f)
g)","DELIVERY TERMS
PENALTIES/FINES","You have agreed to provide 25% buses within
 3 months and balance 75% by 6  th
month after requirement is given by the
Undertaking after release of Contract Work
order.
You have accepted Clause no.1.33 of
AnnexureÂC.",,
h),SECURITY DEPOSIT,"You are requested to furnish Rs.20,00,000.00 in
Cash or Demand Draft or Bank Guarantee in
the prescribed format as shown in the
AnnexureÂ1 in favour of the BEST
Undertaking. Bank Guarantee should be valid
for a period of 96 months from the date of
release of Contract Work Order. In case of
Bank Guarantee, you will have to pay
Rs.2,000/Â towards the Administration Charges",,
i),"CONTRACT VALIDITY
PERIOD","96 months from the technical bid opening date.
(i.e. 06Â02Â2026)",,
j),"OTHER IMPORTANT
TERMS & CONDITIONS",As shown in the attached AnnexureÂC,,
Operating range
in Single charge",Charging time,Rates (In Rs/Kms),,
170 to 200 kms.,3 hours,"Please refer Schedule of Prices
(i.e.
Annexure-M)",,
80 kms,2 hours,,,
50 kms,"With battery swapping within 5
minutes or fast charging within 20
minutes",,,
Specification,"No. of
Buses","Benchmark price
(in Lakhs)","Eligible Incentive (in Lakhs)
(60% of Benchmark price or
Rs.1 Crore (whichever is
lower)]","Total
incentive (in
Lakhs)
9m AC,
80km Range",40,74.9,44.9,1798
9m AC,
170km Range",20,122.97,73.8,1476
9m NonÂAC,
170km Range",20,122.97,73.8,1476
The Assistant General Manager of the BEST by his letter dated 8 May 2018 informed the petitioner that there is a reduction in subsidy amount as mentioned in the letter of the DHI and,,,,
that the BEST will have to follow the latest norms of DHI regarding subsidy disbursement. It was informed that the amount of disbursement as mentioned in the RFT document and the,,,,
total amount will be reduced in the exact proportion of the earlier subsidy and the revised subsidy. It was further informed that the decision regarding ownership of the vehicle will be,,,,
informed to the petitioner in due course. The petitioner was called upon to submit the confirmation by 12 May 2018. The petitioner thereafter had discussions with the officers of the,,,,
BEST on 10 May 2018. By their further letter dated 11 May 2018 the petitioner requested for another extension of time to convey its confirmation as sought in the letter of the BEST,,,,
dated 8 May 2018, on the issue of reduced subsidy amount and joint ownership of buses.",,,,
21. The General Manager of the BEST responded to the said letter dated 26 April 2018 of the DHI by his letter dated 28 May 2018 addressed to the Joint Secretary DHI interalia,,,,
recording the entire background of the participation of the BEST in the incentive scheme and informed the DHI of completion of the bidding process and after obtaining approval of the,,,,
competent authority (BEST Committee), the contract being awarded to the petitioner for 40 electric buses and to another contractor M/s.MP Enterprise for 40 electric buses. The BEST",,,,
recorded that in the second tender the BEST had received aggressive quotes from M/s.MP Enterprises which indicated that though they had quoted a high bus cost, however, they have",,,,
considered the overall project cost, subsidy receivable and ensured that the benefit would be passed to BEST by quoting a very low “rate per kilometer†making the project viable for",,,,
the BEST to operate, but also serve a boost for the initiative for Government of India for promoting cleaner buses. Some paragraphs of this letter are required to be noted which reads",,,,
thus:Â,,,,
“ After completing the bidding process and on obtaining approval of the Competent Authority ie. BES&T Committee, the Contracts were awarded to the Goldstone Infra and",,,,
M.P.Enterprise for 40 Electric Buses each.,,,,
           …………………….,,,,
We therefore, wish to reÂinterate that both the issues raised by you i.e. benchmark incentive and shared ownership are in contravention to our preÂdeclared tender conditions, which we",,,,
may not be able to modify at this stage. It compels us to conduct PostÂtender negotiations with the vendors which we are not comfortable.,,,,
You are therefore requested to approve “AS IS†the declared incentives as agreed earlier and not the benchÂmark incentives. We also request you to allow ownership to be with the,,,,
Operator against a Bank Guarantee.†(emphasis supplied),,,,
22. The petitioner by its letter dated 31 May 2018, confirmed the acceptance on jointly owning the electric buses and in the proportion to the incentive release and balance price of the bus,",,,,
subject to the conditions interalia incorporated in the said letter.,,,,
23. By a communication dated 7 June 2018 of the DHI to the General Manager of the BEST as also to the Municipal Commissioner of the Mumbai Municipal Corporation, it was",,,,
informed that the Hon’ble Minister for Heavy Industries and Public Enterprises desired to review the progress of the proposal received from the BEST for demand incentives for,,,,
procuring 80 electric buses and in that connection a meeting was scheduled at 3 p.m. on 12 June 2018. The concerned officers of the BEST and the Municipal Corporation were,,,,
requested to attend the said meeting.Â,,,,
24. On the backdrop of the meeting held on 12 June 2018 with the Hon’ble Minister for Heavy Industries, the General Manager BEST, by his letter dated 18 June 2018 informed the",,,,
Joint Secretary  DHI, of the steps which would be taken regarding inviting bids for OPEX model that the selection criteria would be the quoted rate per kilometer for both types of",,,,
buses namely ‘the 9 meters AC bus with 80 kilometer single charge’ and the ‘9 meters AC and NON AC bus with 170 kilometers single charge’.,,,,
25. The above letter of the BEST dated 18 June 2018 was responded by the Under Secretary of DHI by his letter dated 21 June 2018 recording that the matter was examined by the,,,,
department and it was decided to advise BEST to call tender in such a way so that rate of bus and per kilometer running charge both are discovered. There is nothing in the above two,,,,
letters which would touch the contract already awarded.,,,,
26. The petitioner by its letter dated 18 June 2018 informed the General ManagerÂBEST that as per the work order, the petitioner had started manufacturing the buses and from time to",,,,
time and that the petitioner were verbally updating the same with the concerned officer and its status, during various discussions, so as to adhere to the delivery schedule and time frame.",,,,
The petitioner informed that the petitioner has manufactured 20 AC buses and 4 nonÂAC buses totaling to 24 buses out of 40 buses which were ready for dispatch. The petitioner,,,,
requested BEST to advise the petitioner of the details of the Depot where the buses should be delivered for starting of the operations. It was informed that once the details of depots were,,,,
available the petitioner would be ready with the equipments for charging the buses. The petitioner also requested to routes and schedule for operation thereafter.,,,,
27. The petitioner by its further letter dated 20 June 2018 also informed the Joint Secretary, DHI of the assurance of the delivery of the Ebuses to the various State Transport",,,,
Undertakings where the petitioner was awarded the contract.,,,,
28. The petitioner thereafter by the letter dated 22 June 2018 informed the General Manager of the BEST that the additional conditions imposed by the BEST by the letter dated 2 May,,,,
2018 are already accepted by the petitioner qua the FAME incentives and joint ownership and the petitioner was once again confirming the same. The petitioner also recorded that the,,,,
petitioner had completed the survey of allocated depots jointly along with the officers of the BEST and requested to advise the concerned depot manager to formally hand over the space,,,,
allocated in the depots so that the battery charging infrastructure installation process can be started and completed. The BEST was also requested to inform the allocation of AC and,,,,
NONÂAC buses to the respective depots so that the buses can accordingly be delivered. Petitioner also requested to inform of the amounts of incentive, that would be released.",,,,
29. By a further letter dated 13 July 2018 the Director (Auto) of the DHI informed the General Manger of the BEST, that the joint ownership in proportion of Govt. of India funds in the",,,,
cost of the bus is necessary, for release of grant as per the expression of interest in case of OPEX model.",,,,
30. The Under Secretary, DHI by his letter dated 10/13 August 2018 informed the General ManagerÂBEST, of the method that can be adopted for calculation of NVP and demand",,,,
incentive in the OPEX Model by the BEST. In paragraph 2 and 3 the letter recorded thus:Â,,,,
“2. In addition, a price quote for the price of the bus will be obtained. The incentive (60% of cost of bus or Rs.1 Crore, whichever is lower, in case localization of minimum 35% is",,,,
achieved) will be determined on the value of the bus arrived at as per Para 1 above or the price quote for the bus, whichever is lower.",,,,
3. I am further directed to inform the BEST Mumbai must satisfy the condition of Joint Ownership for being eligible to line demand incentive through the said Eol. 4. This issues with,,,,
approval of the competent authorityâ€,,,,
31. The General Manager ÂBEST by his letter dated 14 August 2018 replied to the said letter dated 13 August 2018 of the DHI. This letter is crucial showing the real intention of the,,,,
BESTÂ in regard to the award of the contract to the petitioner. We thus note the contents of this letter which reads thus:Â,,,,
   “Surendrakumar Bagde Phd.I.A.S.                                     BRIHANÂMUMBAI ELECTRIC SUPPLY,,,,
     General Manager                                                                   & TRANSPORT UNDERTAKING,,,,
    Â,,,,
                                                                           Â,,,,
  BEST Bhavan, BEST Marg, Colaba,",,,,
                                                                                                   Â,,,,
Mumbai : 400 001,,,,
                                                                      Â,,,,
                             Tel.   : 022Â22873961, 022Â",,,,
22873962Â,,,,
                                                                                                   Â,,,,
Fax    : 022Â2285 1244.,,,,
                                            EÂmail : gm@bestundertaking.comÂ,,,,
            Â,,,,
  Ref.No.DO/GM/AGM(TE)/34281/2018                                         Â,,,,
                                                                    Â,,,,
                                                                       tÂh AÂu Âg uÂs t14,,,,
2018,,,,
Sub: EOI issued by BEST, Mumbai for public and shared electric mobility.",,,,
            Ref: 1.      DO/GM/CMTr./26590/2018 dated 18.6.2018,,,,
2. F.No. 1(07)/2017ÂNAB.II(Auto) dated 21.6.2018.,,,,
3. F.No. 1(07)/2017ÂNAB.II(Auto) dated 13.7.2018.,,,,
4. DO/GM/AGM(TE)./30920/2018 dated 20.7.2018,,,,
5. F.No. 1(07)/2017ÂNAB.II(Auto) dated 13.8.2018.,,,,
      ÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂÂ,,,,
          Dear Sir,",,,,
                      This is in continuation to our earlier communications through above letters in respect of procurement of electric buses for,,,,
Mumbai City, under public and shared electric mobility. We have sought your consent for tender evaluation based on NPV (Not Present Value) and vide letter dtd.13.8.2018",,,,
referred at 5, DHI consented the same.",,,,
                    As regards, joint ownership of buses, Chapter IV â€"Registration of Motor Vehicles, Clause No. 41 of Motor Vehicle Act 1988",,,,
states that “where a motor vehicle is jointly owned by more persons than one, the application shall be made by one of them on behalf of all other owners and such",,,,
applicant shall be deemed to be the owner of the motor vehicle for the purpose of this actâ€,,,,
                  Besides this, initially operator will have to bear the entire cost of the buses and incentive will be transferred as and when received from",,,,
DHI. Due to this, the buses will be invoiced and registered in the name of operator and in the Vehicle Registration Book (i.e. R.C. book), only operator’s name will",,,,
appear. The joint ownership of the buses by BEST will be by virtue of agreement only.,,,,
As regards transfer of incentive, the issue was discussed with the Joint Secretary, Dept. of Heavy Industries on 13.8.2018 and it was informed that 20% of the",,,,
subsidy will be transferred after placing the purchase order and remaining 40% will be transferred within 6 months of placing the purchase order.,,,,
Considering these points, your consent is requested for joint ownership of the buses by BEST by virtue of agreement and for the schedule of transfer of incentives.",,,,
With regards,",,,,
Yours Sincerely,,,,
Sd/Â,,,,
 Â,,,,
                                                         Â,,,,
  ( Surendrakumar Bagde ),,,,
Shri Vishvajit Sahay,,,,
Joint Secretary,,,,
Department of Heavy Industries,,,,
Govt. of India,,,,
Udyog Bhavan,",,,,
New Delhi 110011â€,,,,
Â,,,,
32. The Under Secretary of the DHI responded to the above letter of the General Manager, BEST, by his letter dated 27 August 2018 and conveyed",,,,
that the BEST may follow the methodology adopted by Hyderabad and Bangalore regarding joint ownership of the eÂbuses purchased under the EOI issued by the DHI. It was further,,,,
informed that 20% of the incentive will be released at the time of signing the agreement and the balance would be released in a staggered manner or in one go, once the buses are",,,,
supplied and brought on road.,,,,
33. According to the petitioner this letter dated 27 August 2018 of the DHIÂ indicates that the DHI expected forwarding by the BEST a signed,,,,
agreement for release of the first installment of the incentive to the petitioner, as the petitioner had already accepted the modified terms, as categorically informed in its letter dated 22",,,,
June 2018 to the BEST.,,,,
34. The Dy. Chief Materials Manager, BEST however instead of finalizing the issues and releasing payments, issued the impugned communication dated 30 August 2018 intimating",,,,
withdrawal of the contract order with immediate effect. As serious contentions are raised on the nature of this letter it would be relevant to note the contents of the impugned letter which,,,,
reads thus:Â,,,,
“ Date: 30.08.2018,,,,
To,",,,,
M/s.GoldStone Infratech Limited,,,,
Center Point Bldg, 4th floor,",,,,
Plot No.359Â363/401, U S Consulate Lane, Begumpet, Secunderabad,",,,,
Hyderabad, TelanganaÂ500016.",,,,
Sub: Notice of Withdrawal of Contract Work Order,,,,
 No.H/18421/288 dtd.28.02.2018.   Â,,,,
Sir,",,,,
A Contract Work Order No.H/18421/288 dtd.28.02.2018 was awarded to you with regard to tender No.DMM(TÂII)/08/TUC/43537/2017Â18/Advt., dated",,,,
14.02.2018 for hiring of 20 Nos. Midi AC Electric buses & 20 Nos. Midi Non AC Electric buses of the brand BYD K7D for a contractual period of 7 years from,,,,
the date of commencement of the Contract, defining the obligations you were required to perform subject to the terms and conditions mentioned therein.",,,,
The relevant clauses of the Contract Work Order read as under:,,,,
1.43. The contractor whose tender has been accepted shall, within the one month from the date of acceptance letter, enter into a contract agreement. The",,,,
contractor shall also get the contract agreement duly adjudicated upon from the Stamp Office at Mumbai.,,,,
In the event of a tender of a partnership firm/company being accepted, the contract agreement shall be signed by all the Partner/Directors of the",,,,
firm/company or by competent person on behalf of the firm/company, subject to production of the necessary resolution or any other documents in support",,,,
thereof.,,,,
…………………………….,,,,
“Note: This acceptance letter is subject to approval of Incentive from Department of,,,,
Heavy Industries (DHI)â€,,,,
However, the contract agreement has not been executed between us on account of various changes in the guidelines stipulated by Government of India",,,,
(GOI). Further, the said contract work order is subject to approval of incentive from Department of Heavy Industries (DHI) as evident in the note in the",,,,
Contract Work Order.,,,,
The GOI/Department of Heavy Industries, vide its circular/notification No.1(07)/2017ÂNAB.II dated 26/04/2018 interalia has stipulated that, the Centre",,,,
has agreed to provide a subsidy of Rs.14.76 Cr. For 20 Nos. of 9 m. Air,,,,
Conditioned buses and Rs.14,76 Cr. For 20 Nos. 9 m. NonÂAC buses, subject to the",,,,
same being jointly owned by B.E.S.T and the bus owner.,,,,
Thus the basic nature of the tender has now changed in the light of the aforesaid notification wherein B.E.S.T. is required to have a joint ownership with,,,,
the Successful Bidder and not act only as a mere lessee, in terms of the said Tender.",,,,
You may further note that the Contract Work Order, being in the nature of a Letter of Intent, merely is an expression of an intention to enter into a",,,,
contract.,,,,
Thus in light of the same, and the notification of Department of Heavy Industries, we hereby withdraw the aforesaid Contract Work Order, with",,,,
immediate effect.,,,,
For B.E.S.T,,,,
(R.A.Prabhu),,,,
Dy.Chief Materials Manager.â€,,,,
35. The petitioner immediately by its letter dated 31 August 2018 addressed to the Deputy Chief Materials Manager, BEST interalia informed that the petitioner was awarded the said",,,,
contract by an acceptance letter dated 26 February 2018 and a contract work order dated 28 February 2018, as also the bank guarantees were submitted and it was a binding contract",,,,
between the parties. It was also recorded that the acceptance of the bench mark prices as required by the BEST by its letter dated 2 May 2018 was confirmed by the petitioner on joint,,,,
ownership of buses. The petitioner also recorded that the petitioner having agreed to additional conditions of joint ownership, the BEST should withdraw the letter dated 30 August 2018.",,,,
Another representation was made on 31 August 2018 to the General Manager of BEST. However, as there was no response, the petitioner has filed the present petition.",,,,
     Reply Affidavits of the BEST,,,,
36. The BEST has filed a reply affidavit justifying its decision to withdraw the contract, interalia, contending that the contract work order is withdrawn on account of non compliance by",,,,
the petitioner of the requirement as contained in the letter dated 26 April 2018 of the DHI addressed to the BEST. There are various pleas taken in the reply affidavit. It is contended,,,,
that it is a contractual dispute which ought not to be interfered in the writ jurisdiction. Secondly it is contended that the work order dated 28 February 2018 was conditional in nature,",,,,
subject to approval of the DHI and the petitioner having not complied with the requirement of the DHI as contained in the letter dated 26 April 2018, the petitioner cannot complain of the",,,,
withdrawal / termination of the contract. It is contended that the petitioner was never under a mandate to manufacture the 24 buses, but the mandate was only, that the petitioner supply",,,,
25% of the buses within a period of three months. It is next contended that there is no challenge to the communication of the DHI dated 26 April 2018. In paragraph 7 of the reply,,,,
affidavit the BEST contends that it is the direction of the DHI to issue a fresh tender as contended in DHI’s letter dated 21 June 2018. The averments as made in paragraph 7 are,,,,
required to be noted which read thus:Â,,,,
“DIRECTION OF DEPARTMENT OF HEAVY INDUSTRIES: ISSUE FRESH TENDER,,,,
I say that the Department of Heavy Industries vide its letter dated 21st June,2018 (Exhibit K hereto) directed Respondent no.1 Undertaking to call fresh tender in respect of hiring of",,,,
Electric Buses. The relevant extract of the letter is reproduced below:,,,,
“I am directed to refer to your letter no.DO/GM/CMT/26590/2018 dated 18th,,,,
June,2018 on the subject and to say that the matter has been examined in the Department as per EoI issued by this Department for public & shared electric mobility. It has been decided",,,,
to advise BEST to call tender in such a way so that rate of bus and per km running cost, both are discovered.â€",,,,
I therefore, say that in view of the binding directions issued by the Government of India in the letter dated 21st June,2018, therefore, the Respondent Undertaking in compliance with the",,,,
aforesaid directions has called fresh tender for hiring 80 electric buses. Therefore the said order being binding upon the Respondent undertaking clearly prevents the Petitioner from,,,,
challenging the fresh tender notice issued pursuant to binding direction issued by the Department of Heavy Industries. Therefore, the present petition should be dismissed on this ground",,,,
alone.â€,,,,
37. There is an additional affidavit filed on behalf of the BEST to place on record some events, which have taken place during the pendency of this petition namely that the BEST workers",,,,
union and the Mumbai Electric Workers Union had filed proceedings before the Industrial Court alleging unfair labour practices. One of the relief sought was to restrain the BEST, from",,,,
hiring of buses alongwith bus drivers and other supporting staff,. The Industrial court passed an interim order dated 5 May 2018 permitting the BEST to hire electrical buses from the",,,,
petitioner and M.P. Enterprises and Associates Ltd. This order restrained the BEST from hiring nonÂelectric buses on Wet lease basis, meaning thereby that the BEST was permitted to",,,,
take buses on hire. It is stated that this order is challenged by the BEST workers Union in Writ Petition no.8384 and 8385 and 8386 of 2018. The BEST also filed Writ Petitions,,,,
challenging the said order in so far as the BEST was restrained to take non electric buses on wet lease by filing petition lodg no.2229, 2287, 2288 and 2289 of 2018. It is stated that in all",,,,
there are seven petitions and the learned Single Judge has passed an order dated 25 September 2018 in these petitions, whereby order dated 5 May 2018 passed by Industrial Court has",,,,
been stayed and restrains the BEST from issuing fresh work order for hiring buses and where work order for hiring buses are already issued, it is directed that the same be not acted",,,,
upon. The contention of the BEST is that as a result of the said orders even otherwise the BEST is not in a position to issue work order, unless the aforesaid order of learned Single Judge",,,,
dated 25 September 2018 is vacated. In paragraphs 5 to 9 of the additional affidavit the BEST has contended that in fact, the proposal of the BEST to the Govt. of India was for approval",,,,
of hiring buses on Wet lease basis and by letter dated 27 December 2017 the DHI approved the said proposal of the BEST for hiring buses on wet lease basis and not on joint ownership,,,,
basis. It is thus contended that the conditions which are imposed by the Govt. Of India by its letter dated 26 April 2018 materially and substantially alter the tender condition. In para 5,,,,
of the additional affidavit the BEST states as under:,,,,
Para 5……… In particular, the earlier scheme of things envisage that the bidder shall be sole owner of the electric buses, whereas, now the bidder is only 40% owner of the electric",,,,
buses, and 60% ownership right vest in BEST.â€",,,,
The additional affidavit further records the relevant dates and events to justify the impugned decision. It is also stated on 31 August 2018 a fresh tender has been issued by the BEST,,,,
and the BEST be permitted to proceed with the said tender.,,,,
Stand of the DHI/UOI,,,,
38. The Union of India through the DHI initially was not impleaded as party to the petition and by an amendment to the petition came to be impleaded. On behalf of Union of India a,,,,
letter dated 1 October 2018 is placed on record enclosing the remarks of the Director of the DHI which reads thus:Â,,,,
“Remarks of Department of Heavy Industry (DHI),,,,
 1. DHI issued a letter to BEST vide F.No.1/(07)2017/NAB.II dated 26.4.2018 (annexed at Pg 299 â€" Exh P). As long as petitioner & BEST (Respondent) abide by the conditions,,,,
imposed by this letter, DHI will extend the incentive support to BEST, Mumbai in accordance with EOI conditions. 2. DHI issued a letter to BEST with F.No.1(07)/2017/NAB.II(Auto)",,,,
dated 21.06.2018 (Pg.412 â€" Reply of Best ExbÂM), only as a response to clarification sought by BEST vide letter No.DO/GM/CMT/26590/2018 dated 18th June,2018 (Pg.410 â€"",,,,
Reply of Best ExbÂL). In view of this fact, this is to state that DHI has (SIC was) not asked BEST to cancel the contract and invite fresh tender. It is reiterated that the contract is in",,,,
between BEST and successful bidder & DHI has no role in the matter.â€,,,,
 Submissions on behalf of the Parties,,,,
39. On the above conspectus, we have heard Dr.Sathe, learned Senior Counsel along with Mr. Karan Bhosale for the petitioner, Mr.Godbole with Mr.Aseem Naphade, learned Counsel",,,,
for the BEST and Mr.R.K.Singh, learned Counsel appearing for Union of India/DHI.",,,,
40. Dr.Sathe, learned Senior Counsel for the petitioner would submit that the impugned decision dated 30 August 2018 of the BEST withdrawing the work order and/or terminating the",,,,
contract is patently illegal and violative of the petitioner’s fundamental rights guaranteed under Article 14 and 19(1)(g) of the Constitution. It is submitted that being the lowest,,,,
bidder the petitioner was awarded the contract by issuance of letter of acceptance dated 26 February 2018 and the contractual work order dated 28 February 2018. It is submitted that in,,,,
view of the express stipulation as contained in the tender conditions and the acceptance letter, the petitioner mobilized resources to comply with the requirement of 25% of the delivery of",,,,
the eÂbuses within three months of the issuance of the letter of acceptance and in fact the petitioner has manufactured about 24 buses, not anticipating that the awarded contract will be",,,,
withdrawn/terminated. It is submitted that the BEST is bound by the terms and conditions of the tender and that although there was no direct privity between the petitioner and the DHI,,,,
the petitioner is ready and willing to comply all the requirements as sought by the DHI in its letter dated 26 April 2018 addressed to the BEST.  It is submitted that in fact the,,,,
petitioner has unconditionally accepted the terms and conditions as sought to be imposed by DHI by its letter dated 26 April 2018, even if the said amounted to alteration of certain terms",,,,
and conditions of the contract. It is submitted that the petitioners letter dated 31 May 2018 cannot be termed by the BEST as a conditional acceptance as there is no reply of the BEST to,,,,
the petitioner's said letter, rejecting the contention therein. It is submitted that the unconditional acceptance of the petitioner of the conditions of the DHI as contained in letter dated 26",,,,
April 2018 is clear from the petitioner’s subsequent letter dated 22 June 2018 (page 312 of the petition). It is further submitted that the statement as placed on record on behalf of DHI,,,,
makes is abundantly clear that the DHI is willing to extend the incentive support to the BEST, if the petitioner abide by the condition imposed by Govt. of India by letter dated 26 April",,,,
2018 which the petitioner has confirmed unconditionally to comply, and thus, the apprehension of the BEST that it may not receive incentive from DHI itself erroneous, rendering the",,,,
action of termination of contract as illegal. It is submitted that, in fact para 2 of the statement as made on behalf DHI, completely falsifies the plea of the BEST that the BEST was",,,,
required to terminate the contract on the insistence of the DHI. It is submitted that the stand of the BEST is thus wholly arbitrary and the impugned decision of the BEST to terminate the,,,,
contract, does not fulfil any of the requirement of fairness, non arbitrariness and non discrimination as expected from a public body as enshrined under Article 14 of the Constitution. It",,,,
is submitted that the decision making process leading to impugned communication is clearly on some extraneous consideration which cannot be supported in law.Â,,,,
41. On the other hand, Mr.Godbole, learned Counsel for the BEST has justified the termination. It is submitted that the petitioner was called upon to comply with the requirement by letter",,,,
dated 26 April 2018 of the DHI which the petitioner did not accept and in fact by the petitioner’s letter dated 31 May 2018 conditionally accepted the said conditions imposed by,,,,
DHI. It is therefore submitted that the conditional acceptance is no acceptance in the eyes of law and therefore, respondent BEST was justified in withdrawing the contract work",,,,
order. It is further submitted that the Govt. of India by issuing a letter dated 26 April 2018 has substantially altered the conditions of the original tender and therefore, the work order stood",,,,
frustrated. It is then submitted, that in fact the Govt. of India/DHI by its letter dated 21 June 2018 directed the BEST to call fresh tenders, for hiring of electric buses and on this count the",,,,
action of the BEST, to cancel the work order was justified. It is submitted that the BEST has accordingly issued a fresh tender on 31 August 2018 which should be permitted to be",,,,
completed by upholding the decision to terminate the petitioner’s contract. It is further submitted that in any case in view of the order passed by the learned Single Judge in the writ,,,,
petitions filed by the workers union as also by the BEST the work awarded under the present work order has been stayed and thus in any event the petitioner cannot go ahead with the,,,,
contract. It is contended that the petitioner has not assailed imposing of conditions by letter dated 26 April 2018 of the DHI, and thus the petition on this count should fail. It is submitted",,,,
that the action of the BEST to terminate the contract of the petition is in accordance with law. The petitioner is not entitled to any relief in the present petition. The learned Counsel for,,,,
BEST in supporting the contention that the conditional acceptance of letter of DHI dated 26 April 2018 by the petition vide its letter dated 31 May 2018 has no sanctity in law, has relied",,,,
on the decisions in Haridwar Singh Vs. Bagun Sumbrui & Ors. (1973)3 SCC 889, Abdul Rahim Khan. Vs. Union of India & Ors. (AIR 1968 Pat 433), Raghunadha Reddy Vs. The",,,,
State of Hyderabad (AIR 1963 AP 110), M/s.Swadesh Rubber Industries Vs. Sardar Singh & Ors. (1995(1) ILR Punjab & Haryana page 218)",,,,
42. Mr.Rajendra Singh, learned Counsel for the DHI/Union of India at the outset submits that it is not correct for the BEST to contend that the DHI had asked the BEST to cancel the",,,,
contract and invite fresh tender. Referring to the letter of the DHI along with the note as placed on record on 4 October 2018, it is submitted that the contract is between the BEST and",,,,
the petitioner who is a successful bidder and the DHI has no role in the matter. It is further submitted that it is the clear stand of the DHI, that as long as the petitioner and the BEST",,,,
abide by the conditions imposed by the DHI, under letter dated 26 April 2018, the DHI will extend the incentive support to the BEST in accordance with the expression of interest",,,,
conditions. It is therefore, submitted that the contention of the BEST which are contrary to the stand of DHI as placed on record cannot be accepted.",,,,
 Discussion and Conclusion,,,,
43. Having heard the learned Counsel for the parties and having perused the record, it is indubitably clear that the BEST invited the tender in question to take benefit and participate in the",,,,
policy of Government of India namely the FAME (supra). The intention of the policy is to provide financial incentives in promoting pollution free electric buses. The BEST made a,,,,
proposal dated 30 November 2017 to the Government of India under the FAME India Scheme for 100 buses. The Govt. of India / DHI issued a letter of intent dated 27 December 2017,,,,
to the BEST to extend incentives for purchase of 40 buses as per the terms and conditions of the expression of interest dated 31 October 2017. Accordingly, the BEST issued the",,,,
tender in question by notice dated 10 January 2018. A preÂbid meeting was also held. The petitioner had submitted its issues for clarification in the preÂbid meeting. In the said issues,,,,
the petitioner never commented/ objected on the original ownership criteria which was a criteria not of the exclusive ownership of the bidder but a criteria of proportionate ownership as,,,,
set out in Paragraph 7 of the Schedule III of the tender document. The BEST however altered the ownership criteria so as to maintain the ownership of the buses solely of the supplier,,,,
and not of the joint ownership. No previous approval for this change appears to have been taken from the DHI, when the tender was issued to utilise the grants from the Government of",,,,
India. On 1 February 2018 the General Manager of the BEST informed the Joint Secretary of DHI of the issuance of the tender in question and informing of the nature of the tender and,,,,
that the incentive which would be received from DHI will be transferred to operator on receipt of the same and the maximum incentive available under the scheme is 60% and balance,,,,
40% shall be borne by the operator on behalf of BEST. A meeting was held on 19 February 2018 wherein the General Manager of BEST participated and informed the DHI that the,,,,
BEST has opened the bid and will be issuing supply order shortly. It was informed that the BEST has committed to its involvement in the project as an operator and shall invest 40% cost,,,,
of buses. It was also informed that the BEST will be taking bank guarantee from the operator for seven years for the 70% for the incentive amount to be received from DHI. The,,,,
petitioner being the lowest bidder was awarded the contract by issuance of letter of acceptance dated 26 February 2018 and formal contract work order dated 28 February 2018. It is,,,,
pertinent that the acceptance letter and the contract work order is issued to the petitioner in consonance to the Note below clause 4.2 in AnnexureÂC which provides for the following:Â,,,,
“Note: This acceptance letter is subject to approval of incentive from Department of Heavy Industries (DHI).â€,,,,
This for the reason that the Government of India/DHI by letter dated 27 December 2017 issued to BEST had agreed to provide for incentives for purchase of 40 buses as noted above.,,,,
The BEST therefore, cannot have a quarrel with issuance of contract work order to the petitioner.",,,,
44. There can be no manner of doubt that the issuance of work order amounts to acceptance of the proposal of the petitioner and thus forms formation of a contract between the parties.,,,,
That the contract is awarded to the petitioner is specifically recorded by the BEST in its letter dated 28 May 2018 addressed to the DHI when the BEST recorded that “ After,,,,
completing the bidding process and on obtaining approval of the Competent Authority ie. BES&T Committee, the Contracts were awarded to the Goldstone Infra and M.P.Enterprise for",,,,
40 Electric Buses eachâ€. This clearly falsifies the BEST’s stand in the impugned letter that the contract work order was is in the nature of a letter of intent and an expression of an,,,,
intention to enter into a contract.,,,,
45. It is also not in dispute that the letter of acceptance dated 26 February 2018 in clause F provides that 25% of the buses should be provided by the petitioner within three months and,,,,
balance 75% by six months after requirement is given by the Undertaking after release of the contract work order. The petitioner acted upon the work order by mobilizing the finance and,,,,
other resources and in fact manufactured the required quantity of 25% buses to be made available to BEST. In fact the petitioner manufactured more number of buses than the stipulated,,,,
requirement of 25% to be delivered within three months of the issuance of the work order. This perhaps on the anticipation that once a contract is awarded there can never be a turn,,,,
around by a statutory authority like the BEST. There was also a joint survey between the parties to visit the depots from where the buses would be made operational.,,,,
46. It appears from the record that when the BEST approached the DHI by its letter dated 8 March 2018 requesting for release of the first installment of the incentive, submitting all",,,,
the relevant documents and correspondence as ensued between the parties, there arose some dissimilitude between parties, leading to the letter dated 26 April 2018 of the DHI",,,,
setting out the benchmarks interalia that the respective organization/STU shall jointly own the buses in the same proportion of sharing of cost of bus and calling upon the BEST to submit,,,,
the letter of acceptance for above mentioned benchmark prices and the proposed joint ownership of the buses by 15 May 2018. The BEST acted upon this letter and by its letter dated,,,,
2 May 2018, called upon the petitioner to confirm its acceptance of the condition as contained in the letter of DHI dated 26 April 2018. Initially the petitioner requested for some time to",,,,
ponder on the issue. It also had discussion with the officials of the BEST and finally by letter dated 31 May 2018, conveyed the acceptance of the said conditions to the BEST, however,",,,,
recording that the joint ownership of BEST alongwith petitioner shall be in proportion to the incentive amount to be funded by the petitioner and after the contract period, the bus",,,,
ownership would be automatically deemed to be transferred to the petitioner at no costs. There were certain other conditions which were set out. The BEST never rejected this letter of,,,,
the petitioner nor sought a clarification on it, if it was of the opinion that the contents of the said letter of the petitioner, were not acceptable for some reason or were required to be",,,,
modified by the petitioner. This was the least what could be expected of a public body if it is to be forthright, clear and transparent.",,,,
47. The petitioner in the intervening period, informed the BEST ofcompletion of manufacturing of buses and that they were ready for delivery as per the work order. Further the petitioner",,,,
by its letter dated 22 June 2018 informed the BEST that they have accepted the terms and conditions as imposed by the Government of India and once again confirmed the same. Again,,,,
no clarification on this letter was sought by the BEST. A convenient stand however is taken in the reply affidavit to say that the acceptance of the petitioner was a conditional,,,,
acceptance and also tried to be justified in the arguments. The BEST straight away proceeded to issue the impugned communication dated 30 August 2018 terminating the contract,,,,
observing that as the Govt. of India / DHI by its letter dated 26 April 2018 had stipulated that the subsidy would be granted for the buses to be supplied by the petitioner subject to the,,,,
same being jointly owned by the BEST and the bus owner, by virtue of this condition the basic nature of the tender had changed, in the light of the said directives of the Govt. of India",,,,
wherein the BEST was required to have joint ownership with the successful bidder and not act as a mere lessee. Further astonishingly, the BEST took a position that the contract",,,,
work order was merely in the nature of letter of intent which was an expression to enter into a contract and thus in the light of the directives of the Department of Heavy Industries, the",,,,
contract work order was required to be withdrawn with immediate effect.,,,,
48. Can it be so simple for a statutory authority to float a tenderat public cost, complete the tender process, award the contract with conditions that the contract would be immediately",,,,
acted upon and then for reasons which are not attributable to the contractor terminate the contract? What is the sanctity of the commercial dealing with public bodies? What happens to,,,,
the invaluable constitutional mandate guaranteed under Article 14 and 19(1)(g) of the Constitution and a legitimate expectation of the participating bidders that a public body would act,,,,
with fairness, bonafide and with transparency,are issues which ponder us in this case. Â",,,,
49. We may observe that learned Senior Counsel for the petitioner at the outset submitted that the petitioner unconditionally is accepting the terms and conditions of letter dated 26 April,,,,
2018 of DHI albeit the confirmation of the same in the petitioner’s letter dated 22 June 2018. The matter in our opinion should have rested at this.,,,,
However to our dismay the BEST thought it appropriate to contest the proceedings. We may also observe that the contention of the BEST relying on the decisions that the petitioner,,,,
conditionally accepted the offer cannot be accepted as the facts stand. There can be no quarrel on the propositions of law as laid down in the said decisions however in the facts of the,,,,
case these decisions are certainly, not applicable. This argument of the BEST of a conditional acceptance is clearly an afterthought unsupported by any material and is without any factual",,,,
basis, as we have already observed that the BEST never objected or raised any issue on the contents of the petitioners letter dated 31 May 2018 and the subsequent letter dated 22 June",,,,
2018.,,,,
50. We find that the decision of the BEST to issue the impugned communication terminating the contract which is stated to be withdrawal of the contract work order, is ex facie arbitrary",,,,
and illegal. Considering the impugned communication firstly it is an erroneous or deliberate on the part of the BEST to record in the impugned letter that the work order was in the,,,,
nature of a letter of intent and merely an expression of intention to enter into a contract. The record indicates and that there cannot be a semblance of doubt that the petitioner,,,,
responded to the tender. The petitioner’s tender/bid was accepted by issuance of, not only a letter of acceptance, but a formal contract work order. Above all there is a candid",,,,
acceptance of the award of the contract to the petitioner, in the BEST’s letter dated 28 May 2018 addressed to the DHI, as referred by us above. If this be the case, then for the",,,,
BEST to say that there is no contract between the parties, goes against the fundamental tenets of law on contracts and the basic principles of commercial jurisprudence. Secondly, as",,,,
clearly seen from the impugned communication, the entire basis for the BEST to terminate the contract was on the foundation that the Govt. of India/DHI has imposed a condition of",,,,
joint ownership of the vehicles by its letter dated 26 April 2018 and thus as the nature of the tender has changed the contract was required to be terminated. We find this reason,,,,
astonishing and certainly not appealing to our judicial conscience. Perusal of the record do not inspire any confidence for the BEST to take such a stand. We feel that there may be some,,,,
extraneous reasons which have compelled the BEST to deviate itself from its normal and lawful course expected of the statutory authority. We say so for two basic reasons, firstly the",,,,
BEST maintained a deep silence to react in any manner on the petitioner’s acceptance on the conditions imposed by DHI by its letter dated 26 April 2018 and as called upon to be,,,,
complied by the petitioner by the BEST’s letter dated 2 May 2018. Secondly, if the BEST had any fundamental dispute or reservation on imposing of these conditions, the BEST",,,,
could have never called upon the petitioner to forward its compliance on or before 15 May 2018. In fact the BEST took up the matter with the DHI, and never informed the DHI when",,,,
acting under the incentive scheme of the DHI that it would take such a draconian step to terminate the contract which was also put into execution, as awarded to the petitioner. Moreover,",,,,
the entire correspondence we have referred above from 20 May 2018 till 27 August 2018 gives a clear impression that the BEST agreed to the DHI’s requirement of joint ownership,,,,
of the buses as crystal clear from the BEST’s very own letter dated 14 August 2018. In fact this correspondence shows that a clear impression was created at the doors of the,,,,
Government of India that the compliance of its requirements is being met so as to seek disbursement of the first installment of the subsidy. It appears that the BEST for reasons best,,,,
known to it was playing a dual role one with the Government of India/DHI and another with the petitioner. The question is as to what went wrong between 14th August 2018 and 30th,,,,
August 2018? Considering the entire correspondence it is writ large that there is a fundamental flaw and arbitrariness in the decision of the BEST to terminate the petitioner’s,,,,
contract.,,,,
51. We are also certain that the conspicuous silence of the BEST in reverting to the petitioner either way on the petitioner’s acceptance of the conditions required by the DHI was not,,,,
superficial. It appears and quite possibly hectic activities were going on, for issuance of a new tender for award of the same contract. This is clear from the fact that no sooner on 30",,,,
August 2018 the impugned communication was issued to the petitioner terminating the contract, immediately on the next day on 31 August 2018 a fresh tender was issued and the BEST",,,,
started with the tender process. This shows that the petitioner on one hand was kept in dark on the fate of its contract and on the other hand the BEST was engaged in preparing for,,,,
issuance of a new tender.This was not expected of a public body. This Court in its different orders has recorded that the date to receive the bids is extended by the BEST and as recorded,,,,
in the order dated 1 October 2018, it was extended till 15 October 2018 and further by our order dated 4 October 2018, we directed that the respondent may accept the tender, but shall",,,,
not open the tender without permission of the Court.,,,,
52. We also cannot be oblivious as to what is clearly reflected by the record namely as to how a statutory body like the BEST can adopt an approach so casual in exercising its,,,,
statutory powers to award contracts, as conferred by the Mumbai Municipal Corporation Act 1888 (for short ‘MMC Act’). to terminate an awarded contract when the contract",,,,
is already put into execution and that too on glaringly ostensible reasons as set out in the termination letter. As per the tender document, the tender issuing authority is the BEST",,,,
undertaking (page 28 of the paperbook). It is not in dispute that when such tenders are issued by the BEST the provisions of the MMC Act are attracted. The powers which are,,,,
exercised by the BEST are statutory powers as conferred under Chapter XVIÂA of the MMC Act. Section 460A provides for management of the undertaking by the General Manager.,,,,
It provides that subject to the superintendence of the Brihanmumbai Electric Supply Transport committee and of the Corporation (The Mumbai Municipal Corporation) the General,,,,
Manager shall manage the BEST. Section 460ÂK provides for making of contracts for the purposes of the BEST undertaking. Section 460ÂL provides for mode of executing,,,,
contracts. Section 460ÂM provides that tenders to be invited by the BEST for contract involving expenditure exceeding Rs.50,000/Â. The scheme of the chapter XVIÂAÂ",,,,
postulates that the BEST being a statutory body and a “State†within the meaning of Article 12 is required to function within the framework of law and the well established,,,,
Constitutional principles in the matter of award of contracts and in dealing with public utilities involving public money. The basic requirement expected of a statutory body, when it acts in a",,,,
contractual sphere is that the statutory body should adhere to the principles of fairness, transparency, non arbitrariness, nonÂdiscrimination being the basic tenets of the Article 14 of the",,,,
Constitution. These principles cannot be given a goÂby. It is a settled principle of law that a Constitutional Court in exercising powers of judicial review can examine the decision,,,,
making process in contractual matters, even post award of a contract and concerning termination of contract. In any case there are no disputed questions of fact in the present case. The",,,,
limited scrutiny which is called for is to test the impugned decision making process on the touchstone of article 14 of the Constitution.,,,,
53. In M/s.Dwarkadas Marfatia & Sons Vs. Board of Trustees of the Port of Bombay 1989(3) SCC 293, the Supreme Court was concerned with the action of the public authority",,,,
terminating the tenancy and taking proceedings for eviction. The court referring to many celebrated decisions held that judicial review is not concerned with the decision but the decision,,,,
making process. The court accepted the contention of the petitioner that every action / activity of the Bombay Port Trust /respondent therein which constituted “State†within Article,,,,
12 of the Constitution, in respect to any right conferred or privilege granted under a statute is subject to Article 14 and must be reasonable and taken only upon lawful and relevant ground",,,,
in public interest. It was observed that where there is arbitrariness in State action, Article 14 springs in and judicial review brings such an action down. Every action of the authority must",,,,
be subject to rule of law and must be informed by reason. The Court observed that whatever be the activity of the public authority, it should meet the test of Article 14. It was held that",,,,
any governmental policy and action even in contractual matters, if it fails to satisfy the test of reasonableness, it would be unconstitutional.",,,,
54. Mahavir Auto Stores and Ors. Vs. Indian Oil Corporation and Ors. (1999(3) SCC 752)Â was a case of the respondentÂIndian Oil Corporation suddenly discontinuing the supply of,,,,
the petroleum products without any intimation or notice or hearing, the parties stood in a contractual position. In para 12 of the decision the Supreme Court observed that the rule of reason",,,,
and rule against arbitrariness and discrimination, rule of fair play and natural justice are part of rule of law applicable where a State instrumentality is dealing with citizens. It was held that",,,,
even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to",,,,
judicial review on the touchstone of relevant and reasonableness, fair play, natural justice, equality and non discrimination in the types of the transactions and the nature of the dealings.Â",,,,
55. In Verigamto Navin Vs. Govt. of A.P. (2001(8) SCC 344) which was a case pertaining to illegal termination of a subÂlease under the Mines and Minerals Development Regulation,,,,
Act,1957, the Supreme Court taking a review of the law on interference in contractual matters held that where the breach of contract involves breach of statutory obligation, when the",,,,
order complained of was made in exercise of statutory power by a statutory authority, though the cause of action had arisen out of or pertained to a contract, brings it within the sphere of",,,,
public law because the power exercised is apart from the contract. The freedom of the government to enter into business with anybody it likes is subject to condition of reasonableness,,,,
and fair play as well as public interest. It was observed that after entering into a contract, in cancelling the contract which is subject to the terms of statutory provision, it cannot be said",,,,
that the matter falls purely in a contractual field. The contention that no interference under Article 226 of the Constitution could have been made by the High Court, was thus rejected.",,,,
56. In Food Corporation of India and Anr. Vs. SEIL Ltd. & Ors. 2008(3) SCC 440, the Supreme Court referring to the decision in ABL International Ltd. held that Article 14 of the",,,,
constitution has received a liberal interpretation over the year. Its scope has been expanded by creative interpretation of the Court. The law has developed in this field to a great extent,,,,
and when no disputed question of fact involved, the High Court in appropriate cases grant relief to which the writ petitioner is entitled to law as well as in equity.",,,,
57. Adverting to the above settled principles of law and applying the test of the manner, the method and the motive of a decision expected from a statutory body and when tested on the",,,,
touchstone of Article 14, we have no manner of doubt there is a breach of the statutory obligation as conferred on the BEST to act in a fair, transparent and reasonable manner and in",,,,
public interest, in taking the impugned decision, to terminate the petitioner’s contract and/or withdraw the work order. It was surprising that despite the clear stand of DHI that it",,,,
never insisted the BEST to terminate the petitioner’s contract had in fact resulted into the entire basis of the termination letter having vanished, the BEST nonetheless contested the",,,,
proceeding. Further what would disturb our judicial conscience is that when the learned Single Judge passed the order dated 25 September 2008 on the writ petitions filed by BEST,,,,
challenging the orders passed by the Industrial Court, the pendency of this proceeding was not brought to the notice of the learned Single Judge, as informed to us categorically by the",,,,
learned counsel for the BEST, and more particularly when the issue of contract/work order on ebuses was raised before learned Single Judge as clear from the following observations in",,,,
the order passed by the learned Single Judge:Â,,,,
“In the eventuality the work order are already issued with the directions of the Industrial Court, the same shall not acted upon only until further orders.â€",,,,
58. We may observe that incidentally this petition was also listed before us on the very same day (25 September 2018) when we heard the parties at length and passed an order recording,,,,
the questions which fell for consideration in this petition.,,,,
59. For all these reasons, to our mind the actions, conduct and the approach of the BEST leaves no manner of doubt that the BEST not only acted high handedly and arbitrarily in taking",,,,
the impugned decision, but also attempted to abuse the process of law least expected from a public body.",,,,
60. As a sequel to the above discussion, the impugned decisionas contained in the communication of the BEST dated 30 August 2018 cannot be sustained and is quashed and set aside as",,,,
illegal and unconstitutional.,,,,
61. We clarify that this judgment is confined only to the tender inquestion, as awarded to the petitioner in regard to forty eÂbuses.    Â",,,,
62. Rule is made absolute in the above terms. Now as to cost.We were inclined to impose cost on the BEST, we however refrain from doing so.",,,,
Â,,,,
