Murarilal Bhattad & Ors Vs. State of Maharashtra & Ors  Insc 899 (5 December 2006)
Sinha & Dalveer Bhandari
J U G
D M E N T (Arising out of S.L.P. (C) No.5900 of 2004) WITH
CIVIL APPEAL NO. 5611/2006 (Arising out of S.L.P. (C) No.23665 of 2004) S.B. Sinha,
Mumbai Metropolitan Region Development Authority (for short, 'the Authority')
was created under the Mumbai Metropolitan Region Development Authority Act,
1974 ('the Act'). It conceptualized the idea of establishing a Convention and
Exhibition Centre ('C&EC). Pursuant thereto and in furtherance thereof it
called for "Expression of Interest for development of C&EC" in Bandra
Kurla Complex. An advertisement was issued inviting 'Expression of Interest for
development of C&EC'.
No.1, pursuant whereto and in furtherance whereof, entered into a Memorandum of
Understanding (MoU) with M/s. Larsen & Toubro Ltd. (L&T) for setting up
such a complex. It also conducted conference of investors therefor. It submitted
its tender on 7.4.2003, highlighting :
Entire ground of 75,000 sq.m. would be required for international standard
They have formed a consortium for bidding for the said project and giving the
names of the members of the consortium as including L&T and IMAG (Germany).
Letters of acceptance from L&T was also annexed to show its participation.
Authority was offered equity participation to the extent of 5% of the total
other companies also submitted their tenders.
tenders were to be considered at three stages and thus, three different covers
were to be submitted along with tenders. The first cover contained compliance
with minimum eligibility criteria, the second cover contained financial bid and
the third one contained technical and business proposals. The technical bid was
opened on 7.5.2003. The financial bid was thereafter opened which was contained
in second cover, on 8.5.2003.
was the highest bidder having offered 91.514 crores. M/s. Reliance Capitals
Ltd. was said to be the lowest bidder therein. The offer of the bidders thereof
are as under :
M/s. Shapurji Pallonji & Co. Ltd. Rs.50.005 Crores.
M/s. Reliance Capitals Ltd. Rs.13.032 Crores.
M/s. R.M. Bhuther & Co. Ltd. and its Associate companies in consor- tium
with L&T Ltd. Rs. 91.514 Crores.
Cover thereof was opened thereafter and the Authority, on 26.6.2003 informed
Appellants that it had decided to arrange a presentation on the business
proposal by them on 3.7.2003. Pursuant thereto they made a presentation on
by a letter dated 29.8.2003, informed the Authority that :
concerns like L&T and IMAG were associated in the project.
presentation was made on 4th
July, 2003, a copy
whereof was enclosed.
Thereafter it did not receive any query from the Authority.
List of business partners shown with details of Convention projects of L&T
and business of IMAG.
Role of IMAG was also set out.
Authority, however, took a decision to reject all the bids on 1.9.2003, which
was said to have been communicated to Appellants by a fax message on
the news item appeared in the 'Economic Times' on 2.10.2003, wherein, inter alia,
it was reported that :
Authority is close to finalizing the much talked about Convention centre in Bandra
official of the Authority had stated that they were trying to get private
participation and three bidders had been finalized and in a few days the plans
for the Centre would be finalized in an area of 5.5 hectares.
issued a letter to the Chairman of the Authority, in terms whereof he was,
inter alia, informed that the project would start getting yield only after 12
years from the date of commencement thereof. It was furthermore informed that
its consortium members included L&T and IMAG.
company has offered highest bid price for the land at BKC for a reserved plot
for C&EC since the company is interested in bringing up an international
standard Exhibition Centre, a long over-due infrastructure asset for a city
like Mumbai inspite of reserved plot (restricted utility) area with high
gestation period and longest break even which is almost about 7 years. In all,
the project starts getting yield only after 12 years from date of commencement
It has also been the contention of the company to relocate the asset base of
the company on account of core competency of the company in the field for more
than 50 years and intending to continue to command on industry.
As per the press release for a commercial block bidding invited by the
Authority, it was awarded at Rs.25,000/- per square metre in spite of having a
total flexibility to exploit the commercial aspect vis-`-vis an offer given by
the company for the reserved plot for convention centre at the rate of
Rs.14,642/- per square metre.
Company also expressed that the projects of such type are always being given
land at very concessional rate. Statistics indicates that world over such
exhibition centres are either funded by way of concessional land price or
absolute government contribution by way of land to make the project to early
expertise of L&T and IMAG in setting up Exhibition Centres was again
highlighted by a letter dated 20.10.2002, therein it was alleged :
Authority had informed in the presence of other bidders that the consortium led
by the appellants were the successful bidders.
Some committee members informed that the matter had not been decided on
1.9.2003 and the matter was deferred till the next meeting to be held on
The detailed history was set out including the fact that Reliance Capital had
quoted Rs.13.032 crores against Rs.91.514 crores quoted by Appellants.
L&T and IMAG were the consortium members and the decision would have an
petition was filed before the Bombay High Court by Appellants, inter alia, questioning
validity of clause 2.4 of the Request for Proposal in which the Authority
reserved the right to reject at any stage all or any of the bids without
assigning any reason.
power of the Authority to cancel or reject the bids.
cancellation of the bid by the decision purported to have been made on
contentions of Respondents before the High Court were :
decision to reject all bids is in pursuance of the power was conferred by the
terms of the contract.
authorities acted reasonably and fairly and have now reached a decision to set
up the convention centre on their own without any private participation.
virtue of sections 12(1)(b)(d) and (h) and the power to issue directions under
S.14 of the Act, it could, at any stage, review any decision including the
decision of the executive committee and direct either rejection of all bids or
issuance of fresh bids.
writ petition filed by Appellants was dismissed by the High Court holding :
Executive Committee is not the sole judge in matters of approval or rejection
of tenders for projects and schemes of the authorities.
view of sections 12, 13, 14 and other provisions of the Chapter, the power of
the Authority cannot be whittled down or restricted.
being the authority entitled to acquire, hold and dispose of the property it
cannot be said that its power in such mattes will not include the power to
reject a tender or bid which is invited for projects and schemes framed by it.
exercise of the powers under Article 226 it could not act as an Appellate
Authority to review of supervise the functions of authorities like the Mumbai
Metropolitan Region Development Authority.
Considering the material on record it cannot be held that the Authority acted
unreasonably unfairly or in an unjust manner.
Authority consisting of people possessing expertise and skill in the field its
decision to develop the property as a C&EC by itself cannot be faulted
is not a case where Article 14 can be said to have been infringed.
cannot be said the facts which are pleaded are not based on evidence or
materials which are not annexed to the counter affidavit.
Reasons in such matters can be gathered from files/records maintained by the
review petition filed thereagainst was dismissed.
filed the special leave petition on 29.10.2004 against the order dated
20.1.2004 as also against the order dated 11.10.2004 dismissing the review
counter affidavit filed before this Court the Authority, inter alia, disclosed
that the rate of premium for the commercial properties was increased from Rs.25,000/-
per square metre to Rs.42,500/- per square metre. It was further disclosed that
the Authority called for fresh tenders for development of 5.5 hectares as
C&EC and 2.0 hectares for a commercial complex, in terms whereof the
bidders were required to quote separately for C&EC and Real Estate
Components. Whereas the rate for C&EC was fixed at 130 crores (Rs.20,000/-
per square metre); for the Real Estate Component the bidder was required to
quote higher than 350 crores (i.e. higher than Rs.70,000/- per square metre).
It was further stipulated that the successful bidder was required to pay 50% of
the compensation amount within one month of acceptance thereof and the rest 50%
within three months thereof.
other terms and conditions and procedure for evaluating bids, however, remained
the same. A supplementary affidavit was filed by Respondents on 20th February,
2006, wherein it was brought to this Court's notice that in response to the
tender floated in 2005, Reliance Industries Ltd. had bid Rs.974,00,00,111/- for
the commercial portion and the fixed price of Rs.130 crores for the C&EC.
Reliance Industries Limited thereafter was directed to be impleaded as a party
by an order dated 24.4.2006, wherein this Court recorded:
matters pertain to the construction of a Convention-cum-Exhibition Centre and
commercial complex at Bandra Kurla, Mumbai. The petitioner before us is the
unsuccessful bidder who has challenged the action of the Mumbai Metropolitan
Region Development Authority (MMRDA) cancelling all the bids at an earlier
stage. Despite the application made by the petitioner, we declined to grant
injunction in the matter. As a result, MMRDA re-tendered and we are informed
that the highest bid was by Reliance Industries Limited, which is said to have
been granted the contract and paid a sum of Rs.552 crores.
petitioner desires to demonstrate to this Court
the bid was cancelled by the MMRDA, which had no jurisdiction to do so under
the Act; and
there was mala fides in cancelling all the bids as it was intended to engineer
the re-tendering process to favour the party who has now succeeded. To
demonstrate his bona fides, the petitioner's counsel states that the petitioner
would not only match the bid of the presently successful party only for the
Convention Centre, but that he would also pay the amount at one go instead of
paying it over a period of time.
informed that there is another party who is involved. Mr. R.F. Nariman, the
learned senior counsel, states that the petitioner would move an application to
implead that other party (Reliance Industries Limited)." The Reliance
Industries Limited was impleaded as a party to this appeal thereafter.
R.F. Nariman, learned Senior Counsel appearing on behalf of Appellant in
support of this appeal would contend that
purported major shift in the policy by the Authority was impermissible in law;
of the bid offered by the Authority was wholly illegal as the Executive
Committee alone was the sole judge in relation thereto;
accepting the bid of Reliance Industries Ltd., the offer of the appellants that
they would pay @2=% per year from the annual turnover from the 21st year had
not been considered;
rejecting the tender of the appellant, the Executive Committee/Mumbai
Metropolitan Region Development Authority was required to assign sufficient and
valid reason; and the same having not been done, the order impugned in the writ
petition was vitiated in law.
N. Salve, learned Senior Counsel appearing on behalf of the Reliance Industries
Ltd., on the other hand, would submit that
Executive Committee could not have taken a decision in regard to the change of
the second tender was floated, Appellant did not take part therein;
lapses, if any, cannot be a ground for judicial review.
of Mr. Shekhar Naphade, learned Senior Counsel appearing on behalf of the
review is not maintainable as Appellant has not disclosed infringement of any
constitutional or statutory right;
the Authority was entitled to reject the tender on appreciation of professional
competence and capacity of Appellant to run the centre profitably, as well as
the fact that prices offered by them were competitively low; and
policy being in relation to a mega project and the judgment of the authority
being objective criterion, no interference is called for by this Court.
Act was enacted for forming Brihan Mumbai and certain areas round about into a
Mumbai Metropolitan Region. Section 4 thereof deals with the composition of the
Authority. Section 4A provides for powers and functions, inter alia, of its
Chairman and Metropolitan Commissioner.
7 provides for constitution and powers of Executive Committee.
(iii) of Sub-Section (3) of Section 7 reads as under:
(3)(iii) approval or rejection of tenders for projects and schemes of the
Authority;" Section 12 of the Act provides for powers and functions of the
Authority. Clause (b) of Sub-Section (1) of Section 12 deals with the power of
reviewing any project or scheme for development which may be proposed or may be
in the course of execution or may be completed in the Metropolitan Region.
Clause (d) thereof refers to execution of projects and schemes and Clause (h)
provides for co-ordination in execution of the project or schemes for the
development of the Metropolitan Region.
to or in furtherance of its regulation making power contained in Section 50 of
the Act, regulations were framed by the Authority, known as the Mumbai
Metropolitan Region Development Authority (Disposal of Land) Regulations, 1977
(Regulations). Regulations 7 and 9 of the Regulations are as under :
Disposal of land by offers to Government, Local Authority or Public Sector
Undertaking Where the Authority determines to dispose of land by making offers
to the Government, Local Authority or Public Sector Undertaking, the offers
shall be made by the Metropolitan Commissioner in such form as he may decide,
incorporating the terms and conditions of offers determined by the Authority
which shall include the condition that the offer shall remain open and valid
for acceptance for a period of 30 days and shall lapse if it remains unaccepted
by the expiry of this period; provided that it shall be lawful for the
Metropolitan Commissioner to renew any lapsed offer on an additional condition
that the Government, Local Authority or Public Sector Undertaking, as the case
may be, shall pay interest at the rate of 18% per annum over the premium
specified in the lapsed offer with effect from the date on which the lapsed
offer was made; provided further that nothing contained herein shall authorize
the Metropolitan Commissioner to renew any lapsed offer after three months of
its lapse." Regulation 9 provides for the mode and manner of payment of
(ii) of Regulation 9 reads as under:
Notwithstanding anything contained in the foregoing Clause to contrary, if
there shall a scheme formulated and sanctioned by the Authority to erect or to
finance erection of a building or buildings on land agreed to be leased to the
Government, a Local Authority or a Public Sector Undertaking to subserve the
development of the Metropolitan Region or any part thereof and to grant in
lease such building or buildings to the concerned government, Local Authority
or Public Sector Undertaking it shall be lawful to agree with the concerned
Government local authority or Public Sector Undertaking to recover the premium
agreed to be paid in consideration of the lease of such building or buildings
in yearly installments, not exceeding ten in number." We may also notice some
of the provisions of "Request for Proposal for Grant of Lease of Land for
developing and operating a Convention and Exhibition Centre". Clause 3.15
defines "successful bidder" to mean the bidder selected according to
the evaluation criteria as detailed in Section 7 for grant of lease of land.
The concept of Convention and Exhibition Centre is contained in Clause 4.3
thereof. Clause 5 provides for specification of C&EC. Clause 5.1 reads as
The C&EC facility for Phase I is estimated to require approximately 35,750 sq.m.
of built up area which will be reckoned as 44,525 sq.m. for computation of FSI
after allowing for height in excess of 4.20 m. for exhibitions areas. In Phase
II there is a provision of a further 10,650 sq.m. of built up area (which will
be reckoned as 15,975 sq.m. for computation of FSI for Exhibition areas having
height in excess of 4.20 m) that is to be used for further expansion of
exhibition areas having at least 2 additional exhibition halls having an area
of 5000 sq.m. each." The total built-up area comes to about 60,500 sq.m.
of Convention Auditorium was made in Clause 5.3. Clause 7 provides for
submission and evaluation of bids stating that interested parties shall submit
their bids in three separate sealed covers : (1) Cover 1 should contain
compliance in regard to minimum eligibility criteria.
of minimum eligibility criteria is contained in clause 7.15 in the following terms
The objective of the minimum eligibility criteria is to short list Bidders who have
financial strengths necessary to contribute and/or arrange the funds required
to execute the Project in the desired time frame.
technical skills necessary to design, construct, operate and maintain the
Facility as per the Principles of Good Industry Practice.
commercial skills necessary to market the Facility and successfully develop
7.17 provides for the eligibility criteria being :
Net worth not less than Rs. 750 Million as per the latest audited financial
turnover not less than Rs.500 Million as per the latest audited financial
Profit not less than Rs. 50 Million as per the latest audited financial
statement or Average annual net profit of the last three financial years not
less than Rs.50 Million." Category "I", related to field of
activity defined as Convention & Exhibition Centres, Hotels, Restaurants
and Banquet Halls.
7.22 provides for Category "II" to include an indirectly related field
of activity defined as shopping centers, commercial complexes, housing or
office complexes, retail stores, entertainment centres and amusement parks.
Clause 7.23 provides for the eligibility criteria to show that the bidding
company must have developed during last five years at least one Project having
Capital Cost not less than Rs.1,000 Million. Clauses 7.24 and 7.25 thereof read
as under :
The turnover of the Bidding Company or the combined turnover of the Financially
Significant Members of the Bidding Consortium from the directly related field
of activities shall not be less than Rs.500 million.
Format for Cover I compliance to minimum eligibility criteria Bidders are
required to organize "Cover I Companies with Minimum Eligibility Criteria"
according to the following checklist :
1 Compliance to Minimum Eligibility Criteria Section 1 .
2 a) b) c) Letters of Acceptance, as per the format specified in Exhibit 4,
from each of the Consortium Members in case of a Bidding Consortium.
3 a) ..
Letters of Commitment as per the format specified in Exhibit 3, from each of
the entities which are Financially Significant Consortium Member, the strengths
of which is to be considered for the purpose of evaluation.
7.26 reads as under :
MMRDA on demand will return unopened Financial Bids and Technical Bids (Covers
2 and 3) of the Bidders who do not comply with the minimum eligibility
criteria." Step 2 (Cover 2) provides for financial bid. Clause 7.30
provides for methodology for evaluation of bids.
7.30 deals with the manner in which the bids would be dealt with.
7.34 provides for technical and business proposal evaluation criteria. Clauses
7.38 and 7.39 are as under :
In evaluating the Business Proposal, MMRDA reserves the right to seek
clarifications from the Bidders. The Bidders shall be required to furnish such
The Technical and Business Proposal of only the Rank 1 bidder will be opened.
He may also be requested to make a presentation at his own cost, for
clarifications and additional information on bidder's capability, concept plan
and the business proposal in this regard to the evaluation committee appointed
by the Metropolitan Commissioner, MMRDA. The Committee may seek further
clarifications and make suggestions in respect of the proposal, within the
permitted built-up area, which will not include any change in the premium or
the manner in which it is to be paid. These suggestions will have to be
incorporated by the bidder." The Bidding Companies/Bidding Consortium of
Appellants included :
M/s. R.M. Bhuther & Co. Ltd.
M/s. Larsen & Toubro Ltd.
M/s. R.M. Bhuther & Co.
M/s. M.B. Development Corporation
M/s. M.B. Constructions
M/s. Bhattad Bros.
M/s. Alusett System (India) Pvt. Ltd.
principal question which arises for consideration is as to whether the
Authority had any jurisdiction to cancel the bid.
Executive Committee is a statutory functionary. The powers and functions of the
authority and the respective committees concededly are governed by the
provisions of the statute, but, then the jurisdiction of the Executive
Committee is limited. It was confined to rejection or acceptance of the tender.
The Authority exercises a larger power. For the said purpose we would assume
that the Authority had no incidental or ancillary power, but there cannot be
any doubt or dispute that the Executive Committee could not cancel the entire
tender. It could not have caused any change in the entire scheme or policy. It
could not make alterations in the methodology of tender. It could not have gone
into the working of the project. It also could not have gone into the question
as to whether the project would be financially viable if the method of
calculation is changed.
reliance has been placed by Mr. Nariman on Marathwada University v. Seshrao Balwant
Rao Chavan [(1989) 3 SCC 132 : AIR 1989 SC 1582] to contend that as therein the
power of the Vice Chancellor and the Executive Council was different, the former's
power could not have been exercised by the latter.
not dispute the proposition of law laid down therein.
would assume that the power of the Executive Committee and the Authority under
the Act are different and the latter for all intent and purport could not usurp
the functions of the former. But in this case, it has not been so done.
of the Authority being larger, and the power to cancel the tender being not
vested in the Executive Committee, the action on the part of the former was
neither illegal nor without jurisdiction.
Court rejected the contention that the power of the Vice Chancellor to regulate
work also included the power to initiate disciplinary action, stating :
takes us to the second contention urged for the appellants. The contention
relates to the legal effect of ratification done by the Executive Council in
its meeting held on December 26/27, 1985. The decision taken by the Executive
Council is in the form of a resolution and it reads as follows :
the issues, the Executive Council resolved as follows:
Executive Council at its meeting held on 22-3-1979, had by a resolution given
full authority to the Vice-Chancellor for taking further proceedings and
decision in both the cases of the defaulting officers.
exercise of above authority, the Vice- Chancellor appointed an Inquiry Officer
and as suggested by the Inquiry Officer issued show-cause notices, obtained
replies from the officers and lastly issued orders for terminating their
* * *
It was further resolved that
There has been no inadequacy in the proceedings against both the officers;
The punishment ordered against both the officers is commensurate with the
defaults and allegations proved against both the officers; and
The Executive Council, therefore, wholly, endorses the actions taken by the
then Vice-Chancellor against both the officers." By this resolution, we
are told that the Executive Council has ratified the action taken by the Vice-
Chancellor. Ratification is generally an act of principal with regard to a
contract or an act done by his agent.
Friedman's Law of Agency (5th edn.) Chapter 5 at p. 73, the principle of
ratification has been explained :
the 'agent' does on behalf of the 'principal' is done at a time when the
relation of principal and agent does not exist: (hence the use in this
sentence, but not in subsequent ones, of inverted commas). The agent, in fact,
has no authority to do what he does at the time he does it.
however, the principal, on whose behalf, though without whose authority, the
agent has acted, accepts the agent's act, and adopts it, just as if there had
been a prior authorisation by the principal to do exactly what the agent has
done." As noticed hereinbefore, we have proceeded on the basis that the
powers of the Executive Committee and the Authority are separate and distinct
and we have pointed out that the powers vested in the Executive Committee being
limited, the decision taken by the Authority cannot be said to be illegal.
furthermore contended that the Executive Committee had a special power which
would prevail over general power vested in the Authority. In J.K. Cotton
Spinning & Weaving Mills Co., Ltd. vs. The State of Uttar Pradesh &
Ors. [(1961) 3 SCR 185], this Court applied the rule of construction that
general provisions yield to special provisions, but, the said rule has no
application in the facts and circumstances of the present case. Executive
Committee does not exercise any special power. The jurisdictions of both the
authorities are separate and distinct.
A.M. Singhvi, learned Senior Counsel appearing for Appellants in the connected
appeal relied upon Bhavnagar University vs. Palitana Sugar Mill Pvt. Ltd. & Ors. [(2003) 2 SCC
111], wherein it was held :
is the basic principle of construction of statute that the same should be read
as a whole then chapter by chapter, section by section and words by words.
to construction or interpretation of statute is necessary when there is
ambiguity, obscurity, or inconsistency therein and not otherwise. An effort
must be made to give effect to all parts of statute and unless absolutely
necessary, no part thereof shall be rendered surplusage or redundant." We
fail to understand as to how the principle laid down therein can be said to
have been violated.
has also been placed on State of Uttar Pradesh vs. Singhara singh & Ors. [AIR 1964 SC 358 : (1964) 4
SCR 485], wherein this Court quoted with approval the decision in Taylor v.
Taylor [( 1 Ch. D. 426, 431] for the proposition that where a power is
given to do a certain thing in a certain way, the thing must be done in that
way or not at all and that other methods of performance are necessarily
forbidden. There is again no quarrel over the aforementioned proposition of
law. Here the Authority has not exercised any power forbidden by law. The
Authority has also not exercised its power in the manner which is not in
accordance with law.
merit of the matter, Mr. Nariman has pointed out, the distinction between 2002
and 2005 tenders to show that such a policy decision as laid down in the 2005
tender was not in pari materia with 2002 tender. The comparison of methodology
for evaluation of bids is as under :
TENDER 2002 TENDER METHODOLOGY FOR EVALUATION OF BIDS 7.30 The bidder will have
to quote separately for the Convention & Exhibition Centre and the
Commercial Complex. The built-up area (considered for FSI computa- tion) of the
Convention & Exhibi- tion Centre shall be considered as 65,000 sq.m. irrespective
of the reduction that may be possible on finalization of detailed architectural
designs. Similarly the floor space considered for FSI computation for the
commercial Complex will be 50,000 sq.m. The bidder will have to quote a fixed
rate of Rs.20,000 per sq.m. of built up area for total built-up area 65,000 sq.m.
for Convention & Exhibition Centre.
amount will be Rs.130 crores.
bidder will also have to quote a rate of premium higher than Rs.70,000 per sq.m.
of built-up area for 50,000 sq.m. of total built-up area for Commercial
Complex. The premium amount will be higher than Rs.350 crores. The total
minimum amount of lease premium to be quoted by the bidder will be higher than
Rs.480 crores of the total amount of lease premium that will be payable to
MMRDA 50% will have to be paid within one month and the balance will have to be
paid within two months i.e. within three months from the time the bid is
accepted. The lease period is of 80 years as is indicated in the MMRDA
(Disposal of land) Regulation 1977.
FOR EVALUATION OF BIDS 7.30 The bidder will have to quote separately for the
C&EC and the Real Estate component. The built- up area (considered for FSI
computation) of C&EC shall be considered as 60,500 sq.m. (Phase I and II)
irrespective of the reduction that may be possible on finalization of detailed
the floor space considered in FSI computation for the Real Estate component
shall be 15,000 sq.m. The bidder has the option of bidding only for the
C&EC without the Real Estate component. The bidder has to quote a rate of
premium in terms of Rs. per sq.m. of FSI and the total premium, separately for
the C&EC and the Real Estate component subject to the condition that the
rate quoted for the Real Estate component shall be greater than that quoted for
Authority is a statutory authority. It consists of not only politicians but
also various other responsible officers. It, while exercising its power under
the Act, must necessarily take policy decisions. Whereas under the 2002 tender
the bidder had to quote the rate of premium in terms of rupees per square meter
of FSI and the total premium separately for C&EC and the Real Estate
component subject to the condition that the rate quoted for the Real Estate
component should be greater than that quoted for the C&EC, upon having come
to know that the value of the land would be much more, the Authority in the 2005
tender decided that the bidders should be required to quote a fixed rate of
20,000 per sq.m. of built-up area for total built-up area 65,000 sq.m. for
Convention & Exhibition Centre. Economic viability of the entire project
component, taking into consideration two different components for C&EC and
the Commercial Complex, could have been taken differently. The premium amount
was to be quoted higher than Rs. 350 crores for the Commercial Complex. While
exercising its jurisdiction of judicial review, the Court is required to decide
the cases before it, keeping the well known principles therefor in mind and
having regard to the fact situation obtaining therein. No hard and fast rule
can be laid down therefor. Recently, in Noble Resources Ltd. vs. State of Orissa and Anr. [2006 (9) SCALE 181] this
Court has noticed the power of judicial review vis-`-vis contractual disputes, opining
terms of the invitation to tender may not be open to judicial scrutiny, but the
courts can scrutinize the award of contract by the Government or its agencies
in exercise of their power of judicial review to prevent arbitrariness or favouritism.
[See Directorate of Education and Ors. v. Educomp Datamatics Ltd. and Ors. 2004
(4) SCC 19].
the court may refuse to exercise its jurisdiction, if it does not involve any
the scope of judicial review or the development of law in this field has been
noticed hereinbefore particularly in the light of the decision of this Court in
ABL International Ltd. (supra), each case, however, must be decided on its own
facts. Public interest as noticed hereinbefore, may be one of the factors to
exercise power of judicial review. In a case where a public law element is
involved, judicial review may be permissible." Noticing some of the areas
where judicial review would be permissible, this Court opined that ordinarily,
this Court would not enforce specific performance of contract where damages
would be adequate remedy.
also held that conduct of the parties would also play an important role.
expansive role of Courts in exercising its power of judicial review is not in
dispute. But as indicated hereinbefore, each case must be decided on its own
placed reliance upon Star Enterprises & Ors. vs. City and Industrial
Development Corporation of Maharashtra & Ors. [(1990) 3 SCC 280], wherein Ranganath
Misra, J., as His Lordship then was, opined:
recent times, judicial review of administrative action has become expansive and
is becoming wider day by day. The traditional limitations have been vanishing
and the sphere of judicial scrutiny is being expanded.
activity too is becoming fast pervasive. As the State has descended into the
commercial field and giant public sector undertakings have grown up, the stake
of the public exchequer is also large justifying larger social audit, judicial
control and review by opening of the public gaze; these necessitate recording
of reasons for executive actions including cases of rejection of highest offers.
That very often involves long stakes and availability of reasons for action on
the record assures credibility to the action; disciplines public conduct and
improves the culture of accountability. Looking for reasons in support of such
action provides an opportunity for an objective review in appropriate cases
both by the administrative superior and by the judicial process. The submission
of Mr. Dwivedi, therefore, commends itself to our acceptance, namely, that when
highest offers of the type in question are rejected reasons sufficient to
indicate the stand of the appropriate authority should be made available and
ordinarily the same should be communicated to the concerned parties unless
there be any specific justification not to do so." In this case, highest
offer has not been rejected. A new policy decision has been taken. Question as
noticed herein is not as to whether the offer of the Appellants should have
been rejected but is as to whether the Authority in law could have altered its
policy in regard to disposal of its properties. 'Public Trust Doctrine' was
also sought to be invoked by Mr. Nariman against the Authority and in this
behalf reliance has been placed on This Court therein was dealing with a master
plan in the light of justifiability of exercise of discretionary jurisdiction
under the Town Planning Act.
regard to the provisions contained in Sub-Section (4) of Section 19 of the
Bangalore Development Authority Act, 1976 as also the fact that the
discretionary jurisdiction had been arbitrarily exercised, this Court invoked
the 'public trust doctrine' saying that although the State is required to keep
a vigil on the local body, but, thereby the power thereunder cannot be
stretched so as to entitle the Government to alter any scheme and convert any
site or power specifically reserved in the statute in the Authority.
floating a tender in furtherance of a public project, the Authority was not
truly concerned with the enforcement of its master plan. No such argument was
advanced before the High Court. Such an argument has been advanced for the
first time before us. We would consider the efficacy of said contention a
next question which arises for consideration is as to whether any reason was
required to be assigned. A power to deal with a contractual matter and a power
of a statutory authority to exercise its statutory power in determining the
rights and liabilities of the parties are distinct and different.
reasons are required to be assigned in a case where civil or evil consequences
may ensue, the same may not be necessary where it is contractual in nature,
save and except in some cases, e.g., Star Enterprises (supra).
assignment of reasons forms third pillar of principle of natural justice, is
not free from doubt. There is a diversity of opinion as has been noticed by
this Court in Rajesh Kumar & Ors. vs. D.C.I.T. & Ors. [2006 (11) SCALE
has also been placed by Mr. Nariman on Commissioner of Police, Bombay vs. Gordhardas Bhanji [1952 (1) SCR
135] and Union of India & Ors. vs. Dinesh Enginering Corporation & Anr.
etc. [(2001) 8 SCC 491]. In Commissioner of Police (supra) the Court was
concerned with a situation where a statutory authority had acted on dictation
of an Appellate Authority, which was found to be illegal. In Dinesh Enginering
(supra), this Court opined that the Railways have no arbitrary power to reject
the bid offered by a party merely because it has that power, particularly, when
the same can be exercised only on the existence of certain conditions which in
the opinion of the Railways are not in the interest of the Railways to accept
have noticed hereinbefore that power has not been exercised by the Executive
Committee in rejecting the tender. The power has been exercised by the
Authority in canceling the tenders so as to enable it to have a re-look of the
reasons may be required to be assigned for rejecting the bid, but in the
instant case, in our opinion, no reason was required to be assigned as there
has been a change in the policy decision.
news item appearing in the Economic Times is not of much significance. No
affidavit has been affirmed as regards the correctness or otherwise of the said
be true that the Authorities at one point of time, as was disclosed in the
Counter Affidavit, had thought of setting up a Convention Centre of their own
and without any private participation, but only because there has been a
deviation from the said stand would not, in our considered opinion, render the
entire policy decision vitiated in law.
set up its Evaluation Committee. The decision presumably has been reached by
reasons as regards purported unsatisfactory performance of Appellants, take a
back seat once having a re-look to the entire situation was thought of.
not a case where the Court is called upon to exercise its equity jurisdiction.
It is also not a case where ex facie the policy decision can be held to be
contrary to any statute or against a public policy. A policy decision may be
subjected to change from time to time. Only because a change is effected, the
same by itself does not render a policy decision to be illegal or otherwise
vitiated in law.
Singh Arora vs. Union of India & Ors. [(1986) 3 SCC
247], whereupon Dr. Singhvi relied upon, the tender was arbitrarily rejected.
Therein the writ petition was dismissed in limine only on the premise that the
question involved therein related to contractual obligations and the policy decision
could not be termed as unfair or arbitrary. It was opined that therein no
question of policy decision arose and as such contract was to be given to the
lowest bidder in terms of the tender notice and the contract should have been
awarded to the appellant therein, especially when he had been doing the job for
many years. As to how the said decision is applicable to the facts of the
present case, we fail to understand. For the self-same reasons we are unable to
appreciate the contention that only because a change has been effected in
computation of total price under the new tender, the same was invalid in law.
Horizons Ltd. & Anr. vs. Union of India
& Ors. [(1995) 1 SCC 478], this Court opined that in the matter of grant of
tender the State cannot act as a private person having regard to Article 14 of
the Constitution of India. It was categorically opined that departing from the
narrow legalistic view the Courts have taken note of the realities of the
situation which, by no stretch of imagination, would mean that the Court would
substitute itself in the place of a statutory authority. The Court in a case of
this nature must exercise judicial restraint. It may be one thing to say that
having regard to the public interest, the Court may itself invite bids so as to
verify the justification of accepting a palpably lower bid as was done in Ram
and Shyam Company vs. State of Haryana and
Ors. [(1985) 3 SCC 267], but it is another thing to say the Court would under
all circumstances not allow a play in joint in favour of the employer.
if the Court in a given situation is not in a position to allow a bid to take
place before, it may not still venture to strike down an Act in the name of
public interest, although, no such public interest exists.
stated before us that he is ready and willing to take a part of the contract,
viz., construction of the C&EC and pay the same amount as has been done by
Reliance Industries Ltd. and in addition it would pay 2.5% of its annual
turnover from the Convention Centre from the 21st year, as was initially
did not participate in the second bid. The tender process is complete. Before
us only a higher bid has been given. We do not intend to enter into the
intricacies of the question. Appellants could have submitted its bids pursuant
to the new tender and new conditions, even without prejudice to its rights and
contentions in this appeal. The stipulations made in 2002 tender could have
been repeated by it so as to demonstrate before the experts comprising members
of the Executive Committee that its bid was the highest. If, in view of the
change in the policy decision, the Authority does not intend to become a
partner in the profit making and opt for having the entire bid amount at one go
instead of waiting for 20 years, we do not find any fault therewith.
us comparative bids of the bidders have been placed on the second tender, which
are as follows :
of the Bidder Bid Amount Rs.
per sq. m. (approx.) Rs.
Reliance Industries Ltd. 11,04,00,00,111 96000
1050 crores 91304
Reliance Communications & Infrastructure Ltd. 1011.12 crores 87913
Gammon India 1011 crores 87913
EMAR 911.07 crores 79217
comparative statistics reads as under :
Rate offered by the Petitioners Rs. 91.514 crores (divided by) 75,500 sq.mtrs.
Rs.12,121 per sq. mtrs.
Rate expected by MMRDA Rs. 25,000 per sq.mtrs.
Amount for 75,500 sq. mtrs @ Rs.25,000/- per sq.mtrs. (This should have been
the minimum bid in 2003) Rs.188.75 crores
Amount for 1,15,000 sq.mtrs @ Rs.25,000/- per sq.mtrs. (This would have been
the reserve price at old rate in 2005) Rs.287.50 crores
Reserve Bid of MMRDA in 2005 (Minimum price revised as below) Rs.480 crores
Rate per sq. mtrs in the Reserve bid Rs.480 crores (divided by) 1,15,000 sq.mtrs.
Rs.41,739/- per sq. mtrs.
by Reliance Industries Ltd. Rs.1104,00,00,111/-
Rate per sq.mtrs of RIL Bid Rs.11,04,00,00,111/- (divided by) 1,15,000 sq. mtrs.
Rs.96,000/- per sq. mtrs.
complains that whereas the bid of Sister concern of Reliance Industries Ltd.
was very low, now it has offered a bid of Rs.1104,00,00,111/-. From the chart
placed before us it would appear that there had been a stiff computation. The
Reliance Industries Ltd. has become the highest bidder. Its competitors had
taken part in the earlier contracts.
fide in accepting the tender has been alleged nor do we find any.
therefore, in the facts and circumstances of this case and having regard to the
subsequent events, are of the opinion that it is not a case where we should
interfere with the judgment of the High Court.
however, would not mean that the Authority or the Executive Committee would not
be entitled to take note of the offer of Appellant. It may do so. It would not
further mean that if the terms of new tender are violative of the provisions of
the master plan, the same would not be suitably dealt with. We merely place on
record that we have not gone into the said questions, although raised before us
by the learned counsel for the appellant, simply on the ground that no such
plea had been taken before the High Court. In the absence of any plea that the
policy decision adopted by the Authority would be violative of the provisions
of the Act or any master plan, the same cannot be entertained. The question,
however, is left open.
the reasons aforementioned, there is no merit in these appeals, which are
accordingly dismissed. There shall, however, be no order as to costs.