DSK Legal Successfully Defended BEST Against TATA Motor’s Plea before the Supreme Court

DSK Legal Successfully Defended BEST Against TATA Motor’s Plea before the Supreme Court

The Supreme Court by its three judges bench comprising of Chief Justice of India DY Chandrachud, Justices P.S. Narasimha and J. B. Pardiwala has dismissed a plea filed by Tata Motors which had challenged the Brihanmumbai Electric Supply and Transport (BEST)’s decision to disqualify the automobile company from a tender bid for supplying 1,400 electric buses in Mumbai.

The Court while relying on the decision passed in Jagdish Mandal v. State of Orissa and others (2007), retaliated that, “Power of judicial review will not be invoked to protect private interest at the cost of public interest, or to decide contractual disputes.”

The factual matrix of the case is that BEST had floated a tender dated 26 February, 2022 for the supply, operation and maintenance of 1400 (+50 per cent variation) Single Decker AC Electric Buses with driver, for the purpose of public transport service within the city of Mumbai along with other civil infrastructure development at the BEST depots for a period of 12 years (hereinafter referred to as, ‘the Tender’).

In all, eight market players participated in the Tender process, including EVEY Trans Pvt. Ltd. (EVEY) and TATA Motors.

TATA Motors submitted its bid on 25 April, 2022, wherein it guaranteed operating range of 200 Kms with 80 per cent State of Charge, (SoC) (i.e., 20 per cent reserve left upon running 200 Kms in single charge), however, the same was achieved “in standard test conditions as per AIS 040. This was a deviation from the Tender specifications.

Under Clause 5.1.1 of the Schedule II (Definitions and Instructions to Bidders) of the Tender, the mode and manner of submission of the bid proposal was provided. The said clause also provided for certain annexures to be submitted along with the bid. Pertinently, Annexure Y, which was an undertaking to be given by the Operational Equipment Manufacturer (OEM) for the operating range of the buses, was not required to be submitted along with the bid but was only required to be submitted by the successful bidder. The purpose of the undertakings under Clause 3.5 (e) and Clause 12 of Section 2 of Schedule IX (Technical Specifications) and Annexure Y was to confirm that the requirement of meeting the 200 Kms range in single charge is satisfied.

Aggrieved by the technical suitability evaluation issued by BEST by which it rejected the bid of TATA Motors, the latter approached the Bombay High Court.

The High Court vide its impugned order and judgment dated 5 July, 2022, took the view that the requirement for the operating range to be more than 200 Kms in a single charge in “actual conditions” was unambiguous. Accordingly, the High Court upheld the disqualification of TATA Motors and rejected their claim from being considered as an eligible bidder as they failed to comply with the technical requirements of the Tender. The High Court had further declared EVEY as an unsuccessful bidder.

Aggrieved by the same, TATA Motors approached the Supreme Court.

The issue that came for consideration before the bench was whether the High Court after upholding the disqualification of TATA Motors from the Tender was justified in undertaking further exercise to ascertain whether EVEY also stood disqualified and that BEST in its discretion may undertake a fresh tender process?

The Court at the outset commented that Courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters.

“The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The Courts must realize their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain.”

The Court placed reliance on the decision passed in the case of Silppi Constructions Contractors vs. Union of India, wherein it was courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give “fair play in the joints” to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer.

Averting to the present case, the bench noted that the first and the foremost requirement of the Tender was the prescribed operating range of the single decker buses which would operate for around and average of 200 Kms in a single charge in “actual conditions” with 80 per cent SoC without any interruption.

The Court from materials on record found that the TATA Motors in its bid deviated from this requirement and had informed BEST that it could carry the operating range in the “standard test conditions” which was not in accordance with the Tender conditions.

In this regard, the Court held that the High Court had rightly observed in its impugned judgment that the bid of the TATA Motors failed to comply with the said clause. TATA Motors deviated from the material and the essential term of the Tender.

However, the Apex Court remarked that the High Court having once declared TATA Motors as “non-responsive” and having stood disqualified from the Tender process should not have entered into the fray of investigating into the decision of BEST to declare EVEY as the eligible bidder. The Court opined that the High Court was not exercising its writ jurisdiction in public interest. The High Court looked into a petition filed by a party trying to assert its own rights.

“We are of the view that the High Court should have been a bit slow and circumspect in reversing the action of BEST permitting EVEY to submit a revised Annexure Y. We are of the view that the BEST committed no error or cannot be held guilty of favoritism, etc. in allowing EVEY to submit a revised Annexure Y as the earlier one was incorrect on account of a clerical error. This exercise itself was not sufficient to declare the entire bid offered by EVEY as unlawful or illegal,” regarded the bench.

The Court on perusal of Jagdish Mandal case (Supra) vehemently asserted that if the decision relating to award of contract is bona fide and is in public interest, Courts shall not interfere by exercising powers of judicial review even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out.

Therefore, the Apex Court set aside that part of the judgment and order passed by the High Court by which the decision of BEST to accept the tender of EVEY was set aside and it was left to the discretion of BEST to undertake a fresh tender process.

The Appeal filed by TATA Motors was accordingly dismissed. Whereas the Appeals filed by EVEY and BEST were allowed to the aforesaid extent.

DSK Legal advised, assisted, and successfully defended BEST in the appeal filed by Tata against the Judgement dated 5 July, 2022, of the Hon'ble Bombay High Court.

The DSK Legal team comprised Mr. Anjan Dasgupta (Partner), Ms. Rimali Batra (Associate Partner), Mr. Jash Shah (Senior Associate), and Mr. Abhishek Lalwani (Associate).

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