Calcutta High Court (Appellete Side)
Bindawala Cables & Conductors Ltd. & Anr vs West Bengal State Electricity ... on 24 March, 2008
Author: Dipankar Datta
Bench: Dipankar Datta
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
APPELLATE SIDE
W.P. No.4302 (W) of 2008
Bindawala Cables & Conductors Ltd. & anr.
....Petitioners
Versus
West Bengal State Electricity Distribution
Company Ltd. & ors.
....Respondents
With
W.P. No. 5127 (W) of 2008
Anvil Cables Private Ltd. & anr.
....Petitioners
Versus
West Bengal State Electricity Distribution
Company Ltd. & ors.
....Respondents
Mr. Abhrajit Mitra
Mr. Jishnu Choudhury
Ms. Rajshree Kajaria
...for the petitioners in W.P. 4302 (W) of 2008
Mr. Shakya Sen
Mr. Bhagawan Das
...for the petitioners in W.P. 5127 (W) of 2008
Mr. Bhaskar Mitra
...for the WBSEDCL
Before the Hon'ble Justice Dipankar Datta
Heard on : 17.3.2008 and 18.3.2008
Judgment on : 24.3.2008
The issues involved in the writ petitions are identical and, hence, the same
have been heard together. They would be governed by this common judgment
and order.
While W.P. No. 4302(W) of 2008 (the petitioners therein would be referred
to as BCCI hereafter) was heard on affidavits, W.P. No. 5127(W) of 2008 (the
petitioners therein would be referred to as Anvil hereafter) was heard without
affidavits but the counter affidavit filed by the first respondent to BCCI's petition
has been taken into consideration to decide the claim of Anvil also.
Sealed tenders were invited by the first respondent by publishing a notice
in a daily newspaper on 9.1.08 (hereafter NIT for short) for procurement of, inter
alia, AAC/ACSR conductors of assorted sizes viz. AAC Ant, ACSR Weasel, ACSR
Rabbit and ACSR Dog. The quantity required against each item was mentioned
together with the estimated value thereof. Tender documents were furnished by
the first respondent to BCCI bearing tender notice No.P-26/07-08(P-1) dated
16.1.08 (hereafter notice for short) containing specifications which, unlike
particulars given in the NIT, disclosed the estimated value as Rs. 32.5 crores
(approx.) without break-up of estimated cost of each item of conductors. As per
the terms and conditions in the notice, intending bidders were entitled to submit
offers for a part of the tendered quantity but not less than 20% thereof. The same
further stipulate that each bidder must submit its tender in three separate parts,
viz. Covers 1, 2 and 3 containing earnest money deposit, techno-commercial bid
and price bid respectively and that Cover 2 of a bidder would be opened if the
requirements relating to earnest money are satisfied, and that Cover 3 would be
opened if he/it fulfills the techno-commercial criteria.
At the very beginning of the tender process, the first respondent committed
an error by supplying tender documents to the intending bidders containing
different terms and conditions relating to deposit of earnest money, which later
on was rectified. The tender documents furnished by the first respondent to BCCI
contained the correct terms and conditions relating to earnest money and is
quoted below:
"(2) EARNEST MONEY
a) Earnest Money has to be submitted in a separate sealed envelope
superscribing "Earnest Money" for Tender No., Item & Due Date. Sealed
offer containing tender documents may not be opened if the earnest
money as mentioned above is not found along with tender or any
discrepancy is found in respect of earnest at the time of tender opening.
Tender without earnest money as stated above will be treated as invalid
tender.
b) Earnest money amounting to 2.5.% (Two & Half Percent) of the Pro-rata
tendered estimated cost may be submitted by Cross Bank Draft/Pay
Order/ Banker's Cheque/ Bank Quarantee as per Company's Format
valid upto 6 (six) months drawn in favour of "WEST BENGAL STATE
ELECTRICITY DISTRIBUTION COMPANY LIMITED" payable at KOLKATA
on any Scheduled Bank approved by R.B.I.
Earnest Money in any other form will not be accepted.
c) Earnest Money will be refunded to the unsuccessful tenderer after
finalization of the tender. Earnest Money will be returned to the
successful tenderers after receipt of Security Deposit as per Security
Deposit Clause to be mentioned on the Purchase Order.
d) Price adjustment by the tenderer shall be accepted after opening of the
Price Part. The date and hour for opening of the Price Part will be
informed only to the technically acceptable tenderers in advance, the
tenderers may be present during opening of the Price Part."
However, Anvil was supplied tender documents in which clause 2(b) under
the heading 'Earnest Money" was different. It is set out below:
"(2) EARNEST MONEY
******
(b) Earnest money amounting to 1% (one percent) of the tendered sum subject to a maximum of Rs.25,000/= may be submitted by Crossed Bank Draft/Pay Order/Banker's Cheque only drawn in favour of "WEST BENGAL STATE ELECTRICITY BOARD" payable at KOLKATA on any Scheduled Bank approved by R.B.I. ******"
The tenders of BCCI and Anvil have been rejected on the ground that earnest money deposited by them was insufficient. While BCCI fell short by Rs.12,524.93p., Anvil fell short by Rs. 16,000/- odd.
The common issue involved in these two petitions is whether rejection of the tenders of BCCI and Anvil by the first respondent is valid, legal and proper or not.
It has not been disputed at the Bar that the controversy has arisen due to different interpretations given to the clause regarding earnest money. While both the petitioners have read clause 2(b) to mean that the requirement as to deposit of 2.5% of the pro-rata tendered estimated cost would mean 2.5% of the pro-rata cost of offered quantity, according to the first respondent 2.5% of the cost/value of offered quantity ought to be calculated on pro-rata basis on the estimated cost specified in the NIT.
Anvil in terms of clause 2(b) originally supplied to it had deposited Rs. 25,000/- as and by way of earnest money. On 18.1.08, i.e. the date of pre-bid conference, the error in supply of incorrect tender documents to some of the intending bidders came to light and a decision was taken to give an opportunity to all the bidders who had deposited Rs.25,000/- as earnest money to re-submit their tenders/offers along with earnest money as per the correct terms of clause 2(b).
The first respondent extended the time to deposit earnest money by 24.1.08. Since a number of intervening days between 18.1.08 and 24.1.08 were holidays, Anvil could not deposit earnest money within the extended time. On 24.1.08, Cover 2 of 19 participating bidders was opened. Since the earnest money of Anvil and one other intending bidder were found insufficient, Cover 2 submitted by them was not opened.
By a letter dated 29.1.08 (pg.40 of the counter-affidavit), Anvil informed the first respondent the reasons for not being able to submit the requisite earnest money by 24.1.08 and requested for extension of 3 working days to enable it deposit the earnest money as per the revised instructions. One particular paragraph of this letter is significant for deciding the issue involved in these two petitions and is set out hereunder:
"After this on 22nd January at 2.33 PM (i.e. after close of Banking hours) we received a fax from your Office in which the Earnest Money Clause of the tender was amended and modified to read as E.M. @ 2.5 % pro-rata to the cost of offered quantity has to be submitted. (a copy of fax is enclosed herewith)".
On receipt of this letter from Anvil, the following reply (pg.42 of the counter-affidavit) was given by the Chief Engineer & Material Controller of the first respondent:
" In reference to the above, we would like to intimate you that your prayer for allowing submission of balance Earnest Money in requisite amount, as due as per your offer against above tender, has been duly considered by our higher authority.
As such you are requested to deposite the above balance amount of Earnest Money in the form of Pay Order/DD within 12 Noon of 14.2.08 positively. On receipt of the aforesaid amount, your offer as submitted against the above tender will be opened at 3.00 P.M. on 14.2.2008."
By letter dated 9.2.08, the fact that Anvil and one other intending bidder had been granted extension of time to deposit earnest money by 14.2.08 was conveyed to the other bidders including BCCI.
According to the first respondent, the minimum earnest money required to be deposited by a bidder for being eligible to participate in the tender process was Rs.2,69,999.98p. By 14.2.08, Anvil had deposited balance earnest money and it being in excess of the aforesaid amount of Rs.2,69,999.98p., Cover 2 submitted by it earlier was opened on 14.2.08.
The offers of BCCI and Anvil in respect of the subject tender could not be accepted by the first respondent due to insufficient deposit of earnest money and this was conveyed to them by a letter dated 29.2.08.
On receipt of the above letter, Anvil conveyed to the Chief Engineer & Material Controller of the first respondent that earnest money calculated @ 2.5 % pro-rata of the tendered estimated cost as per the NIT comes to Rs.24,60,576/-. However, apart from the Bank Guarantee for Rs.24,38,000/- given to the first respondent within the further extended date, the bank draft for Rs.25,000/- submitted by it as per original stipulation was lying with the first respondent and the same taken together would result in Rs.24,63,000/- being the amount of earnest money available with it. This would cover 2.5 % of the estimated value, and thereby satisfy the requisite earnest money deposit. Accordingly, a request was made to reconsider their offer.
It has not been disputed on behalf of the first respondent that on the date the offer of Anvil was rejected on the ground of insufficient earnest money deposit, the earlier deposit of Rs.25,000/- had not been returned to it. It has, however, been pointed out that immediately after deposit of earnest money by Anvil within the extended date of 14.2.08, it had made a prayer to the first respondent to return the said amount of Rs.25,000/-.
From the extract of Anvil's letter dated 29.1.08, it appears that Anvil had prayed for extension of time and had in the process conveyed that the earnest money clause of the tender was amended to read as E.M. @ 2.5 % pro-rata to the cost of offered quantity. In the reply dated 8.2.08 issued on behalf of the first respondent, the above position was never disputed by it. If the interpretation given by Anvil to clause 2(b) was incorrect, it was the duty of the first respondent to point it out immediately. That was not done, presumably because considerable confusion prevailed with regard to the correct interpretation of the said clause. By its conduct, the first respondent appears to have agreed to the interpretation given by Anvil to the amended clause relating to deposit of earnest money by it. Had it not been so, the Court might have been persuaded to accept the first respondent's interpretation of clause 2(b), for, it was not an absurd but a plausible view, and it is well settled that a Court of Writ does not substitute its view in such case. In view of the above factual position, the first respondent could not have taken a different stand on 14.2.08 and reject the offer of Anvil on the ground of insufficient deposit of earnest money, and particularly when Rs.25,000/- deposited by Anvil had been retained by it till then and even till date of presentation of the writ petition. In the considered view of this Court, rejection of Anvil's offer by the first respondent is arbitrary and unreasonable.
BCCI had also read clause 2(b) of the notice in the manner the same was read by Anvil. Deposit of earnest money was made by it based on its understanding that 2.5% of pro-rata cost of offered quantity would meet the requirement. If the first respondent did not dispute that Anvil's understanding of the clause was erroneous, the same clause could not have been interpreted in a different manner to negate the claim of BCCI. The reasons assigned above in the preceding paragraph are, therefore, fully applicable in the case of BCCI.
Moreover, the stand of the first respondent in paragraph 17 of its counter affidavit that deposit of earnest money was required to be equivalent to 2.5% of the cost/value of offered items, calculated on pro-rata basis on the estimated cost specified in the Notice Inviting Tender cannot be countenanced since the words in italics above appear to be insertion of words not to be found in the notice. Rules of the game cannot be changed once the game has commenced. The tender specifications and/or the notice contained complete set of tender terms and conditions and being a document furnished to the intending bidders after the NIT was issued, it does not appear to be fair and just to insist that the NIT was also part of the notice and the intending bidders were supposed to deposit earnest money keeping in mind the break-up of estimated valuation of different types of conductors given in the NIT. That apart, this break-up could not have been made applicable after issue of the notice/tender specifications since quantity of each type of conductor as mentioned in the notice is different from quantity as mentioned in NIT. The first respondent, thus, acted illegally in clubbing the NIT with the notice without any indication in the notice that the particulars mentioned in the NIT are to be looked into for making deposit towards earnest money.
True it is that on the basis of the first respondent's understanding of the clause relating to deposit of earnest money, BCCI fell short by about Rs.12,000/- odd. However, it appears that in terms of the Schedule of Bids (Annexure II) of the notice, an intending bidder is required to give particulars of Permanent Bank Guarantee, if any. It has not been disputed before this Court on behalf of the first respondent that a Permanent Bank Guarantee for Rs.50,000/- towards security deposit covering earnest money, security deposit and performance guarantee (valid upto 27.12.09) given by BCCI was lying with the first respondent. While rejecting the offer of BCCI, the first respondent did not consider the aforesaid Permanent Bank Guarantee. No other contract between the first respondent and BCCI subsists against which this Permanent Bank Guarantee could be considered as security/earnest money deposit. The first respondent having sought for particulars of Permanent Bank Guarantee, if any, from the intending bidders, it was well within the authority and competence of the first respondent to consider it before rejecting the offer of BCCI. Clause 2(b) does stipulate that earnest money in any other form would not be considered. This clause, however, cannot impede consideration of BCCI's bid. Permanent Bank Guarantee for Rs.50,000/- given by BCCI conforms to the forms in which earnest money could be deposited in terms of clause 2(b). The first respondent having failed to consider the said Permanent Bank Guarantee, the action in this behalf also appears to be arbitrary and unreasonable.
This Court is conscious that the modern trend of judicial review of administrative decision and exercise of contractual power by government bodies points to judicial restraint in administrative action, but at the same time law is also well-settled that decisions of government bodies having the effect of infringing rights of citizens guaranteed by Article 14 of the Constitution may be interfered with on limited grounds, some of which are illegality, irrationality and procedural impropriety in reaching a particular decision. In Noble Resources Ltd. vs. State of Orissa : AIR 2006 SCW 5409 it has been held that a distinction has to be made between a matter which is at the threshold of a contract and a breach of contract and that in case of the former, the Court's scrutiny would be more intrusive. It is beyond any doubt that an authority within the meaning of Article 12 of the Constitution cannot arbitrarily choose any person it likes for entering into any contractual relationship or to discriminate between persons similarly situate.
In M/s. Poddar Steel Corporation vs M/s. Ganesh Engineering Works reported in AIR 1991 SC 1579, it was ruled by the Apex Court as follows:
"6. ******* As a matter of general proposition it cannot be held that 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 cases 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.*******"
Condition relating to deposit of a particular amount as earnest money is part of essential conditions of a tender but the form in which the earnest money is to be deposited may not be essential in the sense that a minor deviation in compliance of the conditions laid down would not render the bid vulnerable. In a given case, literal compliance of all conditions may not be necessary.
Applying the aforesaid principle to the facts and circumstances, this Court is constrained to hold that there was no justification on the part of the first respondent not to accept the bids of BCCI and Anvil.
It is not in dispute that BCCI and Anvil do have the essential qualifications laid down by the first respondent to participate in the tender process and its tenders were rejected after opening of their respective Covers 2. In view thereof, this Court is also of the considered view that permitting BCCI and Anvil to participate in the tender process would be in public interest. It has been averred in paragraph 6 of the counter-affidavit by the first respondent that in the event it is not possible for any single bidder to supply the required items of conductors in its entirety, orders for supply thereof would be split up in the manner indicated therein. If either BCCI or Anvil turn out to be the lowest bidder, that would enure to the financial interest of the first respondent.
BCCI and Anvil are, accordingly, entitled to relief.
Decision of the first respondent rejecting the offers of BCCI and Anvil are set aside. The Permanent Bank Guarantee for Rs.50,000/- submitted by BCCI and Rs.25,000/- submitted by Anvil shall be taken into consideration for meeting deficiency in deposit of earnest money by them, if at all. The first respondent is restrained from proceeding further with the tender process without considering the price bids of BCCI and Anvil. Only upon consideration of the same shall the first respondent be entitled to proceed further for the purpose of issuing work orders. It is, however, made clear that the first respondent before opening the price bids of BCCI and Anvil shall apprise them the prices offered by the other bidders, bids whereof were opened on 14.2.08.
The writ petitions stand allowed to the extent mentioned above. Parties shall, however, bear their own costs.
Photostat copy of this judgment and order, duly countersigned by the Assistant Court Officer, shall be retained with the records of W.P. 5127(W) of 2008.
Urgent photostat certified copy of this judgment and order, if applied for, be furnished to the applicant within 4 days from date of putting in requisites therefor.
(DIPANKAR DATTA, J.)