Bombay HC Rejects Airtel's Challenge Against Maharashtra Govt Accepting Jio's Bid For High Speed Internet Services

Bombay HC Rejects Airtel

The Bombay High Court on Monday rejected a writ petition filed by Bharti Airtel challenging the notification issued by the state owned Maha IT declaring Reliance Jio's bid of Rs.1,25,659 as the lowest in reverse auction held for providing high-speed internet services across the State of Maharashtra.

Division bench of Justice SC Dharmadhikari and Justice GS Patel referred to the petitioner's stand that it was willing to pay Maha IT to be the chosen service provider (meaning that it would both pay out and would deliver services) and said- "This is possibly only ingenuity borne of desperation."

Case Background

On December 7, 2018 Maha IT issued a Request for Proposal or RFP. Title of the said RFP was: Request for Proposal for Selection of Telecom Service Provider (TSP) for Implementation of Urban Mahanet for the State of Maharashtra.

Basically, Maha IT was in search of Telecom Services Providers to provide high speed internet-based connectivity across the State, with all components: services, effective and stable bandwidth, cost-optimization. The project targeted e-Governance services to be rendered to citizens ("Government to Citizens" or "G2C"; health care, subsidies etc) and to various government agencies ("Government to Government" or "G2G"; payment consolidation and so on).

The RFP itself had one vital feature: it provided major confessions and benefits in regard to what are usually high-cost elements, particularly 'Right of Way' fees which are costs that TSPs incur while laying fables or lines along or across roads.

The entire bidding was in two phases. Phase I was used to determine the ceiling price. Phase II was the e-Reverse Auction to reduce this ceiling price.

BSNL, Reliance Jio and Bharti Airtel put in their bids. BSNLs bid was a little over Rs.1329 cr. Jio came in with a bid for over Rs.1799 cr. Bharti Airtel's bid was over Rs. 2904 cr. These three were thus placed as L1, L2 and L3 respectively in Phase I. Thereafter, Maha IT followed the RFP to fix the ceiling price at Rs.997,01,25,659 (997 cr).

The three bidders went to the e-Reverse Auction. It commenced on January 29, 2019, after some delay. Maha IT suspended the Reverse Auction January 30, 2019 at 3:24 am. By then, the lowest bid that had come in was Rs.370,01,25,659 cr. Bids kept coming in, dropping in multiples of Rs.1 crore. At about 6:14 pm that day, Bharti Airtel put in a bid of Rs.128,01,25,659 cr. Finally, at 6.23 pm on February 1, 2019, Jio put in a bid for Rs.1,25,659, dropping its bid by Rs.128 crores (Bharti Airtel's previous bid). The RFP conditions operated to allow for a further extension of 15 minutes.

According to Bharti Airtel the screen flashed the next possible bid as Rs.1 crore lower, i.e. a negative figure of Rs.-98,74,341, meaning this would be the amount Bharti Airtel now proposed to pay to Maha IT. Bharti Airtel's staff tried to input this negative figure but the system baulked and would not allow it. The 15-minute window slammed shut at 6:45 pm at Jio's final bid of Rs.1,25,659.

Bharti Airtel protested in writing once Reliance Jio was declared the successful bidder on February 2, 2019. On February 6, Maha IT wrote back saying that giving the Ceiling Price and the specification of Rs.1 crore decrement, the minimum possible bid was Rs.1,25,659. It said the system was not configured to accept bids below this or values less than or equal to zero. It also said that the law required a positive monetary consideration.

Judgement

Airtel's lawyer Senior Advocate Aspi Chinoy submitted that the clarification given over a conference call should have been a corrigendum on the website. Further, he stated that there was no material distinction between Jio's bid of Rs. 1,25,659 and a negative bid.

Jio's bid might as well be zero. It is meaningless, and if a negative bid was beyond contemplation, so too was a bid of Rs.1,26,659, Chinoy said.

After examining the Phase I bids by all the TSPs, Court noted –

"What is notable from this is that none of the three ventured to make a negative bid at the outset. No one offered to pay MahaIT, even for the 'great values of the concessions and free access benefits."

Further, the bench observed-

"Indeed, if what Bharti Airtel says is correct — viz., that the privileges and concessions are worth several thousands of crores, and there is no embargo on a negative bid — then nothing stopped it from making a negative Phase I bid in the first place. One of two things would have happened had it done so: it might have been disqualified or, and at a minimum, its bid would have vastly driven down the starting Ceiling Price."

Court pointed out how the petitioner's claim to pay for securing the lowest bid was "counter-intuitive and without known or established precedent."

"As we shall see, there was a possible computer coding error displayed on screen, but this fan hardly nullifies contractual conditions. Where coders err, lawyers prosper, and it seems to us that this is all there is to it. To put it bluntly, Bharti Airtel's case that it was willing to pay MahaIT to be the chosen service provider (meaning that it would both pay out and would deliver services) is possibly only ingenuity borne of desperation.

Certainly, we have seen nothing at all to indicate that from the very inception Bharti Airtel found the concessions and free access so very financially seductive, that it offered to do this work free or by paying Maha IT for the privilege of being a service provider. The record is to the contrary. Bharti Airtel first made this claim of the privileges and confessions being worth thousands of crores of rupees only after the Reverse Auction had closed against it."

Thus, Court noted that the petition was without merit and rejected it.

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