M/S. Hyundai Corporation vs. Respondent: Sumikin Bussan Corporation & Others

IN THE SUPREME COURT OF BANGLADESH
(APPELLATE DIVISION)

Civil Petition for Leave to Appeal No. 1771 of 2001

Decided On: 04.12.2001

Appellants: M/s. Hyundai Corporation
Vs.
Respondent: Sumikin Bussan Corporation & others

**Hon’ble Judges:**Mahmudul Amin Chowdhury, C.J., Mainur Reza Chowdhury, Md. Ruhul Amin and Mohammad Fazlul Karim, JJ.

Subject: Contract

Catch Words

Mentioned IN

**Acts/Rules/Orders:**Constitution Of The People’s Republic Of Bangladesh - Article 14

Counsels:
For Appellant/Petitioner/Plaintiff: Rokanuddin Mahmud, Senior Advocate, instructed by Md. Ataur Rahman Khan, Advocate-on-Record

For Respondents/Defendant: Syed Ishtiaq Ahmed, Senior Advocate, Dr. Rafiqur Raahman, Senior Advocate, instructed by Serajur Rahman, Advocate-on-Record, for the respondent No. 1

Disposition:
Petition Dismissed

Citing Reference:

Discussed

 1

Case Note:
Tender Documents**
Terms and Conditions****
Clarification of Bid****
Where none of the tender terms and conditions either contemplate offering of explanation by a bidder of his own volition for the purpose of clarification of his bid already dropped nor authorize the purchaser to take notice of any such communication for the purpose of taking decision in any respect in favor of the bidder, any decision taking into consideration such materials is not authorized and is violative of the terms and conditions of the Tender Documents.
Constitution of Bangladesh 1972
Article - 102****
Judicial review of administrative actions****
Transparency in the policy/decision making and functioning of public bodies is desired for more than one reason, and in matters where the financial interest of the State is involved, transparency of the decision making authority is a recognized matter. Therefore, in a situation like the instant case, the Court in exercise of its jurisdiction of judicial review of the action of the Government in the discharge of executive functions as well as activities of State functionary in respect of contractual matters, considered the rationality and reasonableness of the decision made.****
Case referred: Tata Cellular v. Union of India AIR 1966(SC)11**

Industry: Services Sector

JUDGMENT

Md. Ruhul Amin, J.

1. This leave petition has been filed against the judgment and order of 4th June, 2001 by a Division Bench of the High Court Division in Writ Petition No. 7 of 2001 making the Rule absolute declaring Memo No. CPA/PMU(EQPT)/P-120(Part1/372 dated 1.1.2001 (Annexure D to the writ petition) to have been made without lawful authority and the result of the price bid opened on 21st September, 2000 be declared accepting the decision by the Chittagong Port Authority in its Board Meeting No. 8823 dated 13th September, 2000. Facts, in short, are that Chittagong Port Authority (respondent No. 2) floated tender on 14.1.2000 fixing 19th June, 2000 as the last date of dropping bid for supply of four units of Rail Mounted Quay Gantry Cranes with necessary spare parts and service as per specification of the bidding documents. The bidder or bidders were required to be of eligible member countries of Asian Development Bank with which Bangladesh has commercial relation. The petitioner and 6 others dropped their responsive bid in “two-envelope system”- one for technical bid and another for price bid. Technical bid was opened on 20th June, 2000 and the same were examined by Technical Evaluation Committee which found the petitioner, respondent Nos. 1, 9 and another substantially responsive. The Technical Evaluation Committee submitted its report on 6th August, 2000. The report of the Technical Evaluation Committee was examined by Supervising Committee and the said committee submits its report on 7th September, 2000 recommending respondent Nos. 1, 9 and another as being responsive and the petitioner was considered non-responsive. The Board of Chittagong Port Authority, hereinafter referred to as the Board, in its meeting held on 13th September, 2000 took resolution No. 8823 declaring the three bidders which were found responsive by the Supervising Committee as responsive. In the light of the decision of the Board letters were issued to the responsive bidders informing them 21 September, 2000 as the date for opening of price bid and the price bid of the respective bidders were opened on that date. On 8th July, 2000 petitioner addressed a letter to the Chittagong Port Authority making certain clarification as to their bid proposal. The Board thereafter by its resolution No. 8889 dated 18th December, 2000 revised its earlier decision as to the petitioner being non-responsive and thereupon declared petitioner as responsive in technical bid. On 1st January, 2001 Chittagong Port Authority wrote a letter (Annexure-D to the Writ Petition) to the petitioner intimating that on 10th January, 2001 his price bid would be opened.

2. In the background of the said facts respondent No. 1 moved the High Court Division in its writ jurisdiction and obtained rule challenging legality of the Board’s decision dated 18th December, 2000 revising its earlier decision dated 13th September, 2000 and thereupon intimating the petitioner date of opening of its price bid contending that as per terms of the tender if a bidder is found responsive on its scrutiny of technical bid only then price bid of the said responsive bidder would be open and in the case of the petitioner Technical Evaluation Committee and the Supervising Committee have found the petitioner non-responsive and that the Board also declared the petitioner non-responsive and thereupon price bid of the respective bidders having already opened any decision revising the earlier decision finding the petitioner responsive for opening of the technical bid as well as price bid being contrary to the terms of the tender, the decision of the Chittagong Port Authority as communicated by its letter dated 1st January, 2001 to the petitioner was illegal and that as per terms of the tender Chittagong Port Authority is legally bound to give effect to its decision dated 13th September, 2000.

3. The petitioner, (Respondent No. 8 in writ petition) contested the Rule obtained by Respondent No. 1, petitioner in the writ petition, contending that he was found responsive by the Board on consideration of the materials those were left out of consideration earlier. It was also contended that the writ petition was not maintainable since final decision as to acceptance of the bid was not made.

4. The Chittagong Port Authority, respondent No. 2 herein, contested the Rule supporting the contention of the petitioner. Respondent No. 9 got himself impleaded in the writ petition and supported the writ petitioner contending that after opening of the price bid of the technically responsive bidders fresh declaration declaring the petitioner responsive was contrary to the terms and conditions of the tender document The High Court Division made the Rule absolute upon observing:

On consideration of the facts and circumstances of the case we find that the Chittagong Port Authority has in exercise of its statutory power floated tender for the purchase of machinery e.g. Gantry Cranes for capital investment and as such it cannot be said that the transaction is an ordinary trading transaction.

Furthermore we have already observed that declaration of respondent No. 8 by the Board of Chittagong port as responsive after reviewing earlier Board’s decision is not a mere violation of the terms of the tender document but it appear to us to be malafide, arbitrary and colorable exercise of power as such following Shipping case we hold that the writ petition is maintainable under writ jurisdiction.

Thus under the terms and condition of the contract the moment a bidder submits a bid both bidder and purchaser are bound under the bidding terms and any breach of that obviously amounts to breach of contract.

Furthermore the petitioner is admittedly a responsive bidder so far the technical bid is concerned and as per terms and conditions of the tender document price bid of those bidders who have been found to be responsive in the technical bid shall be opened that obviously amounts to an agreement between the bidder and the purchaser, breach of the said terms as a clear violation of the tender document in other wards the contract inasmuch as terms and conditions of the tender document are binding upon both sides. Thus cause of action has already arisen for taking legal action.

5. As against the judgment and order of the High Court Division the petitioner has filed Leave Petition No. 171 of 2001 and the Chittagong Port Authority filed Leave Petition No. 1770 of 2001. The Chittagong Port Authority obtained order staying the operation of the judgment and order of the High Court Division from the chamber of this Court. Later on from the chamber, Chittagong Port Authority obtained permission to open the technical bid as well as the price bid of the petitioner for evaluation and that same, as submitted by the learned Advocate for the petitioner, has already been done.

6. The Chittagong Port Authority later on filed an application with the prayer for dismissal of the leave petition for non-prosecution and this Division by the order dated 4th December, 2001 dismissed the leave petition of the Chittagong Port Authority as prayed for.

7. Mr. Rokanuddin Mahmud, learned Counsel appearing for the petitioner, submits that the High Court Division acted illegally and contrary to the law in failing to appreciate the process of award of the contract for supply of the cranes which is still at a very preliminary stage, as the further steps for award of the contract are that the financial proposals of the four bidders will be evaluated to find out the lowest evaluated price and thereafter a combined evaluation of the technical and financial proposals will be made to determine the best-evaluated bid and after the combined evaluations, the bids will be ranked and if the evaluations are accepted by the Board of respondent No. 2, the recommendations of the Board with regard to the ranking of the bids and the relevant evaluation reports will be forwarded to the Ministry of Ports and Shipping since the value of the tender is more than Tk. 5.0 crore and at that stage an inter-ministerial tender committee will review the combined evaluation report and will make recommendations and thereafter, since the value of the tender is more than Tk. 25 crores, the evaluation report and recommendations will be sent to the Council Committee of the Cabinet for its recommendation and approval and thereafter the Council Committee’s recommendation will be sent to the Prime Minister for final decision and approval and only after that awarding of the contract will be finalized and the letter of ward would be issued. He further submits that High Court Division acted illegally and erroneously in not considering the evaluation process which is at a very early stage, and in fact the stage of ranking the bidders has not yet been reached and as such it is not at all possible to state at this stage which of the bidders whose technical proposals have been found to be substantially responsive and it will be found to have submitted the best evaluated bid, for the purpose of being ranked first for being recommended at the various stages described above for award of the contract and at the initial stage the present Respondent No. 3 on 24.10.200 directed the Supervisory Committee to examine the report of the Supervisory Committee and to submit a report about the complaints for examination by the Board and the Supervisory Committee then on 13.11.2000 submitted its report upon examining the aforesaid complaints, which found the bid of present Petitioner as responsive and the Board of respondent No. 2 in its meeting dated 24.11.2000 considered the aforesaid report and decided to suspend all decisions regarding procurement of the crane in its meeting dated 24.11.2000 and then the present respondent No. 2 in its Board meeting held on 15.12.2000 and 18.12.2000 considered the matter and accepted the bid of petitioner (respondent No. 8 in Writ Petition) as substantially responsive acting on the report of the Supervisory Committee and accordingly decided to open the price bid of petitioner (respondent No. 8 in Writ petition) as substantially responsive acting on the report of the Supervisory Committee and accordingly decided to open the price bid of petitioner in the said Board meeting and accordingly, it was decided that the price bid of petitioner would be opened on 10.01.2001 and that it should be notified to all the four bidders including the writ petitioner whose bid had already been opened earlier, but the price bid of present petitioner could not be opened on 10.01.2001 as in the meantime the writ petition was filed by the writ petitioner and order of stay was granted upon issuance of a rule.

8. To appreciate the contentions of the petitioner it is necessary to refer to the Clause 29.1 of the Tender Document, which runs as:

29.1 To assist in the examination, evaluation and comparison of Bids, the purchaser may, at its discretion, ask the Udder for a clarification/information/document of its bid. The requests for clarification/information/document and responses to requests for clarification shall be in writing, and no change in the price or substance of the Bid shall be sought, offered or permitted.

9. It is evident from the aforesaid clause that only the purchaser would ask the bidder for clarification of any matters relating to the bid. In the instant case it is seen that the petitioner-bidder of its own wrote a letter on 8th July, 2000 giving certain clarifications as to his bid and in the background of that letter the Board revised its decision on 18th December, 2000 and thereupon declared the petitioner as responsive bidder. There is one important fact that technical bid was opened on 20th June, 2000 and the Technical Evaluation Committee submitted its report on 6th August, 2000 with the finding 4 bidders, the petitioner, respondents No. 1, 9 and another, substantially responsive. The report of the Technical Evaluation Committee was examined by Supervising Committee which found respondents No. 1, 9 and another responsive bidders and that found the petitioner along with others non-responsive bidders. The report of the Supervising Committee was considered by the Board of the Chittagong Port Authority and the Board by its resolution dated 13th September, 2000 found the respondents No. 1, 9 and another responsive bidders and the petitioner as non-responsive bidder. It may be mentioned price bids of the responsive bidders were opened on 21st September, 2000 and after all these the Board revised its decision dated 13th September, 2000 and declared petitioner on 18th December, 2000 responsive bidder and thereafter wrote a letter on 1st January, 2001 intimating that petitioner’s price bid would be opened for scrutiny on 10th January, 2001. Since no clarification or information or document relating to the bid was asked for by the purchaser from the petition for assistance of the purchaser in the examination, evaluation or comparison of the bids, the Chittagong Port Authority on the basis of the unsolicited letter of the petitioner has went for review of its earlier decision dated 13th December, 2000 declaring the petitioner non-responsive, and finally declared the petitioner responsive acted in clear violation of the provision of Section 29.1 of the Tender Document.

10. The other contention of the learned Counsel for the petitioner is that petitioner by its letter dated 8 July, 2000 only gave certain explanation by way of clarification but by that no alteration or addition was made in the initial bid. Suffices it to say none of the tender’s terms or conditions contemplate offering of explanation by the bidder of his own volition for the purpose of clarification of the bid already dropped. Moreover, tender’s terms and condition do not authorize the purchaser to take into notice any kind of communication made by the bidder of his volition for the purpose of clarification of the bid for the purpose of taking decision in any respect in favor of the bidder.

11. In our opinion actions of the Respondent No. 2 i.e. revision of its previous decision No. 8823 dated 13.9.2000, where by petitioner was found non-responsive, by the subsequent decision No. 8989 dated 18.12.2000 and thereupon declaring petitioner’s Technical bid responsive is unauthorized since the later decision on revision of previous decision was made on the basis of materials which the Respondent No. 2 in law is not authorized to take into consideration in arriving at decision as to the bid of the petitioner and that entertainment of the said material was also violative of the terms and conditions of the Tender Document.

12. It may be mentioned while the petition for leave to appeal of the Chittagong Port Authority was pending for hearing the said authority obtained permission of the Court, because of the order of stay of the judgment of the High Court Division, for evaluation of both technical bid and price bid of the petitioner. The learned Counsel appearing for the petitioner has submitted that evaluation of the bids has already been done and that upon evaluation petitioner’s price bid is taka Ten crore less than that of Respondent No. 1’s price bid. The learned Counsel for the petitioner submits that since petitioner’s price bid is less for an amount of Taka 10 crore from that of the amount offered by the respondent No. 1, then keeping in view the question of economic expenditure of public money the bid of the petitioner in all fairness merits consideration. He also submits that since final decision as to acceptance of the bid in connection with the procurement of Rail Mounted Quay Gantry Cranes has yet not been finalized by the competent authority, the Chittagong Port Authority should place the bids of the petitioner along with the bids of the bidders who have earlier been found responsive before the decision making authority so that the decision making authority keeping in view financial interest of the State finalizes its decision.

13. In repelling the aforesaid submission of the learned Counsel of the petitioner, the learned Counsel entering caveat for the respondent No. 1 submits that upon acceptance of the said submission if direction is made to the Chittagong Port Authority that would amount to stepping into by the Court in the domain of the decision making authority and interference in the matter of running the domestic business of the Chittagong Port Authority. This submission of the learned Counsel entering caveat for the respondent No. 1 is not well founded one since transparency in the policy/decision making as well as in the functioning of the public bodies is desired, for more than one reasons and particularly in the matter where financial interest of the State is involved transparency of the decision making authority is a recognized matter. The learned Counsel for the petitioner in support of his submission that the Court in the exercise of its jurisdiction of judicial review of the action of the Government in the discharge of executive functions as well as activities of State functionary in respect of the contractual matter considered the rationality and reasonableness of decision made has referred to the decision in the case of Tata Cellular v. Union of India, reported in AIR 1966 (SC) 11 where in a situation like the instant one the Supreme Court of India has observed;

It 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. But 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 justiciable and the need to remedy any unfairness. Such an unfairness is set right be judicial review.

The 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 and 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 of judicial review is made, but the decision making process itself.

14. Since question of financial interest of the State is seriously involved in the instant case, in our view the Chittagong Port Authority should place the papers relating to the bid of the petitioner along with the bids of other 3 responsive bidders before the decision making authority that would ultimately finalize the matter of procurement of the cranes.

15. As we have already found that Respondent No. 2 (Chittagong Port Authority) declared the petitioner as responsive bidder is violation of the tender’s terms and conditions and that after opening of the technical as well as financial price bid of the bidders who were found by the Board responsive in its meeting held on 13th September, 2000 the action of the Board subsequently declaring the petition as responsive has rightly been declared without lawful authority by the High Court Division. In afore stated view of the matter this petition is dismissed with the observations made herein before.