Caretel Infotech Ltd. v. Hindustan Petroleum Corporation Limited & Ors.
SANJAY KISHAN KAUL, J.
1. Leave granted.
2. Hindustan Petroleum Corporation Limited (respondent No.1)
floated an e-public tender on 4.12.2017 for setting up call c entres for
receiving, recording and replying to information enquiries and complaints
from LPG customers of IOC/HPC/BPC. The appellant participat ed in
the tender. Clause 20 of the tender reads as under:
“20. Black List/Ban/Holiday List
i. Bids received from parties who have been banned/blacklisted/
put on holiday list or parties in respect of whom the act ion for
blacklisting and holiday listing has been initiated by HPCL/any
Government/Quasi Government Agencies or PSUs, shall not be
considered for either evaluation or for award of work. Off er of
Vendor who has not submitted declaration on black listed or holi-
day listed shall be considered as non-responsive and offer sha ll
be rejected.
ii. The bidder shall give a written declaration indicating that they
are not on holiday list/banned/blacklisted as on due date of th is
tender.”
3. The appellant was issued a show cause notice on 5.12.2017 in
respect of another tender, i.e., after floating of the tender , but before
submitting of the bid, for blacklisting on the allegation of furnishing false
information and bid documents, submitted for providing Kisan Call Cen-
tre Services to the Department of Agriculture, Cooperation & Farmers
Welfare, Ministry of Agriculture & Farmers Welfare, Gover nment of
India.
4. The show cause notice alleged that on questions being raised
about the correctness of information furnished by the appellant in the bid
documents regarding running of call centres at different loca tions, an
inquiry was made through officers and despite further information being
sought, the same was not forthcoming. The operative portion o f the
show cause notice reads as under:
“Accordingly, in the above circumstances a situation has,
prima facie , emerged that M/s Caretel Infotech Pvt. Ltd. has
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM
CORPORATION LTD. & ORS.
endeavoured to procure the above tender by providing fal se,
misleading and wrong information. Therefore, the Department
hereby issues notice to M/s Caretel Infotech Pvt. Ltd. to show
cause as to why suitable action for blacklisting the firm (M /s.
Caretel Infotech Pvt. Ltd.) should not be initiated . You are
requested to clarify your position within 7 (seven) days from the
date of issue of this letter. Response received after expiry of the
provided time limit will not be entertained.”
(emphasis supplied)
5. The appellant submitted the bid in respect of the e-tende r on
19.12.2017. In terms of clause 20 extracted aforesaid, a format ha d
been provided for the declaration to be made, which is as under:
“DECLARATION NON BLACKLISTED/NON
BANNED/NON HOLIDAY LISTED PARTY
WE CONFIRM THAT WE HAVE NOT BEEN BANNED
OR BLACK LISTED OR DELISTED OR HOLIDAY
LISTED BY ANY GOVERNMENT OR QUASI
GOVERNMENT AGENCIES OR PUBLIC SECTOR
UNDERTAKINGS
Date: __________ Name of Tenderer: _____________
Place: _________ Signature & Seal
of Tenderer : _____________
Note: If a bidder has been banned by any Government or
Quasi Government Agencies or Public Sector
Undertakings, this fact must be clearly stated with de tails.
If this declaration is not given along with the UNPRICED
Bid, the tender will be rejected as non-responsive. ”
The appellant submitted the declaration in terms aforesai d, i.e.,
stating that the appellant had not been blacklisted by any Government or
Quasi Government Agency or Public Sector Undertakings.
959
6. The appellant also submitted an undertaking, once again, in the
prescribed form. The format of undertaking is as under:
“ON LETTER HEAD
Undertaking by the bidder
I/we hereby undertake that the entire information furnished/given
to you in our bid and attachments are true to the best of our knowledge
and belief and nothing therein is false.
I/We further undertake, that if it is found during the tender stage
(before accepting our bid/placement of Purchase Order by HPCL) that
any information or document furnished/submitted by us is false or
incorrect, then we agree that HPCL shall be free to re ject our tender/
bid. If the same is found to be false or incorrect during any stage after
accepting of our bid/placement of Purchase Order, then HPCL sha ll
have the right to summarily cancel our tender and procure the balance
quantity from any alternate source. HPCL shall have the right to recover
the differential amount between the rates of our contract and the rates
at which HPCL is compelled to procure from the alternate source, if the
latter rate is higher. To this effect, the recovery can be made by HPCL
by encashing any bank guarantee that we may have submitted or from
any pending bills under this contract or any other contract with HPCL.
Further HPCL shall be at liberty to take any appropriate action as deemed
fit in such an eventuality.
I/we further undertake as and when called upon by Hindustan
Petroleum Corporation Limited, to produce, for its inspection, original(s)
of the document(s) of which copies have been annexed hereto.
Date: __________ Name of Bidder: _____________
Place: _________ Signature & Seal
of Bidder : _____________”
7. Respondent No.1 evaluated the technical and financial bi ds
and declared the appellant as L-1 and respondent No. 3 as L-2 on
16.1.2018. The letter of acceptance of the tender awar ded to the
appellant was issued on 12.2.2018 for a value of Rs.791 lakh basic for
services to be rendered for a period of two years.
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM
CORPORATION LID. & ORS. [SANJAY KISHAN KAUL, J.]
8. Respondent No.3 filed a writ petition in the Bombay High Court
on 17.2.2018, assailing the declaration of the appellant as L-1. The
purchase order in favour of the appellant confirming t he terms of
contract and mode of payment was issued on 21.2.2018. One day later,
on 22.2.2018, the Ministry of Agriculture and Farmers Welfare passed
an order blacklisting and debarring the appellant from partic ipating in
any tender process of the Government of India, Ministry of Agriculture
and Farmers’ Welfare for two years with effect from the da te of issue
of the order. This order was assailed by the appellant by filing a writ
petition before the Delhi High Court, which was pleased to issue notice
on 9.3.2018, and we are informed that subsequently, on 12.3.2019, that
petition was dismissed and a Letters Patent Appeal file d against the
same is pending.
9. Respondent No.3, having become aware of the factum of
blacklisting of the appellant amended the petition to incorporate the said
fact. The writ petition was allowed by the impugned o rder of the
Division Bench dated 21.12.2018.
10. The decision of the High Court is predicated on two facts –
firstly the non-disclosure of the factum of the show cause notice issued
to the appellant amounted to violation of the undertaking. Linked to this
issue is that clause 20(iii) of the tender provided for an int egrity pact
“ensuring transparency and fair dealing” and that integrity pact had been
duly signed and submitted by the appellant. Secondly, the Division Bench
doubted the compliance, by the appellant, of clause 8 read with clause
10(g) of Section 4 of the tender. This controversy pertains to the clause
dealing with the business continuity and the requirement of submitting a
valid ISO certificate for the purpose of securing the te nder. The rel-
evant clauses read as under:
“8. Business Continuity
OMCs currently have an agreement for inbound calls with a ser-
vice provider based in different Regions. The successful bidder
has to submit the transition plan to migrate to new platform and
facility with “ZERO” disruption of services with respect to fol-
lowing areas:
a) Toll-free services.
b) IVRS based call handling.
c) Diversion of call traffic at the successful bidder’s premises.
961
d) Trained Operators at the time of Go-Live date.”
.... .... .... ....
....
“10. Other Mandatory Requirements:
xxxx xxxx xxxx xxxx
xxxx
g) Valid ISO Certification 27001 for security and ISO 2301 for
Business Continuity.”
It is not disputed that the certificate of registration submitted by
the appellant was issued by Elite Certifications Pvt. Ltd., respondent
No.2. However, respondent No.3 sought to throw doub ts on the
certificate and the High Court found reason to believe th e same even
though in the counter affidavit filed by respondent No.1 a stand was
taken to the contrary.
11. On 7.1.2019, notice was issued on the present appeal filed
against the impugned order and an interim order was passed i n the
following terms:
“In the meantime, Respondent No.1 (HPCL) may take a
decision but not implement it. The petitioner may continue under
the contract until further orders.”
The result of the same is that the appellant has continued to give
services under the contract now for almost more than thirteen (13) months
out of the contract for two years and respondent No.1, though is stated
to have issued a notice to the appellant in pursuance of the dire ctions
contained in the impugned order, has deemed it fit not to proceed with
the inquiry and to await the verdict in the present appeal.
12. We have heard Mr. Shyam Diwan, learned senior counsel for
the appellant, Mr. K.V. Vishwanathan, learned senior counsel for
respondent No.3 and Mr. Parijat Sinha, learned counsel for respondent
No.1. The submissions on the two aspects advanced by learned
counsel for the parties and our findings are recorded hereinafter.
Blacklisting:
13. Mr. Shyam Diwan, learned senior counsel for the appellant
contends that the impugned order misreads the blacklisting clause 20.
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM
CORPORATION LID. & ORS. [SANJAY KISHAN KAUL, J.]
The submission was that undoubtedly, the appellant could not have been
categorised as a party who has been banned/blacklisted/put on holiday
list. This is also in the context of the fact that such blac klisting has
severe consequences and the clause itself provided that non-submission
of declaration in the prescribed format would make the bid non-respon-
sive and the offer would be rejected. In terms of clause 20(ii ), the
written declaration had to be given as on the due date of the tender. The
format in which this declaration was to be given was specified and was
not left to the own words of the bidder. The format extracted aforesaid
clearly stated that such declaration was required to be furnished only if
the bidder had “been banned or black listed or delisted or holiday listed.”
That position was not prevalent on the date of submission of the bid, on
19.12.2017 as by that date only a show cause notice had been issued, on
5.12.2017. The order of blacklisting was passed on 22.2.2018, after the
date of acceptance of the tender and placement of the purchas e order
on the appellant, on 21.2.2018.
14. In the aforesaid context, it is also contended that ‘Annexure
21’ lays down the ‘Guidelines for Holiday Listing (Banning of Business
Dealing)’. That occasion would arise if the tender awarding authority,
i.e., respondent No.1 would have initiated any process and as per clause
2.5, the banning was to be with prospective effect, i .e., for future
business dealings. The contract in question, having already been placed
on the appellant, there can be no question of retrospective blacklisting of
the appellant.
15. The second limb of the submission is based on clause 20(i) to
the extent it refers to “or parties in respect of whom t he action for
blacklisting and holiday listing has been initiated by HPCL/any
Government/quasi Government agencies or PSUs.” This clause, it was
submitted, had to be read with the wordings of the show cause noti ce.
Undisputedly, the format in which the information had to be furnished
only provided for an eventual blacklisting having taken place. The
operative portion of the show cause notice, extracted aforesai d, states
“why suitable action for blacklisting the firm (M/s. Caretel Infotech Pvt.
Ltd.) should not be initiated .” 1 The requirement of clause 20(i) was
the actual initiation. Thus, it was pleaded that blacklisting had not been
“initiated” by mere issuing of the show cause notice, as the notice was
1 Emphasis supplied
963
to show cause as to why proceedings should not be initiated, i.e., a prior
stage.
16. On the other hand, Mr. Vishwanathan, learned senior counsel
for respondent No.3, contended that the format was prescribed in the
context of clause 20(ii), which was a case where bl acklisting had
already taken place, as on the due date of the tender. However, as per
clause 20(i) there were four eventualities: (a) banned; (b) blacklisted;
(c) put on holiday list; or (d) action for blacklisting or holiday listing had
been initiated. It was his submission that the present c ase was one
where blacklisting had been, at least, initiated and, therefore, the
appellant was duty bound to make a disclosure of this fact along with his
tender, not as per the format, but in terms of the undertaking to be given
by the bidder, which required full disclosure. That undertaking, it was
submitted, was breached, as held by the impugned order.
17. Learned counsel further contended that the plea sought to be
raised by the appellant, on the interpretation of clause 20( i), was not
even the case pleaded by the appellant in their chall enge to the
blacklisting order, in their writ petition, but what was pleaded there was
only the absence of an opportunity of hearing.
18. In the alternative, learned counsel also sought to contend that
respondent No.1 had not complied with the interim directions, at the
stage of issuing notice on 7.1.2019, and ought to have implemented the
impugned order and held an inquiry and that inquiry report ought to have
been placed before the Court.
19. On the other hand, learned counsel for respondent No.1
submitted that respondent No.1 had, in its wisdom, stayed its hand after
issuance of notice in pursuance to the impugned order and preferred to
await the decision of this Court.
20. On careful consideration of the rival submissions, we are of
the view that there is force in the contention of learned counsel for the
appellant. We are, in fact, in agreement with both the aspects, i.e., the
interpretation of clause 20 read with the format, as well a s with the
effect of the show cause notice.
21. It is no doubt true that clause 20 does provide for four
eventualities, as submitted by learned counsel for respondent No.3. The
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM
CORPORATION LID. & ORS. [SANJAY KISHAN KAUL, J.]
present case is not one where on the date of submission of the tender
the appellant had been banned, blacklisted or put on holiday list. The
question before us, thus, would be the effect of an action for blacklisting
and holiday listing being initiated. The declaration to be given by the
bidder is specified in clause 20(ii), which deals with t he first three
aspects. The format enclosed with the tender documents also re fers
only to these three eventualities. It is not a case wher e no specific
format is provided, where possibly it could have been contended that the
disclosure has to be in respect of all the four aspect s. The format
having been provided, if initiation of blacklisting was to be specified,
then that ought to have been included in the format. It cannot be said
that the undertaking by the appellant made it the bounden duty of the
appellant to disclose the aspect of a show cause notice for blacklisting.
We say so as there is a specific clause with the specific format provided
for, requiring disclosures, as per the same.
22. It may be possible to contend that the format is not correctly
made. But then, that is the problem of the framing of the form at by
respondent No.1. It appears that respondent No.1 also, faced with the
factual situation, took a considered view that since clause 20(i) provided
for the four eventualities, while the format did not provide for it, the
appellant could not be penalised. May be, for future the format would
require an appropriate modification!
23. If we refer to the undertaking submitted by the appellant all
that it states is that the information furnished in the bid and attachments
are true to the best of the knowledge and belief of the bidder . In case
any false or incorrect information is submitted, the bid can be rejected.
It cannot be said that there is any false informatio n given by the
appellant as to violate the stated condition 4 of clause 20(i). We may
look at another angle of the same issue, i.e., the integrity pact provided
for in clause 20(iii) with the format thereof, a detailed one. The integrity
pack provided that the “parties shall make certain commitments to each
other in regard to ensuring transparency and fair d ealing in the
procurement activities of the Corporation.” The duly signed i ntegrity
pact is an essential condition for a valid bid. This clause, thus, deals with
the transparency and fair dealing of the activities carried out under the
tender were it to be awarded insofar as the procurement ac tivities are
concerned. Once again, this would not have any relevance to the stated
fourth part of clause 20(i).
965
24. We may also look at this aspect from another perspective.
Blacklisting has very serious consequences. A show cause notice may
result in blacklisting or may not result in blacklisting. The mere show
cause notice being issued, to visit such a severe conseq uence on a
bidder, may be difficult to sustain.
25. The case of the appellant is further fortified by even the
language used in the show cause notice. The show cause notice itself,
in the last paragraph, calls upon the appellant to show cause as to why
suitable action for blacklisting “should not be initiated.” Pursuant to the
response of the appellant, the next stage would have been the initiation
of the blacklisting process, if the explanation was not found satisfactory.
The term used in the blacklisting clause 20(i), on the other hand, talk s
about a situation where blacklisting has already been init iated. Plain
English words used must be given their ordinary grammatical meaning,
an aspect discussed in a little more detail hereinafter.
26. Thus, it is difficult to accept the submission of learned
counsel for respondent No.3 that the show cause notice dated 5.12.2017
itself amounted to the process of blacklisting having alre ady been
initiated.
27. On both these accounts it cannot be said that the appellant
would be disentitled to the contract.
28. Insofar as the effect of the blacklisting order dated 22.2.2018
is concerned, in the eventuality of respondent No.1 considering it proper
to initiate certain action, that would have to be in terms of the guidelines
for blacklisting of HPCL. The guidelines itself show that the ban would
have prospective effect, for future business dealings. T hus, the same
would have no application to the tender awarded.
Business Continuity Certificate:
29. The second reason which found favour with the High Court
was the doubts created by respondent No.3 over the Business
Continuity Certificate filed by the appellant. Clause 8, dealing with
business continuity, requires the successful bidder to submit the
transition plan to migrate to new platform and faci lity with zero
disruption of services, with respect to four aspect s provided
hereinbefore. In terms of clause 10(g), valid ISO Certificate 27001 for
security and ISO 2301 for business continuity have to be provided. It is
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM
CORPORATION LID. & ORS. [SANJAY KISHAN KAUL, J.]
not in question that the appellant did submit a certificate of business
continuity, as obtained from respondent No.2.
30. Respondent No.3 has sought to cast doubts on this business
certificates , and the Division Bench, in terms of the impugned order, has
also embarked on a course of inquiry into this certificate by calling upon
parties to file their affidavits and has thereafter taken a ca ll to express
its own doubts over the certificate. In our view, such a course of action
was not permissible.
31. There are serious disputes relating to the allegations made by
respondent No.3, which are rebutted by the appellant. Opportunity had
to be afforded to cross-examine the deponents who had filed affidavits.
This would really not be possible in writ proceedings and could have
only been determined in suit proceedings. There cannot always be a
shortcut, through a process of writ proceedings under Article 226 of the
Constitution of India, when such disputes exist. We may usefully refer
to the observations of this Court in Roshina T v. Abdul Azeez K.T. &
Ors., 2 opining that the writ jurisdiction under Article 2 26 of the
Constitution of India is not intended to replace ordinary remedi es by
way of a civil suit, and this jurisdiction should not be exercised casually
or lightly on mere asking by the litigant.
32. We may notice another important aspect also, i.e., reluctance
of respondent No.1 to accept the allegations of respondent No. 3. If
respondent No.1 itself had doubts on the certificate, that would ha ve
been another matter. This is not so as is apparent from the affidavit filed
by respondent No.1. In any case, at best, this aspect ought to have been
left to the wisdom of respondent No.1, rather than the Court embarking
on the course of action it followed, as if it was sitting in appe al over a
decision of respondent No.1. We may add that if respondent No.1 itself
has any doubts on these certificates, nothing preve nted, nor still
prevents respondent No.1 from looking into this aspect.
33. We do not agree with the contention of learned senior counsel
for respondent No.3 that the interim order dated 7.1.2019 mandated
respondent No.1 to enquire into all these aspects, in pursuance of the
directions contained in the impugned order. All that was observed was
that respondent No.1 “may” take a decision, but the interdict was against
implementing it. Respondent No.1 in its wisdom, as submitted by learned
2 (2019) 2 SCC 329
967
counsel for respondent No.1, has chosen not to proceed further, a fter
issuance of notice to the appellant and has decided to await the decision
of this Court. We have already come to the conclusion that it was not
really within the domain of the High Court to have issued the direction,
as it sought to do.
34. The operative directions of the High Court, as contained in
para 47 of the judgment, to take appropriate decisions, in the conspectus
of the observations made, really amounts to directing respondent No.1
to breach its contract with the appellant. We are of the view that, thus,
no such direction ought to have been issued to compel a breach of the
contract by the appellant.
35. We, thus, are unable to sustain the impugned order even on
this ground.
Epilogue:
36. We consider it appropriate to make certain observations in the
context of the nature of dispute which is before us. Normally parties
would be governed by their contracts and the tender terms, and really no
writ would be maintainable under Article 226 of the Constitutio n of
India. In view of Government and Public Sector Enterprises venturing
into economic activities, this Court found it appropriate to build in certain
checks and balances of fairness in procedure. It is this approach which
has given rise to scrutiny of tenders in writ proceedings unde r Article
226 of the Constitution of India. It, however, appears that the window
has been opened too wide as almost every small or big t ender is now
sought to be challenged in writ proceedings almost as a matter of
routine. This in turn, affects the efficacy of commercial activities of the
public sectors, which may be in competition with the private sector. This
could hardly have been the objective in mind. An unnecessary , close
scrutiny of minute details, contrary to the view of the tendering
authority, makes awarding of contracts by Government and Public
Sectors a cumbersome exercise, with long drawn out litigation at the
threshold. The private sector is competing often in the same field.
Promptness and efficiency levels in private contracts, thus, often tend to
make the tenders of the public sector a non-competitive exercise. This
works to a great disadvantage to the Government and the Public Sector.
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM
CORPORATION LID. & ORS. [SANJAY KISHAN KAUL, J.]
37. In Afcons Infrastructure Limited v. Nagpur Metro Rail
Corporation Limited & Anr. 3, this Court has expounded further on this
aspect, while observing that the decision making process in accepting or
rejecting the bid should not be interfered with. I nterference is
permissible only if the decision making process is arbitrary or irrational
to an extent that no responsible authority, acting reasonably and in
accordance with law, could have reached such a decision. It ha s been
cautioned that Constitutional Courts are expected to exercise re straint
in interfering with the administrative decision and ought not to substitute
their view for that of the administrative authority. Mere disagreement
with the decision making process would not suffice.
38. Another aspect emphasised is that the author of the document
is the best person to understand and appreciate its requirements. In the
facts of the present case, the view, on interpretin g the tender
documents, of respondent No.1 must prevail. Respondent No.1 i tself,
appreciative of the wording of clause 20 and the format, has taken a
considered view. Respondent No.3 cannot compel its own
interpretation of the contract to be thrust on respondent No.1, or ask the
Court to compel respondent No.1 to accept that interpretation. In fact,
the Court went on to observe in the aforesaid judgment that it is possible
that the author of the tender may give an interpretati on that is not
acceptable to the Constitutional Court, but that itself would not be a
reason for interfering with the interpretation given. We reproduce the
observations in this behalf as under:
“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 inter pret its
documents. The constitutional courts must defer to this under-
standing and appreciation of the tender documents, unless there
is mala fide or perversity in the understanding or appreciation or
in the application of the terms of the tender condition s. It is
possible that the owner or employer of a project may give an
interpretation to the tender documents that is not acceptab le to
the constitutional courts but that by itself is not a reaso n for
interfering with the interpretation given.”
3 (2016) 16 SCC 818
969
39. We may also refer to the judgment of this Court in Nabha
Power Limited (NPL) v. Punjab State Power Corporation Lim ited
(PSPCL) & Anr., 4 authored by one of us (Sanjay Kishan Kaul, J.). The
legal principles for interpretation of commercial contract s have been
discussed. In the said judgment, a reference was m ade to the
observations of the Privy Council in Attorney General of Belize v. Belize
Telecom Ltd. 5 as under:
“16. Before discussing in greater detail the reasoning of the Court
of Appeal, the Board will make some general observations about
the process of implication. The court has no power to impro ve
upon the instrument which it is called upon to construe, whether it
be a contract, a statute or articles of association . It cannot
introduce terms to make it fairer or more reasonable. It is concerned
only to discover what the instrument means. However, that
meaning is not necessarily or always what the authors or parties
to the document would have intended…”
.... .... .... .... ....
“19. .....In Trollope & Colls Ltd. v. North West Metropolita n
Regional Hospital Board [1973] 1 WLR 601, 609 Lord Pearson,
with whom Lord Guest and Lord Diplock agreed, said:
“the court does not make a contract for the parties. The court
will not even improve the contract which the parties have made
for themselves, however desirable the improvement might be.
The court’s function is to interpret and apply the contract which
the parties have made for themselves. If the express t erms
are perfectly clear and free from ambiguity, there is no choice
to be made between different possible meanings: the clear
terms must be applied even if the court thinks some other terms
would have been more suitable. An unexpressed term can be
implied if and only if the court finds that the parties must have
intended that term to form part of their contract: it is not enough
for the court to find that such a term would have been adopted
by the parties as reasonable men if it had been suggeste d to
them: it must have been a term that went without saying, a
term necessary to give business efficacy to the contract, a
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM
CORPORATION LID. & ORS. [SANJAY KISHAN KAUL, J.]
4 (2018) 11 SCC 508
5 (2009) 1 WLR 1988 (PC)
term which, though tacit, formed part of the contract which
the parties made for themselves.”
40 . Nabha Power Limited (NPL) 6 also took note of the earlier
judgment of this court in Satya Jain (Dead) Through LRs. and Ors.
vs. Anis Ahmed Rushdie (Dead) Through LRs. and Ors. 7, which
discussed the principle of business efficacy as proposed by Bowen, L.J.
in the Moorcock 8. It has been elucidated that this test requires that
terms can be implied only if it is necessary to give business efficacy to
the contract to avoid failure of the contract and only the bare minimum
of implication is to be there to achieve this goal. Thus, if the co ntract
makes business sense without the implication of terms, the courts will
not imply the same.
41. The judgment in Nabha Power Limited (NPL) 9 concluded
with the following observations in para 72:
“72. We may, however, in the end, extend a word of caution. It
should certainly not be an endeavour of commercial courts to
look to implied terms of contract. In the current day and age,
making of contracts is a matter of high technical expertise with
legal brains from all sides involved in the process of drafti ng a
contract. It is even preceded by opportunities of seeking
clarifications and doubts so that the parties know what they are
getting into. Thus, normally a contract should be read as it reads,
as per its express terms. The implied terms is a concept, which is
necessitated only when the Penta-test referred to aforesaid comes
into play. There has to be a strict necessity for it. In the present
case, we have really only read the contract in the manner it reads.
We have not really read into it any ‘implied term’ but from the
collection of clauses, come to a conclusion as to w hat the
contract says. The formula for energy charges, to our mind, was
quite clear. We have only expounded it in accordance to its
natural grammatical contour, keeping in mind the nature of the
contract.”
6 (supra)
7 (2013) 8 SCC 131
8 (1889) LR 14 PD 64 (CA)
9 (supra)
971
42. We have considered it appropriate to, once again, emphasise
the aforesaid aspects, especially in the context of endeavours of courts
to give their own interpretation to contracts, more specifi cally tender
terms, at the behest of a third party competing for the tender, rather than
what is propounded by the party framing the tender. The object cannot
be that in every contract, where some parties would lose out, they should
get the opportunity to somehow pick holes, to disqualify the successful
parties, on grounds on which even the party floating the tender finds no
merit.
43. The observations made aforesaid should be understood in the
larger context, so as to avoid situations similar to the one we find in the
impugned order.
Conclusion:
44. The result of the aforesaid discussion is that the impugned
order is set aside and the writ petition filed by resp ondent No.3 is
accordingly dismissed.
45. The appeal is accordingly allowed, leaving the parties to bear
their own costs.
Nidhi Jain Appeal allowed.
CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUM
CORPORATION LID. & ORS. [SANJAY KISHAN KAUL, J.]