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® IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 6TH DAY OF DECEMBER 2012
BEFORE
THE HON’BLE MR. JUSTICE DILIP B BHOSALE
W.P.NO. 46481/2012 (GM-TEN)
BETWEEN M/S IVRCL-PJSC LSHP-PJSC LGSH-DM CONSORTIUM C/O IVRCL LIMITED “MIHIR”, 8-2-350/5/a/24/1-b &2, PANCHAVATI COLONY ROAD NO.2 BANJARA HILLS HYDERABAD-500 0034, ANDHRA PRADESH, INDIA BY ITS AUTHORIZED REPRESENTATIVE SRI.V.VASUDEVA, AGED ABOUT 52 YEARS
... PETITIONER
(By Sri. UDAYA HOLLA FOR SRI. A K SUBBAIAH & A S PONNANNA)
AND 1. THE STATE OF KARNATAKA
BY ITS SECRETARY DEPARTMENT OF MINES & GEOLOGY VIDHANA SOUDHA, BANGALORE.-560001
2. M/S HUTTI GOLD MINES LTD., (GOVERNMENT OF KARNATAKA UNDERTAKING) HAVING ITS REGD. OFFICE AT 3RD FLOOR KARNATAKA HOUSING BOARD NEW SHOPPING COMPLEX KORAMANGALA POST BANGALORE-560047, BY ITS MANAGING DIRECTOR
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3. M/S SHRIRAM EPC LTD.,
SHANDONG GOLD GROUP YANTAI DESIGN RESEARCH ENGINEERING COMPANY LTD., REP.BY ITS REPRESENTATIVE SRI.ARVIGALAM. ENGINEERING CENTRE TECHNOLOGY PARK NO.SP 31A, 2ND MAIN ROAD, AMBATTUR INDUSTRIAL ESTATE, AMBATTUR, CHENNAI - 600058. ... RESPONDENTS
(By Sri. E.S. INDIRESH - HCGP FOR R1) (BY SRI. M.R.C. RAVI – FOR R-2) (BY SRI. K.G. RAGHAVAN – SR. ADVOCATE FOR SRI. K. SHASHIKIRAN SHETTY – FOR R-3)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO CALL
FOR THE RECORDS AND DIRECT IN THE NATURE OF
MANDAMUS DECLARING THAT THE ACTION OF R2 OPENING
THE PRICE BID OF R3 ON 10.11.12 IS ILLEGAL AND AB-INITIO
VOID;
DIRECT IN THE NATURE OF MANDAMUS DECLARING
THAT THE ACTION OF THE R2 OPENING PRICE BID OF THE R3
WITHOUT THERE BEING PROPER TENDER FROM R3 IS WITHOUT
JURISDICTION AND ILLEGAL;
DIRECT IN THE NATURE OF MANDAMUS DECLARING
THAT THE PETITIONER IS THE ONLY QUALIFIED BIDDER IN
THE TENDER PURSUANT TO THE NOTICE INVITING TENDER
DATED 24.5.12 VIDE ANNX-D; ETC.
THIS W.P. COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING:
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ORAL JUDGMENT (DILIP B. BHOSALE J.)
In this writ petition, the petitioner is seeking the
following reliefs :
i) issue appropriate writ or order or direction in the
nature of mandamus declaring that the action of
the 2nd respondent in opening the price bid of the
3rd respondent on 10.11.2012 is illegal and ab-
initio void, in the interest of justice.
ii) Issue appropriate writ or order or direction in the
nature of mandamus declaring that the action of
the 2nd respondent in opening the price bid of the
3rd respondent without there being a proper
tender from the 3rd respondent is without
jurisdiction and illegal.
iii) Issue appropriate writ or order or direction in the
nature of mandamus declaring that the petitioner
is the only qualified bidder in the tender pursuant
to the notice inviting tender dated 24.05.2012, a
copy of which is herein produced as ANNEXURE –
D.
iv) Issue appropriate writ or order or direction in the
nature of mandamus directing the 2nd respondent
to accept the bid of the petitioner and award the
work in its favour.
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2. Briefly stated the facts leading to this writ
petition are as under:
The 2nd respondent invited tenders by issuing a
Notification on 10.8.2010 for the work of shaft construction
(sinking & lining), furnishing and equipping of a new
vertical shaft of 6.0 mts. finished dia and 940 mts. depth
complete with winding installations, on TURNKEY basis at
the Hutti Gold Mines Co. Ltd., District Raichur, State of
Karnataka. In response thereto, several parties
participated in the tender process and ultimately the
petitioner and one another remained in the race. The
another party had to file an appeal and after succeeding in
the appeal, it was also held to be qualified in the first
round. This entire process took about 1 ½ years and
hence respondent no. 2 – the Tender Inviting Authority
(for short `the TIA’) cancelled the said tender notification,
without opening the price bids. Thereafter, once again a
Tender Inviting Notice (for short “NIT”) was issued on
24.5.2012. The bids were invited through e-portal system
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as provided for in the Karnataka Transparency Public
Procurement Act, 1999 (for short `the Transparency Act’)
from bonafide and experienced contractors for the very
same work on turnkey basis.
3. As per NIT dated 24.5.2012 the last date for
submission of bids in two covers (i.e. technical and price)
was 25.7.2012 and the date for opening the bids was
28.7.2012. A pre-bid meeting was scheduled to be held on
22.6.2012,as indicated in the NIT. Eight participants
including the petitioner and respondent no.3 attended the
pre-bid meeting. In the said meeting, TIA received 44
queries in all from different parties to which clarification
was up-loaded in the e-portal on 2.7.2012 as addendum –
I. Subsequently, 14 more queries were received and they
were also considered and clarification thereto was up-
loaded as addendum-II in e-portal on 27.7.2012.
Considering the quantum of queries and the time
consumed in clarifying the queries, the TIA, vide
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corrigendum dated 24.7.2012, extended the last date for
submission of tender till 10.8.2012 and for opening the
tender it was extended to 14.8.2012. Once again the
dates were extended to 27.8.2012 and 31.8.2012.
Though the tenders were to be opened on
31.8.2012, the Tender Scrutiny Committee (for short `the
Committee’) met only on 14.9.2012 to open the technical
bids. In the first round (i.e. technical bid stage) the
petitioner and respondent no.3 only were held to be
successful by the Committee. Both were, therefore, invited
for discussion and accordingly the meeting was held on
20th & 21st Sept. 2012. The said meeting, was, however,
attended by the petitioner alone. In that meeting the
petitioner was requested to furnish clarifications on 42
points raised by the Committee. Since the 3rd respondent
could not attend the meeting on the 20th & 21st Sept., they
were invited for discussion on 1.10.2012. During this
meeting the 3rd respondent was requested to clarify 33
points raised by the Committee. The meeting dated
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1.10.2012 was attended by the petitioner also. Neither
the petitioner nor respondent No.3 raised any objection
against each other at any point of time till filling of the writ
petition. The Committee thereafter met on 12.10.2012 to
consider the replies furnished by the petitioner and
respondent no.3. During the meeting, petitioner
requested, in writing, to permit them to revise the price
bid. The permission was however refused.
4. Subsequently, the matter was placed before the
Board in its meeting dated 18.10.2012. The Board noted
the recommendations of the Committee, qualifying both
the bidders, having complied all the requirements of NIT.
Thereafter, the matter was placed before the Board in its
meeting held on 18.10.2012. The Board after detailed
discussion resolved to open price bids and authorized the
Managing Director to open and send proposal to the
Government for approval. The price bids were, accordingly
opened on 10.11.2012 and on comparison it was found
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that the price quoted by the 3rd respondent was lower by
about Rs.36 crores.
5. After evaluation of the price bids, a statement of
the price quoted was prepared and proposal was submitted
to the Government for approval where the matter is still
pending. The Government has yet not taken final decision.
6. This writ petition has been filed by the petitioner
on 17.11.2012, challenging the decision of the 2nd
respondent to open the price bid of the 3rd respondent.
The petitioner also seeks declaration that he is the only
qualified bidder and that the 2nd respondent be directed to
accept their bid and award the work in their favour.
7. I have heard learned counsel for the parties at
considerable length. The challenge in the writ petition is
on the ground that the condition to submit a copy of the
registered Memorandum of Understanding (for short `the
MoU’) entered into by parties along with the technical bid
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was not complied by respondent no.3. The condition to
submit registered MoU, according to the petitioner, was
mandatory as was clarified in the pre-bid meeting.
Admittedly, respondent no.3 while submitting their tender
did not enclose / submit registered MoU. While submitting
the technical bid, a notarized copy of the MoU was
submitted by respondent no.3 and the registered MoU was
submitted on 11.10.2012, i.e. before the price bids were
opened.
8. Mr. Holla, learned senior counsel appearing for the
petitioner vehemently submitted that the condition to
submit a registered MoU being mandatory in nature, the
TIA ought to have rejected the technical bid submitted by
respondent no.3. In support of this contention, he invited
my attention to various terms and conditions incorporated
in the NIT – Part II – instructions to tenderers. He
submitted that the degree of care required in such bidding,
which is in the nature of global tender, is greater than in
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ordinary local bids for small works and that it is essential
to maintain the sanctity and integrity of process of tender /
bid and also award of contract. In a work of this nature
and magnitude, he submitted that the bidder who fulfills
pre-qualification alone should be invited to bid, and in any
case adherence to the instructions cannot be given a go
bye, by branding it as a pedantic approach encouraging
and providing scope for discrimination, arbitrariness and
favouritism which is totally opposed to the rule of law and
our constitutional values. In support of this contention he
placed reliance upon the judgment of the Supreme Court
in W.B. STATE ELECTRICITY BOARD versus PATEL
ENGINEERING CO. LTD AND OTHERS – (2001) 2 SCC
451. Mr. Holla then invited my attention to the Judgment
of the Supreme Court in GLODYNE TECHNOSERVE
LIMITED Versus STATE OF MADHYA PRADESH AND
OTHERS – (2011) 5 SCC 103 to submit that the TIA
ought to have rejected the bid document of respondent
no.3 solely on the ground that they did not submit
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registered MoU along with their technical bid and that they
should not have relaxed the conditions because such
discretion was not vested in it by the NIT or under Rules
26 or 27 of the Transparency Rules. In support of this
contention, he placed reliance upon the Judgment of this
Court in M/S GAGANA vs. PRL. SECRETARY TO
GOVERNMENT, ENGINEERING DEPARTMENT & ORS. –
ILR 2005 KAR. 3973.
9. On the other hand, Mr. M.R.C. Ravi learned
counsel for the TIA submitted that the petitioner did not
raise any objection of whatsoever nature, when the
technical bids were opened or during pre-bid meetings or
any time before price bids were opened. He submitted
that as a matter of fact, even the respondent’s bid was
also liable to be rejected solely on the ground that he
sought permission to revise the price bid in contravention
of clause 4 (3) in the TIA. He submitted that as the TIA
over-looked the letter issued by petitioner seeking
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permission to revise the price bid they allowed respondent
no.3 also to place on record registered MoU in the place of
notarized MoU. In any case this was not a mandatory or
essential condition as argued. The TIA did not disqualify
both, the petitioner and respondent no.3 with an intention
to have healthy competition and to avoid further delay. He
then invited my attention to the statement of objections
filed by them and submitted that seeking clarification on
42 points raised by the Committee from the petitioner and
on 33 points from respondent itself indicates that the
technical bids were suffering from certain deficiencies and
they were allowed to be rectified. In the circumstances, it
is not open for the petitioner now turn around and to seek
the prayers as made in the present writ petition.
10. Mr. K.G. Raghavan, learned senior counsel for
respondent no.3 at the outset invited my attention to the
Judgment of the Supreme Court in G.J.FERNANDEZ VS.
STATE OF KARNATAKA & ORS -1990 SCR (1) 229 and
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submitted that even if it is assumed that there was an
irregularity in the technical bid submitted by respondent
no.3, that itself cannot be a ground for rejecting their bid.
The decision to open the price bid of respondent no.3,
despite the fact that registered MoU was not submitted
along with the technical bid, has not caused any prejudice
to the petitioner who had supplied registered MoU along
with their technical bid. On the contrary, the TIA by
accepting the technical bids of both, the petitioner and
respondent no.3, kept the fair competition alive which is
the objective of inviting tenders. In any case, a participant
such as the petitioner cannot oppose the decision of the
TIA to gain immunity from competition. He then
submitted, it cannot be held that the TIA was not entitled
to waive even a technical irregularity of little or no
significance and that it was not open to the TIA to deviate
from and not to insist upon the strict literal compliance of
the said condition. He placed reliance upon the Judgments
of the Supreme Court in PODDAR STEEL CORPORATION
14
vs. GANESH ENGINEERING WORKS – AIR
1991 SC
1579. Next he submitted that in any case the impugned
decision cannot be held to be vitiated by malafides,
unreasonableness and arbitrariness. In other words, the
impugned decision cannot be stated to be of such a nature
where this court should exercise its discriminatory power
under Article 226 of the Constitution of India. The power
under this Article needs to be exercised with great caution
and it should be in furtherance of public interest and not
merely on the making out of a legal point. In support he
placed reliance upon the judgments of the Supreme Court
in AIR INDIA LTD. vs. COCHIN INTERNATIONAL
AIRPORT LTD. & ORS - AIR 2000 SC 801;
M/S.B.S.N.JOSHI & SONS LTD vs. NAIR COAL
SERVICES LTD. & ORS - AIR 2007 SC 437; SIEMONS
PUBLIC COMMUNICATION PVT. LTD vs. UNION OF
INDIA & ORS. - AIR 2009 SC 1204; and W B STATE
ELECTRICITY BOARD (supra).
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11. Learned AGA appearing on behalf of respondent
no.1 submitted the present petition is premature since the
Government has yet not taken final decision and that the
possibility of cancelling the entire tender process initiated
on the basis of NIT dated 24.5.2012 cannot be ruled out,
having regard to the powers of the Government to cancel
the tender process and invite fresh bids. Next he
submitted that the petitioner cannot be granted the reliefs,
as prayed, at such a belated stage, i.e. after opening of
the price bid.
12. At the outset, I would like to look into the law
referred to by learned counsel for the parties. My
attention was invited to the judgment of the Supreme
Court in W.B. STATE ELECTRICITY BOARD (supra) in
support of the contention that the nature of tender in the
present case is like an international competitive bid which
postulates keen competition and high efficiency. My
attention was specifically drawn to paragraph 24 of the
judgment which reads thus:
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The controversy in this case has arisen at the threshold. It cannot be disputed that this is an international competitive bidding which postulates keen competition and high efficiency. The bidders have or should have assistance of technical experts. The degree of care required in such a bidding is greater
than in ordinary local bids for small works. It is essential to maintain the
sanctity and integrity of process of tender/bid and also award of a contract. The appellant, respondents 1 to 4 and respondents 10 & 11 are all bound by the ITB which should be complied with scrupulously. In a work of this nature and magnitude where bidders who fulfil prequalification alone are invited to bid, adherence to the instructions cannot be given a go-by by branding it as a pedantic approach otherwise it will encourage and provide scope for discrimination, arbitrariness and favouritism which are totally opposed to the rule of law and our Constitutional values. The very purpose of issuing rules/instructions is to ensure their enforcement lest the rule of law should be a casualty. Relaxation or waiver of a rule or condition, unless so provided under ITB, by the State or its agencies (the
appellant) in favour of one bidder would create justifiable doubts in the minds of
other bidders, would impair the rule of
transparency and fairness and provide room for manipulation to suit the whims
of the State agencies in picking and choosing a bidder for awarding contracts
as in the case of distributing bounty or charity. In our view such approach should
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always be avoided. Where power to relax or waive a rule or a condition exists under the rules, it has to be done strictly in compliance with the rules. We have, therefore, no hesitation in concluding that adherence to ITB or rules is the best principle to be followed, which is also in the best public interest.
In GLODYNE TECHNOSERVE LIMITED Versus STATE
OF MADHYA PRADESH AND OTHERS – (2011) 5 SCC
103 the bidders were expected to possess a valid quality
certificate in the Capability Maturity Model (CMM level 3 or
above). In addition, the partners of the consortium were
expected to submit current ISO 9001:2000 certificate as
qualifying document. The question in that case for
decision was whether on account of the corrigendum,
whereby the provisions of section 3 of the tender
document and section 7 of the bidder’s check list were
amended, the appellant was disqualified from
consideration, in view of the fact that along with the
tender document, it had filed through inadvertence or
otherwise a copy of the ISO 9001:2000 certificate of the
previous year, instead of the current year, although it did
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have the said valid ISO 9001:2000 certificate at the time
of making of the bid. In that case, the technical bid was
rejected solely on the ground that the current ISO
certificate was not produced. The Supreme Court upheld
the decision rejecting the bid of the appellant. The
relevant observations to which my attention was drawn in
paragraphs 46 & 47 reads thus:
“ 46. The above provision obliges a tenderer to produce along with the bid document a copy of the quality certificate which is valid and active on the date of submission of the bid and it does not enable a bidder to withhold the copy of such quality certificate. Where the quality certificate will be expiring shortly and is due for renewal, the bidder is also obliged to produce the renewed certificate at the time of signing of the contract. The appellant calimed to have a vlid and active ISO 9001:2000 certificate at the time of submission of the bid, but did not produce a copy of the said certificate along with the bid document.
47. The submissions made on behalf of the
appellant proceeds on the basis that it was entitled, almost as a matter of right, not to submit the documents required to be submitted along with the bid documents on the supposition that, even if such documents were valid and active, they could be submitted
19
at the time of signing of the memorandum of understanding. The appellant had a valid and active ISO 9001:2000 certification
which it did not submit along with the bid documents, may be due to inadvertence,
but “whether such explanation was to be accepted or not lay within the
discretionary powers of the authority inviting the bids”. The decision taken to
reject the technical bid of the appellant cannot be said to be perverse or
arbitrary……
In Glodyne Technoservice Ltd., the challenge was
to the decision to reject the bid for non-submission of ISO
Certificate and while dealing with the challenge the
Supreme Court observed that the concerned authority was
within the discretionary powers and their decision cannot
be said to be perverse or arbitrary, which is not a case in
the present petition.
My attention was also invited to paragraph 20 of the
judgment of this Court in M/S GAJANANA ENGINEERS
vs THE PRINCIPAL SECY. TO GOVERNMENT ENERGY
DEPARTMENT AND OTHERS - ILR 2005 KAR 3973.
The relevant paragraph reads thus:
20
“If we carefully peruse the Certificates produced by the appellant and the contesting respondents 4 to 6, extract above, the Certificates produced by respondents 4 to 6 cannot be said to be the Certificate in proof of the qualifying condition of financial capacity As on the date of submission of tender, in terms of the tender conditions incorporated in the Tender Notification, the tenderers should have the minimum capapcity to spend Rs. 40 lakhs, which the appellant has as per the Certificate issued by the State Bank of India, whereas the contesting respondents 4 to 6 did not have. There can be no relaxation of the conditions by the Tender inviting Authority because such discretion is not bested in it by the Tender Notification or under the Rules 27 and 28 of the Rules. The condition requiring the proof of Financial capacity to an extent of Rs. 40 lakh cannot be regarded as a subsidiary or ancillary condition. The prescription that a tenderer should produce the proof of Financial capacity of Rs. 40 Lakhs to spend is undeniably an essential tender condition to ensure that a tenderer would carry out the work effectively and without any default, it ultimately the contract is awarded to such tenderer. There can be no
relaxation of the condition by the Tender inviting Authority in view of the condition
specified in the Tender Notification and
also in view of the Rules 27 and 28 of the Rules. (emphasis supplied) In G.J. FERNANDEZ (supra) the contract pertained
to construction of Main Station Building of a Power House
21
at the Raichur Thermal Power Plant. It appears that six
parties had applied for tender books. On scrutiny with
reference to pre-qualifying requirements and data of
experience, work done, etc. four of the firms were found to
be pre-qualified by the Chief Engineer. The principal
argument advanced on behalf of the petitioner in the case
was that paragraph I & V of the NIT specified certified
pre-qualification requirements and unless they were
fulfilled the contractor was not even entitled to be supplied
with a set of tender documents. It was submitted that
MCC did not comply with those requirements and hence
their application ought to have been rejected. The learned
Single Judge and so also the Division Bench in appeal
rejected the argument advanced on behalf of the
petitioner. The Supreme Court while dealing with the
appeal observed that it would be difficult to accept the
view of the learned single Judge of the High Court that it is
only paragraph I that stipulates pre-condition and that all
the documents referred to in the other paragraphs can be
22
supplied at any time before final award of the contract.
Despite such observation, the Supreme Court refused to
interfere with the view taken by the High Court. The
relevant observations in the Judgments read thus:
“It will be too extreme to hold that the omission to supply every small detail referred
in para V would affect the eligibility under
para I and disqualify the tenderer. The question how far the delayed supply, or
omission to supply, any one or more of the details referred to therein will affect any of
the prequalifying conditions is a matter which it is for the K.P.C. to assess. We have seen that the documents having a direct bearning on para I viz. regarding output of concrete and brick work had been supplied in time. The delay was only in supplying the details regarding "hollow cement blocks" and to what extent this lacuna effected the conditions in para I was for the K.P.C. to assess. The minutes relied upon show that, after getting a clarification from the General Manager (Technical), the conclusion was reached that "the use of cement hollow block masonry may not be required at all and instead the brick masonry may be used". In other words, the contract was unlikely to need any work in hollow cement blocks and so the document in question was considered to be of no importance in judging the pre-qualifying requirements. There is nothing wrong with this particularly as this document was eventually supplied”.
(emphasis supplied)
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…………..
“Right or wrong, this was the way they had understood the standard stipulations and on the basis of which it had processed the applications for contracts all along. The minutes show that they did not deviate or want to deviate from this established procedure in regard to this contract, but, on the contrary, decided to adhere to it even in regard to this contract. They only decided, in view of the contentions raised by the appellant that para V should also be treated as part of the prequalifying conditions, that they would make it specific and clear in their future N.I.T.s that only the fulfilment of prequalifying conditions would be mandatory. If a party has been consistently and bona fide interpreting the standards
prescribed by it in a particular manner, we do not think this Court should interfere
though it may be inclined to read or construe the conditions differently. We are, therefore,
of opinion that the High Court was right in
declining to interfere”.
…………
“The question, then, is whether the
course adopted by the K.P.C. has caused any real prejudice to the appellant and
other parties who had already supplied all the documents in time and sought no
extension at all? It is true that the relaxations of the time schedule in the case
of one party does affect even such a person in the sense that he would otherwise have
had one competitor less. But, we are inclined to agree with the respondent's
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contention that while the rule in Ramana's case (supra) will be readily applied by Courts to a case where a person complains that a departure from the qualifications has kept him out of the race, injustice is less apparent where the attempt of the applicant before Court is only to gain immunity from competition”.
(emphasis supplied)
In PODDAR STEEL CORPORATION VS. GANESH
ENGINEERING WORKS- AIR 1991 AIR SC 1579 the
Supreme Court observed thus:
“As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every
term mentioned in the notice in meticulous detail, and is not entitled to waive even a
technical irregularity of little or no significance. The requirements in a tender
notice can be classified into two categories-those which lay down the essential
conditions of eligibility, and the others which are merely ancillary or subsidiary
with the main object to be achieved by the
condition. In the first case the authority issuing the tender may be required to
enforce them rigidly. In the other case it must be open to the authority to deviate
from and not to insist upon the strict literal compliance of the condition in appropriate
cases.” (emphasis supplied)
Similarly, in SEIMONS PUB. COMMUNICATION
NETWORKS (supra) the Supreme Court observed thus:
25
“ 21. In Jagdish Mandal Vs. State of Orissa & Ors. 2006 (14) SCALE, 224, the scope of limited power of judicial review in tender and award of contracts was also lucidly stated in paragraph 19 as follows :-
“19. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides. Its purpose is to check whether choice or decision is made 'lawfully' and not to check whether choice or decision is 'sound'. When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise
of power of judicial review will not be permitted to be invoked to protect private
interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succor to thousands
26
and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual
matters in exercise of power of judicial review, should pose to itself the following
questions:
(i) Whether the process adopted or decision made by the authority is mala
fide or intended to favour someone.
OR Whether the process adopted or
decision made is so arbitrary and
irrational that the Court can say: 'the decision is such that no responsible
authority acting reasonable and in accordance with relevant law could have
reached.'
(ii) Whether public interest is
affected. If the answers are in the negative, there should be no interference
under Article 226. Cases involving black-listing or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.
(emphasis supplied)
In B.S.N. JOSHI & SONS LTD. (supra) the
Supreme Court observed thus:
“59. In Jagdish Swarup's Constitution of India, 2nd Edition, page 286, it is stated:
27
"It is equally true that even in contractual matters, a public authority does not have an unfettered decision to ignore the norms recognized by the Courts, but at the same time if a decision has been taken by a public authority in a bona
fide manner, although not strictly following the norms laid down by the Courts, such
decision is upheld on the principle that the Courts, while judging the constitutional
validity of executing decisions, must grant a certain measure of freedom of "play in the
joints" to the executive."
60……… Even when some defect is found in the decision-making process, the court must exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point.
68. We are also not shutting our eyes towards the new principles of judicial review which are being developed; but the law as it stands now having regard to the principles laid down in the aforementioned decisions may be summarized as under :
i) If there are essential conditions, the same must be adhered to;
ii) If there is no power of general relaxation,
the same shall not be exercised and the principle of strict compliance would be applied
where it is possible for all the parties to comply with all such conditions fully;
28
iii) If, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing
iv) The parties who have taken the benefit of such relaxation should not
ordinarily be allowed to take a different stand in relation to compliance of another
part of tender contract, particularly when he was also not in a position to comply
with all the conditions of tender fully, unless the court otherwise finds
relaxation of a condition which being essential in nature could not be relaxed
and thus the same was wholly illegal and without jurisdiction.
v) When a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders
had in fact substantially complied with the purport and object for which essential
conditions were laid down, the same may not ordinarily be interfered with.
(vi) The contractors cannot form a cartel. If despite the same, their bids are considered and they are given an offer to match with the rates quoted by the lowest tenderer, public interest would be given priority.
(vii) Where a decision has been taken purely on public interest, the Court ordinarily should exercise judicial
restraint. (emphasis supplied)
29
In AIR INDIA LTD. (supra) the Supreme Court observed thus:
“The award of contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount are commercial considerations. The State can choose its own method to arrive at a
decision. It can fix its own terms of invitation to tender and that is not open
to judicial scrutiny. It can enter into negotiations before finally deciding to
accept one of the offers made to it. Price need not always be the sole criterion for
awarding a contract. It is free to grant
any relaxation, for bona fide reasons, if the tender conditions permit such a
relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial
review, the Court can examine the decision making process and interfere if
it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision making process the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not
30
merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide
whether its intervention is called for or not. Only when it comes to a conclusion
that overwhelming public interest requires interference, the Court should
intervene”.
(emphasis supplied)
13. Mr. Holla, learned senior counsel appearing for
the petitioner while commenting on the judgments relied
upon by learned counsel for the respondents submitted
that in none of those cases pre-bid meetings were held
and a clarification, as sought in the pre-bid meeting in the
present case, was sought and that the request made by
the bidders, to allow them to submit registered MoU
subsequently was rejected. Mr. Raghaven, on the other
hand, submitted, that even if it is assumed that there was
a defect in the technical bid submitted by respondent no.3,
this Court should not exercise its discretionary power
under Article 226 since the decision was not malafide and
it is not against the public interest. In other words, he
31
submitted that even when some defect is found in the
decision making process, the High Court must exercise its
discretionary power with great caution and should exercise
it only in furtherance of public interest and not merely on
the making out of legal point. He therefore, submitted
that the judgments relied upon by the learned senior
counsel for the petitioner would not apply to the facts of
the present case.
14. In the present case, the tenders were invited in
the two covers bid system as per the transparency Act and
it was to be submitted through e-portal. The parties
having joint venture / consortium, were also allowed to
participate in the tender process subject to their
registration with the Government of Karnataka e-
procurement portal prior to tender application. The
tenders were to be accepted through electronic tendering
mode only with tender processing fees as per e-portal
norms. Before I proceed further, it would be relevant to
32
have a glance at the relevant clauses in the NIT which
stipulates conditions to be complied with for participating
in the tender process.
15. The NIT provided that tenderers should have
completed at least one work of shaft sinking of depth not
less than 800m with high speed shaft sinking method and
achieved an average advance of more than 60m per month
in shaft sinking and its allied works; designed a shaft
system for carrying men, material and ore for shaft of
depth not less than 800 m in the last ten years including
lining; designed, manufactured/supplied and installed a
suitable conventional double drum winding system
(Man/Material Winding), for an operating depth of more
than 1000m and a friction winder (Ore Hoisting) for similar
depth in the last 10 years; and the tenderer or lead
member in case of a Joint venture Company Consortium
should have a consistent turnover of $150 crores or
33
equivalent, in the last 5 years, and a net worth of $200
crores or equivalent, during the last 5 years.
Under clause 1.4 of the instructions to tenderers the
NIT made it clear that the incomplete tenders will be
rejected. The next relevant condition in the NIT under
clause 1.5 reads thus:
“No page of the Tender document shall be removed or altered and the whole set of Tender document given must be submitted after being filled in and signed by the Tenderer himself or his authorized signatory, in which case, poof of such authorization should be submitted along with the Tender. Failure to comply with this instruction may result in rejection of the Tender”. Clause 2 of the Instructions deals with eligibility
criteria. It would be useful to reproduce this clause to
appreciate the arguments advanced by learned counsel for
the parties. Clause 2 reads thus:
2.1 The Tenderers should have successfully planned, designed and implemented similar projects preferably under conditions similar to those prevailing in India. The Tenderers should be experienced in the following:
34
i) Should have completed at least one work contract in high speed shaft sinking and associated works and should have achieved an average advance of more than 60 meters per month in shaft sinking for a minimum depth of 800m. during the last 10 years. ii) Should have designed and executed a shaft system for carrying men, material and ore for shaft of depth not less than 800m. in the last 10 years
iii) Should have designed and executed shaft lining and insets for a shaft of depth not less than 800m. in the last 10 years
iv) Should have designed, manufactured/ supplied and installed a suitable conventional double drum winding system (Man / material Winding), for an operating depth of 1300 m. and a friction winder (Ore Hoisting) for similar depth in the last 10 years. The Winders should be of the following make only: a) M/s. ABB, Switzerland/Sweden; b) M/s. Inco, Czech Republic; c) M/s. Davy Markham, UK; d) M/s. Siemag, Germany; e) M/s. Siemens, Germany; and f) M/s Hepburn Engineering, Canada
v) The bidder or lead member in case of a Joint venture Company/Consortium should have a consistent turnover, of 150 crores of equivalent, in the last 5 years, and a net worth of 200 crores or equivalent, during the last 5 years. Documentary evidence in the form of a signed photocopy of work order or similar document proving compliance for (i) to (iv) and signed photocopy of audited balance sheet proving compliance for (v) should be submitted along with the Tender.
35
This clause provides eligibility criteria for tenderers
to participate in the tender process. From the very nature
of the conditions prescribed in this clause, it is clear that
they are not only essential conditions but they are
mandatory in nature having regard to the nature of work
that will be allotted to the successful bidder and the
quantum of the tender amount. In short, on the face of
these conditions, it is further clear that these conditions,
in any circumstances, cannot be relaxed, and that perhaps
is the reason why the compliance of these conditions is
made mandatory in clause 2.3 which deals with
Consortium.
Clause 2.3 of the instructions to tenderers provides
that a consortium may also along with copy of satisfactory
performance report issued by the customer, submit
tenders. Either of the members or combination of
members together should meet the eligibility criteria as
specified for joint venture company in cl. 2.1, (i) to (iv). It
further provides that in case successful tenderer is a
36
Consortium, all Consortium members shall be the
signatories to the contract. In addition thereto, some
more conditions were prescribed under cl. 2.3 for the
Consortium to comply with. Sub-cl. (vi) in cl. 2.3 provides
a copy of the registered MoU entered into by the
Consortium members shall be submitted with the tender
containing division of work of each member. Their joint
and several responsibility, which shall be followed by a
firm agreement of becoming a successful tenderer is to be
submitted along with the security deposit. In case of
Consortium, it further provides that tender must be
supported by a certified copy of MoU among the
consortium members satisfying clause 2.1 (i) and 2.1 (v).
Thus from clause 2.3 which deals with Consortium
make it clear that unless eligibility criteria as specified for
joint venture company in clause 2.1 is complied with, their
tender shall not be considered. In other words, from bare
perusal of clause no.2.1 and 2.3 it is clear that the
conditions prescribed in clause 2.1 are mandatory in
37
nature and / or essential conditions for participating in
tender process. It is true that in the present case in reply
to the clarification sought by some of the tenderers, it was
made clear that registered MoU should be submitted with
the tender and that this condition has been relaxed in case
of respondent no.3. I will deal with this aspect little later.
From perusal of clause 2.1 and 2.3 it appears that TIA was
more concerned and focused about the eligibility criteria.
Insofar MoU is concerned, they were also concerned about
the division of work of each member of the consortium and
that their joint and several responsibilities, followed by a
firm agreement. In other words, a copy of the MoU was
required along with the tender so as to verify whether it
contains division of work of each member and that there is
a firm agreement between the members of the
Consortium. It is also relevant that members of
Consortium should satisfy all the conditions prescribed in
cl. 2.1 (i) to cl. 2.1 (v).
38
Clause 3.3. provides that the commercial part shall
consist of commercial terms and conditions – the original
tender document issued to the tenderer duly signed by the
authorized signatory on all the pages as proof of accepting
the conditions of contract (excluding the price bid). The
next relevant clause 4.3 provides that any request from
the tenderer in respect of the additions, alterations,
modifications, corrections, etc. of their terms and
conditions or rates of his tender, after opening of the
tenders would lead to rejection of their tender.
16. In the present case, the second respondent had
initially invited tender by issuing Tender Notification on
10.8.2010. In response to the said notice, several parties
including the petitioner had submitted tenders and
ultimately petitioner alone remained in the race. This
Court is informed by learned counsel for the TIA that one
of the participant whose technical bid was rejected on the
ground that he did not submit registered partnership deed
39
along with their tender had approached the appellate
authority under section 16 of the Transparency Act and the
appeal was allowed and in view thereof, petitioner and that
party remained in the race. However, in this process
about 1½ years time elapsed and therefore, TIA decided to
cancel the tender process without opening the price bids.
Thereafter, they issued another NIT on 25.4.2012.
In response thereto eight companies participated in the
process including the petitioner and respondent no.3. The
last date that was extended to submit the tender was
27.8.2012 and the Tender Scrutiny Committee opened the
technical bids on 14.9.2012. On scrutiny only 2 bidders
viz. the petitioner and respondent no.3 were declared
successful / qualified and they both were invited for
discussion in the meetings scheduled on 21st and 22nd
Sept. 2012 and once again on 1st October, 2012 since
respondent no.3 could not remain present on 20th and 21st.
During those meetings the TIA sought clarification from
the petitioner as well as from respondent no.3 on certain
40
points. The petitioner did not raise any objection of
whatsoever nature against the decision of holding
respondent no.3 qualified either in the meeting held on
20th and 21st September, 2012 or in the meeting held on
1st Oct. 2012.
17. It is true that respondent no.3 had not submitted
registered MOU along with technical bid and he was
allowed to submit the registered MoU on 11.10.2012, i.e.
before opening the price bid. Apart from this deficiency no
other deficiency, worth noticing was pointed out by the
petitioner in the course of hearing of the petition.
Similarly, it was specifically pointed out that the petitioner
also had not submitted signed copy of NIT, duly accepting
the terms and conditions therein. The petitioner supplied
copy of the NIT duly signed by the authorized person on
8.10.2012. Though the petitioner claims that they had up-
loaded the signed copy of NIT along with the technical bid,
apart from oral submission, nothing was placed on record
41
to show that such a copy of NIT was uploaded. On the
contrary, the documents produced on record show that the
signed copy of NIT as demanded by the Tender Scrutiny
Committee was supplied on 8.10.2012. It has also come
on record that when technical bid of the petitioner was
opened, it was found that they had not uploaded signed
copy of NIT and it was uploaded with price bid which was
also a deficiency in submitting the tender.
18. Moreover, the petitioner after opening of the
price bid had requested vide their letter dated 28.9.2012
seeking permission to revise price bid. This letter
subsequently was withdrawn by the petitioner vide their
letter dated 26th Oct. 2012. In view thereof, it was
submitted that the petitioner also had committed a breach
of the terms and conditions in the NIT and his bid was also
liable to be rejected. Clause 4.3 in the NIT provides that
any request from the tenderer in respect of the additions,
alterations, modifications, corrections, etc. of their terms
and conditions or rates of the tender, after opening of the
42
tenders lead to rejection of the tender. Thus it appears,
the TIA in case of the petitioner also overlooked their letter
seeking revision of the price bid and so also non-
compliance on the part of respondent no.3 in submitting a
registered MoU. Learned counsel for the TIA submitted
that they accepted technical bids of both despite certain
irregularities which were of technical nature and allowed
them to rectify the same. He submitted that insofar as the
petitioner is concerned, apart from allowing them to place
signed NIT on record subsequently, they also ignored the
letter whereby they sought permission to revise the price
bid and insofar as respondent no.3 is concerned, they were
allowed to place on record a registered MoU before
opening the price bids to which neither petitioner nor
respondent no.3 objected to.
19. It is pertinent to note that the petitioner made
grievance of holding respondent no.3 qualified only after
opening of the price bids and having found that the rates
43
quoted by them were on the higher side by almost 36
crores. Moreover the petitioner while withdrawing their
request for revised price bid had requested to open the
price bid at the earliest and expedite the tender process
vide letter dated 26.10.2012. Till this date and / or till
filing of the writ petition, no grievance was made by the
petitioner for having opened the price bid holding
respondent no.3 qualified despite the fact that they had
not tendered registered MoU along with the technical bid.
20. It is against this backdrop the TIA seems to have
exercised their discretion and allowed the petitioner and
respondent no.3 to compete and therefore, opened their
price bids. The entire process which began with the NIT
dated 10.8.2010 got delayed for number of reasons and
the TIA was, therefore, apprehending further escalation of
costs of the project. They opened the price bids of both
the tenderers so as to have fair competition and till they
were opened no objection of whatsoever nature was raised
44
by either of them for holding them qualified. The process
adopted by the TIA or decision made by them cannot be
stated to be malafide or intended to favour respondent
no.3. the decision has been taken in a bonafide manner,
and therefore, I am satisfied that no error of law was
committed in relaxing the technical and / or ancillary
conditions in case of both, the petitioner and respondent
no.3.
21. The requirements in a tender notice can be
classified into two categories - those which lay down the
essential conditions of eligibility, and the others which are
merely ancillary or subsidiary with the main object to be
achieved by the condition. In the first case the authority
issuing the tender may be required to enforce them rigidly.
In the other case it must be open to the authority to
deviate from and not to insist upon the strict literal
compliance of the condition in appropriate cases (See
PODDAR STEEL). The TIA in the present case has
exercised its discretion in ignoring the ancillary or
45
subsidiary condition in order to achieve the main object. I
am satisfied that the TIA did not compromise in seeking
strict compliance of the essential conditions of eligibility.
22. It is now well settled that wherever there is a
dispute between two tenderers, the Court must be very
careful to see if there is any element of public interest
involved in the litigation or the Court must be satisfied that
there is some element of public interest involved in
entertaining such a petition. It is important to bear in
mind that by Court intervention, the proposed project may
be considerably delayed thus escalating the cost far more
than any saving which the Court would ultimately effect in
public money by deciding the dispute in favour of one
tenderer or the other tenderer. Therefore, unless the
Court is satisfied that there is a substantial amount of
public interest, or the transaction entered into is malafide,
the Court should not intervene under Article 226 in a
dispute between two rival tenderers. The Court has to
46
satisfy itself that the public interest in holding up the
project far outweighs the public interest in carrying out
within a reasonable time. The Court must also take into
account the cost involved and whether the public would
stand to benefit by incurring such cost. (See RAUNAQ
INTERNATIONAL LTD. vs. IVR CONSTRUCTION LTD.
– AIR 1999 SC 393). Further, it is true that if there is no
power of general relaxation, ordinarily same shall not be
exercised. If, however, a deviation is made in relation to
other participant/s, in regard to any of the conditions,
ordinarily again a power of relaxation may be held to be
existing. In such event, the party who has taken the
tender on such relaxation should not ordinarily be allowed
to take a different stand in relation to compliance of
another part of tender contract or the condition,
particularly when he was also not in a position to comply
with all the conditions of tender fully, unless the Court
otherwise finds relaxation of a condition which being
essential in nature could not be relaxed and thus the same
47
was wholly illegal and without jurisdiction. [See M/s B.N.
JOSHI & SONS LTD. (supra) ]. The Court is also
expected to examine whether any relaxation is granted for
bonafide reasons. In the present case, relaxation of
certain conditions, which, as observed earlier, was for the
benefit of the petitioner also, and therefore, they cannot
take a different stand in relation to compliance of any
condition, of ancillary nature, in case of respondent no.3.
23. Thus, it is settled that if the decision relating to
award of contract is bonafide and is in public interest, the
Court will not, in exercise of the power of judicial review,
be permitted to revoke the decision to protect private
interest at the cost of public interest, or to decide
contractual disputes. In any case, in the present case the
process adopted or decision made cannot be stated to be
arbitrary and irrational that the Court can say that no
responsible authority acting reasonably or in accordance
48
with relevant law could be reached. As settled by the
Supreme Court, the High Court is not expected to exercise
its discretionary power under Article 226 of the
Constitution of India unless the public interest is affected.
In other words, the Courts are expected to exercise their
discretionary powers under Article 226 with great caution
and should exercise it only in furtherance of public interest
and not merely on the making out of a legal point. It is
true that even in contractual matters, a public authority
does not have an unfettered decision to ignore the norms
recognized by the Court, but at the same time if a decision
has been taken by a public authority in a bonafide manner,
although not strictly following the norms laid down by the
Courts, such decision is upheld on the principle that the
Courts while judging the constitutional validity of executive
decisions, must grant a certain measure of freedom of
"play in the joints" to the executive. In my opinion, this is
not a fit case where the Court should exercise its
discretionary powers under Article 226 of the Constitution
49
of India to interfere with the decision of the TIA which
allowed the petitioner as well as respondent no.3 to cure
the defects of ancillary nature and then to open their price
bids.
In the circumstances, the petition is dismissed.
Sd/-
JUDGE
sak
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