TATA CELLULAR v. UNION OF INDIA

An innovative approach is made by Clive Lewis as to why the courts should be slow in quashing administrative (in his Judicial· Remedies in Public Law 1992 Edition at pages 294-95). The illuminating passage reads G as under:

"The courts now recognise that the impact on the administra- tion is relevant in the exercise of their remedial jurisdiction. Quash- ing decisions may impose heavy administrative burdens on the administration, divert resources towards re- opening decisions, and H

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A lead to increased ad unbudgeted expenditure. Earlier cases took the robust line that the law had to be observed, and the decision invalidated whatever the administrative inconvenience caused. The courts nowadays recognise that such an approach is not always appropriate and may not be in the wider public interest. The effect on the administrative process is relevant to the court' remedial B discretion and any prove decisive. This is particularly the case when the challenge is procedural rather then substantive, or if the courts can be certain that the administrator would not reach a different decision even if the original decision were quashed. Judges may differ in the importance they attach to the disruption that quashing c a decision will cause. They may also be influenced by the extent to which the illegality arises from the conduct of the administrative body itself, and their view of that conduct.

The current approach is best exemplified by R. v. Monopolies 011d Mergers Commission, et p. Argyll Group, [1986] 1 W.L.R. 763." D Sir John Donaldson M.R. in R. v. Monopolies Commission, Ex p. Argyll Pie., (C.A.) [1986] 1 WLR 736 at 774, observed thus :

"We are sitting as a public law court concerned to review an administrative decision, albeit one which has to be reached by the E application of judicial or quasi-judicial principles. We have to approach our duties with a proper awareness of the need:; of public administration. I cannot catalogue then-all, but, in the present context, would draw attention to a few which are relevant.

F Good public administration is concerned with substance rather than form .

......... Good public administration is concerned with speed of decision, particular in the final field. G .......... Good public administration requires a proper con- sideration of the public interest. In this context, the Secretary of State is the guardian of the public interest.

.......... Good public administration requires a proper considera- H tion of the legitimate interests of individual citizens, however rich

TATA CELLULAR v. U.0.¹. [MOHAN, J.) 169

and powerful they may be and whether they are natural or judicial A persons. But in judging the relevance of an interest, however legimiate, regard has to be had to the purpose of the administrative process concerned .

........ Lastly, good public administration requires decisiveness and finality, unless there dare compelling reasons to the contrary." B

We may 11ow look at some of the pronouncements of this Court including the authorities cited by Mr. Ashok Sen.

"It is well settled that there should be fair play in action in a situation like the present one, as was observed by this Court in D Ram & Shyam Co. v. State of Haryana, [19S5] 3 SCC 267, 268-69. It is also well settled that the authorities like the Doordarshan should act fairly and their action should be legitimate and fair and transaction should be without any aversion, malice or affection. Nothing should be done which gives the impression of favouritism or nepotism. See the observations of this Court inHaji T.M. Hassan Rawther v. Kera/a Financial Corpn., [1988] l SCC 166, 173 para 14.

While, as mentioned hereinbefore, fairplay in action in matters like the present one is an essential requirement, similarly, however, 'free play in the joints', is also .a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere as the present one. Judged from that standpoint of view, though all the proposals might not have been considered strictly in accordance with order of preceqence, it appears that these were considered fairly, reasonably, objectively and without any malice or ill-will." ·

In G.B. Mahajan v. Jalgaon Municipal Council, [1991] 3 SCC 91 the concept of reasonableness in administrative law came to be dealt with elaborately by one of us, Venkatachaliah, J. (as he then was). In paragraphs 37 to 46 the Court observed thus : H

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A "It was urged that the basic concept of the manner of the development of the real estate and disposal of occupancy right were visited by unreasonableness. It is a truism, doctrinally, that powers must be exercised reasonably. But as Prof. Wade points out :

B "The doctrine that powers must be exercised reasonably has to be reconciled with the no less important doctrine that the court must not usurp· the discretion of the public authority which Parlia, ment appointed to take the decision. Within the bounds of legal reasonableness is the area in which the deciding authority has c genuinely free discretion. If it passes those bounds, it acts ultra vires. The court must therefore resist the temptation to draw the bounds too tightly, merely according to its own opinion. It must strive to apply an objective standard which leaves to the deciding authority the full range of choices which the legislature is presumed to have intended. Decisions which are extravagant or capricious D cannot be legitimate. But if the decision is within the confines of reasonableness, it is no part of the court's function to look further into its merits. 'With the question whether a particular policy is wise or foolish the court is not concerned; it can only interfere if to pursue it is beyond the powers of the authority' ...... " E In the arguments there is some general misapprehension of the scope of the "reasonableness" test in administrative law. By whose standards of reasonableness that a matter is to be decided? Some phrases which pass from one branch of law to another - as did the expressions 'void' and 'voidable' from private law areas to public law situations - carry over with them meanings that may be inap- posite in the changed context. Some such thing has happened to the word 11 reasonable 11, "reasonableness 11 etc. In Tiller v. Atlantic Coast Line Rail Road Company justice frankfurter said :

"A phrase begins life as a literary expression; its felicity leads to its lazy repetition; and repetition soon establishes it as a legal formula, undiscriminatingly used to express different and some- times contradictory ideas. 11

Different contexts in which the operation of 11 reasonableness 11 H es test of validity operates must be kept distinguished. For instance

TATA CELLULAR v. U.O. I. [MOHAN, J.] 171

as the arguments in the present case invoke, the administrative law test of 'reasonableness' as the touchstone of validity of the im- pugned resolutions is different from the test of the 'reasonable man' familiar to the law of torts, whom English law figuratively identifies as the "man on the Clapham omnibus". In the latter case the standards of the 'reasonable man', to the extent a reasonable man' is court's creation, is in a manner of saying, a mere transferred epithet Lord Radcliffe observed : (All ER p.160)

"By this time, it might seem that the parties themselves have become so far disembodied spirits that their actual persons should be allowed to rest in peace. In there place there rises the figure of the fair and reasonable man. And the spokesman of the fair and reasonable man, who represents after all no more than the anthropomorphic conception of justice, is, and must be, "the court itself....... 11

See Davis Contractors Ltd. v. Fareham U.D.C., (1956] 2 All ER D 145, 160.

Yet another area of reasonableness which must be distin- guished is the constitutional standards of 'reasonableness; of the restrictions on the fundamental rights of which the court of judicial E review is the arbiter. ·

The administrative law test of reasonableness is not by the standards of the "reasonable man" of the torts law. Prof. Wade says: F 'This is not therefore the standard of 'the man on the Clapham omnibus' . It is the standard indicated by a true construction of the Act which distinguishes between what the statutory authority may or may not be authorised to do. It distinguishes between proper use and improper abuse of power. It is often expressed by G saying that the decision is unlawful if it is one to which no reasonable authority could have come. This is the essence of what is now commonly called 'Wednesbury unreasonableness' after the new famous case in what Lord Greene, M.R. expounded it."

Referring to the doctrine of unreasonableness, Prof. Wade says in H

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A Administration Law (supra):

"The point to not is that a thing is not unreasonable in the legal sense merely because the Court thinks it is unwise."

"In contractual sphere as in all other State actions, the State and all ·its instrumentalities have to conform to Article 14 of the Constitution of which non-arbitrariness is a significant facet. There is no unfettered discretion in public law : A public authority c possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a procedure which is 'fairplay in action'."

In Sterling Computers limited v. M/s. M & N Publications Limited, D [1993] 1 sec 445 at page 455 this Court observed thus :

"........ .In contracts having commercial element, some more dis- cretion has to be conceded to the authorities so that they may enter into contracts with persons, keeping an eye on the augmentation of the revenue. But even in such matters they have to follow the norms recognised by courts while dealing with public property. It is not possible for courts to question and adjudicate every decision taken by an authority, because many of the Government Under- takings which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand, they can come out with a plea that it is not always possible to act like a quasi-judicial authority while awarding con- tracts. Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contact be awarded and at what terms. It G the decisions have been taken in bona fide manner although not strictly following the norms laid down by the courts, such decisions are upheld on the principle laid down by Justice Holmes, that courts while judging the constitutional validity of executive decisions .must grant certain measure of freedom of "play in the H joints11 to the executive.'1

TATA CELLULAR i·. U.O. l. (MOHAN,J.J 173

In Union of flldia v. Hindustan Development Corporation, (1993] 3 A SCC 499 at 515 this Court held thus:

"........... the Government had the right to either accept or reject the lowest offer but that of course, if done on a policy, should be on some rational and reasonable grounds. In Entsian Equipnzent and Chemicals Ltd. v. State of WB. this Court obs :rred as under: B

"When the Government is trading with the public, 'the democratic form of Government demands equality and absence of arbitrariness and discrimination in such transactions'. The activities of the Government have a public element and, therefore, there should be fairness and equality. The State need not enter into any c contract with anyone but if it does so, it must do so fairly without discrimination and without unfair procedure."

The principles deducible from the above are : D (1) The modern trend points to judicial restraint in administrative action.

(2) The Court does no sit as a court of appeal but merely reviews the manner in which the decision was made. E (3) The Court does not have the expertise to correct the administra- tive decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. F (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. G (5) The Government must have freedom of contract. In other words, a fairplay in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed H

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A out ahC1\'C) hut must be frt.:e arbitrariness not alfcctcd by bias or acluated hy 111ala fidcs.

(6) Qu;i,hing decision.I m;iy impose heow administrntiYe burden on the administration and lead to increased and unbudgeted expenditure.

B Based on these principles \\'C \viii examine the facts of this case ~.incc they con1mend to us as the correct principles.

Point /1.10. 2 : U1u:ther the selection is ritiated by arbitaraliness '!:

Mr. Soli J. Sorabjee, leorned counsel appearing for Tata Cellular C argued that there. ar~ clear instances of arbitrariness.

Criterion No. 2.4.7 has been totally ignored ;ind excluded. This has been so admitted. No marks have been awarded on this scope under this criterion.

D Note II of the same General conditions 2.4. 7 says minimum reliance on Indian Public financial institutions will be prefened. This requirement has been breached by Bharti Cellular, Mobile Telecom, Sterling Cellular and Skycell Communication. They have borrowed fI 0m commercial banks 4.87 per cent, 43.48 per cent and 34.41 per cent respectively. This criterion E carries 8 marks. In spite of the borrowing they have been awarded 6, 8 (full marks), 5 and 7 respectively. The company, Tata Cellular, which had not borrowed at all from the commercial banks, has been awarded only 4 marks. It requires io be noted that borrowing from commercial banks was prohibited by Reserve Bank of India.

F Then again, one of the prescribed criterion is 2.4.6 which carries 12 marks, namely, the financial strength of the partner company. The annual turnover from Tata Cellular, from Indian parameter was 12, 000 crores and annual turnover of their foreign parameters was 51,000 crores yet what has been awarded is only 9 marks. As against this Huchison Max has only G an annual turnover of 75 crores and rupees 6,600 crores of foreign parameter yet it has been awarded 12 marks. Equally, Sterling Cellular was turnover according to its bid document was 77 crores; the foreign parameter·is unknown, it has also been awarded 9 marks.

The cut-off date for financial bid document was fixed as 17.8.92. To H examine and evaluate the same a committee was set up. The committee

TATA CELLULAR 1·. U.O. l. [MOHAN, J.] 175

adopted some paramclcrs and devised a marking system. It is under : A

Paramclcr Total Marks

Rental 50

Project Financing 8 B Foreign Exchange innow/outllow 10

Purchase plan for Cellular equipment within the country including lie-ups with the proposed c Indian manufacturers 5

Experience 15

Financial strength 12 D Note : No marks were allotted for the seventh criterion of financial projections of Cellular Mobile Service.

The report of the Tender Evaluation Committee on this aspect states as under : E "One of the parameters is about the financial projection. The Committee discussed about the reliability of financial projections made by the bidders and came to the conclusion that it is not possible for them to verify the reliability of the projections which are based on individual postulations about the number of sub- scribers, traffic, tariff, financial structure etc. For this purpose we have to go by the cl.ate furnished by the bidders at its face value. In any case the financial data, having relevance to evaluation of the tender have well been covered under various parameters."

Annexure I to the Report of the said Committee shows the manner the parameters and their weightage were given to each criterion. The debt/equity ratio is 1.5 for city of Bombay. It has been rightly assigned 3 marks.

The bid proforma of Bharti Cellular, Mobile Telecom, Sterling Cel- lular and Skycell indicates minimum reliance on financial institutions. It has H

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A also made distinction between loans from public financial institutions and banks. Therefore, there is a confusion on the part of Tata Cellular about this requirement with loans from the banks.

Records reveal that in the case of India Telecomp while awarding marks care was taken to exclude the open market projects and foreign exchange from the evaluation process.

As regards Skycell they had projected their operation in Madras for initial years which would be below profitable levels. Therefore, no dividend would have been paid to their foreign collaborators participating in the equity of company. The foreign exchange inflow position in their case was considered to be better. The markings came to be awarded on the same basis as in the case of all the bidders. The foreign collaborators of Skycell, B.P.L. Systems and Projects, Usha Martin, l:lharti Cellular and Tata Cel- lular specifically undertook to cover the foreign exchange funding by equity and loans. International roaming has been correctly taken into considera- D tion. As submitted by the learned Solicitor General roaming is defined in paragraph 1.3.¹.2 of N.l.T. as follows :

"Roaming: This feature shall enable a subscriber to communicate in a cellular system other than its home registered one."

E Paragraph 1.3.¹.18 talks of home location registered.

Paragraph 1.3.¹.19 deals with Visitor Location Register (VLR} which says as follows :

"Visitor location register (VLR) : shall be able to store the F following information. Their functions shall also include data retrieval, date collection, update of data entry, once PLMNs are established.

The IMS! G The mobile Station lriternational ISON number

The Mobile Station Roaming number, if allocated at location updating.

H The temporary Mobile Station Identity\ if applicable

TATA CELLULAR v. U.O. l. [MOHAN,J.] 177

the location area where the mobile station has been A registered.

supplementary service parameters.

any other information needed for management of mobile station." B

All these paragraphs will clearly establish that the system provides for facility of roaming to visitors. International roaming in G.S.M. is well-accepted technique.

GSM is defined as a Global System for Mobile communications. The C GSM specifications are highly standarized. This means that the systems that are designed as per GSM specifications will be compatible with each other and, therefore, can be easily connected together from day one.

Roaming in GSM Cellular mobile systems means that a subscriber D belonging to one operator can use his telephone to receive and make calls while he is in the area of another operator automatically. When a sub- scriber goes into the area of another operator, who bas a roaming agree- ment with his another operator, the details of the subscriber available in the HLR (Home Location Register) of the home MSC (Mobile Switching Centre) are obtained by the visitor MSC and placed in the VLR (Visitor E Location Register). The subscriber can originate and receive calls without feeling any difference. The roaming can be easily extended internationally and is already being done in parts of Europe. Since the systems are compatible, all that is required_ is an agreement between the operators for revenue sharing etc. F Thus, we find the argument that paragraph 2.4.7, namely, the finan· cial projection of the proposed Cellular Mobile Cellular and the 7th criterion having been left out of consideration cannot be accepted.

Point No. 3 Bias of Mr. Nair· Whether affects the selection? G In Black's Law Dictionary Sixth Edition at page 162 bias defined as under:

"Inclination; bent; prepossession; a pre·conceived op1n1on; a predisposition to decide a cause or an issue in a certain way, which does H

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A not leave the mind perfectly open conviction. To incline to one side. Condition of mind, which sways judgment and renders judge unable to exercise his functions impartially in particular case. As used in la\v regard- ing disqualification of judge, refers to mental attitude or disposition of the judge toward a party to the litigation, and not to any views that he may entertain regarding the subject matter involved. State ex rel. Mitchell v. Sage B Stores Co., 157 Kan. 622, 143 p.2d 652, 655.

The rule of bias is founded on the well-known maxim Nemo judex non cause sua: ·no person can be a judge in his own cause. ' C De Smith's Constitutional and Administrative Law New Edition at page 583 states as follows :

"First, an adjudicator must not have any direct financial or proprietary interest in the outcome of the proceedings. Secondly, he must not be reasonably suspected, or show a real likelihood, D of bias."

Jn the instant case, the first aspect of the matter does not arise. As regards the second, the law is as stated by De Smith's Constitutional and Administrative Law New Edition at page 584-85 : E "If an adjudicator is likely to be biased he is also disqualified from acting. Likelihood of bias may arise from a number of causes: membership of an organisation or autb,ority that is a party to the proceedings; partisanship expressed in extra-judicial pronounce- ments; the fact of appearing as a witness for a party to the proceedings; personal animosity or friendship towards a party; family relationship with a party; professional or commercial relationship with a party; and so on. The categories of situations potentially giving rise to a likelihood of bias are not closed."

"............. How should the test of disqualification for likelihood of bias be formulated? .... A more common formulation of the test is: Would a member of the public, looking at the situation as a whole, reasonably suspect that a member of the adjudicating body would be biased? Another common formulation is: Is there in fact a real likelihood of bias? There is no need, on either formulation, H , to prove actual bias; indeed, the courts may refuse to entertain

TATA CELLULAR v. U.O. L[MOHAN,J.] 179

submissions designed to establish the actual bias of a member of A an independent tribunal, on the ground that such an inquiry would be unseemly. In practice the test of 'reasonable suspicion' and 'real likelihood' of bias will generally lead to the same result. Seldom indeed will one find a situation in which reasonable persons ade- quately apprised of the facts will reasonably suspect bias but a B court reviewing the facts will hold that there was no real likelihood of bias. Neither formulation is concerned wholly with appearances or wholly with objective reality. In ninety-nine cases out of a hundred it is enough for the court to ask itself whether a reasonable person viewing the facts would think that there was substantial possibility of bias." c Geoffrey A Flick in his work on Natural Justice (Principles and Practical Application) 1979 Edition at 118-120 states : -· "PERSONAL INVOLVEMENT D Whenever a decision-maker becomes personally involved with one of the parties there aries the suspicion that a determination may not be reached exclusively on the merits of the case as discussed at the hearing. Unlike allegations of bias by reason of the pecuniary interest of the decision-maker however, allegations of bias founded upon a personal involvement will only result in disqualification where there is a real likelihood that a hearing will not be fair: de Smith at 232-37; David @ 12.02.

The most obvious group of cases calling for scrutiny are th9se in which one of the parties has close ties of kinship with the decisjon-maker. A chairman of county commissioners, therefore, cannot hear a petition to build a new road which was intended to pass over land belonging to his brother-in-law; nor can a member of a zoning commission determine his wife's application for a change in zoning from residential to business: Low v. Town of G Madison, 60 A 2d 774 (Conn 1948). In the last cited case the court was concerned with both the family sentiment that was present and with the opportunity for the wife to have what in reality a private hearing before the board with her husband acting as advocate: see

778. But not all family relationships will disqualify and, by way of contrast, on the circumstances of one particular case it was said H

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A that a board of adjustment c.ould decided an application by a company for permission to deveJ.op a free parking area despite the fact that an employee of the company was the wife of one board member and the fact that a third or fourth cousin of another board member was the president of the company: Moody v. City of University Park, 278 SW 2d 912 (Dt Civ App Tex 1955). B

Disqualification on the basis of personal involvement is not, of course, limited to the above two situations but may n:sult whenever there is a sufficient nexus between the decisionrnaker and a party c to justify the appearance that this nexus may influence the decision reached: of R v. Altrincham Justices, Ex parte Pennington, (1975) QB 549. Street CT has state.cl the law in this respect in yet another New South Wales decision: Ex Parle Burnett, Re Wurth (1955) 72 WN (NSW) 457. The last cited case involved a former officer of D the Department of Education who later sat as a member of the Public Service Board inquiring into alleged false and scandalous allegations made by a teacher against various persons, including the officer in question, and during the course of his judgment street CT observed: E Where bias arises not from {pecuniary) interest, the officer must have so conducted himself that a high probability arises of a bias inconsistent with the fair performance of his duties, with the result that a substantial distrust of the result must exist in the minds of reasonable persons. F Put in other words, the issue is not merely whether justice has in fact has been done, but whether it has manifestly and undoubtedly been seen to be done. It may, therefore, be improper for the clerk of the court to act as a solicitor for a party. Similarly, it may be unwise for a headmaster to sit in judgment upon a case involving G a former pupil who had been adversely criticised in a detailed staff report signed by the headmaster some three months previously even where the existence of the report has been forgotten: R v. Abingdon Justices, Ex Porte Cousins, {1964) 108 Sol. J. 840."

H The leading cases on bias may now be seen.

TATACELLUIAR v. U.0.¹.[MOHAN,J.] 181

In R v. Combome Justices, Ex parte Pearce, (1954) 2 All ER 850 at A 855 it was held :

"In R v. Essex JJ. Ex P.' Perkine (9) Avory, J.,, said (1927) 2 K.B. 488:

"We have here to determine, however, or not there might B appear to be a reasonable likelihood of his being biased."

And SWIFr, J., said (ibid., 490):

"It is essential that justice should be so administered as to satisfy reasonable persons that the tribunal is impartial and unbiased. As C LORD HEWART, CJ., said inR v. Sussex!!. Ex.p. McCaTthy (6) (1924] 1 K.B. 259) : 'Nothing is to be done which crates even a suspicion that there has been an improper interference with the course of justice.'· might a reasonable man suppose that there had here been such an interference with the course of justice?" D In R. v. Salford Assessment Committee, Ex p. Ogden (10) SLESSER, L. J. (1937] 2 All E.R. 103 and ,LUXMOORE, J. (ibid., 108) applied the "reasonable likelihood" test, while GREENE, L.J. (ibid., 107) dissented only on the inference to be drawn from the facts. In Cottle v. Cottle ( 11) SIR BOYD MERRIMAN, P. (1939] 2 E All E.R. 541) asked himself the question whether the party com- plaining.

".... might -reasonably have formed the impression that Mr: Browing (the Chairman of the bench) could not give this case in unbiased hearing. 11

BUCKNIL, J., said (ibid) :

"The test which we have to apply is whether or not a reasonable man, in all the circumstances, might suppose that there was an improper interference with the course of justice ..."

In the judgment of this court the right test is that prescribed by BLACKBURN, J. (L.R. 1 Q.B. 233)in R v. Rand (I), namely, that to disqualify a person from acting in a judicial or quasi-judicial capacity on the ground of interest (other than pecuniary or H

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

A proprietary) in the subject- matter of the· proceedings a real likelihood of bias must be shown. This court is, further, of opinion that a real likelihood of bias must be made to appear not only from the materials in fact ascertained by the party complaining, but from such further facts as he might readily have ascertained and easily verified in the course of his inquires. In the present case, for B example, the facts relied on in the applicant's statement under R.S.C. Ord. 59, r. 3 (2), of the grounds of his application might create a more sinister impression that the full facts as found by this court, all or most of which would have been availalJ!e to the applicant had he pursued his inquiries on learned that Mr. Thomas c was a member of the Cornwall County Council and none of these further facts was disputed at the hearing of this motion. The frequency with which allegations of bias have come before the courts in recent times seems to indicate that the reminder of LORD HEWART, C.J., in R v. Sussex JI. Exp. McCarthy, (6) [1924] 1 K.B. 259) that it is. D "Of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done."

In Metropolitan Properties Co. (F.G.C.), Ltd. v. Lannon and Others, E [1968] 3 All E.R. 304 at 310 it was held thus:

".............. in considering whether there was a real likelihood of bias, the court does not look at the mind of the justice himself or at the mind of the chairman of the tribunal, or whoever it may be, who sits in a judicial capacity. It does not look to see if there was a real likelihood that he would, or did, in fact favour one side at the expense of the other. The court looks at the impression which would be given to other people. Even if he was impartial as could be, nevertheless, if right-minded persons would thank that, in the circumstances, there was a real likelihood of bias on his part, than he should not sit. And if he does sit, his decision cannot stand: See R v. Huggins (8); R v. Sunderland justices (9), per Vaughan Wil- liams, L. J. Nevertheless, there must appear to be a real likelihood of bias. Suimis or conjecture is not enough: see R v. Combome Justices, Ex P. Pearce (10); R v. Nailsworth Justices, Ex~P. Birds H (11). There must be circumstances from which a reaso;;able man

TATACELLULAR v. U.0.¹.[MOHAN,J.) 183

would think it likely or probable that the justice or chairman, as A the case may be, would, or did, favour one side unfairly at the expense of the other. The court will not enquire whether he did, in fact, favour one side unfairly. Suffice it that reasonable people might think he did. The reason is plain enough. Justice must be rooted in confidence; and confidence is destroyed when right- B minded people go away thinking : "The judge was biased" ·

In R v. Liverpool City Justices, ex parte Tooping [1983) 1 All ER 490 at 494 it was observed :

"In the past there has also been a conflict of view as to the way C in which that test should be applied. Must there appear to be a real likelihood of bias? Or is it enough if there appears to be a reasonable suspicion of bias? (For a discussion on the cases, see de Smith's Judicial Review of Administrative Action (4th edn. 1980) pp 262- 264 and H W R wade, Administrative Law (5th edn, 1982) pp 430- 432.) We accept the view of Cross Li, expressed in D Hannam v. Bradford City Council, (1970) 2 All ER 690 at 700, (1970) 1 WLR 937 at 949, that there is really little if any difference between the two tests:

'If a reasonable person who has no knowledge 'of the matter beyond knowledge of the relationship which subsists between some members of the tribunal and one of the parties would think that there might well be bias, then there is in his opinion a real likelihood of bias. Of course, someone else with inside knowledge of the character of the members in question might say: "Although things don's look very well, in fact there is no real likelihood of bias." But that would be beside the point, because the question is not whether the tribunal will in fact be biased, but whether a reasonable man with no inside knowledge might well think that it might be biased.'

We conclude that the test to be applied can conveniently be expressed by slightly adapting in words of Lord Widgery CJ in a test which he laid down in R. v. Uxbridge Justices, ex p. Burbridge (1972)'Times, 21 June and referred to by him in R v. Mclean, ex p. Aikens [1974) 139 JP 261 at 266: would a reasonable and fair-minded person sitting in court and knowing all the relevant facts have a reasonable suspicion that fair trial for the applicant H

184 SUPREME COURT REPORTS [1994) SUPP. 2 S.C.R.

A was not possible?"

In University College of Swansea v. Cornelius, [1988] I.C.R. 735 at 73~ holds :

"Cases of bias and ostensible bias had to be regarded in the light of their own circumstances. The circumstances of this case could have no relevance to other cases.' 1

The Indian Law can be gathered from the following rulings:

In Manak Lal v. Dr. Prem Chand, [1955) SCR 575 at 581 it was held thus:

"But where pecunciary interest is not attributed but instead a bias is suggested, it often becomes necessary to consider whether there is a reasonable ground for assuming the possibility of a bias and whether it is likely to produce in the minds of the litigant or the public at large a reasonable doubt about the fairness of the administration of justice. It would always be a question of fact to be decided in each case. 11 The principlen, says Halsbury, "nemo debet esse judex: in causa propria sua precludes a justice, who is interest in the subject-matter of a dispute, from acting as a justice therein". In our opinion, there is and can be no doubt about the validity of this principle and we are prepared to assume that this principle applies not only to the justices as mentioned by Halsbury but to all tribunals and bodies which are given jurisdiction to determine judicially the rights of parties."

F In J. Mahapatra & Co. v. State of Orissa, [1985) 1 SCR 322 at 334 it was observed thus :

"It is no answer to say that an author-member is only one of the members of the Assessment Sub-Committee and that the ultimate decision rests with the State Government which may reject any book out of the list of approved books. A similar argument was rejected by this court in Kraipak's case. The State Government would normally be guided by the list approved by the Assessment Sub-Committee. Further, to say that such author-member is only one of the members of the Assessment Sub-Committee is to overlook the fact that the author-member can subtly influence the

TATA CELLULAR"· U.O. l. iMOHAN.J.] 185

minds of the other members against selecting books by other authors in preference to his own. It can also be that books by some .. of the other members may also have been submitted for selection and there can be between them in quid pro quo or, in other words, you see that my book is selected and in return I will do the same for you. In either case, when a book of an author-member comes up for consideration, the other members would feel themselves embarassed in frankly discussing it merits. Such author-member may also be a person holding a high official position whom the other members may not want to displease. It can be that the other members may not be influenced by the fact that the book which they are considering for approval was written by one of their members. Whether they were so influenced or not is, however, a matter impossible to determine. It is not, therefore, the actual bias in favour or the author-member that is material but the possibility of such bias. All these considerations require that an author-mem- ber should not be a member of any such committee or sub-com- D mittee.'

inAshok Kumar Yadav v. State of Haryana, [1985] 4 SCC 417 at 441 this Court emphasised the reasonable likelihood of bias thus :

'This Co1¥t emphasised that it was not necessary to established E bias but it was sufficient to invalidate the selection process if it could be shown that there was reasonable likelihood of bias. The likelihood of bias may arise on account of proprietary interest or on account of personal reasons, such as, hostility to one party or personal friendship or family relationship with the other. Where reasonable likelihood of bias is alleged on the ground of relation- F ship, the question would always be as to how close is the degree of relationship so great as to give rise to reasonable apprehension of bias on the part of the authority making the selection. "

In Ranjit Thakur v. Union of India, (1988] 1 SCR 512 at 520 the law G was stated by one of us, Venkatachaliah, J. (as he then was) as under : -

"As to the tests of the likelihood of bias what is relevaot is the reasonableness of the apprehension in that regard in the mind of the party. The proper approach for the judge is not to took at his . own mind and ask himself, however, honestly; "Am I biased? "but H

186 SUPREME COURT REPORTS [1994) SUPP. 2 S.C.R.

A to look at the mind of the party before him."

Reference was made therein to a dictum laid down by Justice Frankfurter in Public Utilities Commission of the District of Columbia v. Pollack, 343 US 451 at 466 which is reproduced as under :

B "The judicial process demands that a judge move within the frame work of relevant legal rules and the court covenanted modes of thought for ascertaining them. He must think dispassionately and submerge private feeling on every aspect of a case. There is a good deal of shallow talk that the judicial robe does not change c the man within it. It does. The fact is that on the whole judges do lay aside private views in discharging their judicial functions. This is achieved through training, professional habits, self-discipline and that fortunate alchemy by which men are loyal to the obligation with which they are interested. But it is also true that reason cannot control the subconscious influence of feelings or which it is un- D aware. When there is ground for believing that such unconscious feelings may operate in the ultimate judgment or may not unfairly lead others to believe they are operating, judges rescue themselves. They do no sit in judgment... .................. '

E In International Airports Authority of India v. KD. Bali, [1988) 2 SCC 360 at 367 this Court observed thus :

"Several points were taken in support of the application for revocation. It was sought to be urged that the petitioner had lost confidence in the sole arbitrator and was apprehensive that the arbitrator was biased against the petitioner. It is necessary to reiterate before proceeding further what are the parameter by which an appointed arbitrator on the application of a party can be removed. It is well settled that there must be purity in the ad- ministration of quasi-justice as are involved in the adjudicatory process before the arbitratrs. It is well said that once the arbitrator enters in an arbitration, the arbitrator must not be guilty of any act which can possibly be construed as indicative of partiality or unfairness. It is not a question of the effect which misconduct on his part had in fact upon the result of the proceeding, but of what effect it might possibly have produced. It is not enough to show

TATAtELLULAR v. U.O. l. [MOHAN.J.J 187

that, even if there was misconduct on his part, the award \Vas A unaffected by it, and was reality just; arbitrator must not do anything which is not io itself fair and impartial. See Russel on Arbitration, 18th Edition, page 378 and observations of Justice Edition, page 378 and observations of Justice Boyd in Re Brien and Brien. Lord O'Brien in King (De Vosci) v. Justice of Queen's B Country observed as follows :

'By bias I understand a real likelihood of an operative prejudice, whether conscious or unconscious. There must in may opinion be reasonable evidenee to satisfy us that there was a real likelihood of bias. I do not think that their vague suspicions of C whimsical. capricious and unreasonable people should be made a standard to regulate our action here. It might be a different matter of suspicion rested on reasonable grounds - was reasonably generated - but certainly mere flimsy, elusive, morbid suspicions ·. should not be permitted to form a ground of decision. D (Emphasis supplied)'

In Union Carbide Corporation v. Union of India, [1991) 4 SCC 584 at 667 this Court observed thus: E "But the effects and consequences of non-compliance may alter with situational variations and particularities, illustrating a 'flexible use of discretionary remedies to meet novel legal situations'. "One motive' says Prof. Wade 'for holding administrative acts to be voidable where accordiog to priociple they are void may be a desire to. extend the discretionary powers of the Court". As observed by F Lord Reid in Wiseman v. Borneman natural justice should degenerate into a set of hard and fast rules. There should be a circumstantial flexibility.'

In the light of this let us fmd out whether bias has been established? G The Report of the Tender Evaluation Committee was made on 16.5.92. In that Committee Mr. B.R. Nair was a party. As seen above, the offer of the four companies did not fully satisfy the criteria. Their cases were recommended to be considered for condonation. The four companies are: H

188 SUPREME COURT REPORTS 11994] SUPP. 2 S.C.R.

A L BPL Systems and Projects

2. Mobile Communication India private Limited

3. Mobile Telecom Service limited and

B 4. Indian Telecom private Limited.

Mr. B.R. Nair, Member (Production) made the following note :

"I agree with the recommendations of the Evaluation Commit: tee that the four firms must be in paragraph 3 of Page 1JN should C be included in the short-list. Thus, there would 14 companies in the short-list instead of 16 recommended by adviser (O).'

On 8th of September, 19921 Mr. Nair, as Member of the Committee, agreed to a noting that only three companies, Bharti Cellular, BPL Systems and Projects and Skycell qualified for selection. After further discussion, 8 D companies came to selected and the note was accordingly put up on 9.10.92. This recommendation is agreed to by Mr. Nair.

According to Mr. Harish Salve, the very presence of Mr. Nair itself will amount to bias.

E In the case, as noted above, the crucial test is whether there was a reai likelihood of bias. As to how Mr. R. Satish Kumar, the son of Mr. B.R. Nair, came to be appointed in BPL Systems and Projects is explained in the additional affidavit filed on behalf of BPL Systems & Projects Ltd. Respondent No. 10, by Mr. S. Sunder Rao, Corporate Personnel Manager F of BPL Group of Companies, including respondent No. 10 company. The relevant portion is extracted as under :

"With regard to the selection and appointment of Shri R. Salish Kumar I state as follows :

G That the respondent No. 10 company desired to employ certain manager and executives as follows :

(i) Sr. Manager, (Push Button Telephone) for New Delhi, Bangalore and Bombay.

H (ii) Manager (Communications) for Madras, Calcutta and Ban-

TATA CELLULAR v. U.O. I. [MOHAN, J.) 189

galore. A

-. (iii) Territory Manager (Sales) for Delhi, Hyderabad and Madras.

(iv) Sales Executives for Delhi, Madras, Kanpur Chandigarh, Baroda, Kochhi, Calcutta, Bhopal, Poona and Coimbatore. B These posts were advertised for in several newspapers as fol- lows:

(i) The Times of India, Delhi and Bombay Editions. c (ii) The Hindustan Times, Delhi Edition.

(iii) Statesman, Calcutta Edition.

(iv) The Hindu, All India Edition. D (v) Deccan Herald, Bangalore.

These advertisement appeared between 26th August, 1991 and 29th August, 1991. The eligibility conditions for the candidates was specified and with regard to the post of Territory Manager (Sales) it was mentioned that the candidates should be an Electronics/ E Electrical Engineer with 5/6 years experience of office automation products, Computer, Telecom equipments, etc .......... .

In response to advertisement Shri R. Salish Kumar applied for the post of Territory Manager (Sales) vide his letter dated 28th August, 1991 enclosing thereby his bio-data........ F As per practice of the Respondent Company the bio-data of all the applicants were scruitinised by the Personnel Department and thereafter by the Asst. General Manager Qf the Respondent Company. Thereafter the short:listed candidates were called for G interview on various dates. Shri Salish Kumar was called for an interview on 6th September, 1991. Two other candidates were also interviewed for this post. Shri Salish Kumar was interviewed by the Senior Officer of the company inclnding myself. At the con- clusion of the interview as per· practice, an internal assessment form was filled by the interviewers. ......... H

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

A On the basis of the said interview Shri Satish Kumar was selected and a letter dated 21st October, 1991 was addressed to ~ him offering him the said post. Shri Satish Kumar was required to report for duty on or before 2nd December 1991 at Bangalore. Shri Satish Kumar however requested for some time to enable him to handover the charge in his previous company and this was B agreed to by the company. Shri Satish Kumar accordingly joined respondent No. 10 on 6th January, 1992.........

I state and submit that Shri Satish Kumar was selected by respondent No. 10 company in the normal course and the selection c was purely on merit."

It is to be seen that Mr. Satish Nair is only one of the officers in BPL Systems and Projects, which has over 5500 employees in 27 offices all over India. There are 89 officers of his rank.

D Mr. B.R. Nair was not a decision-maker at all. He was one of the recommending authorities. As Director General of Communication·as well as Telecom Authority his involvement in the approval an.d selectiol) of tender was indispensable. He came to be appointed as member (Services) on 29.5.92. By virtue of the Notification dated 28.7.92 Mr. B.R. Nair became the Director General of Telecommunication. As such, he could E exercise all the powers under Section 3(6) of the Indian Telegraphs Act of

1885. Such a Telecom Authority has the right to grant cellular operating licences to the successful party and also reject any bids without assigning any reason. Registration fees, security deposit and other financial charges shall be fixed by the licensor in consultation with the Telecom Authority. F This is what is stated in the financial bid. Therefore, Mr. B.R. Nair could not dissociate himself from the decision-making process. It is under these circumstances the High Court rightly applied the doctrine of necessity. This Court in Charan Lal Sahu v. Union of India, [1990] 1 SCC 613 at 694 dealt with this doctrine which is stated as follows : G "The questio;, whether there is scope for the Union of India being responsible or liable as joint tort-feasor is a difficult and different question. But even assuming that it was possible that the Central Government might be liable in a case of this nature, the learned Attorney General was right in contending that it was proper that the Central Government should be able and authorised r

TATA CELLULAR v. U.0. I. [MOHAN, J.] 191

to represent the victims. In such a situation, there will be no scope of the violation of the principles of natural justice. The doctrine of necessity would be applicable in a situation of this nature. The doctrine has been elaborated, in Halsbury's Laws or England, 4th edn., page 89, paragraph 73, where it was reiterated that even if all the members of the tribunal competent to determine a .matter were subject to disqualification, they might be authorised and obliged to hear that matter by virtue of the operation of the common law doctrine of necessity. An adjudicator who is subject to disqualification on the ground of bias or interest in the matter which he has to decide may in certain circumstances be required to adjudicate if there is no other person who is competent or authorised to be adjudicator of if a quorum cannot be formed without him or if no other competent tribunal can be constituted."

Therefore, we are unable to accept the contentions of Mr. Soli J Sorabjee and Mr. Harish Salve. D We hold Mr. B.R. Nair's involvement did not vitiate the selection on the ground of bias. Since we have reached this conclusion we are not going to the other question argued by Mr. F.S. Narirnan whether India Telecomp or Tata Cellular could urged this point relating to bias. E Point No. 4 : Whether the Apex Committee has been bypassed?:

After finding that only three companies qualified for selection on 8.9.92 the following note was made by Mr. G.T. Naryanan, Adviser (Opera, lions) : F "The financial bid which was approved by the apex committee was given to the shortlisted bidders and these were received and ppened on 17.8.1992. these were evaluated by the Tender Evalua- tion Committee (TEC). The evaluation report is placed below. The financial evaluation was done based upon the weightages of the G various parameters namely, rental, financing, foreign exchange inflow/outflow, financial strength, experience and purchase plants. The rental was given the maximum weightage. The various guidelines made for giving the marks are at Annexure I (page 11, Flag 'A'). H

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

A So far as the rental and other allied parameters are concerned, there are wide variations of rent, deposit, registration/connection fee. In some cases rent is zero. It was considered by the TEC that these are to be equated to one parameter as 'equated rental' and the method adopted was loading the basic rental and other charges B like deposit, interest rate @ 13% per annum. Based upon these assumptions, the gradation for various bidders for each city is at page 9 of the main report.

.The Chairman and Member of the Telecom Commission were consulted in this regard. It was felt that the rate of interest adopted c by the TEC was low, and the maximum lending rate of the State B~nk of India as on 1.8.1992 viz. 21.75% is more appropriate to adopt both for refundable and non-refundable deposits and non- returnable charges. For the non-refundable charges the monthly amortised value over 5 years at the lending rate uiz. 21.75% should D be used for loading the rental, to get at the equivalent rental value which represents the actual monthly burden on the subscribers., As per this guideline the TEC gave the fresh calculations on 7.9.1992 and a new gradation list was prepared which is placed at Flag 'B'. E After examining the TEC report the following points have come to light -

(i) M/s. Hutchison Max India Ltd. in their bid document (Annexure 1>) have not given proper and full compliance. The F TEC has observed "Compliance to Chapter III (Operative Condi- tions) and Chapter IV (Financial Conditions) has not been indi- cated by the bidder". Thus, it clearly shows that they have not complied with these important conditions which from the very basis of the financial bid It is evident that the bidder has serious reservations about financial conditions and operative conditions and if granted a licence, there is a possibility of litigation.

(ii) Since we require good operators with experience the min- imum of 10 marks out of 15 for this parameter is considered a must and those bidders who have scored less than 10 for this parameter should be disqualified. This represents an experience

TATA CELLULAR v. U.O. I. [MOHAN,J.] 193

of handling of 1 lakh cellular phones or 80,000 with a GSM licence. A

(iii) In accordance with the policy of the Govt .. for encouraging foreign exchange investment only those who do foresee the inflow of foreign exchange should be considered. For this parameter the TEC had allocated 5 marks to those bids which were foreign exchange neutral. Those getting more than 5 indicate a net foreign B exchange. inflow. Thus, 5 marks or above for this parameter is considered essential and those getting below 5 marks deserves to be disqualified.

So with the points listed above taken into account, the following companies qualify citiwise as per the gradation - c Delhi Bombay

1. Bharati Cellular 1. Bharati Cellular

2. BPL Systems & Projects Ud. 2. BPL Systems & 'Projects Ltd. D

3. Sterling Cellular 3. Sterling Cellular

4. Tata Cellular 4. Tata Cellular

Calcutta Madras

1. Bharati Cellular 1. Bharati Cellular E

2. Sterling Cellular 2. Sterling Cellular

3. Tata Cellular 3. Tata Cellular (on an exclusive basis) (on an exclusive basis)

While making the final selection, it should be borne in mind that sterling Cellular has got a problem which is explained in the F notes of DDG(Vig.) placed below. Sterling Computer which is mentioned in the notes of DDG(Vig.) flag C has a tie up with Sterling Cellular from the list of approved operators.

Summarizing, the following operators are recommended for giving G the cellular licence -

FE Name of the Equated Exper- Over Inflow/ Collaborator Company rental ience all Outflow 1 2 3 4 5 6 H

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

A Bombay SRF France

1. Bharnti Cellular 37.3 7 15 78.3 France

2. BPL Systems & 33.2 6 14 76.2 Telecom Projects Ltd. Delhi SRF France

1. Bharti Cellular 41.0 8 15 83.0 B France

2. BPL Systems & 33.8 6 14 76.8 Telecom Projects Ltd. Madras 38.5 8 15 80.0 SRF France

1. Bharti Cellular 24.6 10 15 71.6 Bell South

2. Skycell c Calclltta .

27.¹ 8 15 69.¹ SRF France

1. Bharti Cellular

There is no other bider who qualifies for giving the licence. Even though Tata Cellular fulfils all the conditions but in bid· D document they have based their calculations on single operator concept. However, we may, if approved by Telecom Commission and High Power Committee make a counter offer to operate on a non-exclusive basis. •. After the operators are selected, tariff fixation and other licens- E ing terms can be negotiated by the Telecom authorities.

A separate note is being prepared for sending to the High Power Committee based upon the observations that are likely to be made on this note.

F For approval, please.

sd/-8.9.92 (G.T. NARAYAN) Adviser (Operations) G ·Member (Services) Member (Productions) Member (Finance) Chainnan (TC.)

H The proposal on pre-page with all the relevant calculation

TATA CELLULAR v. U.O.l.[MOHAN.J.] 195

sheets and TEC report, copy of the F.B. document, may please be sent to the high power committee nominated by NOS (C) for its consideration and for making final recommendations to the Gm¹. Re. selection of the licencees.

sd/- 10.9.92 B

Adv. (0) - Out of Stn. DOG (TM)

A brief note, copies of TEC report, financial tender document have been sent to the High Power Committee. The Note was shown to Member c (S) before dispatch. (Emphasis supplied)

sd/- 10.9.92 D Adv. (0)

sd/- (G.T. Narayan) 14.9.92" E On 10. 9.92 the Chairman (TC) made the following note :

"In pursuances of the orders of the MOS(C}, a Committee consisting of Principal Secretary to the Prime Minister, in his capacity as chairman, foreign Jnvi'stment Promotion Board, Secretary Finance, Secretary Electronics and Chairman Telecom F Commission was appointed to make recommendations regarding selection of the franchisees to provide Cellular Mobile Telephone Service in the four metro cities. This committee examined the bids received against the tenders floated on the basis of Tender Evalua- tion Committee report and made recommendations to MOS(C) regarding short-listing of the bidders and the financial bids docu- G ment. The financial bids from the short-listed bidders have now been received and examined in the Department. The recommen- dations of the Evaluation Committee are being· forwarded to the members of the High Court Level Committee appointed by MOS (C} for examination and making recommendations to the Govern- H

196 SUPREME COURT REPORTS [1994} SUPP. 2 S.C.R.

A ment regarding final selection of the franchisees.

I spoke to Principal Secretary to the Hon'ble Prime Minister with the request to expedite the process. He indicated that the Committee earlier appointed by MOS(C) stands dissolved and a fresh Committee will have to be nominated for considering the financial bids etc. He also indicated that he proposes to put up the case to the Hon'ble Prime Minister for his clearance. It is, therefore, proposed to issue a letter to the members of the High Level Committee as per draft placed below. The same may please be seen by MOS (C) for approval before issue. c · In the draft letter it has been indicated that the same Com- mittee will also examine the bids received for provision of the Paging Service in 27 cities_- first for short- listing and finalising the financial bids and the later for selection of the franchisees. The documents relating to short- listing of Paging Service bidders have D also been sent separately to the members of the Committee.

sd/- SEPT 10, 1992 (H.P. WAGLE) CHAIRMAN (TC) E MOS(C) 11.9.92 D.O. tO Prin. Sec. with copies to F.S./Elec. Sec. may issue F sci/· 14/9

P.S. D.O. issued, pl. G sd/-14/9

DDG (TM)"

However, the D.O. came to be issued in accordance with the note of 10.9.92 dissolving the apex committee. Therefore, it is not correct to H contend; as urged by Mr. Harish Salve, that the apex committee had been

TATACELLULAR v. U.0.¹.[MOHAN,J.] 197

bypassed. The learned Solicitor General is right in his submission. A Point No.5: Entry of Hidden Criteria - Whether valid?

In the original tender document, paragraph 2.2.¹ in relation to the Subscriber's Capacity states as follows : B "Subscriber Capacity: 1000 with modular expansion upto min. 40,000 subscribers."

In Section II of General Condition Clause 1 (d} states :

"Copy of the agreement between the Indian and the foreign partner, if any foreign partner is proposed."

Chapter II of General Conditions in paragraph 2.4.5 states : 11 Experience of the Foreign operating partner; 11

On 8.9.92 Mr. G.T. Narayan, Adviser (Operations) in his note in the file inter alia stated as follows :

"Since we require good operators with experience the minimum of 10 marks out of 15 for this parameter is considered a must and those bidders who have scored less than 10 for this parameter should be disqualified. This represents an experience of handing of 1 lakh cellular phones or 80,000 with a GSM license."

These hidden criteria came to be evolved in the following context :

The Apex Committee indicated the parameters in which it stated that F "...... the committee decided to consider foreign companies who have ex- perience of operating a cellular system of at least five years and who have developed a reasonable sized network (25,000 subscribers)."

Inter a/ia it stated in the report of the Selection Committee for the Cellular Mobile Telephone Service Tender : G "15. The Committee, therefore, drew up the following criteria: -

(i) The experience of the bidding company. Since none of the Indian companies have any experience of operating a cellular H

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

A service, this would necessary apply to the foreign collaborator. Also smce GSM technology is only now beginning to come into com- mercial operation, the Committee decided to consider foreign Companies who have experience of operating a cellular system of at least 5years and who have developed a reasonable sized network (25,000 - 25,000 subscribers)." B On 2.9.92 the Tender Evaluation Committee made the recommenda- tions. Upon these recommendations Bharti Cellular got three cities, Delhi, Bombay and Madras. Even then BPL Systems and Projects did not feature. Therefore, it was directed that an additional output of gradation of dif- C. ferent bidders for the four cities by adopting inter a/ia the highest lending rate of State Bank of India for 5 years for lending of monthly rental with simple interest on deposits. As per this revised gradation Bharti Cellular got Delhi, Calcutta and Madras. However, it was eliminated from Bombay.

On 8.9.92, the criterion of one lakh lines was introduced. It was D suggested by Mr. G.T. Narayan, Adviser (Operations) that those who have secured less than 10 marks for this parameter should be disqualified. this is in relation to the experience of handing of one lakh cellular phones or 80,000 with GSM line. It is submitted that criterion of experience of 1 lakh lines helped elimination of Usha Martin in Bombay and created place for E BPL Systems and Projects.

The criterion of experience was introduced as a ground of dis- qualification. If the criterion of experience. of one lakh lines is a principal condition to qualify for consideration for Bombay and Delhi was intro- duced uniformly then Bharti Cellular could be disqualified. Thus, a relaxa- F tion of 80,000 with the GSM line was introduced. It is important to note the person who evolved this criterion did not consider Talkland as Bharti Cellular' s collaborator.

As noted above, the learned Solicitor General would submit that as on 31.12.91 Bharti Cellular had experience of 81,085 lines of SFR France and 1,982 lines EMTEL making a total of 83,067 lines. Added to this, Talkland had an experience of 1,70,000 subscribers. The reference to the marks awarded for comparative evaluation in this context is irrelevant. Besides, even assuming that in comparative evaluation the holding of the licence may be given some weight; cannot be made the governing factor in determinin~ the experience of a bidder for the purpose of its eligibility.

TATACELLULAR v. U.0.¹.[MOHAN,J.) 199

As a result of 8.9 .92 recommendations, Bharti cellular got all the four · A cities. BPL System and Projects got two out of four cities. Only Skycell got Madras. No fourth party got any city. Having realised that this decision will patently be unacceptable a relaxation was made on 9.10.92 one day before the final decision whether those with less than one lakh lines experience could be considered for Calcutta and Madras. Even, on 9.10.92, Bharti B Cellular was evaluated vis-a-vis SRF France and EMTEL Mauritius. There was no mention of Talkland. On 10.10.92, Bharti Cellular was again evalua- tion vis-a-vis its collaborators SFR France and EMTEL Mauritius. In the affidavit filed in the High Court the Government urged that" one lakh lines carrying 10 points was considered equivalent to 80,000 lines with GSM licence. This, however, had no impact on Bbarti Cellular. Bharti Cellular's C collaborators included Talkland which is one of the highest sendce provides United Kingdoms."

The learned Solicitor General submits that the evaluation in the case of Bharti Cellular was correct and in any event, including Talkland, Bharti D cellular was properly considered. The parameter of experience had three comvonents :

1. The number of subscribers

2. The number of countries

3. GSM experience. E It is true that during evaluation it was noted that any bidder with less 10 marks out of 15 for experience ..yould stand disqualified. The cut-off of one lakh lines was in the context of minii;num experience of 10 marks. Bharti Cellular had a collaborator other then talkland, namely, SFR France. It was mentioned in Bharti Cellular's bid in its tender on 31.12.91 F that the number of SFR France was over 80,000. By 31st December, 1992 it was estimated to be 1, 10,000 In August 1992 when the bids were submitted SFR France line experience could reasonably be expected to be above one lakh lines. In addition, SFR had a GSM Licence. In view of all, it would not be a unreasonable-estimate on the part of experts to consider G Bharti Cellular as having one lakh having lines' experience.

We are not in a position to accept the contentions of Mr. Harish Salve that these criteria were evolved as tailor-made to suit some other bidders and knock off others. In a technical matter like this where the Government of Indi.a is embarking upon new communication scheme with H

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

A advance technology all the criteria cannot be postulated in the beginning itself. Where the Committee of Experts thought certain criteria have to be evolved in. order to subserve the interest of the scheme it is not necessary to have all of them set out in the beginning itself. However, the important question remains after the evolution of the criteria whether they have been uniformly and properly applied, as urged by Mr. Ashok Sen. B A careful perusal of the tiles shows that the Advisor (Operations) selected Bharti Cellular for franchise, with it foreign collaborators SFR France; EMTEL Mauritius. The same was approved by the Chairman in his final proposal which was ultimately approved on 10th October, 1992. C Thus, it is clear that at no point of time Talkland ever figured as Bharti Cellular's collaborator. SFR France, the foreign collaborator of Bharti Cellular had GSM Paris area Sept. 23, 1992. As on 31.12.91 it had 81,085 subscribers with no GSM experience. The number of subscribers was es- timated to go upto 1,10,000 by 31st December, 1992. On the date of submission of the bid it was expected to cross the one lakh mark. The other collaborator EMTEL Mauritius had only an experience of 1,982 lines. In order to make Bharti Cellular qualify Talkland is also included as a foreign collaborator. This is factually wrong, as noted above, because at no point of time Talkland was thought of as foreign collaborator for Bharti Cellular. Even then, as seen from the file, Talkland is providing marketing, sales, customer care, billing services to both Vodaphone and Celine! under contracts with both of them. This evident from the material produced before us. It states. :

"Talkland's sole foundation is to distribute radiotelephone ser- F vices. Unlike SFR in France it neither sets up nor manages networ/r.s. In the UK these two activities have been separated by the 1984 Telecommunications Act. While two operators develop and manage the networks some 20 marketing companies known as "service providers" deal with the end-user, undertaking m.arketing • after-sales service and billing. This original mode of organization G has proved beneficial and has helped to promote .the rapid development of radiotelephone in the UK. At the beginning of 1992 there were already some 1.2 million subscribers. This cor- responds to a penetration. This corresponds to a penetration rate of more than 2% of the population, against around 0.7% in France H Talkland, with a market share of about 13%, is one of the foremost

TATACELLULAR v. U.0.¹.[MOHAN,J.] 201

service providers it has 165,000 subscribers and reports anol!al sales of some FRF 1.4 billion." (Emphasis supplied)

In. Annexure VII experience of foreign collaborators Item 10 is .Bharti Cellular. The number of subscribers that is put against it is 2,53,067. This figure could be reached only by including Talkland. It is necessary to point out that what is required is either experience of handling one lakh cellular phones or 80,000 with the GSM lines. Both the learned Solicitor General and Mr. Kaura would argue that service is relevant. But the nature of service that is contemplated here as per the tender document is found in Section Ill of Commercial Conditions at para 1.4. That reads as under:

"'Services refer to the scope of the services defined to be within c the licence in para 4 Section IV."

Therefore, one has to obviously refer to Para 4 of Section IV which sets out the following : D "In the first instance the system should be capable of providing the following services :

- Tele-services

lnfom1ation types services E Speech Telephone Emergency calls

Data Message handling system 300 bps access F Short text Communication of short Alphanumeric messages .

Graphics Grp. 3 Facsimile

· Bearer services G Data transmission in Asynchronous duplex circuit mode with PSTN

300 bps (V 21) 1200 bps (V 22) H

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

A Data transmission in Sychronous duplex circuit mode with PSTN

1200 bps 2400 bps

Mobile. access in the Asynchronous mode to the packet as- B sembler/disassembler of packet switching network

300 bps 1200 bps

c Mobile access in the synchronuos mode to the packet switching network

2400 bps 4800 bps

D - Supplementary Services

In the first instance the following supplementary services may be provided :

• Calling Number Identification Presentation E • Calling Number Identification Restriction • Connected Number Identification Presentation • Connected Number Identification Restriction • Malicious Call Identification • Call Forwarding U ncoitditional F • Call Forwarding on Mobile Subscriber Busy • Call Forwarding on No Reply • Call forwarding on Mobile Subscriber Not Reachable • Call Transfer • Mobile Access Hunting • Call :Waiting G • Call Hold * Completion of Call to Busy Subscriber • Three Party Service • Conference Calling • Closed User Group H • Advice of Charge

TATA CELLULAR 1·. U.O. l. [MOHAN, 1.J 203

* Freephone Service A • Reverse Charging (Called or Calling MS) ' Barring of all Out going Calls ' Barring of Outgoing International Call except those directed to the Home PLMN Country. • Barring of all Incoming Calls B • Barring of Incoming Calls when Roaming outside the Home PLMN Country."

The reliance placed by Mr. Kaura and learned Solicitor General on paragraph 2.¹.¹. of Section III of Commercial conditions to include services is not correct because that speaks of the obligations of the licensee. That C is obvious as seen under :

"2.¹ Obligations of the Licensee :

2.¹.¹ The Licensee shall operate and provide and the SER- · VICES. He will be solely responsible for the installation, network- D ing, operation, treatment of the complaints, issue of bills to his subscribers, collection of his component of the revenue, claims, damages arising out of this operation."

In the judgment under appeal the High Court has observed : E "Thus, one lakh lines carrying 10 marks was considered equivalent to 80,000 lines with GSM Lines. Even otherwise the respondents say that this had no impact in the case of Bharti as jts collaborators included Talkland who was on of the .largest service providers in U .K. Experience of providing service was an F Important consideration and experience of Talkland in computing Bharti's foreign collaborators was correctly included in the com- putations and, thus, its experience exceeded 2.51 Iakh lines. The respondents say that Bharti was treated on this basis and not on the basis of 80,000 lines. In support of this argument Mr. Gupta, G learned Solicitor General, submitted that all services were to be provided by the licensee, and though Talkland had no operating experience it was having service experience for rendering service to subscribers which was an important factor. A subscriber is more concerned with the service than as to how the Cellular Telephone operates. The service would be of any type like billing, correction H

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

A of de~ects in hand sets, shifting of phones, etc. The operation said service though go hand in hand we do not find anything wrong in taking into account the experience of Talkland which has been done by the respondents."

We are unable to support this finding as it clearly ignores that B Talkland never figure as a collaborator for Bharti Cellular. Further, ignor- ing the disjunctive clause, two qualifications were sought to be subsumed to give an undue advantage to Bharti Cellular. Besides, the nature of service is as set out in Para 4 of Section IV as stated in Condition 1.4 of Section Ill. Thus, we .hold, {borrowing the words of Donaldson L.J. Emma Hotels Ltd. v. Secretary of the State for Environment, [1980[ 41 P & CR 255" C we could not see on what basis the Committee had reached its conclusion".

If, after excluding the experience of Talkland, whether still Bharti Cellular could fulfil the requisite qualification, namely, 80,000 GMS lines and whether SFR France with EMTEL Mauritius had that experience are D matters which require to the factually analysed. The Committee may decide this factual aspect as on the date on which the offer was made i.e. 20th Jaouary, 1992. If the finding is.rendered in favour of Bharti Cellular it will qualify.

The other "hidden criteria" alleged is about the same foreign col- E laborator. The Chairman, Telecom Commission, in relation to these criteria noted 'the element of competition will get vitiated if the two JV s with a common foreign partner were to be selected to provide the service at the same location.'

Concerning this criterion the attack against BPL System and F Projects, its foreign collaborator came to be changed iii the middle aod yet iii violation of the conditions laid down in Chapter 11, clause 7 of the General Conditions. Originally, there were the following three foreign collaborators:

1. Fraoce Telecom Mobile International Fraoce G

2. McCaw Cellular Commns. Inc. USA

3. LCC Inc. USA

At the second stage of financial bid, the name of the third partner has come to be omitted. This is the argument of Mr. Soli J. Sorabjee aod

TATA CELLULAR v. U.0.¹.[MOHAN,J.] 205

Mr. Harish Salve. The dropping of McCaw resulted iii a change of the joint venture which was not permissible. This is answered by Mr. F.S. Nariman, as noted above, that .the deficiencies in tender conditions could be condoned. This argument is supported by reference to GJ. Fernandez v. State of Kamataka, [1990] 2 SCC 488 and Poddar Steel Corporation v. Ganesh Engineering Works, [1991] 3 sec 273. The condition relating to change does not include the dropping out one condition of 2 or 3 col- laborators. Further, this condition is not found in the tender documents but only financial bid documents.

BPL Systems and Projects submitted its financial bid on 17.8.92. In that bid McCaw was never shown. Inasmuch as the financial bid was received by BPL Systems and Projects only on 31.7.92 Condition No. 7 was inapplicable or impossible of compliance because the dropping was before Condition No. 7 was brought to the notice of BPL Systems and Projects. Where, therefore, the financial bid came to be submitted on 17.8.92 no question of alternation would ever arise. After all the object of the first stage was only to short-list and not to allot the franchise. Therefore, there D. is nothing wrong in the same.

In the financial bid clause 7 of Chapter II reads as follows :

"No change can be made in the Indian or foreign partners E already indicated in the first stage bid.'

It is common case beiween the parties that originally the foreign collaborators of BPL Systems and Projects were three, as mentioned above.

So this is the position at the first stage, on 16.5.92, when the evalua- F tion took place. Clause 7 of Chapter II, quote above, forbids only change.

(Emphasis supplied)

On 17.8.92, when it submitted bid,. McCaw had been dropped out. G It does not amount to a change of foreign collaborator. Still, the original_ two remained. There is no change in joint venture. This does not violate Clause 7 of Chapter II. (Emphasis supplied)

Mr. F.S. Nariman has rightly placed reliance on the abovesaid two rulings relevant passages are quoted as under : H

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

A In GJ. Fernandes v. State of Kamataka, (1990] 2 SCC 488 at pages 499 to 501, in paragraphs 13 to 15 this Court inter alia observed :

"....... In the first place, although, as we have explained above, para V cannot but be read with para I and that the supply of some of the documents referred to in para V is indispensable to assess B whether the application fulfils the pre- qualifying requirements set out in para I, it will be too extreme to hold that the omission to supply every small detail referred to in VI would affect the eligibility under para I and disqualify the tenderer. The question how far the delayed supply, or omission to supply, any one or more c of the details referred to therein will affect any of the pre-qualifying conditions is a matter which it is for the KPC to assess. We have seen that the documents having a direct bearing on para I viz. rngarding output of concrete and brick work had been supplied in time. The delay was only in supply the details regarding "hollow cement blocks" and to what extent this lacuna affected the condi- D tions in para I was for the KPC to assess.

Secondly, whatever may be the interpretation that a court may place on the NIT, the way in which the tender documents issued by it has been understood and implemented by the KPC is ex- E . plained in its "note", makes it clear that the KPC took the view that para I alone incorporated the "minimum pre-qualify- ingieligibility conditions " and the data called for under para V was in the nature "general requirements". It further clarifies that while tenders will be issued ordy to those who comply with the pre- F qualifying conditions, any deficiency in the general requirements will not disqualify the applicant from receiving tender documents and that data regarding these requirements could be supplied later. Right or wrong, this was the way they had understood the standard stipulations and on the basis of which it had processed the applica- tions for contracts all along. The minutes show that they did not deviate or want to deviate from this established procedure in regard to this contract. They ordy decided, in view of the conten- tions raised by the appellant that para V should also be tre.ated as part of the pre-qualifying conditions, that they would make it specific and dear in their future N!Ts that only the fulfillment of pre-qualifying conditions would be mandatory. If a party has been

TATA CELLULAR v. U.0.¹. [MOHAN, J.] '2IJ7

consistently and bona fide interpreting the standards prescribed by it in a particular manner, we do not think this Court should interfere though it may be inclined to read or construe the condi- tions differently. We are, therefore, of opinion that the High Court was right in declining to interfere.

Thir4ly, the conditions and stipulations in a tender notice like this ha~e two types of consequences. The first is that the party issuing the. tender has the right to punctiliously and rigidly enforce them. Thus, if a party does not strictly comply with the require- ments of 11ara III, V or VI of the NIT, it is open to the KPC to decline to considei'i the party for the contract and if a party comes to court saying that the KPC should be stopped from doing so, the court will decline relief. The second consequence, indicated by this Court in earlier decisions, is not that the KPC cannot deviate from these guidelines in all in any station but that any deviation, if made, should not result in arbitrariness or discrimination.' D In Poddar Steel Corporation v. Ganesh Engineering Works, (1991] 3 SCC 273 at page 276, in paragraph 6, this Court observed :

"....... As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and' is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories - those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main/object to be achieved by the conditions. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the conditions in appropriate cases." G The High Court observed thus :

"We also do not find any error on the part of the respondents in treating the financial bid of BPL in order if at the stage BPL dropped one of its three foreign collaborators (Which were named by it at the technical bid stage) as otherwise financial bid satisfied H

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

A all the criteria and dropping of one of the collaborators made no difference."

It further observed :

"We, therefore, find that stand of the petitioner .that any undue preference had been given to some of the companies cannot be upheld. We ~ven otherwise do not find that deviation or relaxation in .the stand~rds prescribed has resulted in any arbitrariness or discrimination. (See in this connection G.J. Fernandez v. State of Karnataka, (1990] 2 SCC 488. We do not think it is necessary for us to go into each and every deficiency as us to go into each and every deficiency as alleged by the petitioner we find that the action ofthe respondents had been bona fide. Motivation is providing of best possible service to the consumers.''

We are in agreement with this finding. D Yet another attack that is made against BPL Systems and Projects is tha,t it submitted its application for foreign collaborator on 22.4.92 to SIA beyond the cut-off date of 31.3.92. It should not loom large because there was a confusion as to who was competent authority to receive the applica- E tion. As a matter of fact BPL Systems and Projects did submit its applica- tion (or foreign collaboration on 31.3.92 to the Reserve Bank of India. When that application was returned on 20th April, 1992 it came to be sent to SIA on 22.4.92. We do not think BPL Systems and Projects could be faulted on this score. Equally, the argument that the memorandum and articles do not mean cellular business does not merit acceptance at our F hand. In fact, the High Court has correctly construed the main object, namely, to .design, develop, fabricate, manufacture, assemble, exporting from and importing into India by self or otherwise dealing and act as consultants and render services in connection with all kinds of telecom- munication equipments as including cellular telephones. G Now we go on to Huchison Max. It came to be rejected by the TEC, Relevant note dated 9.. 10.92 Inter alia reads as follows :

: "Huchison Max : Non-compliance of operative and Financial Conditions laid down in Chapter III at the time of opening of H Financial Bids. They have accepted these conditions, through a

TATACELLULAR v. U.0.¹.[MOHAN,J.] 209

letter, explaining their earlier non-compliance as typographical A error."

Section II, General Conditions, para 3 states as under :

"3 Compliance : B Point to point compliance report in respect of Technical, Com- mercial and views on Financial conditions must be submitted. Deviation, if any, must be separately highlighted. In case com- pliance report is not enclosed with the offer, the offer shall not be considered. u c The proforma of the compliance statement is in the following form :

''This company hereby agrees to fully comply with all Te.chni- cal, Commercial and General Conditions of Tender document No. 44-24/91-MMC including amendments/clarifications issued by the D Department of Telecom without any deviations and reservations.

This company also hereby agrees to fully comply with all paragraphs of Chapter II General Conditions, Chapter III : Operating Conditions, Chapter IV: Financial Conditions and Chapter V : Tariffs of document number 44-24/91 MMC(FINAN- E CIAL) without any deviations and reservations,

Signature of the authorised signatory of the bidder/operating company

for and on behalf of----------------------- F The compliance statement, as submitted by (Name of the company)" Huchison Max Telecom is as under :

'Compliance Statement G This company hereby agrees to fully comply with all Technical, Commercial and General conditions of Tender document No. 44-24/91-MMC including amendments/clarifications issued by the Department of Telecom without any deviations and reservations.

This company also hereby agrees to fully comply with an· H

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

A paragraphs of Chapter II: General Conditions and Chapter V: Tariffs of Document number 44-24/91-MMC(FINANCIAL) without any deviations and reservations.

Signature of the authorised signatory of the bidder/operating company. B For and on .behalf of HUTCHISON MAX TELECOM PRIVATE LIMITED

c (ASHWANI WINDLASS) DIRECTOR'".

In all the four separate tender documents similar compliance state- ments were filed. D Therefore, obviously, there is no reference to either Chapter III: Operating Conditions or Chapter IV: Financial Conditions. It has already been noted that for the second stage the last date for filing tender docu- ment was 17.8.92. On 11.9.92, Hutchison Max wrote a letter to the Minister for State for Communication about the inadvertant error due to a typo- E graphical/clerical mistake in not referring to Chapter Ill or Chapter IV. It is relevant to note that in the concluding paragraph of that letter it is stated:

"We reiterate and reconfirm OUF unequivocal compliance without any reservations and deviations with the said tender con- ditions: Accordingly, enclosed herewith is a corrected Compliance F Statement duly signed by the authorised signatory of the Company which may kindly be taken on regard."

The proper Compliance Statement came to be filed later. Since it had not filed a proper Compliance Statement it had come to be excluded G (which knowledge was gained by it) it made representations to the Chair- man, Telecom Commission and the Prime Minister. According to Mr. K.K. Venugopal it is an accidental omission amounting to a clerical error. In support of this he cites Mofett Hodgkins & Clarke Company v. City of Rochester, 178 US Supreme Court Reports 1108. The Headnote reads:

H "A mistake in the proposals by a bidder for a contract with a

TATA CELLULAR v. U.0.¹.[MOHAN,J.J 211

city, which is promptly declared by an agent of the bidder as soon A as it is discovered and before the city has done anything to alter its condition, will not bind the the bidder by reason of a provision in the city charter that in a bid shall not be withdrawn or canceled until the board shall have let the contract."

At page 1115 it reads: B

'The compliant is not endeavoring 'to withdraw or cancel a bid or bond.' the bill proceeds upon the theory that the bid upon which the defendants acted was not the complainant's bid; that the complainant was no more responsible for it than if it had been the result of agraphia or the mistake of a acopyist or printer. In other words, that the proposal read at the meeting of the board was one which the complainant never inten.ded to make, and that the minds of the parties never met upon a contract based thereon. If the defendants are correct in their contention there is absolutely no redress for a bidder for public work, no matter how aggravated or palpable his blunder. The moment his proposal is opened by the executive board he is held as in a grasp of steel. There is no remedy, no escape. If, through an error of his clerk, he has agreed to do work worth #1,000,000 for #10, he must be held to the strict letter of his contract, while equity stands by with folded hands and sees him driven into bankruptcy. The defendants ' position admits of no compromise, no exception, no middle ground. (82 Fed. Rep. 256)"

The alternate submission is the question of even clerical error does not arise here because one month before acceptance Hutchison Max had sent the compliance form. Where the matter is purely technical the court should not exercise the power of judicial review. We find great force in this submission. We are clearly of the opinion that the mistake is in relation to a non-essential matter that is in relation to peripheral or collateral matter. There has been every intention to comply with the terms of the bid. For an accidental omission it cannot be punished. We concur with the High G Court.

Regarding Sterling Cellular the note dated 9.10.92 inter alia states as under:

"This J.V. has the Indian partner M/s. Sterling Computers Ltd. H

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

A which is under investigation by CBI, in respect of their dealings with MTNL for publication of directions. Delhi H.C. has in recent judgment passed strictures on the deal. The Joint Venture has, ·therefore, been excluded from consideration. CBI report is, how- ever, yet to be received and formal blacklisting proposal in respect of the first has not been initiated so far. Exclusion has therefore B to be justified."

Note dated 10.10.92 reads as follows:

"MOS (C) further discussed the case with me today, when M(s) was present. c 'He indicated that after examining the reasons for elimination of the six short-listed parties from consideration for selection, he is of the opinion that Mis. Sterling Cellular need not be excluded outright, since CBI report has not yet been received. The company D ~ay be considered for selection and included in the select list on a provisional basis, if found eligible otherwise ..Similarly, Mis indian Telecom Ltd. (partner OIC Australia) need not be eliminated just because they have desired exclusive license. We may offer them the license on a non-exclusive basis, if they are found eligible. It is upto them to convey acceptance to the offer. E Exclusion of other four companies can stand for reasons indicated.

I have examined the case again. I recommend that if Mis. Sterling Cellular is to be selected on a ·provisional basis, the ·company may be allotted Madras for following reasons: F (a) Foreign exchange investment profile submitted by the com- pany indicates that there will be a heavy F.E. outflow over 3 years if the company were to be allotted Bombay or Delhi.

(b) Madras is the least popular of the stations along with Calcutta. Rentals quoted are high as pointed in our earlier note. G Mis. Usha Martin will help bring down the rentals in Calcutta. Allotment of Mis. Sterling to Madras will achieve the same pur- pose.

(c) Any delay in allotment of license to Mis Sterling on account H of the CB.I. investigations will have the least adverse effect in

TATA CELLULAR v. U.0.¹.[MOHAN,J.] 213

Madras for lack of competition to other licensee. A

M(S) may kindly examine the again in the light of the observa- tions of MOS(C) and ·rework out the select list. The case may be put up for approval of MOS(C).

Then it came to be selected on the approval of the Minister. B

The High Court in upholding the selection observed thus:

"The case of Sterling Cellular, however, appears to us to be rather strange. There were no strictures against the holding of this company by the name Sterling Computers Ltd. in M/s. M. & N C Publications Limited v. Mahanagar Telephones Nigam Limited and Others, (1992) 4 DLT 24 by this Court and the strictures were only against MTNL and United India Periodicals Pvt. Ltd. (UPI) and United Database (India Pvt. Ltd. (UDI). M/s. Sterling Computers Ltd. had got associated with UP!/UDI in getting a supplementary agreement for publication of telephone directories for the cities of Bombay & Delhi. This Supplementary agreement was struck down. The Supreme Court in appeal Sierling Computers Limited v. M/s. M & N Publications Limited and others, JT (1993) 1S.C.187 against that judgment also did not appear to have made any strictures. There was nothing on the record of the respondents to suggest that any CBI enquiry was pending against this company. There was no FIR and no preliminary report adverse to the company and we feel the ghost of CBI has been unnecessarily brought into play. The company appears to have been punished for no sin of its. However, since the company has not complained we will leave the matter at that.11 F

It is submitted hy Mr. Parasaran that as on the date of the judgment no inquiry was pending. It was only after 10th of June, 1993 an FIR was filed by CBI when the High Court of Madras was approached for quashing the FIR under Section 482 Cr. P.C. An order by consent was passed. CBI G was allowed to proceed with the investigation and complete the same within one year. It was also ordered that there would be no arrest or harassment. Therefore, as on the date of selection there was no adverse report against Sterling Computers.

On the date of consideration by the Technical Evaluation Committee H

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

A its position was even better. If, therefore, this aspect had been borne in mind it is not for us to reweigh the claims and come to one conclusion or another. So much for selections.

A letter dated 27.8.93 by Departmet of Communications, Telecom Commissi.on was addressed to the appellants as follows : B "Department of Telecommunications {Telecom Commission) New Delhi-110001

No. 842-2/92-TM Dated : 27th August, 1993 c To:

Sub.: Tender No.44-21/91-MMC(FIN) for franchise for cellular mobile telephone service for Bombay Delhi, E Calcutta and Madras.

Kindly refer this office letter of even No. dated 2.10.92 inform- ing your that M/s. Tata Cellular Ltd. were provisionally selected for franchise for providing cellular mobile telephone service at Delhi on a non-exclusive basis. F That matter has been reconsidered in the light of the judgment delivered by the High Court of Delhi in this case and a revised list of provisionally selected bidders in the cities of Bombay, Delhi, Calcutta and Madras has been prepared. The revised list does not include mobile telephone service in any of the four cities. the G earlier letter of even No. dated 12.10.92 may therefore be treated as cancelled.

sd/- {S.K.GARG) 27.08.93 H DDG {TM-'

TATACELLUL~ v. U.0.¹.(MOHAN,J.) 215

From this letter we are not able to fathom the reason for omission. A As seen above, Tata Cellular was originally selected for Delhi. By im- plementation of the judgment of the High Court it has been left out. Before doing so, as rightly urged by Mr. Soli, J. Sorabjee, this appellant ought to have been heard. Therefore, there is a clear violation of the principle of natural justice. On an overall view we find it has two distinctive quaJifica- B tions. In that :

1. It has not borrowed from any commercial bank.

2. It has an annual turnover from Indian Parameters of Rs. 12,000 crores and the annual turnover of the foreign parameters, Rs. 51,000 C crores. Comparatively speaking, the other companies do not possess such high credentials yet it has been awarded low marks with regard to the · reliance on Indian public financial institutions and the financial strength of the parameters/partner companies.

· .These qualifications could have been validly urged had it been heard. D Then, we do not know what decision could have been arrived at.

Indian Telecomp had been omitted for the following reasons as indicated in note dated 9.10.92 :

"India Telecom (Partner Telecom Malaysia): E Limited experience. Telecom Malaysia already selected as partner of Mis. Usha Martin ICC Calcutta."

We cannot find fault with this reasoning since there can be only one foreign collaborator. It cannot have Telecom Malaysia as its collaborator F since Usha Martin has the same foreign collaborator.

In the case of Ashok Leyland, the noting, as seen above, is as under:

"In both cases of _(i) M/s. Ashok Leyland and (ii) Mis. Varn <;J Organic Chemicals Ltd. - a joint venture company has not been · formed as stipulated in the tender, and there is no indication of the enquity structure or the extent of participation of the foreign collaborators."

We cannot interfere with the discretion of the Committee. H

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

A In thJ above two cases, we are obliged to interfere on the ground of arbitrariness. and violation of the principle of natural justice confining ourselves to the doctrine of judicial restraint, however, by the application of permissible parameters to set right rite decision-making process (Em- phasis supplied) B We make it clear that we are not disturbing the other selections since the power of judicial review is not an appeal from the decision. We cannot substitute. our decision since we do not have the necessary expertise to review.

C Lastly, quashing may involve heavy administrative burden and lead to delay, increased and unbudgeted expenditure; more so, in a vital field like telecommunication.

In view of the foregoing, we thus reach the conclusion that Bharti Cellular could not claim the experience to Talkland. This conclusion has D come to be arrived at on the basis of the parameters we have set out in relation to the scope of judicial review. We may reiterate that it is not our intention to substitute our opinion to that of the experts. Apart from the fact that the Court is hardly equipped to do so, it would not be desirable either .. Where the selection or rejection is arbitrary, certainly this Court E would interfere.

· In the result, we hold that Bharti Cellular's claim based on Talkland's experience is incorrect. Talkland's experience will have to be excluded. The matter will have to be reconsidered on a factual basis as on 20th January, · 1992, in the light of what we have observed. The claim of Tata Cellular will F have to be reconsidered in the light of the above observations. Accordingly, civil appeals arising out of SLP (C) Nos. 14191-94 of 1993 will stand allowed. Civil Appeals arising out ofSLP{C) No. 14266 of 1993, SLP{C) No. 17809 of 1993 and T.C. (C) No. 49 or 1993 will stand dismissed with no order as to costs.

B.K.M. Appeals disposed of.