Andhra HC (Pre-Telangana)
M.V. Krishna Reddy Rep. By His Son And ... vs The Commissioner, Commissionerate Of ... on 16 December, 1994
Equivalent citations: 1995(1)ALT161
ORDER P. Ramakrishnam Raju, J.
1. This writ petition is filed questioning the arbitrary, illegal and unfair action of the respondent Nos. 1 & 2 in rejecting the tender of the petitioner which is the lowest on the alleged ground that the petitioner had not paid the Earnest Money Deposit (EMD) through a demand draft. The petitioner is a registered special class contractor. The third respondent had invited sealed tenders on 22-6-1994 from contractors for construction of a bridge across the river 'Nagavali' in Srikakulam town limits at convent junction. The petitioner along with six others, including the 4th respondent has submitted their tenders. As per the tender notice the EMD should be paid along with the application for tender schedule. As per column '4' of the tender notice EMD of a sum of Rs. 1 lakh should be paid. However, as per condition 8(A) of the tender conditions, the lumpsum deposit holders who have a permanent deposit of Rs. 1 lakh with the Department have to pay only a sum of Rs. 75,000/ - as EMD instead of Rs. 1 lakh. The petitioner who had deposited the lumpsum amount of Rs. 1 lakh, had submitted an application for tender schedule along with a sum of Rs. 10,000/-by way of a demand draft and a Bank Guarantee for the balance of Rs. 65,000/-. The third respondent has opened the tenders on 26-8-1994 and found that the petitioner's tender is the lowest of all the seven tenderers. The third respondent by his letter da ted 31-8-1994 has requested the Bank of Baroda, Asil Mitta Branch to issue a crossed demand draft for Rs. 65,000/- in lieu of the Dank Guarantee furnished by the petitioner. The 3rd respondent by his letter dated 3-9-1994 has requested the petitioner to attend his office on or before 8-9-1994 for negotiations to reduce his rates for which the petitioner has promptly sent a reply on 6-9-1994 stating that he had quoted the lowest rates, and, therefore, he will not be able to reduce the rates any further. As the tender of the petitioner is the lowest, the third respondent had recommended to award the contract to the petitioner. However, the 4th respondent was called for negotiations, and as he reduced his rates, he was awarded the contract The petitioner made detailed representations to Respondent Nos. 1 & 2 on 20-10-1994 and 24-10-1994, but they did not evoke any response. Therefore, it is clear that the 4th respondent is favoured by awarding the contract, and as such the action of the respondents is arbitrary and mala fide.. Hence the writ petition.
2. The second respondent filed a counter-affidavit. It is stated that the estimated cost of work is Rs. 5.45 crores. The petitioner had quoted his bid at Rs. 6.31 crores; while the 4th respondent has quoted Rs. 6.36 crores. There is a difference of Rs. 5 lakhs between them. The petitioner had not paid the EMD in the shape of demand draft as stipulated in the tender notice. The third respondent is only the tender receiving authority. The deciding authority is the Commissionerate of tenders as the value of the tender is more than Rs. 30 lakhs. As the petitioner did not follow the procedure for obtaining tender forms as per the tender notification, the petitioner's tender cannot be considered. The 3rd respondent by mistake had exchanged the Bank Guarantee given by the petitioner with a demand draft. The 3rd respondent had realised the mistake committed by the Circle Office in issuing tender schedule without proper EMD to the petitioner. As the petitioner's tender is not valid, the question of accepting his tender does not arise. The 4th respondent who is the next lowest tenderer was invited for negotiations and he had agreed to reduce his tender by Rs. 5 lakhs bringing it on par with the tender filed by the petitioner at Rs. 6.31 crores. The 2nd respondent had followed the judgment in Writ Appeal No. 1067 of 1994 and the guidelines therein while considering the tenders in question. Therefore, there is no flaw in the procedure adopted by the second respondent and no favour it, shown to the 4th respondent. In view of the judgment in Writ Appeal No. 1067of 1994, this writ petition is not maintainable, and it has to be dismissed. The 4th respondent has also raised more or less the same contentions as raised by the 2nd respondent.
3. Sri M.V. Ramana Reddy, the learned Senior Advocate appearing for the petitioner contends that a distinction should be drawn between essential conditions of the tender and ancillary conditions. Relying on a decision of the Supreme Court reported in Poddar Steel Corporation. v. Ganesh Engineering Works, the learned Senior Advocate contends that essential conditions relate to eligibility, while other conditions are merely ancillary or subsidiary in nature. EMD is only an ancillary condition and is not an essential condition. In the said decision, the Supreme Court has observed that although under the terms of tender notice the EMD should be deposited by cash or through a demand draft on State Bank of India, payment of the same by Banker's cheque issued by Union Bank of India could be treated as sufficient compliance of the terms. In view of the said authority, the learned Counsel contends that tine deposit of EMD is not an essential condition and inasmuch as Bank Guarantee was furnished by the petitioner which was also encashed and converted into a demand draft by the 3rd respondent, the petitioner had fully complied with the said condition, and, therefore, rejection of tender of the petitioner is arbitrary. He has also relied on a decision of the Division Bench of Bombay High Court in B.D. Yadav & M.R. Meshram, E. & C. v. Administrator, AIR 1984 Bombay 351 to show that it is the duty of the Court to see whether non-compliance alleged was with regard to essential condition, or only an ancillary condition of the tender notice. It is a case where the tender notice required the Earnest Money Deposit shall be in the form of call deposit or bank draft or national savings certificates, the respondent No. 2 therein made a deposit through a time deposit receipt which was pledged in the Office of the Development Engineer along with the tender forms.
4. The next decision relied upon by the learned Counsel for the petitioner is T.V. Subhadra Amnia v. Kerala Board of Revenue, . In this decision the Kerala High Court has considered whether a pay order would amount to compliance of Rule 5-A of Kerala Abkari Shops (Disposal by Auction) Rules, 1970, when the Rule contemplates demand draft.
5. The learned Government Pleader and Sri Ramalingeswara Rao, the learned Counsel for the 4th respondent relying upon a Division Bench judgment of this Court in Writ Appeal No. 1067 of 1994 dated 5-10-1994 contend that in identical circumstances, the Division Bench found that furnishing Bank Guarantee for a sum of Rs. 65,000/- and furnishing a demand draft for a sum of Rs. 10,000/- instead of furnishing a demand draft for Rs. 75,000/- cannot be held to be in compliance with the tender conditions. The Division Bench followed the judgment of the Supreme Court in Ramanna v. I. A. Authority of India . They also relied upon another Division Bench judgment reported in State Bank of Hyderabad, Hyd. v. Jyothi Krishna Engineers, 1993 (1) APLJ 246. In this case, the writ petitioner has submitted a TDR for Rs. 63,260/- towards Earnest Money Deposit instead of a Bank draft as required by the tender conditions. The Division Bench has observed that refusal on the part of the Bank to waive the condition and accept TDR instead of demand draft cannot be held to be arbitrary or discriminatory and the Bank cannot be compelled to waive the condition regarding furnishing of Bank draft covering tine EMD. The Bench noticed the judgment relied upon by the learned Counsel for the petitioner in Poddar Steel Corporation. v. Ganesh Engineering Works (1 supra). The learned Counsel for the petitioner contends that these two Bench decisions should be held as per incurium as they are contrary to the dicta laid down by the Supreme Court in Poddar Steel Corporation v. Ganesh Engineering Works (1 supra). As already stated the Division Bench in the decision reported in State Bank of Hyderabad, Hyd. v. Jyothi Krishna Engineers 1993 (1) APLJ 246, has noticed the said judgment and distinguished the same. A later Bench judgment referred to above, has followed the dicta laid down by the Supreme Court in Poddar Steel Corporation v. Ganesh Engineering Works (1 supra), wherein it is held that the State and its instrumentalities are bound to conform to the standard or norm laid down in the notice inviting tenders unless the standard or norm prescribed is unreasonable or discriminatory. Therefore, I have no hesitation in following the latest Division Bench Judgment of this Court and hold that the petitioner had failed to comply with the tender conditions by furnishing Bank Guarantee only instead of a demand draft as required thereunder. In fact, he had furnished a demand draft for Rs. 75,000/-on 4-7-1994 for another contract viz., construction of a bridge across 'Yerrakalava' in the R & B Circle, Eluru, West Godavari District. Therefore, it cannot be said that the petitioner is not aware of the implication of the tender conditions. As the respondents have followed the ruling of the latest Division Bench of this Court, I cannot find fault with the action taken by them.
6. Sri M.V. Ramana Reddy, the learned Counsel for the petitioner contends that what all tender condition 8(a) implies is only that other than those lumpsum depositors of Rs. 1 lakh will have to deposit EMD by crossed demand draft and this clause will not apply to lumpsum depositors. Under clause 8 no doubt, lumpsum depsoitors are entitled for concession of 1 per cent of value of work as EMD subject to a maximum of Rs. 75,000/-. In respect of other tenderers who are not having the standing deposit of Rs. 1 lakh with the Chief Engineer, they should deposit EMD at 1 1/2 per cent of the value of work given thereunder subject to a maximum of Rs. 1 lakh in the shape of crossed demand draft only. Though this rule is in two limbs, a cumulative reading of both limbs of the Rule only would show that EMD must be made by crossed demand draft only. This conclusion of mine is supported by head note in Column 4 of the tender schedule which says that EMD is to be paid in the shape of crossed demand draft along with an application for tender schedule. Rule 6 of the Tender conditions reiterates that the EMD as shown inColumn4 should be in the shape of crossed demand draft drawn in favour of Executive Engineer (R & B) Srikakulam. What is more important is that even under G.O.Ms. No. 85 dated 20-3-1993, clause 4 specifically provides that the EMD shall be paid only through a crossed demand draft and in no other form. Therefore, a reading of these provisions viz., Column 4 of the said Government Order read with Tender conditions, clearly enjoin a duty on the tenderers that the EMD shall be made by a demand draft only. Therefore, this contention of the learned Counsel for the petitioner cannot be accepted. The learned Counsel, however, relies on G.O.Ms. No. 141 Finance and Planning (Fin. Wing. W & M.1) Deparment, dated 16-4-1983 wherein it is stated that the EMD. of over and above Rs. 10,000/- can be made by Bank Guarantee and it can be accepted for the amount in excess of Rs. 10,000/-. According to the learned Counsel this Government Order is not superseded by G.O.Ms. No. 85 da ted 20-3-1993. G.O.Ms. No. 85 dated 20-3-1993 is by Irrigation & CAD (Projects Wing-COD) Department. Therefore, when the irrigation Department has issued a specific Government Order viz., G.O.Ms. No. 85, the terms and conditions stipulated thereunder alone will govern the contracts awarded by this department. Even otherwise when the latest Government Order prescribes a particular mode of furnishing the EMD, I cannot find fault with the respondents for that matter if they have insisted that the said mode alone will be followed. That apart, in this case, Tender conditions clearly indicate how the EMD should be deposited. Therefore, there is no ambiguity or scope to entertain any doubt in regard to tine method in which the EMD should be made. Hence the contention of the petitioner that without superseding G.O.No. 141 the terms and conditions under G.O.Ms. No. 85 cannot be insisted upon, has no substance.
7. Even then, Sri M.V. Ramana Reddy, the learned Counsel for the petitioner submits that the EMD is only meant for obtaining tender schedules and when once EMD is accepted and tender schedules are furnished, the question of validity of tine EMD does not survive for scrutiny any longer. The learned Counsel for the petitioner has cited a decision of the Division Bench of this Court In A. Sreeramulu v. Superintending Engineer R & B Nellore Circle, 1994 (2) APLJ 57 wherein it is held that the crucial stage at which the competence and financial ability of the competetors should be adjudged is not at the time of issuing tender forms, but at the time of selecting the successful tenderers. Accordingly, tine Bench ruled that the action of the first respondent therein in issuing the tender schedules to the second respondent therein, subject to the latter giving a written undertaking that it would produce fresh registration certificate of Class-I Contractor cannot be found fault with. But, in this case, the validity of the tender depends on the validity of receipt of tender forms. Tender forms cannot be supplied to all and sundry unless the application for tender forms is in order i.e., in accordance with the tender notice. Therefore, supply of tender forms, forms integral part of the whole procedure prescribed for accepting tenders. Therefore, I am unable to accept the contention of the learned Counsel for the petitioner that when once tender forms are issued, the question whether the tender forms are issued by following the procedure or not fades into insignificance.
8. The next contention raised by the learned Counsel for the petitioner is that the petitioner who ought to have been called for negotiations was not called for negotiations and in any event failure to call him for negotiations renders the process of tender selection, illegal and arbitrary. It is admitted by the petitioner that he was invited to attend the office of the 3rd respondent before 8-9-1994 for negotiations to reduce his rates; and the petitioner had sent a reply stating that he quoted the lowest rates, and, therefore, there is nothing for him to reduce any further. In view of this correspondence, it cannot be said that the petitioner is not called for negotiations. No doubt, the second respondent maintains that inasmuch as the petitioner's tender is not a valid tender, there is no question of calling him to participate for negotiations. Be that as it may. The fact remains that the petitioner was invited for negotiations and as he has refused to participate by stating that he is not in a position to reduce his rates any further, the respondents have called the next lowest tenderer viz., the fourth respondent. The 4th respondent had agreed to reduce his tender from Rs. 6.37 to Rs. 6.31 crores on par with the tender submitted by the petitioner. So, the department has ensured that the valid tender of the 4th respondent had been brought down to the level of the lowest tenderer. Even here, the learned Counsel for the petitioner submits that calling the 4th respondent alone for negotiations is illegal. The learned Counsel relying on a decision reported in Food Corporation of India v. Kamdhenu Cattle Feed Industries, AIR 1903 SC 1601 contends that all the tenderers must be invited to participate. As seen in this decision, the Supreme Court has observed that all the tenderers were invited to participate in the negotiations to revise their bids as it was found that the price offered there was inadequate. But this decision is not an authority for the proposition that all the tenderers must be invited for negotiations. The learned Government Pleader relied on the Government Memo No. 34/Y/72-10,dated 25-9-1972 wherein the Government issued instructions that whenever a tender in excess of the estimated value is proposed to be accepted, negotiations should be made to bring the tender reduced and negotiations should be made with the lowest tenderer only. Apart from this the petitioner who was called for negotiations cannot complain that there was any prejudice caused to him for not inviting other tenderers for negotiations. The other tenderers who could have objected to this procedure, if they are aggrieved, have not come before this Court. Therefore, the petitioner cannot be permitted to raise this objection when the affected tenderers have not questioned this procedure.
9. Sri M.V. Ramana Reddy, the learned Counsel for the petitioner, next submitted that the second respondent who is the authority to receive the tenders, has not only accepted the tender of the petitioner and also requested the Bank of Baroda, Asil Mitta Branch to issue a crossed demand draft for Rs. 65,000/- in lieu of the Bank Guarantee enclosed by the petitioner, and, therefore, the defect if any in not enclosing the demand draft along with the application for tender schedule is cured, inasmuch as the Bank of Baroda had issued the demand draft. It is also his contention that even assuming that there is defect in obtaining tender schedule, it is only a defect in pre-qualification of the tender which under no way affect the merits of the tender. The learned Counsel goes to the extent of contending that when a tender schedule is received even improperly, the same cannot be rejected when filed by a fully eligible contractor. The learned Counsel relies on two decisions reported in Ramana v. I.A. Authority of India, ; G.J. Fernadez v. State of Kamataka, to show that pre qualifications of tender can be waived. For the reasons already stated above, I cannot accept this contention. Those who are seeking to obtain tender forms by following proper procedure alone are entitled to apply for and file their tenders.
10. The learned Counsel for the petitioner has relied on some decisions including the decisions reported in Kodanda Rao v. Govt. of A.P., 1981 (2) ALT 380, Ramachandra Kulkari (dead) by L.Rs. v. Dinkar, 1983 (2) ALT 1, V. Nageswara Rao v. Government of A.P., 1989 (2) ALT 612 for the proposition that when a decision rendered by the High Court is directly in conflict with the ratio laid down by the Supreme Court, the former falls within the inhibition of the doctrine of per incuriam. There cannot be any dispute with this proposition of law. As I have held earlier that the two Bench decisions of this Court have not taken a view contrary to the views expressed by the Supreme Court, I cannot hold that those decisions are per incuriam and so I am not discussing these decisions at length.
11. Sri M.V. Ramana Reddy, the learned Counsel for the petitioner next contended that the respondents are estopped from rejecting the petitioner's tender. Here again, the learned Counsel submits that the application for tender schedule was accepted by the third respondent who is the proper authority, tender forms were issued, Bank Guarantee was converted into demand draft and the third respondent had recommended to accept the tender of the petitioner being the lowest, and, therefore, the second respondent is estopped from rejecting the said tender. The petitioner relied on a decision of the Supreme Court reported in Union of India v. Godfrey Philips India Ltd., and contends that the respondents by accepting the application of the petitioner for supply of tender forms, by addressing the Bank of furnish demand draft in lieu of Bank Guarantee furnished by the petitioner and having opened the tenders and having found that the petitioner's tender is the lowest, cannot turn round and reject the same on the ground that the tender forms were obtained improperly or by mistake. Even assuming that there was a mistake on the part of the third respondent, the learned Counsel submits relying on a decision reported in Ashok Chand Singhvi v. University of Jodhpur, to show that when a candidate concealed nothing from the University and authorities having granted admission, cannot afterwards cancel his admission, even though they have realised that the earlier admission was by mistake. In this case a student admitted to B.E., course whose admission was withheld on the ground that the said admission was made by mistake, approached the High Court of Rajasthan questioning the order of the Dean of the University keeping his admission in abeyance and seeking for appropriate writ. As the High Court dismissed the writ and declined to grant the relief prayed for, he carried the matter in appeal to the Supreme Court and the Court held that such action is bad.
12. The next decision relied upon by the learned Counsel for the petitioner is K. Narmada v. Secy. Medical & Health Deptt., A.P., Here again, when the application for admission to Medical College was accepted and the petitioner therein was allowed to sit for the entrance examination, though the petitioner had stated that the date of birth as entered in her SSLC Register was wrong and she tried to get it corrected unsuccessfully and the petitioner having been given admission, the authorities cannot subsequently turn round and cancel the same.
13. No doubt, these decisions have indicated the parameters or the principles of promissory estoppel. But in this case, the tender proceedings were not finalised and during scrutiny of the tender schedules submitted by the rival tenderers, it is noticed that the petitioner's tender was defective, inasmuch as he failed to follow the guidelines issued under the tender notice. Therefore, the cases cited before me have no anology for this case. The learned Government Pleader relying on Executive Instructions under 159(3) of P.W.D. Code, submits that the Superintending Engineer is competent to execute contracts regardless of whether they are accepted by the Chief Engineer or Government. Hence, the Chief Engineer need not execute the contracts even if the tenders are accepted by the Government. So, according to the learned Government Pleader, the contract will be executed by the third respondent irrespective of the fact whether the contract is accepted by the Commissionerate of Tenders as in this case, or the Government. In view of this, the contention of the petitioner that the third respondent who is the competent authority has accepted the tender and as such, the second respondent cannot interfere with the said process has no substance.
14. Sri M.V. Ramana Reddy, the learned Counsel for the petitioner submits that as the petitioner's legitimate expectation cannot be thwarted by the second respondent, the action of the second respondent, therefore is arbitrary, unjust and unreasonable. Relying on a decision reported in Food Corporation of India v. Kamdhenu Cattle Food Industries, the learned Counsel submits that the power to reject the tenders cannot be exercised arbitrarily and without valid reasons. As already stated, the petitioner's tender is not a valid tender which merits consideration along with the other valid tenders. The Supreme Court in its recent judgment reported in Madras City Wine Merchants's Assn. v. State of T.N., observed that "Legitimate expectation may arise...
(a) if there is an express promise given by a public authority; or
(b) because of the existence of a regular practice which the claimant can reasonably expect to continue;
(c) Such an expectation must be reasonable."
As already seen, there is no express promise held out in the instant case, equally there is no existence of a regular practice which the petitioner can reasonably expect to continue. Under these circumstances, the claim of the petitioner on the principles of legitimate expectation cannot be entertained.
15. Sri A. Ramalingeswara Rao, the learned Counsel for the 4th respondent, however, cited a decision of a Division Bench of the Karnataka High Court reported in H.P. Veeresh v. Chanmabassm, to show that non-compliance of Clause 7(c) of the tender conditions which says that security deposit in the form of Banker's Guarantee or in the form of fixed deposit or in cash for a sum equivalent to 12 months licence fee shall be furnished, as this was not done, the Karnataka High Court following the decision reported in G.J. Femandez v. State of Karnataka (8 supra), held that in view of non-compliance of Clause 7(c) which enables the inventor to reject the tender, the action taken by the inventor cannot be interfered with.
16. The next decision relied upon by the learned Counsel for the 4th respondent in B. Rajkumar Patra v. Union of India, for the proposition that non-compliance of the conditions imposed under the tender notice, cannot be waived, whatever be tine reason for non-compliance either good or bad. The learned Counsel has also relied on a Division Bench Judgment of this Court reported in Bhanu Constructions Co. Ltd. v. A.P. State Electricity Board, and submits that unless there is power of relaxation in the authority, the condition imposed under the tender cannot be waived. The learned Counsel has also relied on another decision reported in Nanalal Madhavji v. State of A.P., and contends that inasmuch as the third respondent has no authority to finalise the tender, any recommendation made by him, is not final, and, therefore, the petitioner cannot rely on the said recommendation to contend that the tender made by him is a valid one. In Nanalal Madhavji v. State of A.P., the learned Judge held that the Additional Chief Engineer, State Electricity Board has no power to enter into contracts on behalf of the State, therefore, the contract is not valid under Article 299 (1) of the Constitution. The learned Counsel for the fourth respondent has lastly relying upon a recent Judgment of the Supreme Court in Tata Cellular v. U.O.I., 1994 (3) SCALE 477 contends that unless the administrative action is tainted with arbitratiness or unreasonableness or actuated by mala fides, this Court shall not interfere. The Supreme Court has observed thus:
"The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."
The learned Counsel for the 4th respondent finally submits that in any event the tenders are not finalised, the writ petition is pre-mature.
17. Having regard to the above discussion, it is clear that the administrative authority has got some discretion to relax certain ancillary or minor stipulations in the tender conditions, but this Court exercising jurisdiction under Article 226 of the Constitution cannot compel the authorities to relax any such conditions. Strict adherence to the tender conditions cannot be termed as arbitrary, unreasonable or mala fide. The petitioner having deposited demand draft for the required sum in respect of another contract, in or around the same time, has failed to follow the same procedure. Therefore, it is not a case where the petitioner being unaware did not comply with the said conditions, but might have applied for this tender schedule with little or less earnestness or seriousness. The third respondent who noticed the defect in the tender submitted by the petitioner has addressed the Bank of Baroda, Asil Mitta Branch, Visakhapatnam requesting the Bank to issue a crossed demand draft for Rs. 65,000/- in lieu of the Bank Guarantee by sending back the Bank Guarantee furnished by the petitioner. As the second respondent found fault with the third respondent for the procedure adopted by him and the third respondent informed the second respondent that the Superintendent, Accounts Section, S. (11) in the office of the third respondent had issued the tender schedule to the petitioner on his own accord without taking any order from the third respondent and without verifying whether EMD was deposited properly. The third respondent had expressed his concern about the lapse and promised that such lapses will not be repeated in future.
18. For all the above reasons and also following the Division Bench Judgment in Writ Appeal No. 1067 of 1994 dated 5-10-1994 which applied to this case on all fours I do not find any ground to interfere with the procedure adopted by the respondents. Therefore, this writ petition is devoid of merits and is accordingly, dismissed. No order as to costs.