TATA CELLULAR v. UNION OF INDIA

The Judgment of the Court was delivered by

F MOHAN, J. Leave granted.

All these appeals can be dealt with under a common. judgment since one and same issue requires to be decided. The brief facts are as under :

The Department of Telecommunications, Government of India, in- G viled 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 \vhich allows two ways telecommunicaR tion between a mobile or stationary telephone to another mobile or sta- H tionary unit at a location. It may be within or outside the city including

TATACELLULAR v. U.0.1.(MOHAN,J.] 135

subscriber-cum-dialing and international subscriber-cum-dialing calls. The A last date for submission of tender was 31.3.92. The tender process was in two stages. First stage involved technical evaluation and the second in- volved financial evaluation. Those who were short-listed at the first stage were invited for the second stage.

30 bidders participated initially at the first stage. The first tender B Evaluation Committee was constituted consisting of senior officers of the Department of Telecommunication.

A Telecom Commission was constituted on 6.4.89 comprising of a Chairman and four full-time Members : c

1Copy pinpoint1. Member (Production)

2Copy pinpoint2. Member (Service)

3Copy pinpoint3. Member (Technology) D

4Copy pinpoint4. Member (Finance)

It short-listed 16 companies, 12 of which were eligible without any defect. However, in the case of 4 the Committee recommended condona- tion of certain defects. Those four were : E

1. BPL Systems and Projects Limited

2. Mobile Telecommunication Limited

3. Mobile Telecom Services F

4. Indian Telecom Limited

Between 19th of May, 1992 and 27 of May, 1992 the recommenda- tions were submitted to the Telecom Commission. the matter came up for discussion among the members of the Commission. On 27.5.92 the Telecom G 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 the earliest.

It requires to be noted, at this stage, that a Selection Committee also H

136 SUPREME COURT REPORTS [1994] SUPP. 2 S.C.R.

A described as Apex/High-powered Committee comprising ol the Principal Secretary to the Prime Minister and three other Secretaries to the Govern- ment of India had been set up by the Minister for final evaluation of the bid.

Mr. B.R. Nair, a Member (Budget) of Telecom Commission came to B be appointed as Member (Services) on 29.5.92. It appears the Selection Committee met a number of times and discussed the matter with the Minister. He submitted an interim report on 16th July, 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 c 14 companies. The Selection Committee also met the representatives of equipment manufacturers for the selection of the licensees. On 20th July, 1992, the revised financial bid and the short-list approved by the Telecom Commission were put up before the· Minister for approval. On 24.7.92, further meetings of the Selection Committee were held and the financial bid document was revised. On 28.7.92, the Selection Committee submitted its final report. Two bidders, namely, M/s. Ashok Leyland Ltd. and Mis. Varn Organics Ltd. were dropped from out of the short-list of 16 bidders. On 29.7.92, Mr. Nair was appointed as Director General of Telecom- munications. 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 recommencied by the Selection Committee on 29.7.92. The approval took place on 30.7.92.

On 30.7.92, the financial tenders were issued. It contained seven criteria which had been approved by the. Selection Committee. However, F no marks were earmarked for any of the criteria. 17.8.92 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 ceiling and the cities for which the bids were made, was read out. G Another 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 2.9.92 the second Tender Evaluation H Committee submitted its recommendations. However, the matter was

TATACELLULAR v. U.0.1.[MOHAN,J.] 137

referred back to it for a fresh gradation on the basis of 21. 75 per cent A interest rate in respect of 13 per cent rate which it had earlier adopted. On 7.9.92 the recommendations were re-submitted. The Adviser (Opera- tion) recommended only 4 operators based on the evaluation and fmancial bids. Bharti Cellular was recommended as a first choice for all the four cities. BPL as the second choice for botb Delhi and Bombay, Tata Cellular B and Skycell as second choice for Calcutta and Madras. This was done since in his view no other bidder qualified· for licence. On 10.9.92 the Chairman of the Tender Evaluation Committee directed that all the docu- ments and recommendations be sent to the Selection Committee for its consideration and for making final recommendations to the Government. When the file was put up to the Minister on 9.10.92 he made three C important notings:

1. In view of the time taken by the High powered Committee the selection process be completed by Dot internally;

2. Only one party may be granted licence for one city; and D

3. The 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. E On 9.10.92, 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 9.10.92 noted that Bharti Cellular, Modi Telecom· and Mobile Telecom did not fulfill the conditions provided in clause 2.4.7 of Chapter II 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 because some investigation against them was pending before the C.B.I. 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.

On 10.10.92, the list was recast. Sterling Cellular was provisionally selected for the city of Madras. On 12.10.92, the selected bidders were notified of their provisional selection subject to the acceptance of rentals and other terms as might be advised. H

138 SUPREME COURT REPORTS (1994] SUPP. 2 S.C.R.

A It is under these circumstances, four writ petitions were preferred bearing C.W.P. Nos. 403Q, 4031, 4032 and 163 of 1992. The petitioners were:

1. India Telecomp (Petitioner in C.W.P. No. 4030 of 1992)

B 2. Adino Telecom Limited (Petitioner in C.W.P. No. 4031 of 1992)

3. Kanazia Digital System (Petitioner in C.W.P. No. 4032 of 1992)

4. Hutchison Max Telecom Private Limited (Petitioner in C.W.P. No. 163/92) c It Was urged before the High Court of Delhi that the decision of the Government in selecting eight parties, two for each of the cities, was bad on the following grounds:

(i) bias D (ii) invoking certain hidden criteria

(iii) irrelevant considerations

(iv) by-passing the Selection Committee E (v) selecting otherwise underqualified parties.

(vi) marketing system which was evaluated by the second Technical Evaluation Committee for grading various bidders.

F So manipulated thereby a criterion was evolved which was tailor- made to knock out the petitioners before the High Court or resulting in knocking out of the petitioner in the case of India Telecomp Limited and Adino Telecom Limited. Hutchison Max Telecom Private Limited urged that it wa~ that highest in the gradation. Its bid was not considered for a G 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.

Lengthy arguments were advanced before the High Court. On a consideration of those arguments the writ petitions of Adino Telecom and H Kanazia Digital System were dismissed. C.W.P. 4030 of 1992 filed by India

TATACELLULAR v. U.0.1.(MOHAN.J.) 139

Telecomp was allowed. A ma11dam11s 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, C.W.P. 163 of 1992 in which the petitioner was Mis 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 on 26.2.93.

After the judgment of the Delhi Court, the matter was reconsidered in the light of the said judgment. A revised list of Provisionally selected bidders was prepared on 27.8.93. That is as follows :

Position as on 12.10.92 Position as on 27.8.93

Bombay Bombay D Bharti Cellular Hutchison Max BPL Projects & Systems Bharti Cellular

Delhi Delhi India Telecomp Ltd. BPL Projects & Systems Tata Cellular Pvt. Ltd. Sterling Celluler Ltd. E

Calculla Calculla Mobile Telecom Ltd. India Telecomp Ltd. Usha Matin Telecom Usha Martin Telecom F Madras Madras Skycell Mobile Telecom Ltd. Sterling Cellular Ltd. Skycell

It could be seen from the above that Tata Cellular which was originally selected for Delhi has been left out. Therefore, it has preferred G SLP (Civil) Nos. 14191-94 of 1993.

Mis. 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. H

140 SUPREME COURT REPORTS [1994) SUPP. 2 S.C.R. • A Indian Telecom Private Limited preferred SLP (C) No. 17809/93. India Telecomp preferred SLP (C) No. 14266 of 1993.

Mr. Soli J. Sorabjee, learned counsel for the appellant, Tata Cellular, argues that this is a two staged tender. In the first stage, the evaruation had to be made on the basis of technical and commercial considerations. The B bidders short-listed at the first stage would then compete in the second stage, namely, ttie financial bid. Chapter II 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: c (i) Entire foreign exchange requirement shall be met by the foreign collaborator.

(ii) Minimum reliance of Indian public financial institutions will be preferred.

(iii) Debt equity ratio should not be more than 2:1.

It is borne out by records that out of the seven criteria in evaluating the financial bid, six parameters alone were taken into consideration. For E 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 9.10.92 specifically states that the com- panies 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:

"Ministry of Communication (Telecom Commission) _, New Delhi-110001

H No./92-TM Dated : 27.8.93

TATACELLULAR V. u.o.i.[MOHAN,J.J 141

To A Kind attenion :

Subject : Tender No. 44-21/91-MMC(FIN) for franchise for cel- lular mobile telephone service for Bombay, Delhi, Calcutta and Madras. B Sir,

Kindly refer letter of even No. dated 12.10.92 informing you that you have provisionally selected for franchise for providing cellular mobile telephones service at on a non- exclusive basis. C

2. The 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 D partner.

3. The details of the rental, deposits and other terms fixed for the . franchise wilt be intimated to you shortly.

4. Kindly get necessary formalities completed by 30.9.93. E Your faithfully'

{S.K. Garg) DOG (TM)" . F

The second ground of attack is bias. In that, Mr. B.R. Nair, Member of Production in the Telecom Commission, who was appointed as Member (Service) on 29th May, 1992, participated. From the Advisor the file went to Member {Service). The note of Mr. Nair is dated 21st May, 1992. He agreed with the recommendation of T.E.C. that four firms which had some G deficiencies should be included in the short-list. They were B.P.L. Systems and Projects, Mobile Telecom, Mobile Communications and Indian Cel- lular Therefore, B.P.L. was approved by Mr. Nair. Admittedly, Mr. Nair's son is employed. in B.P.L. Systems and Projects.

The _High Court in dealing with the allegations of bias made against H

142 SUPREME COURT REPORTS [1994) SUP!'. 2 S.C.R.

A Mr. Nair held :

"Nexus of father and son in the chain of decision making process is too remote to be of any consequence. It is quite inter- esting to note that of the four companies which were having some deficiencies in their tender documents in the first stage and were B 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 circumstan- ces it is not possible for us to hold any allegation of bias made against Nair." c The High Court concluded :

"We do not think in a case like this the mere fact that Nair was part of the machinery to 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.

The English decisions on this aspect which will support the conten- tion are :

F Metropolitan v. Lennon and others, (1986) 3 AER 304 at 310.

In 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 cause by the award of marks after the bids were opened. The Dot was obliged to disclose the maximum marks for each i, criterion at the threshold of the financial bid in the interest of transparency and to ensure a non-arbitrary selection.

TATA CELLULAR v. U.0.1. (MOHAN, J.] 143

In 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 crores. 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 B 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 Bharti Cellular, Modi Telecom, Mobile communications, Hutchison Max, Skycell Communication would have been eliminated. Likewise, Sterling Cellular also did not fulfil this Condition. c It 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. Yet in the case of BPL one of its foreign collaborators, namely, McCaw Cellular D withdrew from the collaboration. Inspite of this, the breach was dis- regarded. The bidder had to furnish 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. G The High Court noted that no material had been brought on record to show that there was any complaint against Sterling Cellular. But, 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. H

144 SUPREME COURT REPORTS [1994J SUPP. 2 S.C.R.

A 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 approval.

B Having regard to all these, the selection is vitiated by arbitrariness or unfairness.

Mr. Harish Salve, learned counsel, appearing for India Telecomp attacks the selection as arbitrary on the following three grounds :

c 1. By-passing the Apex Committee and entrusting to a Committee which did not follow the norms.

2. Certain hidden criteria which were not disclosed earlier, were applied not as parameters, but for elimination. D 3.' There are five glaring errors in the selection. One such 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 incomprehensible.

E Elaborating these points it is urged that after short-listing, in 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.

F Two hidden criteria were postulated. (i) Persons having less than one Iakh experience will not be considered. (ii) If two bidders have the same collaborator in relation to foreign exchange that bid will not be con- sidered. These criteria were evolved after 18th August, 1992. When one looks at the conditions of tender, paragraph 2.2.1 talks of subscriber's G capacity. That does not mentio:i about the nature of ex'Jlerience. Equally, paragraph 2.4.5 makes no mention about one foreign collaborator for each bidder. In the case of Bharti Cellular it was having only eighty one thousand lines. The criterion of 80 thousand GSM was prescribed only to favour Bharti Cellular.

H · If no change of foreign collaborator 1s allowed at the stage of

TATA CELLULAR v. U.O. I. [MOHAN,J.) 145

financial assessment after the technical committee has passed its bid, in the A case to permit such a change to BPL, is clearly arbitrary.

Indian Telecom was excluded because it has the same foreign col- laborator, namely Telecom Malayasia. However, in the case of Bharti Cellular, that test was not applied. Its collaborator is Talkland Vodaphone. The same Vodaphone has been the collaborator with Mobile Telecom. B This would amount to adopting double standards.

As against BPL the attack is as under :

1. BPL did not apply to SIA/FIPB but to Reserve Bank of India C (RBI).

2. The 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. D

3. Mr. Nair was biased in favour of BPL . • 4: Total marks awarded are five. The idea is indigenous equipment whereas what has been done by BPL is to quote higher custom duty.

In so far as Sterling Cellular is preferred for Delhi that again is arbitrary. There is a C.B.l. Inquiry pending against it. Secondly, the foreign exchange is sought to be procured by international roaming and it is awarded 10 marks out of 10.

Mr. Ashok 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 examined. Such limits could be gathered from Sterling Com- puters Limited v. M. & N. Publications Limited, (1993) ·1 Scale 36 and Union of India v. Hindustan Development Cotporation, (1993) 3 SCC 499 which lay down the methods 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. The is wrong. H

146 SUPREME COURT REPORTS (1994] SUPP. 2 S.C.R.

A ln 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 number of cases no such certificate has been produced, Paragraph 2.4.5 of Chapter II of General Conditions lays down one of the parameter is the experience of foreign operating partner. In. the case of Bharti Cellular, SFR Finance Company has no experience. Talkland's sole B function is service. Therefore, its experience should not have been added. In paragraph 1.4 the nature of services is listed. These are not the services offered by Talkland. Hutchison Max did not produce any certificate; likewise Bharti Cellular.

C 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 communicated the reason as to why it came to be rejected. On 29.9.92, the Committee records that reasons must be given. Yet no reasons are fur- nished to the petitioner. Even though the Tender Evaluation Committee D held that petitioner to be qualified yet its bid had been reje~ted without communicating any reason whatever. Jn Mahabir Auto Stores v. Indian Oil Corporation, (1990] 3 SCC 752 at paragraph 18 at page 763 this Court has held that there is an obligation to communicate the reasons.

Mr. Kaura, learned counsel appearing for the Bharti-Cellular, in E 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 2.1 refers only to obligations of licensee.

F · ' Besides, the services are also essential, they should be regarded as a part of operation.

Mr. G. Ramaswami, learned counsel, appearing for skycell states that his client has been awarded Madras City. It is submitted that in the absence G of ma/a fides the individual marking system should not have been 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 outflow.

Mr. Anil B. Divan Learned counsel, appearing for Mobile Telecom Services submits that thought this respondent supports the judgment of the H High Court, in so far as it is allowed the writ petition filed by Hutchison

TATA CELLULAR 1·. U.0.1. jMOHAN. J.] 147

Max, the Same ought to be reconsidered. The bid of Hutchison Max was A rejected since it had filed an incomplete compliance report. The High court has chosen to accept the bid of Hutchison Max on four grounds :

L The approach of the Department was hypertechnical.

2. Compliance statement is akin to verification in a pleading. It B cannot be placed on a higher pedestal than verification.

3. The Department ought to have allowed rectification since it was purely a mistake unintentionally made.

4. Inasmuch as the Department had allowed a favourable treatment c in the case of Indian Telecom Private Limited and Tata Cellular the same treatment ought to have been accorded to hutchison Max as well. These 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 as of the technical bid states, in the even cf the compliance report not be 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. If, 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 F cannot sit in judgment. To state it is like verification of pleading is to overlook that the pleadings are governed by the Code of Civil Procedure which permits amendments of pleadings as well as 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 G compliance. Only in the covering letter a view has been expressed about the economic viability of the services and bidders' preference. Hence, it cannot be contended that the bid was conditional, in any manner. Similarly, Tata cellular was not accompanied in this regard.

The allegation against this respondent that the foreign exchange H

148 SUPREME COURT REPORTS (1994) SUPP. 2 S.C.R,

A 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 B a lower 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 international levels. c The argument that there is a common collaborator of Bharti Cellular and Mobile Telecom Services proceeds on the footing that Bharti cellular is collaborating with Talkland. That Talkland has a service privately in agreement with Vodaphone group. Thus Vodaphone is the common foreign collaborator of Bharti 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. 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 a cellular network operator under Section 7 of the U.K Telecommunications Act of 1984. It is known as a public telecom- munication operator. Vodaphone has about 30 service providers in U.K including Talkland. It has no equity in Talkland. There are no common Iilirectors on the boards of two companies. Vodaphone is the foreign collaborator of Mobile Telecom. It has no collaboration agreement with Bharti Cellular. In regard to Bharti cellular it has only a collaboration agreement with Talkland which is a mere service provider.

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. It was amongst the 12 tenders 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

TATACELLULAR v. U.O.l.[MOHAN,J.) 149

Cellular has projected its stand that the foreign exchange inflow will be from foreign tourists and business travellers 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 B 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 -;ondition 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 earning from tourists and business travellers is a very relevant considera- tion. Like this respondent, Hutchison Max selected for the Bombay City al.so projected for the foreign exchange opening by the us~ 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 hours companion. That, 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. E

As regards the allegation of CBI inquire, 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 S.C.L by the name Sterling F Computers Limited, in M&N Publicatio11 Limited v. M. T.N.L., Giid others {1992) 4 D.L.T. 24. 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 10th July, 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 G in Erusian Equipment & Chemicals Ltd. v. State of West Bengal & Anr., [1975] 2 SCR 674 has laid down that pending investigation black listing cannot be permitted. The. said ratio will apply to this case.

Mr. K.K. Venugopal, learned counsel appearing for Hutchison Max H

150 SUPREME COURT REPORTS [1994] SUPP. 2 S.C.R.

A submits that this responde~t was rejected by the committee. That was questioned in the Writ Petition. The 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 B failure, in the first instance, to state about compliance with Chapters II and IV. This is an accidental omission. It amounts to a clerical error as laid down in Moffet Hodgkins v. City of Rochester, (178 U.S. 1108). If it is a mistake in relation to non-essential or collateral matter it could always be condoned. The Privy Council in Mohammad Ejaz Hussain v. Mohammad C Iftikhar Husain, AIR (1932) PC 78 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 11.9.92 while the contract came to D be awarded only on 12.10.92. 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 :

1. Quasi-judicial

E 2. Administrative, for example, price fixing

3. 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. F The parameters for interference in such matter would be :

(i) Mala fide

G (ii) Bias

(iii) ".'-rbitrariness to the extent of perversity.

If none of these is present, the court should not interfere. It must be left to the authorities. The contrary arguments advanced on behalf of the H appellants against this respondent are not tenable.

TATACELLULAR v. U.0.1.[MOHAN,J.] 151

Mr. F.S. Nariman, learned counsel appearing for BPL in the · A foremost argues by way of preliminary submissions that three questions will arise at the threshold.

(a) The scope and ambit of judicial review with regard to decisions bona fide arrived at in tender cases (pre contract). B

(b) The applicability of judicial review in these cases.

(c) The interference under Article 136 of the Constitution where the power of judicial review has been exercised by the High Court under Article 226. c It 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 A.B. Mahajan v. Jalgaon Municipal Council, [1991] 3 D SCC 91 (in paragraphs 43-46). There is a possibility of fallibility inherent in all factp findings. To insist upon a strict. complianci;; with each and every tender document is not the law. This Court upheld that waiver of technical, literal compliance of the tender conditions in Poddar Steel Corporation v. Ganesh Engineering Works, (1991] 3 SCC 273. In the present case, the short- E 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 \vill 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 tenderers did not tender for one city alone but for more than one. The.allegation of bias on the part of Mr. Nair is without substance. It is submitted, Whenever disqualification on the ground of personal involvement is alleged: H

152 SUPREME COURT REPORTS [1994] SUPP. 2 S.C.R.

A (i) the person involved (for example related) must be the decision- maker;

(ii) there must be sufficient nexus between the decision-maker and the party complaining in order to justify the real likelihood of bias.

B After a d_ecision is reached the standard of proof of bias is higher as laid down in Vassiliades v. VasEiliades and another, AIR (1945) PC 38. This decision has been referred to by this Court in Rajit 17iakur v. Union of India, [1987] 4 SCC 611. 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 c only one of the officers in B.P.L., 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 29.5.92. Thereafter he became D Director General, Telecommunications by a Notification issued on 28.7.92 by the President of India. As such, he was to exercise all powers of Telegraph Authority under General 3(6) of the Act. Therefore, the High Court was right in applying the doctrine of necessity. This doctrine has come up for discussion in Charan Lal Sahu v. Union of India, [1990] 1 SCC 613. E 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 involvement. Equally, Tata Cellular did not raise the allega- tion of bias in the High Court. In fact, it opposed the plea of bias.

F No doubt, this respondent dropped Mccaw as a foreign collaborator. That does not amount to change where one out of two or three col- laborators 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 17.8.92 showing only two of the G 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.

H The learned Solicitor General produced the copies of the relevant

TATA CELLULAR v. U.0.1.(MOHAN,J.) 153

documents in the file and took us though the same. It is submitted, after A 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 :

1. Quoted rental ceiling B

2. Prnject financing plan

3. Foreign Exchange inflow and outflow

4. Project's plan for cellular equipment within the country including C the tie-up with the proposed Indian manufacturers.

5Copy pinpoint5. Experience of foreign operating partner and

6Copy pinpoint6. Financial strength of parameters/partner companies. D These parameters were assigned marks. The evaluation report in- cluding 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 further 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.

Mis. India Telecomp secured the second place for Calcutta. In asmuch 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 direction& the matter was reconsidered and selections have been made as was done earlier. G 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 con- stitute itself the selecting authority. However, no appeal is preferred, as otherwise, it would have further delayed the introduction of very valuable H

154 SUPREME COURT REPORTS [1994] SUPP. 2 S.C.R.

A communication facility in this country. Beyond 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. The selection process was dictated by the exigencies of the situation.

B 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 c 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 selection process. Even otherwise, the relationship is not such as to give a reasonable apprehension of bias. In support of this argument reliance is placed on Manak Lal (Supra) and Ashok Kukar Yadav v. State of Haryana, (1Q85] 4' SCC 417 al 441, (para- graph 16). As regards the paraliieter·i~-~~lation to project financing it was kept in view by taking into account the estimated number of subscribers, installation charges, monthly rental, any other charges etc. They were included in the competition. The other parameters of the bidders were treated on the same footing as regards this parameter is concerned. Con· cerning rental, it was specifically averred in the counter before the High Court that the other charges had also been included calculating quoted rental. F It 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 corporator and a proper service provider, acting together. The licensee is required to perform the combined functions of a network G operator as well as service provider. The duties and functions of a licensee are not limited to making available to 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 service. Therefore, the experiences of a H network operator and the service provider are both important and relevant.

TATACELLULAR v. U.0.1.[MOHAN,J.] 155

In the case of Bharti Cellular the attack is that the cut-off came to A be reduced to 80, 000 subscribers to accommodate it. Bharti Cellular mentioned in its tender, as on 31.12.91 The name of S.F.R. France which had 80,000 subscribers. By 31.12.91, it would have got increased to more than one lakh. In August 1992, when the bids were submitted S.F.R.'s line of experience could reasonably be expected to be more than one lakh. B S.F.R. France had a G.S.M. Licence. Having regard to these facts, it would not be an unreasonable estimate, for the experts, to conclude that Bharti Cellular was having experience of over one lakh lines.

It is alleged that the debt/equity ratio of Skycell has not been proper· ly taken. Skycell ratio was 1.5 and was correctly assigned 3 marks. C Tata Cellular alleges that Bharti 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 proforma made distinction between loans from Public Financial Institutions and Banks. The criticism of Tata confuses this requirement D with loan from Banks. the criterion, it is submitted, was correctly applied.

In the evaluation of process open market purchase was left out of consideration. E 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 foreign collaborators. Accordingly, it was concluded that the foreign exchange inflow position was better. F International roaming is a relevant consideration. From 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 G.S.M. system. Even if this conditions had been relaxed in favour of certain bidders, there is nothing wrong. Reliance is placed on G.J. Fernandez v. State of Karnataka, [1992] G 2 sec 488, paragraph 18.

With regard to the foreign collaborator of B.P.L. there was no change. French Telecom is one of the foremost in the world in this technology. It remained as foreign collaborator of B.P.L. Dropping out of McCaw did not violate the bid conditions which were really aimed at H

156 SUPREME COURT REPORTS (1994] SUPP. 2 S.C.R.

A 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.

B Mr. 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 Dharamander Prasad Singh, [1989) 1 SCR 176 at 202 judicial review is confined to decision- making process. This being an administrative action c the scope of judicial review could be gathered from Council of Civil Service Union v. Minister for the Civil Service, (1985) 1 Appeal Cases 374. In Secretary of State for Education and Science v. Tameside Metropolitan Borough Council, (1977) Appeal Cases 1014 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 D law relating to judicial review in Sterling Computers Limited v. Mis M & N Publications Limited, (1993] 1 SCC 445 at 455 and 458, paragraph 19. Then again, in Union of India v. Hindustan Development Corporation, [1993) 3 sec 499. E 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.

Mr. Nair's participation from the beginning would constitute bias in law. F Mr. Ashok Sen, in his reply would stated 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 The King v. Essex Justices (Sizer and others) Ex parte Perkins, (1927] 2 K.B. 475, would G apply. Similar passage occurs in be Smith's Constitutional and Administra- tive Law (Fourth Edition) page 268.

Mr. Barish 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 H and take into consideration. It is not so, as seen from the file. The

TATA CELLULAR v. U.0.1. [MOHAN,J.) 157

conditions were tailor-made to suit Bharti Cellular and BPL. A Mr. K.K. Venugopal would urge that the rule relating to judicial review would not be applied here because it is one of selection by an administrative process.

Having regard to the above arguments we proposed to deal with the B matter from the following five aspects:

1. The scope of judicial review in matters of this Kind.

2. Whether the selection is vitiated by arbitrariness? :- (a) regarding .financial projection and (b) regarding rental. C

3. Bias of Mr. Nair - whether affected the selection?

4. Whether the Apex Commitiee has been bypassed? 5. Evolving of hidden criteria - whether valid? D point I - Scope of Judicial Review :

A tender is an offer. It is something which invites and is communi-. cated to notify acceptance. Broadly stated, the following are the requisites of a valid tender : E

1. It must be unconditional

2. Must be made at 'the proper place

3. Must conform to the terms of obligation F

4. Must be made at the proper time

5. Must be made in the proper form

6. The person by whom the tender is made must be able and willing to perform his obligations. G

7Copy pinpoint7. There must be reasonable opportunity for inspection

8Copy pinpoint8. Tender must be made to the proper person

9Copy pinpoint9. It. must be of full amount. H

158 SUPREME COURT REPORTS [1994] SUPP. 2 S.C.R.

A It cannot be r!enied that the principles of judicial revic'w would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of. that power of judicial review. Govemment is the guardian of tlv finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or 1 B any other tender is always available to the government. But, the principles j 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 infrigement 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 c 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 that right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are. D not essentially justiciable 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 Environment, [1986] AC 240 at 251 proclaimed : E . '"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 beneficent power."

Commenting upon this Michael Supperstone and James Goudie in F their work on "Judicial Review" (1992 Edition) at page 16 say: ·

"If 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 he .as received the endorsement of the Jaw Lords G generally. The 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. Petrocoip, exploration Ltd. 18 March 1991."

H Observance of judicial restraint is currently the mood in England.

TATA CELLULAR v. U.O. l. [MOHAN.].] 159

The judicial power of revie\V is exercised to rein in any unbridled executive functioning. The restraint has tv.·o contemporary manifestations. One is the ambit of judicial intervention; the order covers the scope of the court's ability to quash an administrative decision on its merits. These restrains 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.

In Chief Constable of the North Wales Police v. Evans, (1992] 3 All ER 141 at 154 Lord Brightman said: c "Judicial review, as the words imply, is nuL an appeal from a decision, but a review of the manner in which the decision was made.

Judicial Review is concerned, not with the decision, with the decision-making process. Unless that restriction on the power of the court is observed, the court will, in may 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;

This remdey, vastly increased in the extent, and rendered, over a long period in recent years, of infinitely more convenien't 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 bee!' though when I first practised at the Bar, administrative. It is not intended to take away from those authorities the powers and 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 are their powers G

in a proper manner. (p. 1160)

R v. Panel take-overs and Mergers, exp Datafin pie, Sir John Donaldson MR commented : 'an application for judicial review is not an appeal'. In lonrlw pie v. Secretary of State for Trade and H

160 SUPREME COURT REPORTS (1994J SUPP. 2 S.C.R.

A Industry, 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 Re Amin, Lord Fraser observed that :

'Judicial review is concerned not with the meriits of a decision B 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 an administrative decision without substituting its own decision, and is to be contrasted with an appeal where the appellate tribunal substitutes is own decision on the c merits for that of the administrative officer.'

In R v. Penal on Take overs and Mergers, exp Gunness pie, (1990j 1 QB, 146 Lord Donaldson MR. referred to the Judicial review jurisdiction as being supervisory or 'longstop' jurisdiction. Unless tha.t restriction on the power of the courts is observed, the court· will, under the guise of D preventing the abuse of power, be itself guilty of usurping power.

The duty of the court i~ to confine itself to the question of legality. Its concern should be :

1. Whether a decision-making authority exceeded its powers? E

2. committed an error of law

3. committed a breach of the rules of natural justice

4. reached a decision which no reasonable tribunal would have F reached or

5. abused its powers.

Therefore, it is not for the court to determine whether a particular ' G 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. The 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 :

H (i) Illegality: This means the decision-maker must understand car-

TATA CELLULAR 1·. U.0.1.[MOHAN,J.] 161

rectly the law that regulates his decision-making power and must give effect A to it.

(ii) Irrationality, namely, Wednesbury unreasonableness.

(iii) Procedural impropriety. B The il'bove are only the broad grounds but it does not rule out additional of further grounds in courts of time. As a matter of fact, in R v. SecretOI)' of Srate for tile Home Departmem ex parte Bri11d, (1991) 1 AC 696 Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportional,ity. In all these cases the test to be adopted is that the court should, "consider whether something has gone c \VTOng of nature and degree which requires its intervention".

What is this charming principle of Wednesbury unreasonableness? Is it is a magical formula? In R v. Askew, (1768] 4 2168, Lord Mansfield considered the question whether 111a11da11111s should be granted against the D College of Physicians. He expressed the relevant principles in two eloquent sentences. They gained greater value two centuries later :

"It 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 Physician: and this Court E 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, can did and unprejudiced; not arbitrary, capiricious, or biassed; much less, warped by resentment, or personal dislike. 11 F To quote again, Michael Supperstone and James Goudie; in their work 'judicial Review (1992 Edition) it is observed at pages 119 to 121 as under:

"The assertion of a claim to examine the reasonableness been done by a public authority inevitably led to differences of judicial opinion G as to the circumstances in which the court should intervene. These difference of opinion were resolved in two landmark cases which confined the circumstances for intervention to narrO\V limits. In K!Use v. loh11so11 a specially constituted divisional court had to consider the validity of a byelaw made by a local authority. In the H

'162 SUPRH!E COURT REPORTS 11994] SUPP, 2 S,C,R,

A leading judgment of Lord Russell of Killowen CJ the approach to be adopted by the court was set out Such byelaws ought to be 'benevolently' interpreted, and credit ought to be given to those who ha''< to administer them that they would be reasonably ad- ministered, they could be held in\'alid if unreasonable: where for instance bvelaws were found to be partial and unequal in their B operation as between different classes, if they were manifestly unjust, if they disclosed bad faith, or if they inrnh'ed such oppres- sive or gratuitous interference \Vith the rights of citizens as could find no justification in the minds of reasonable men, Lord Russell emphasised that a byelaws is not unreasonable just because par- c ticular judges might think it went further than was prudent or necessary or convenient.

In 1947 the Court of Appeal confirmed a similar approach for the review of executive discretion generally in Associated Provincial Picture Houses Ltd v, Wednesbwy Corpn, This case wa:; concerned D '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 E 'Greene M,R, drew attention to the fact that the word 'unreasonable' had often been used in a sense which com- prehended d.ifferent grounds of review, (At page 229, where it was said that the dismissal of a teacher for' having red hair (cited by Wanington LJ in Short v, Poole Corpn,, (1926] Ch 66, 91 as an example of a 'frivolous and foolish reason') was, in another 'ense, F taking into consideration extraneous matters, and might be so unreasonable that it could almost be described a being done in .bad faith; see also R v, Tower Hamlets London Borough council, exp Chetllik Developments Ltd,, (1988] AC 858 at page 873,Chapter 4, p 73, supra, He summarised the principles as follows : G "The Court is entitled to investigate the action of the local authority with a view to seeing whether or not they have taken into account matter which they ought not to have taken into account, or, conversely, have refused to take into account 01 neglected to take into account matter which they ought to take into account

TATA CELLULAR "· U.0.1. [~!0llAN. J.] 163 ' ()nee that question is ans\vcre<l in fa\'OUr of the local authority, it may still be possible to say that, although the local authority had kept \vithin the four corners of the matters \vhich they ought to consider, they have nc\'crthelcss come .to a conclusion so un- reasonable that no reasonable authority could ever ha,·e come to it. In such a case~ again, I think the court can interfere. The po\ver of the court to interfere of the court to interfere in each case is not as an appellate authority to override a decision of the local allthority, but as a judicial authority which is concerned, as con- c~rned only, to see whether the local authority has contravened the law by acting in excess of the power which Parliament has confided in them." , c This summary by Lord Greene has been applied in countless subsequent cases.

The modern statement of the principle is found in a passage in the speech of lord Diplock in Council of Civil Se1Vice Unions v. D Minister for the Civil Sen. ice: 1

"By "irrationality" I mean that can now be succinctly referred to as "Wednesbury unreasonableness" Associated Provincial Picture Houses v. Wednesbwy Corpn., [1948) 1 KB 233. It applies to a E 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."

At this stage, The Supreme Court Practice 1993 Volume 1 Pages 849-850, may be quoted : F

Two other facts of irrationality may be 1nentioned. H

164 SUPREME COURT REPORTS [1994LSUPP. 2 S.C.R.

A (1) It 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. Secreta1y of the State of Environment, [1980[ 41 P & CR 255, the Secretary of State referred to a number of factors which led him to the conclusibn that a non-resident's bar in a hotel was operated in such a way that the bar was not in 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 LJ said that he could not see on what basis the Secretary of State had reached his conclusion.

(2) A 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. Barnet London Borough Council, exp Johnson, [1989[ 88 LGR 73 the condition imposed by a local authority prohibiting participation by those affiliated with political parties at events to be hekl in the authority's parks was struck down.

Bernard Schwartz in Administrative Law Second Edition page 584 E has this to say :

nlf 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 lo secure the benefit of special knowledge acquired through continuous ad- F ministration 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 a hopeless for- mality 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, "I have very few illusions about my own limitations as a judge and from those limitations I

' I TATA CELLULAR v. U.O. I. (MOHAN,J.] 165

- generalize to the inherent limitations of all appellate courts review- A ing rate cases. It must be remembered that this Court sees ap- proximately 1, 262 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 5,000 page record addressing the intricacies of public utility operation." It is not the function of a judge to act as a super board, or with the zeal of a pedantic schoolmaster substituting its judgment for that of the ad- ministrator.

The result is a theory of review that limits the extent to which the discretion of the expert may be scrutinized by the nonexpe(! 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 a state board of medical examiners "it would find itself wandering amid the mazes of therapeutics of 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."

The second consideration leading to narrow review that of calen- dar 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 affirmance of the vest majority of agency decision."

A modern 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 :

"Parliament 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. Some- times Parliament says it decision is to be final. At other times it says nothing H

166 SUPREME COURT REPORTS (1994] SUPP. 2 S.C.R.

A about it. In all these cases the courts will not themselves take the place of the body to whom Parliament has entrusted t.he decision. The courts will not themselves embark on a rehearing of the matter: See Healey v. Minister of Health, (1955] 1 QB 221. But nevertheless, the courts will, if called upon act in a supervisory capacity. They will see that the decision-making body acts fairly: see in re H.K. (an Infant), [1967] 2 QB 617, at 630 and Reg. v. B Gaming Board for Great Britain; Ex parte Benaim and Khaida, (1970] 2 QB

417. 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. Minister of Pensions and National Insurance, [1963] 1 W.L.R. 186. And if the decision- c making body has gone wrong in its interpretation they can set its order aside: see Aslibridge Investments Ltd. v. Minister of House and Local Govemment, [1965] 1 W.L.R. 1320. (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 D account matters which it ought to take into account, the court will interfere: See Padfield v. Minister of Agriculture, Fisheries and Food, [1968] A.C. 997. 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 Corporation, [1948] E 1 KB. 223. If the decision-making body goes outside its powers or mis- contrues the extent of its powers, then, too the courts can interfere: see Anisminic Ltd. v. Foreign Compensation Commission, [1969] 2 A.C. 147. And, of course, if the body acts in bad faith or for an ulterior object, which is not authorised by law, its decision object, which is not authorised by law, its decision will be set aside: see Sydeney Municipal Council v. Campbell, F [1925] A.C. 228. In exercising these powers, the courts will take into account any reason which the body may given 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 according: see Padjield's case (A.C. 997, 1007 @ 1061)." G We may usefully refer to Administrative Law Rethinking Judicial Control of Bureaucracy by Christopher F. Edley, JR (1990) Edn.) At page 96 it is stated thus :

H A great deal of administrative law boils down to the scope of

TATACELLULAR v. U.0.1.(MOHAN,J.) 167

review problem; defining what degree of deference a court will A accord 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 piecemeal by a large collection of doctrines. Kenneth Culp Davis has offered a condensed summary of the subject : B "Courts 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 direction." c In U11iversa/ Camera Corp. v. NLRB, 340 US 474 at 488-89, Justice Frankfurter stated :

"A 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 com- petence and character and the constant play of an informed professional acritique 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 underfined defining terms."