Prognosys Medical Systems Ltd. vs Mumbai Municipal Corporation and Others

D.Y. Chandrachud, J.—The Municipal Corporation invited tenders on 25 January 2010 for the supply and installation of four Flat Panel Digital Radiography Systems at KEM Hospital. On 10 March 2010, the technical bids were opened. The Municipal Corporation received six bids of which four were considered as being responsive. After scrutiny of the contents of the technical bids, the report of the scrutiny was placed before the Technical Scrutiny Committee on 23 August 2010. Dr.Hemant Deshmukh, Professor in the Department of Radiology observed a demonstration together with the Executive Engineer in the Medico Electronic Cell in June and July 2010. A report was prepared by these two officials and by the concerned Heads of Department at KEM, Nair and Sion Hospitals. During the course of the scrutiny, a letter was received from the Third Respondent on 7 May 2010 offering a demonstration of the system installed by it in South Korea and Turkey. This request was approved by the Competent Authority. A team of officials visited South Korea to observe the demonstration. Commercial bids were opened on 4 September 2010. The bid of the Third Respondent was found to be the lowest. The report was thereafter placed before the Common Purchase Committee, Technical Screening Committee and Common Tender Committee on 13 September 2010. These Committees recommended the award of the contract to the Third Respondent. The recommendation was approved by the Standing Committee of the Municipal Corporation on 7 October 2010. A letter of acceptance was issued to the Third Respondent on 11 October 2010. The contract was executed on 19 October 2010. On 2 November 2010, the Municipal Corporation opened an irrevocable letter of credit for 80% of the contract amount, in the total value of US$ 784,000 equivalent to Rs.3.55 crores. The Petition before this Court was instituted on 16 November 2010.

The challenge in this Petition to the award of the contract to the Third Respondent, is on the ground that the Third Respondent failed to meet the conditions of eligibility. Counsel appearing on behalf of the Petitioner submitted that: (i) There was no basis or justification for the Municipal Corporation to permit a demonstration by the Third Respondent in South Korea since the tender specifications provided that if needed, the tenderer would at his cost arrange for demonstration of the equipment quoted for in the tender in India; (ii) An essential requirement of the tender was that the bidder must achieve a DQE (Detective Quantum Efficiency) of at least 65% at zero line pair per millimeter. According to the Petitioner, the Third Respondent quoted a DQE of 69% at 0.1 line pair per millimeter which did not meet the tender specifications; and (iii) Contrary to the tender condition, the Third Respondent had not submitted a data sheet from the manufacturer of the equipment.

Affidavits were filed originally, in these proceedings, on behalf of the Municipal Corporation by Dr.Hemant Deshmukh, Professor, Department of Radiology and on behalf of the Third Respondent. In the affidavit filed on behalf of the Municipal Corporation, the allegation as regards the failure of the Third Respondent to fulfill the DQE parameters was denied in the following terms:

I say that Respondent No.3 are supplying Samsung detectors having maximum availability of maximum ''69% DQE'' and hence, the same meet with the specification of minimum requirement of 65% DQE.

The affidavit of the Third Respondent was silent on whether the requirement was duly fulfilled. By an order of this Court dated 9 December 2010, an opportunity was granted to the Municipal Corporation and to the Third Respondent to file further affidavits clarifying as to whether the Third Respondent fulfilled the tender conditions.

In his affidavit which has been filed on 13 December 2010, in pursuance of the directions of this Court, Dr. Deshmukh has explained the relevance of the DQE specification as follows in paragraph 2:

I say that as per the tender specifications for D.R. Systems, DQE >=65% at 0 lp/mm was one of the tender specifications asked for. DQE means Detective Quantum Efficiency and ">=" sign stands for more than or equal to. "0 lp/mm" stands for zero line pair per millimeter. This denotes spatial frequency. DQE is neither a physical component nor an accessory of the D.R. system. It is a figure expressed in percentage which is arrived after complex mathematical calculations. Detective Quantum Efficiency is not an explicitly inscribed number on the Equipment or the Detector, but has been the most commonly used metric of the ''overall'' image quality of D. R systems. It describes how efficiently a D R system translates incident Xray photons into useful signal within an Xray image. DQE is regarded as a convenient, reasonably accurate and widely accepted metric of image quality. Our specifications asking for DQE at 0 lp/mm allows for the best chance for evaluation of DQE expressed by the Petitioner and other tenderers without quoting non zero frequencies, while the Respondent No.3 specifically has given DQE of 69% at 0.1lp/mm.

Dr.Deshmukh has stated that the Third Respondent had given a technical specification of DQE as more than 69% at 0.1 line pair per millimeter. The tender specification was at zero line pair per millimeter while Samsung, whose equipment was supplied by the Third Respondent, had quoted for 0.1 line pair per millimeter. The affidavit clarifies that the DQE of 69% of the Third Respondent technically will be more than what is asked for by the technical specification. A graph is annexed to the affidavit.

In the affidavit which has been filed by the Third Respondent, it has been stated that in the data sheet submitted by the Third Respondent to the Municipal Corporation, there is a column showing Xray performance rate. A decrease in the line pair per millimeter increases the DQE. According to the Third Respondent, the requirement of DQE of at least 65% was achieved by the Third Respondent at 0.1 line pair per millimeter. According to the Third Respondent, the measurement of DQE at zero line pair per millimeter is only an extrapolation to estimate the value outside the known range.

On behalf of the Petitioner it has been submitted that neither in the affidavits as originally filed, nor in the further affidavits that have been filed, have the Respondents established the fulfillment of the tender condition by the Third Respondent.

At the outset, while evaluating the submission, the Court must be mindful of the fact that in an area involving technical expertise, the Court must be conscious of the limitations on its own jurisdiction to enquire into disputed factual issues particularly involving a scientific bearing. The Court in such cases is essentially concerned with the decision making process. There are well settled parameters for the exercise of judicial review. The award of a contract can be set aside on grounds of illegality, irrationality or procedural impropriety. There is an element of judicial restraint in judicial review of administrative action and the Court rarely if ever sits as a court of appeal. Unless there is a patent illegality in the assessment of a tender evaluation committee of the technical qualifications of a selected bidder, the Court would not ordinarily interfere under Article 226 of the Constitution. These principles emerge from several judgments of the Supreme Court, among them being the judgment in Siemons Public Communication Pvt. Ltd. v. Union of India (UOI).1 The Supreme Court there reviewed the body of law on the subject, including the earlier decision of the Court.

Now, the data sheet which was submitted by the Third Respondent reflected a DQE of 69% at 0.1 line pair per millimeter. At 0.1 line pair per millimeter, the required parameter of a DQE of at least 65% is achieved and in fact exceeded. The fact that the Third Respondent achieved the parameter at o.1 line pair per millimeter does not lead to the acceptance of the contention of the Petitioner that the DQE of the product which is to be supplied by the Third Respondent would fail to meet the tender specification of a minimum of 65% DQE at zero line pair per millimeter. The data sheet which has been placed on the record by the Third Respondent in Exhibit ''B'' to the affidavit filed before this Court on 14 December 2010, in fact, shows that as the DQE reduces from 3.5 line pair per millimeter to 0.1 line pair per millimeter, the measured DQE value increases from 20.7 to 69.0. On this basis, particularly when in the affidavit which has been filed on behalf of the Municipal Corporation by Dr.Deshmukh, it has been stated that the DQE of 69% of the Third Respondent will be more than what is asked for in the technical specification, there is no reason for the Court to sit in judgment in the manner of an appeal. That would not be the proper scope of the exercise of the writ jurisdiction. The Third Respondent, as the record before the Court indicates, submitted a data sheet and the only question was as to whether that the data sheet which had been submitted fulfills the technical specifications of the First Respondent. We do not find any perversity in the administrative decision that was taken in this regard.

The tender specification contained a requirement that when needed the tenderer at his cost should arrange for the demonstration for the equipment quoted for in India within fifteen days from the intimation of a request for demonstration. The Third Respondent has, in the affidavit dated 1 December 2010 filed in these proceedings, explained the reason why, it had suggested to the Municipal Corporation to permit a demonstration to be held in South Korea of a D.R. system installed by the Third Respondent. The relevant part of the affidavit reads as follows :

The 1st Respondent has sought for certain specific additional features like Auto positioning, auto collimation etc. It is significant to mention that these additional features are optional in nature and the existing customers of this respondent did not opt for them in the DR Systems supplied to them in India. Hence, what differs is only some additional features (which the first respondent opted), while in respect of technology, the DR systems (offered by this respondent) are exactly similar to the one which are already supplied/installed by this respondent to their existing customers in India. Hence, though the DR systems with similar technologies supplied/installed by this respondent are available in India for inspection, this respondent requested the first respondent for inspection of the DR systems (with additional features sought for by the first respondent) abroad. It was only in these circumstances, the necessity for inspection abroad arose and the first respondent thought it fit and agreed to inspect the machine abroad as well, wherein a customer had installed the machine with all these features.

One of the tender specifications was that only those tenderers who have installed and successfully commissioned at least two Digital Radiography Systems in India in the previous three years would be eligible to apply. The Third Respondent did, as a matter of fact, fulfill this requirement. In its affidavit, the Third Respondent has stated that at the time of the submission of the tender, it had more than twelve installations in large hospitals and medical colleges such as Apollo Hospitals at Chennai, Delhi, Bangalore and Kolkata, at five medical college hospitals run by Uttaranchal Government and at three Mumbai Municipal Corporation hospitals. Counsel appearing on behalf of the Municipal Corporation has also, in order to establish the bona fides of the administrative decision, adverted to a certificate dated 10 March 2010 issued by Apollo Hospital and another certificate issued by Godavari Imaging Science and Research Centre Pvt. Ltd. to the Third Respondent. The Third Respondent had also supplied a list of all the installations where it had provided Digital Radiography Systems.

The bid of the Third Respondent was accepted since it was lower than the bid of the Petitioner. As we have already noted earlier, following the acceptance of the bid, a contract was signed on 19 October 2010. The Municipal Corporation has opened an irrevocable letter of credit of 2 November 2010 for an amount of about Rs.3.55 crores. The Petition has been filed only on 16 November 2010 after this process was completed. Hence, the Court must in addition, weigh in balance the circumstance that intervention at this stage, is liable to result in the invocation of the letter of credit by the supplier. The Petitioner was not unaware of the fact that the bid of the Third Respondent was found to be technically responsive for, it was on that basis that the commercial bids of all the responsive bidders were opened on 4 September 2010.

For all these reasons, we are of the view that it would neither be appropriate nor proper for this Court to interfere in the exercise of the writ jurisdiction under Article 226 of the Constitution, particularly having regard to the well settled parameters governing the exercise of this jurisdiction in a matter relating to the award of public contracts. Even if the Court were to come to the conclusion that the administrative decision is a possible decision to be arrived at on the basis of the material on record, the Court would not be inclined to interfere. In the absence of any perversity, illegality or procedural impropriety, it would not be proper for this Court to intervene in a petition raising the grievances which we have dealt with earlier.

The Petition is accordingly dismissed. No costs.