IN THE HIGH COURT OF ANDHRA PRADESH :: AMAR TUESDAY,THE TWENTIETH DAY OF MAY TWO THOUSAND AND TWENTY FIVE PRESENT HONJBLE JUSTICE SRI DHIRAJ SINGH THAKUR, THE CHIEF JUSTICE AND THE HONOURABLE SRI JUSTICE RAVI CHEEMALAPATl WRIT APPEAL Mos: WRIT APPEAL 747 AND 876 OF 2022 NO: 747 OF 2022 Writ Appeal under clause 15 of the Letters Patent against the order dated 04.07.2022, in W.P. No.17014 of 2022 on the file of the High Court. Between: Vijaya and company contractors, A sole Proprietary concern office at 12-13- 104, Street No.3 Tarnaka, Secunderabad 500 017 Telangana State. Represented by I-tS Proprietor Mr. Y. Radha Krishna Gajendra Rao, S/o. Gajendra Rao Yelamanchali, Aged about 70 years, R/o. Room No.26, Chhatrapati shivaji Maharaj Sankul Super Market, Rajura MandaI Chandrapur, Maharashtra. .UWRIT APPELLANT/THIRD PARTY AND 1. V.S. ETgineering Private Limited,, (Reg. No.01-14287/1992 Rep., by its Managlng Director F. No. 101, Vamsiram's Jyothi Bhopal Opp Country Club, Begumpet Hyderabad. 2. A. Rajesvyara Rao, S/o. Prasada Rao Aged 60 years Managing Director V.S. Englneering Private Limited R/o F. No. B1, CSR JubiII'ant Residency I st Lane, Uma Nagar, Begumpet Hyderabad. ...RESPONDENTSAVRIT PETITIONERS in WP 3. The Union of India, South Central Railway Rep., by I-tS General Manager Rail Nilayam, Secunderabad. 4. DivisionaI Railways Manager, (DRM) Works South Central Railway Guntur Div1'SiOn. 5. The Principal Chief Engineer,'South Central Railway Rail Nilayam Secunde-rabad. ...RESPONDENTS/RESPONDENTS in W.P. IANO:4OF2022 Petition under Section 151. CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the Respondents 3 to 5 not to proceed with the tender Process Pending disposal of this Writ Appeal. Counsel for the Appellants : SRI Y. SRINIVASA MURTHY, SENIOR COUNSEL APPEARING VICE SRI `P. VENKAIAH NAIDU Counsel for the Respondent Nos.1 & 2 : SRI POSANI VENKATTESWARULU, SENIOR COUNSEL APPEARING FOR SRI P. VIVEK Counsel for the Respondent Mos.3 & 4 : SRI C.V.R. RUDRA PRASAD, CENTRAL GOVT. COUNSEL WRIT APPEAL NO: 876 OF 2022 Writ Appeal under clause 15 of the Letters Patent against the order in W.P.No.17014 of 2022 dated 04.07.2022 on the file of the High Court. Between.I 1. The Union of India, South Central Railway, Rep by General Manager, Rail Nilayam Secunderabad. 2. DivisionaI Railways Manager (DRM), Works South Central Railway Guntur Division. 3. The Principal Chief Engineer South Central Railway, Railway Nilayam, Secunderabad ...APPELLANT AND 1. V. S. Engineering Private Limited, Rep by its Managing Director, F.No.101, Vamsirams Jyothi BhopaI, Opp Country club, Begumpet, Hyderabad. 2. A Rajesvyara Rao, S/o. Prasada Rao, aged 60, Managing Director, V. S. Engineerlng Private Limited, R/o. F.No. BI, CSR Jubilant residency, lane, UIna Nagar, Begumpet, Hyderabad, ...RESPONDENTS IANO: 2OF2022 Petition under section 151 CPC praying that in the circumstances stated in the affidavit filed jn support of the petition, the High Court may be pleased to stay t he operation of the order dated.o4.07.2022 passed in W.P. No.17014 of2022. Counsel for the Appellants :.SRI C. V. R. RUDRA PRASAD (CENTRAL GOVT COUNSEL) Counsel for the Respondent Nos.1 & 2 : SRI POSANI VENKATTESWARULU, SENIOR COUNSEL APPEARING FOR SRI P. VIVEK The Court made the following: COMMON JUDGMENT • r\ APHCO10462842022 EFffiF lN THE HIGH COURT OF ANDHRA PRADESH [3483] AT AMARAVATI WRIT APPEAL NO: 747 of 2022 along with W.A,No.876 of 2022 W.A. No.747 of 2022 Vijaya & Company Contractors Vs. V, S. Engineering Private Limited and Others Advocate for Appellant: Advocate(s) for Respondent(s): ...Appellant ...Respondent(s) ********** Mr. Y. Srinivasa Murthy, Senior Counsel appearing vice Mr. P.. Venkaiah Naidu Mr. C.V.R Rudra Prasad (Central Govt. Counsel), Mr. Posani Venkateswarulu, Senior Counsel appearing for Mr. P Vivek CORAM :THE CHIEF JUSTICE DHIRAJ SINGH THAKUR SRI JUSTICE RAVI CHEEMALAPATI DATE :2C).05.2025 Per DHIRAJ SINGH THAKUR The present writ appeals have been preferred against the judgment and order, dated 04,07.2022, passed in W.P. No.17014 of 2022, whereby the petl-lion filed by the petitioner, v. s. Engineering Private Limited -respondent herein, was allowed, and the bid submitted by it, which was otherwise rejected, was directed to be considered and the petitioner was permitted to participate in the tender process. HCJaRC, J W.A. Mos: 747 E[ 876 of 2022 Briefly stated, the material facts are as under: 2. A notice inviting tender (NIT) came to be issued by the Department of Railways for supplying and slacking of 50 mm gauge hard and durable machine crushed sto'ne ballast at the depot in Guntur Division and also for loading the same into ED/Hoppers/Traffic ballast wagons by mechanical means. The'tender involved submission and evaluation of a technical bid as also the fjnancia[ bid. The petitioner Company submitted its tender through the e-tendering Process aS Was required through its Managing Director, who claimed that he had been duly authorized by the Board of Directors to sign all the documents Pertaining tO the tender. The technical bid of the petitioner company, however, was rejected on the ground that it I{failed to submit valid authorization/GPA backed by Board resolution as per GCC-2020'7. While the technical bid of the petitioner was rejected, vijaya and Company Contractors, a sole proprietor concern -appellant in W.A. No.747 of 2022 was the only other bidder whose bid was found to be responsive. Aggrieved by the rejection of the tender submitted by the petitioner company, W.P.No.17014 of 2022 was filed wherein the stand taken was that the rejection of the technical bid of the petitioner was unsustainable in law inasmuch as all the required documents, which were otherwise required {o be ' _ HCJ E[ RC, J W.A. Nos: 747 8: 876 of 2022 filed as per the terms and conditions Of the tender documents, had been filed and uploaded. 3. The stand of the petit'loner Company was that the Board of Directors of the petitioner Compahy had authorized the Managing Director of the Company namely Mr. A Rajeswara Rao to sign and submit the tender documents. It was also the stahd of the petitioner that the authorized signatory - the Managing Director had also undertaken the liability in the event any of the submissions made in the tender documents were found to be false. The stand of the petitioner further was that without verifying the said documents, which were present before the Tender Evaluation Committee, the technical bid was rejected and the action was thus vitiated by malice in law. 4. The learned single Judge, by virtue of the judgment and Order impugned, on a perusal of the bid document filed before the said Court, came to a conclusion that resolution of the Board of Directors of the petitioner company, dated ll.04.2022, had been uploaded along with the bid, which fact was otherwise disputed by the learned Assistant Solicitor General appearing for the Railways. The learned single Judge held that the documents produced before it, were the documents downloaded from the portal of the official respondents, which bid reflects that the resolution, dated ll.04.2022, was uploaded with the bid. ERE HCJ&RC,J W.A. Nos: 747 a 876 of 2022 The learned single Judge further held that the second petitioner in the writ petition i.e., Mr. A Rajeswara Rao, being the Managing Director of the petitioner Company, was even otherwise entitled to represent the Company before any authority by operation of law and, therefore, held that the question of filing or non-flling Of the Said authorization Was not relevant. What was held by the learned single Judge in para Nos.5 to 7 is reproduced hereunder: "5. A perusal of the bid document filed before this Court shows that the resolution dated ll.04.2022 has been uploaded along with the bid. This is disputed by the learned Assistant Solicit,or General. The documents produced before this court are the documents down loaded from the portal of the respondents and these documents show that the resolution dated ll.04.2022 was uploaded with lthe bid. 6. Further, the fact remains that the 2nd petitioner is the Managing Director of the lst petitioner company and as such, is entitled to represent the company before any authority, by operation of law. In the circumstances, the question of filing or non-filing of the saI-d authOriSatiOn may not be relevant. However, s1-nCe the Petitioners have filed the authorisation, it would be appropriate to permit the lst petitioner to participate in the tender process. 7. Accordingly, this writ petition is disposed of directing the responden,ts 2 and 3 to permit the petitioners to participate in the tender process in tender No.382-DRM-W- GNTTid-2492 without reference t,o the alleged non filing of the authorisation and Board Resolution dated ll.04.2022." 5. The aforementioned judgment has been 'challenged by way of W.A. No.876 of 2022 preferred by the Union of India for the South Central Railways whereas W.A. No.747 of 2022 has been preferred by the only other bidder whose bid is said to be responsive in accordance with the conditions of the tender documents. I.. ` HCJ &RC, J W.A. Mos: 747 a 876 of 2022 6. Before we proceed further, it would be apt to refer to some of the relevant conditions of the tender document in the context of which the present controversy has arisen. The controversy in fact revolves around the non- fulfi]lment of clause 12 of the tender document and in particular, clause 12(e)(iii), which required a Company registered under the companies Act, 2013, to furnish, among others, certain specified documehts, which is comparable to clause 14(ii)(e)(iii) of the GCC, 2020. "12. Documents to be submitted along with the tender: (a).. (b).. (e). Company registered under Companies Act 2013: (i) (ii) (iii) A copy of Authorization/Power of Attorney issued by the Company(backed by the resolution of Board of Directors) in favour of the individual to sign the tender on behalf of the company and create liability against the company. (iv) (v) " 7. The case setup by the union of India {o justify the rejection of the technical bid of the petitioner -respondent No.1 herein is that although the Petitioner Company had filed a resolution of the Board of Directors along with the bid document, yet, it did not fully satisfy the requirement of 12(e)(iii) inasmuch as the Board resolution had only authorized the Managing Director to sign the tender document on behalf of the company but did not authorize (,'3fS o~ tlCJ &RC, J W.A. Nos: 747 a: 876 of 2022 him to create a ]iabi]ity against the Company. In this context, it would be worthwhile to reproduce the resolution of the Board of petitioner Company which is stated to have been uploaded by the petitioner Company along with the tender documents. ""RESOLVED that Sri A.Rajeswara Rao, Managing Director of the company is hereby authorized to Digital'y sign all documents, submit the Tender documents in connection with Tender No. 382- DRM-W-GNT-Tid-2492 related to "Supplying and stackjng 50 mm gauge hard and durable machine crushed stone ballast at Nallapadu ballast depot in Guntur Division and loading the same into ED/Hoppers/Traffic ballast wagons by mechanical means (1,75,000 Gum) (TWO PACKET SYSTEM" with the SOUTH CENTRAL RAILWAY, GUNTUR DIVISION-ENGG., GUNTURI ANDHRA PRADESH." 8. A bare perusal of the aforementioned Board resolution clearly reflects that it authorized Mr. A Rajeswara Rao,the Managing Director of the Company, to digitally sign the documents and submit the tender documents in connection with the tender in question but did not authorize him to create liability against the Company, which was otherwise required by the bid document and, in particular, condition No.12(e)(iii). ln addl'tion to the extract of the minutes of the meeting held on ll.04.2022 as reproduced hereinabove, the Managing Director of the Company also submitted a document by way of Annexure-G, wherein, apart from declaring that the submitted documents along with the tender were correct and that no false representation or statements had been made therein,in para Nos.7 and 8 of the said Annexure-G, the following statements ERE HCJ &RC, J W.A. Nos: 747 ft 876 of 2022 were incorporated, which, according to the petitioner, otherwise fulfilled the requirement of condition 12(e)(iii) in regard to creating a ]jability on the Company in the event the certificates submitted by the tenderer were found to be false or forged at any time after the award of the Contract. "7. lM/e undersigned that if the certificates regarding eligibility criteria submitted by us are found to be forged/false or incorrect at any time du.ring process for evaluation of tenders, it shall lead to forfeiture of the tender EMD besides banning of business for a period of upto five year. Further, lM/e (insert the name of the tenderer) M/s V S Engineering Pvt. Ltd and all my/our constituents understand that my/our offer shall be summarily rejected. 8. lM/e also understand that if the certificates submitted by us are found to be false/forged or incorrect at any time after the award of the contract, it will lead to termination of the contract along with forfeiture of EMD/SD and performance guarantee besides any other action provided in the contract including banning of business for a period of upto five year." 9. Learned counsel for the appellan{s would submit that the judgment and order impugned passed by the learned single Judge is unsustainable inasmuch as the learned single Judge committed an error in not appreciating that the essential condition as contained in clause 12(e)(iii), which required the authorization in favour of the Managing Director to be accompanied by a Board resolution not only for purposes of signing the tender documents On behalf of the company, but more importantly, the condition wh'lch required the Board to authorize the Managing Director to create a liability against the Company,was conspicuously absent in the authorization of the Board. EiE HCJ 8:RC, I W.A. Nos: 747 Et 876 of 2022 10. On a perusal of the documents which have been placed on record before us, it does become clear that while the Managing Director did file a declaration in Annexure-G stating therein that in case any of the certificates regarding eligibility were found to be forged or incorrect during the process of evaluation of tenders, it -would lead to the forfeiture of the Earnest Money Deposit besides banning of the business of the Company for a period up to five years, yet the said statement made in Annexure-G by the Managing Director was bereft of the backing of the Board's decision, which would have otherwise enabled the Managing Director to undertake creation of such a liability by him against the Company. The learned single Judge appears to have allowed the writ petition also on the ground that, being the Managing Director, petitioner No.2 was even otherwise entitled to represent a Company in authority by operation of law and that the question of following or non-filing of the authorization was not relevant, is, in our opinion, a finding which is unsustainable. ll. The Managing Directorofa Company only acts on behalfofa company to the extent the Managing Director is permitted and authorized by virtue of the decisions of the Board of Directors of a Company. Articles 35 and 36 of the Articles of Association of the petitioner Company, whichdeals with the powers Of the Managing Director of the said Company, reads as under: "MANAGING DIRECTORS .''R HCJ ft RC, J W.A. Nos: 747 a 876 of 2022 35. The Board may from tl'me to time appoint one or more of their body to the office of Managing Director for such remuneration (whether by way of salary or commission or both) as they may think fit. POWERS OF MANAGING DIRECTOR 36. The Directors may from time to time entrust to and confer upon the Managing Director such of the powers exercisable under these presents by the Directors as they may think fit and may confer such powers for such time and to be exercised for such objects and upon such terms and with such restrictions and they think expedient and they may from time to time withdraw, revoke, alter or vary all or any such powers." 12. As per the definition contained in Section 2(54) of the Companies Act, 2013, Managing Director means a director who, by virtue of the articles of a company or an agreement with the company or a resolution. passed in its general meeting, or by I-ts Board of Directors, is entrusted with sljbstantial powers of management of the affairs of the company and includes a director occupying the position of managing director, by whatever name called. 13. Be that as it may, the powers exercisable by the Managing Director are notal[ pervasive but are restricted to the extent as is otherwise permissible in terms of the provisions of the Companies Act, 2013, read with Articles of Association of the instant Company. Therefore, to say that the Managing Director of the petitioner Company would have even otherwise been deemed to be authorized to create a liability on the Company is a proposition, which is legally unacceptable. The mere fact that the Board, in its resolution, dated ll.04.2022, authorized the Managing Director with the limited authority to submit the tender documents and authorized Mr. V. Srinivas 10 tq tlCJ ft RC, J W.A. Mos: 747 a 876 of 2022 Chowdary,another Director of the Company, to correspond and negotiate and enter into agreement etc., with the Railways, goes to show that all pervasive authority was never envisaged to be conferred on the Managing Director by the Board of the petitioner Company, 14. The scope of judicial review in tender matters is no longer res ,'r7fegra. It is settled that the award of contract by the State or an instrumentality of the State falls within the ambit of a commercial transaction and that the State, its corporations, instrumenta]ities and agencies are bound to adhere to the norms, standards and procedures from which it cannot depart arbitrarily. lt js also settled that the decision taken by such an authority in acceptI®ng Or rejecting a tender may not be amenable to judicial review, the Court can examine the decision-making process and interfere if it Its found Vitiated by malafides, unreasonableness and arbitrariness, as was held in Air India Ltd v.Cochin International Airport Ltd1. 15. In Afcons Infrastructure Limited v. Nagpur Metro Rail Corporation Limited & another2, the issue that arose for considerationbefore the Apex Court was whether the bidder had fulfilled the tender condition which required the execution of a minimum number of similar contracts which were required to be satisfactorily completed as a prime contractor/joint venture member (2000) 2 SCC 617 2 (2016) 16 SCC 818 ll + -ct=` HCJ E[RC, J W.A. Nos: 747 a 876 of 2022 during the last ten years, and the condition, among others, that it should have received a minimum of INR 3200 million from one contract in a civil construction work and also should have completed a viaduct length not less than five kms in the same contract. The bidder claimed that it had received lNR 3200 million from I,he project of an intercity highspeed railway project in China where from i{ had received lNR 3200million from the said project and it also constructed a viaduct under that contract. Before the High Court, the question was whether the intercity highspeed railway project executed by the bidder had met the requirement of a metro civil construction work as was otherwise envisaged by the bid document. According to the Nagpur Metro Rail Corporation Limited (NMRCL), the intercity highspeed railway project did not meet the requirement of a metro civil construction work. The High Court disagreed with NMRCL. lt is in that context that the Apex Courtproceeded to hold that disagreement with the decision-making process was no reason for the constitutional Court to interfere and that the threshold of mala fI-deS, arbitrariness, irrationality and perversity has to be met before any interference is made in the decision- making process or the decision. The Court observed and held: "15. We may add that the owner or the employer of a project, having authored the tender documents, is the best Person tO understand and appreciate its requirements and 12 HCJ &RC,J W.A. Mos: 747 ft 876 of 2022 interpret its documents. The constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there js ma]a fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional Courts but that by itself is not a reason for interfering with the interpretation given. 16. ln the present appeals, although there does not appear to be any ambiguity or doubt about the interpretation given by NMRCL to the tender conditions, we are of the vie'w that even if there was such an ambiguity or doubt, the High Court ought to have refrained from giving its own interpretation unless it had come to a clear conclusion that the interpretation given by NMRCL was perverse or mala tide or intended to favour one of the bidders. This was certainly not the case either before the High Court or before this Court." 16. Reiterating the principles of law laid down bytheApex Court in Ramana Dayaram Shetty v. International Airport Authority of lndia3, the Apex court in JSW Infrastructure Limited v. Kakinada Seaports Limited4held that in contractual matters, writ Courts should not interfere unless the decision taken is {otal[y arbitrary, perverse or mala tide. 17. In Jagdish Mandal v. State ofOrissa5, theApex Courtheld thatpower of judicial review of administrative action in matters relating to tenders or award of contracts is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. lt was held that if a decision relating to award of contract was bona fide and in public interest, the Court, in exercise 3 (1979) 3 SCC 489 4 (2017) 4 SCC 170 (2007) 14 SCC 517 G-----_--_ •-: '\ HCJ&RC,J W.A. Nos: 747 a 876 of 2022 of power of judicial review, would not interfere even if there was a procedural aberration or error in assessment or prejudice to a tenderer is made out. The tests which were prescribed were the following: [t22. ...(i) Whether the process adopted or decision made by the authority was mala fide or intended to favour someone; OR whether the decision made was so arbitrary and irrational that the court can say: "the decisl-on is such that no responsible authority acting reasonably and in accordance with relevant law could have reached": (ii) whether public interest was affected." 18. Testing the facts of the present case on the touchstone of the law discussed hereinabove, i{.can be seen that the petitioners had not questioned any of the conditions of the tender document including the one pertaining to the requirement of a resolution of the Board of Directors authorizing an individual to create a liability against the Company. - The only question for consideration is whether the petitioners had met with the tender conditions so prescribed and in that context whether the decision of the appellant in W.A. No.876 of 2022 could be said to be arbitrary, perverse or vitiated by mala fides.No mala tides against any person have been alleged in the writ petition and what was alleged was only malice in law. 14 HCJaRC, J W.A. Nos: 747 -E[ 876 of 2022 ln the present case while the petitioner Company did authorize petitioner No.2 - the Managing Director to sign its tender dcouments, it certainly did not authorize him to create any liability against the company. When we look at rejection in the context of the requirement set out in the tender document, it cannot, by any stretch of+ imagination, be said to be suffering from any illegality or arbitrariness, much less can jt be said to be suffering from perversity or said to be bad when {ested on the wednesbury principle. 20. We are not convinced with the arguments advanced by Mr.Posani Venkateswarulu, Senior Counsel, appearing on behalf of petitioner company that the tender condition 12(e)(jii) ever required the Company to authorize an individual {o create any liability against the company and that the conditions of the tender document had been met when the company authorized the Managing Director to submit the tender document, which was the only authorization required to be granted in favour of the ManagI-ng Director. ln our opinion, the said argument runs contrary to the express condition of the tender document, which is condition 12(e)(iii) of the tender document. 21. Be that as it may, we allowthe writ appeals and set aside thejudgment and order impugned, dated 04.07.2022, and uphold the decision taken by the P`ailways to reject the technical bid of the petitioner company. No costs. I 4fai / 15 HCJ ft RC, J W.A. Nos: 747 6: 876 of 2022 Registry is directed to return the records produced, to the learned counsel for the appellant in W.A. No.876 of 2022. Pending miscellaneous applications, if any, shall stand closed. Sd/-M.S.V. NAVEEN CHANDRA DEPUT SECT EGISTRAR //TRUE COPY// Tol ON OFFICER 1. The Registrar General, High Court of A.P., Amaravati. 2. The Registrar(Judicial), High Court of A.P. at Amaravati. 3. M/s. Managing Director, V.S. Engineering Private LimI'ted, (Reg. No.01- 14287/1992 F. No.101, Vamsiram's Jyothi BhopaI Opp Country Club, Begumpet Hyderabad. 4. The General Manager, Union of India, South Central Railway, Rail Nilayam, Secunderabad. 5. The Divisional Railways Manager, (DRM) Works South Central Railway,S Guntur Division. 6. The Principal Chief Engineer, South Central Railway Rail Nilayam Secunderabad. 7. One CC to Sri P. Venkaiah NaI'du, Advocate [OPUC] 8. One CC to Sri Sri P. Vivek, Advocate [OPUC] 9. One CC to Sri C.V.R. Rudra Prasad, Central Govt. Counsel (OPUC) 10. Three C.D. Copies. Cnr 7 I. I _. -+rfu' I,{ *\. ,.+ \... -``±,'\ .® CNR HIGH COURT DATED:20/05/2025 COMMON JUDGMENT WA.Mos.747 & 876 of 2022 ALLOWING THE WRIT APPEALS WITHOUT COSTS