the date of selection
there was no adverse report against Sterling Computers.
On the date of consideration by the Technical Evaluation Committee its position
was even better. If, therefore, this aspect had been bome in mind it is not for
us to reweigh the claims and come to one conclusion or another. So much for
letter dated 27-8-1993 by Department of Communications, Telecom Commission was
addressed to the appellants as follows :
of Telecommunications (Telecom Commission) New Delhi - 110001 Dated 27-8-1993
No. 842-2/92-TM To :
Cellular Ltd., Bombay House, 24, Homi Modi Street, Bombay - 400 001 (Kind
attention Shri Z.A. Baig) Sub : Tender No. 44-21/91-MMC (FIN) for franchise for
cellular mobile telephone service for Bombay, Delhi, Calcutta and Madras.
refer this office letter of even No......... dated 2- 10-1992 informing you
that M/s TATA Cellular Ltd. were provisionally selected for franchise for
providing cellular mobile telephone service at Delhi on a non-exclusive basis.
matter has been reconsidered in the light of the judgment delivered by the High
Court of Delhi in this case and a revised list of provisionally selected
bidders in the cities of Bombay, Delhi, Calcutta and Madras has been prepared.
The revised list does not include mobile telephone service in any of the four
cities. The earlier letter of even number dated 12-10-1992 may therefore be
treated as cancelled.
(S.K. Garg) DDG (TM) 27-8-1993" From this letter we are not able to fathom
the reason for omission. As seen above, TATA Cellular was originally selected
for Delhi. By implementation of the judgment of the High Court it has been left
out. Before doing so, as rightly urged by Mr Soli J. Sorabjee, this appellant
ought to have been heard. Therefore, there is a clear violation of the
principle of natural justice. On an overall view we find it has two distinctive
qualifications. In that
has not borrowed from any commercial bank.
has an annual turnover from Indian parameters of Rs 12,000 crores and the
annual turnover of the foreign parameters of Rs 51,000 crores. Comparatively
speaking, the other companies do not possess such high credentials yet it has
been awarded low marks with regard to the reliance on Indian public financial
institutions and financial strength of the parameters/partner companies.
qualifications could have been validly urged had it been heard. Then, we do not
know what decision could have been arrived at.
India Telecomp had been omitted for the following reasons as indicated in note
Telecomp (Partner Telecom Malaysia) Limited experience. Telecom Malaysia
already selected as partner of M/s Usha Martin Inc. Calcutta." We cannot
find fault with this reasoning since there can be only one foreign
collaborator. It cannot have Telecom Malaysia as its collaborator since Usha
Martin has the same foreign collaborator.
In the case of Ashok Leyland, the noting, as seen above, is as under:
both cases of (i) M/s Ashok Leyland and (ii) M/s Vam Organic Chemicals Ltd. a
joint venture company has not been formed as stipulated in the tender, and
there is no indication of the equity structure or the extent of participation
of the foreign collaborators." We cannot interfere with the discretion of
In the above two cases, we are obliged to interfere on the ground of
arbitrariness and violation of the principle of natural justice confining
ourselves to the doctrine of judicial restraint, however, by the application of
permissible parameters to set right the decision-making process.
supplied) 152. We make it clear that we are not disturbing the other selections
since the power of judicial review is not an appeal from the decision. We
cannot substitute our decision since we do not have the necessary expertise to
Lastly, quashing may involve heavy administrative burden and lead to delay,
increased and unbudgeted expenditure; more so, in a vital field like
In view of the foregoing, we thus reach the conclusion that Bharati Cellular
could not claim the experience of Talkland. This conclusion has come to be
arrived at on the basis of the parameters we have set out in relation to the
scope of judicial review. We may reiterate that it is not our intention to
substitute our opinion to that of the experts. Apart from the fact that the
Court is hardly equipped to do so, it would not be desirable either.
Where the selection or rejection is arbitrary, certainly this Court would
In the result, we hold that Bharati Cellular's claim based on Talkland's
experience is incorrect. Talkland's experience will have to be excluded. The
matter will have to be reconsidered on a factual basis as on 20-1-1992, in the light of what we have observed above. The
claim of TATA Cellular will have to be reconsidered in the light of the above
observations. Accordingly, civil appeals arising out of SLP (C) Nos. 14191-94
of 1993 will stand allowed. Civil Appeals arising out of SLP (C) No. 14266 of
1993, SLP (C) No. 17809 of 1993 and TC (C) No. 49 of 1993 will stand dismissed
with no order as to costs.