Jharkhand High Court
M/S Ampl-Mil Jv vs Union Of India on 14 July, 2025
Author: Rajesh Shankar
Bench: Rajesh Shankar
2025:JHHC:18993-DB
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (C) No. 3436 of 2025
M/S AMPL-MIL JV, a joint venture of AMPL Resources Pvt. Ltd. and
M/S Mahalaxmi Infra Contract Ltd. having its registered office at
Circular Court, Block No. 92, 9th Floor, 8, A.J.C. Bose Road, P.O., P.S.
& District Kolkata through its authorized signatory namely Om Prakash
Pareek, son of Late Radheshyam Pareek, aged about 64 years, resident
of A-2, Laxmi Ganesh Apartment, Kanke Road, P.O. Ranchi University
and P.S. Morahbadi, District Ranchi.
... Petitioner
Versus
1. Union of India, through Secretary Ministry of Coal, Government of
India, having its office at 120, 1st Floor, F-wing, Shastri Bhawan,
P.O. & P.S District New Delhi.
2. Coal India Ltd., through its Chief Managing Director, having its
registered office at Coal Bhawan Premise No-04 MAR, Plot No-AF-
III, Action Area-1A, Newtown, P.O. & P.S. Rajarhat, District
Kolkata.
3. Central Coalfields Limited, (A Subsidiary of Coal India Limited),
Represented by Chairman-cum-Managing Director, Having its office
at Central Coalfields Limited, Darbhanga House, P.O. & P.S.
Kutchery Road, District Ranchi-834029, Jharkhand
4. The General Manager (CMC), Central Coalfields Limited,
Darbhanga House, Kutchery Road, P.O. GPO, P.S. Kotwali, District
Ranchi-834029, Jharkhand.
5. Government E-Market Place (GEM) through its Managing Director,
a Government of India Enterprise, having its Office at 3rd Floor,
Jeevan Bharti Building, Tower-2, Connaught Circus, P.O., P.S. and
District New Delhi.
6. Caliber (JV), (A Joint Venture), having its registered corporate
office at Office No. 1101, Naniks Ashtavinayak Park Avenue, near
Nagpur Urban Nagpur M Corp, Nagpur, P.O- Sadar Bazar, P.S. -
Sadar Police Station, District Nagpur, Maharashtra-440001 through
its Authorized Signatory, namely T. Krishna Shahu, aged about 56
years, son of Late T. Raghu Sahu, Resident of 63/129, B T Road,
Vivek Nagar, Titagarh (M), P.O. Titagarh & P.S. Khardah, District-
North 24 Parganas, West Bengal-700119.
... Respondents
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CORAM: HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJESH SHANKAR
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For the Petitioner: Mr. Rajiv Ranjan, Sr. Advocate
Mr. Rohitashya Roy, Advocate
Mr. Piyush Chitresh, Advocate
Mr. Vibhor Mayank, Advocate
Mr. Shivam Kumar, Advocate
For Respondents-CCL: Mr. Tushar Mehta, Sr. Advocate (Solicitor
General of India)
Mr. Amit Kumar Das, Advocate
For Resp. No.5/GEM: Ms. Khushboo Kataruka, Advocate
Mr. Shubham Kataruka, Advocate
For Pvt. Resp. No.6: Mr. Sumeet Gadodia, Advocate
Mr. Ritesh Kumar Gupta, Advocate
Mr. Ashutosh Agarwal, Advocate
Ms. Nidhi Lall, Advocate
---------
Reserved on: 11.07.2025 Pronounced on: 14/07/2025
Per M.S. Ramachandra Rao, C.J.
The background facts
1. The petitioner is a Joint Venture based in Kolkata. The respondent no.6 is also a Joint Venture based in Nagpur, Maharashtra.
2. The Central Coalfields Limited (3rd respondent), a subsidiary of Coal India Limited (2nd respondent) issued NIT No. CCL/GM(CMC)/A&C/GeM/2024/48 dt. 05.12.2024 (hereinafter referred to as the "Tender").
3. The scope of the work was Hiring of HEMM for removal of Over Burden, Extraction of coal by Surface Miner, Transportation to Shivpur Siding and Surface Stockyard under different lead slabs, and Wagon loading of coal at Shivpur Siding at Amrapali OCP, Amrapali- Chandragupt Area for 07 years (Production period) and 360 days (Development period) (i.e. 2915 days). The estimated value of the tender was Rs.10206.53 Crore.
4. The said e-tender notice was floated on the GeM Portal (Respondent 5 in the writ petition) i.e. Government e-Marketplace, a Government of India enterprise.
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5. The petitioner participated in the Tender and quoted 13.16% below the estimated value/ cost.
6. The respondent no.6 quoted 18.90% below the estimated value/ cost.
7. Thus, the respondent no.6 became L-1 and the petitioner was L-2 and the other 7 bidders had quoted higher than both of them and so we are not concerned with them.
8. The financial bid was opened on 28.4.2025 and respondent no.6 was issued the Letter of Acceptance on 2.7.2025 and thereafter, on 2.7.2025, the site for work was also handed over to it.
9. Importantly, this Writ Petition had been filed on 1.7.2025, a day before the issuance of Letter of Acceptance to the respondent no.6 on 2.7.2025 and it was registered on 10.7.2025.
10. We may point out that annexed to the tender were Additional Terms and Conditions (for short 'ATC') (Instruction to Bidder). Clause 23.6 of ATC, insofar as it is relevant for this case, states as under -
"23.6 There should be no provision in the Bid Documents regarding submission of Additional Security Deposit/Bank Guarantee (BG) in case of Abnormally Low Bids. There shall be a provision in the Bid document regarding Abnormally Low Bid that the Procuring Entity may in such cases seek written clarifications from the Bidder, including detailed price analyses of its bid price in relation to scope, schedule, allocation of risks and responsibilities, and any other requirements of the bids document If, after evaluating the price analyses, Procuring Entity determines that the Bidder has substantially failed to demonstrate its capability to deliver the contract at the offered price, the Procuring Entity may reject the bid/ proposal.Page 3 of 25
2025:JHHC:18993-DB Such Additional Performance Security (APS) shall be applicable if the bid price is below 15% of the updated/justified cost Finalized by the Owner as on the last date of Bid submission. The amount of such APS shall be the difference between 85% of the updated/justified cost Finalized by the Owner as on the last date of Bid submission and quoted price.
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11. Thus though abnormally low bids may be given without Additional Performance Security, if such bid is below 15% of updated/justified cost Finalized by the Owner ( for short the 'estimated value/ cost'), Additional Performance Security has to be provided.
12. The issue in this Writ Petition revolves as to the binding nature of this clause in the ATC on the respondents 3,4 and 6 (since the bid of the respondent no.6 was admittedly below 15% of the estimated value/ cost) , and whether it prevails over the contents of the Service Level Agreement (SLA) which forms part of Special Terms and Conditions(STC).
Contentions of petitioner
13. It is the contention of petitioner that though the petitioner was in a position to quote below 15%, it was precluded from doing so due to the clause 23.6 of the ATC of the Tender which mandates the giving of Additional performance Security for such a bid; and if such a clause Page 4 of 25 2025:JHHC:18993-DB had not been there, petitioner also would have made a more aggressive/competitive bid.
14. It is contended that as per Clause 23.6 of the ATC (referred to in para 10 supra), the respondent no.6, whose bid was admittedly 18.90% less than the estimated value/cost i.e below 15% of the 'estimated value/ cost', was bound to offer Additional Performance Security of Rs.337 Crores as per the 2nd paragraph of Clause 23.6, and the said clause is attempted to be waived by respondent No.s 3 and 4 to favor respondent no.6.
15. It is contended that the financial condition of the respondent no.6 was not good; in the immediately preceding financial year, its working capital was negative as per a recently filed DRHP for an IPO; that as on 31.12.2024, even the cash credit facility and working capital facility was also utilized by more than 85%; and if the respondent no.6 is awarded the work, it will not be able to execute the work causing damage to public interest, and the respondent nos. 3 and 4 will again have to invite fresh tenders which will cause much loss to public exchequer.
16. It is contended that the respondents 3 and 4 were contemplating to waive the requirement of furnishing of Additional Performance Security in order to enable respondent no.6 to get the work order and execute an agreement in its favor.
17. It is contended that there is clear malafide on part of the officers of the respondents 3 and 4 as the clause 23.6 of the ATC was deliberately retained in the Tender to prevent or preclude other bidders from quoting aggressively below 15 %. Once the other bidders quoted more (i.e. more than 85% of the estimated value/cost), they would be Page 5 of 25 2025:JHHC:18993-DB out of the race, and then the clause 23.6 will be clandestinely waived for respondent no.6 by the respondents 3 and 4.
18. Counsel for the Petitioner placed on record the Letter of Acceptance dt. 02.07.2025 issued to respondent no.6 along with the Letter dt. 02.07.2025 handing over the site to the respondent no.6 for work and stated that the apprehensions of the petitioner have come true as the Letter of Acceptance dt. 02.07.2025 issued by respondents 3 and 4 does not ask the respondent no.6 to furnish Additional Performance Security of Rs.337 crores, and thus the respondent no.6 has been favored by the said respondent Nos.3 and 4.
19. Counsel contended that in the Letter of Acceptance dt. 02.07.2025, the respondent no.6 was asked to furnish only a normal Performance Security, that there is no mention of Additional Performance Security, and the respondent nos. 3 and 4, being bound by the ATC, could not have granted any waiver to the respondent no.6 of the requirement of furnishing the Additional Performance Security.
20. The learned Senior Counsel refers to Clause 26.2 of the ATC which states "the notification of the Letter of Acceptance will constitute the formation of the contract and the issue of the Letter of Acceptance will supersede the contract generated on the GeM Portal"; and contends that it was not open to the respondents to issue the Letter of Acceptance and later the Work Order to the respondent no.6 excluding the requirement of furnishing the Additional Performance Security which is mandated by Clause 23.6 of the ATC.
21. Learned Senior Counsel also drew our attention to the General Terms and Conditions on GeM 4.0 (Version 1.19) dt. 26.09.2024 which Page 6 of 25 2025:JHHC:18993-DB stated in Clause 5 (page 23 thereof) ( for short "GTC of GeM) as under:
"5. Contract(s) Following documents shall be construed to be part of the contract generated through GeM:
i. Scope of supply including price as enumerated in the Contract Document ii. General Terms and Conditions (GTC). iii. Product/ Service specific Special Terms and Condition (STC).
iv. Product / Track / Domain Specific sTC of Particular Service including its SAL (Service Level Agreement). v. Bid / RA specific Additional Terms and Conditions (ATC). The Terms and Conditions stipulated in STC & SLA will supersede those in GTC and Terms and Conditions stipulated in ATC will supersede those in GTC and STC in case of any conflicting provisions."
(Emphasis supplied)
22. The learned Senior Counsel contends that the last portion of the last paragraph of Clause 5 states specifically that terms and conditions stipulated in the Additional Terms and Conditions(ATC) will supersede those in the General Terms and Conditions (GTC) and Special Terms and Conditions (STC), in case of any conflicting provisions; that the Service Level Agreement (SLA) is part of the Special Terms and Conditions (STC); and even if the Service Level Agreement (SLA) deleted the requirement of furnishing Additional Performance Security for a Bidder (like the respondent no.6 whose bid price is below 15% of the estimated vale/cost), the Bidder was bound to provide the Additional Performance Security in view of Clause 23.6 of the ATC; and the respondent Nos.3 and 4 failed in their duty to direct the Page 7 of 25 2025:JHHC:18993-DB respondent no.6 to do so arbitrarily and therefore, the award of contract to the respondent no.6 has to be set aside.
Contentions of respondents
23. The learned Solicitor General appearing for the respondent No.3 and 4 refuted the said contentions of the petitioner.
24. In para 22 of the counter affidavit filed by respondent no.3, it is contended that the sentence " There should be no provision in the Bid documents regarding submission of Additional Security Deposit/BG in case of Abnormally Low bids" in the first para of clause 23.6 , clearly points out that there is no requirement to provide Additional Performance Security; that requirement to provide Additional Performance Security is not automatically triggered; that this is also clarified by Annexure 13 at page 135 of the Writ Petition and clause 27 of the ATC at page 92 of the Writ Petition.
25. He pointed out that in the Service Level Agreement (SLA) which forms of the Special Terms and Conditions (STC), Clause 4.6 deals with Additional Performance Security as provided in Clause 23.6 of the ATC, but the same was specifically struck off, and therefore, there was no necessity for respondent No.s 3 and 4 to insist that the respondent no.6 give the Additional Performance Security.
26. According to him, the Service Level Agreement (SLA) contained in the Special Terms and Conditions (STC) overrides the General Terms and Conditions (GTC) and also the Additional Terms and Conditions (ATC) (which contained in the 2nd paragraph of clause 23.6, the requirement of providing Additional Performance Security by a Bidder whose bide price is below 15% of the estimated value/cost). Page 8 of 25
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27. He also sought to contend that the price bid was opened on 28.04.2025, but in spite of the same, the petitioner did not file the writ petition at that time and waited till July, 2025 (2 months) ; that in the meantime, Letter of Acceptance and even Work Order had been issued to the respondent no.6; and on the ground of unexplained laches, the petitioner has to be denied relief in the Writ petition.
28. According to him, the filing of the writ petition is an afterthought and any intervention by this Court at the behest of the petitioner would cause huge loss to the respondents.
29. He also sought to contend that GTC of GeM (i.e., the General Terms and Conditions on GeM 4.0 (Version 1.19) dt. 26.09.2024), on which reliance is placed by the petitioner, is general in operation and will not prevail over the Service Level Agreement (SLA) in the Special Terms and Conditions (STC); and when the requirement of providing Additional Performance Security by a Bidder whose bid is below 15% of estimated value/cost is specifically struck off in the Service Level Agreement (SLA), the GTC of GeM will have no application.
30. He also contended that since the respondent no.6 was the lowest bidder and there is a difference of 5% between the bid of petitioner and respondent no.6 running into Rs.500 Crore, no illegality was committed by the respondent No.s 3 and 4 in preferring the lowest bidder and not awarding the contract to the petitioner.
31. He pointed out that it is not as if the petitioner has quoted 15% below the estimated contract price or even close to the bid by the respondent no.6, and therefore, public interest will not suffer if the award of contract to the respondent no.6 is sustained by not interfering in this Writ petition with the action of the respondent Nos. 3 and 4. Page 9 of 25
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32. According to him, there was a pre-bid meeting held as per Clause 8 of the Additional Terms and Conditions, and the petitioner should have sought clarification on this aspect of giving of Additional Performance Security in that pre-bid meeting if he really intended to quote less than 15% from the estimated contract price; and having not chosen to do so, he cannot be now permitted to raise the said dispute. According to him, the petitioner had sought clarification on other aspects in the pre-bid meeting but not this aspect.
33. In the counter affidavit it is pleaded at para 30 that the respondent no.6 had given a Chartered Accountant's certificate which had been verified by the respondent no.3 and the same indicates that respondent no.6 has working capital of Rs.253.86 crores which is more than the required working capital as per the Tender.
34. In para 36 of the counter affidavit, it is also stated that no relaxation had been given to any bidder.
35. Though respondent no.6 did not file any counter affidavit, the counsel for the respondent no.6 adopted the submission of the learned Solicitor General.
Consideration by the Court
36. We have noted the submissions of the parties.
37. The Writ Petition had been filed on 1.7.2025 and registered on 10.7.2025 alleging that respondent No.s 3 and 4 would award the work to the respondent no.6 arbitrarily waiving the requirement of giving Additional Performance Security of Rs.337 Crores which it was bound to give as its bid was below 15% of the estimated value/cost.
38. On 2.7.2025, the Letter of Acceptance was issued to respondent no.6 without any provision for Additional performance Security. This Page 10 of 25 2025:JHHC:18993-DB subsequent event can certainly be relied on by this Court and it can mould relief appropriately, when there is larger public interest involved, if there is merit in the petitioner's contention as there exist pleadings in the Writ Petition on the aspect. (PRP Exports v. State of T.N1 and All India Railway Recruitment Board v. Shyam Kumar2)
39. The scope of interference by the courts in the decision-making process regarding award of tenders has been subject-matter of several judgments of the Supreme Court.
40. In Tata Cellular v. Union of India3, the Supreme Court held that it cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism.
It held that however, there are inherent limitations in exercise of that power of judicial review.
The right to refuse the lowest or any other tender is always available to the Government, but the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender.
The right to choose cannot be considered to be an arbitrary power, but if the said power is exercised for any collateral purpose, the exercise of that power will be struck down.
It declared that the grounds upon which an administrative action is subject to control by judicial review are illegality, irrationality, namely Wednesbury unreasonableness and procedural impropriety. However, it stated that the court does not sit as a court of appeal but merely reviews the manner in which the decision was made. 1 (2014) 13 SCC 692 2 (2010) 6 SCC 614 3 (1994) 6 SCC 651 Page 11 of 25 2025:JHHC:18993-DB While accepting that Government must have freedom of contract, it held that however, the decision must not only be tested by the application of Wednesbury principle of reasonableness, but must be free from arbitrariness not affected by bias or actuated by mala fides.
41. The issue of binding nature of terms of tender fell for consideration in the celebrated judgment of the Supreme Court in Ramana Dayaram Shetty v. International Airport Authority of India4.
In that case, there was a condition in the tender describing eligibility which required that the person submitting the tender must be conducting or running a registered 2nd class hotel or restaurant and he must have 5 years' as such experience, and if he did not satisfy the condition of eligibility, his tender would not be eligible for consideration.
The Supreme Court in the said case held that it is a settled rule of administrative law that an executive authority must be rigorously held to the standards by which it professes its actions to be judged, and it must scrupulously observe those standards on pain of invalidation of an act in violation of them.
The Supreme Court held in the said case that this was the standard or norm of eligibility laid down by Respondent 1, that it is binding, and since the Respondent 4 did not satisfy this standard or norm, it was not competent on the part of Respondent 1 to entertain the tender of Respondent 4.
Thus a condition or norm prescribing eligibility to bid was held binding.
4 (1979) 3 SCC 489 Page 12 of 25 2025:JHHC:18993-DB
42. In Air India Ltd. v. Cochin International Airport Ltd.5, also it was held that 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. It elucidated:
" 7. ... ... The award of a 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 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 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 5 (2000) 2 SCC 617, at page 623 Page 13 of 25 2025:JHHC:18993-DB conclusion that overwhelming public interest requires interference, the court should intervene."
(emphasis supplied)
43. In B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd6, also same view of taken. It was held:
"66. 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 summarised as under:
(i) if there are essential conditions, the same must be adhered to;
(ii) if there is no power of general relaxation, ordinarily 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;
(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 with 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 6 (2006) 11 SCC 548 Page 14 of 25 2025:JHHC:18993-DB 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.
67. Law operating in the field is no longer res integra. The application of law, however, would depend upon the facts and circumstances of each case. .... ....
68. The employer concededly is not bound to accept a bid only because it is the lowest. It must take into consideration not only the viability but also the fact that the contractor would be able to discharge its contractual obligations".
(emphasis supplied)
44. Therefore, the main question to be considered is:
"Whether the 2nd paragraph of Clause 23.6 in the Additional Terms and Conditions in the tender ( which mandates the furnishing of an Additional Performance security by a bidder whose bid is below 15% of the estimated value/ cost) would prevail?
or whether the Service Level Agreement contained in the Special Terms and Conditions (which omitted the requirement of providing Additional Performance Security if the bid is below 15%) would prevail?"
45. Admittedly, the tender in question was placed on the portal of Government e-Marketplace.
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46. Note (xiv) of the Tender after para 2 ( at pg .6 of the tender) thereof stated as under -
"xiv. Procurement of Services through GeM for Services
i) The guidelines issued by GeM/GoI from time to time through Notification/Circular/ Office Memorandum will be followed for procurement through GeM, (only if mandated by GeM Portal), even if the same are either not specially indicated in the Bid Document or not in line with the provisions of Chapter - 6 of CIL's CMM.
ii) The other provisions which are not mandated by GeM portal shall be guided as per respective Manuals/ Guidelines."
(Emphasis supplied)
47. Thus as per the above clause contained in the tender itself, the directives of the GeM as mandated in the GeM portal will apply. Thus they bind the respondents as well as all bidders including the petitioner and respondent no.6.
48. The GTC of GeM (i.e., General Terms and Conditions on GeM 4.0 (Version 1.19) dt. 26.09.2024) states in para-1 thereof that the document is an electronic record published by GeM under the provisions of the Information Technology Act, 2000 and the rules made thereunder as applicable and shall act as valid agreement between Seller/Service Provider and Buyer.
49. The said para also states that the GeM Portal for Sale/Purchase of Goods/Services and the resulting contracts shall be governed by the General Terms and Conditions unless otherwise superseded by Product/Service specific Special Terms and Conditions (STC), Product/Track/Domain Specific STC of Particular Service including its Page 16 of 25 2025:JHHC:18993-DB SLA (Service Level Agreement) and BID/Reverse Auction Specific Additional Terms and Conditions (ATC) as applicable.
50. Clause 5 of the GTC of GeM ( also extracted at para 21 supra states:
"5. Contract(s) Following documents shall be construed to be part of the contract generated through GeM:
i. Scope of supply including price as enumerated in the Contract Document ii. General Terms and Conditions (GTC). iii. Product/ Service specific Special Terms and Condition (STC).
iv. Product / Track / Domain Specific sTC of Particular Service including its SAL (Service Level Agreement). v. Bid / RA specific Additional Terms and Conditions (ATC). The Terms and Conditions stipulated in STC & SLA will supersede those in GTC and Terms and Conditions stipulated in ATC will supersede those in GTC and STC in case of any conflicting provisions."
(Emphasis supplied)
51. There are thus a list of five documents which would form part of the "contract" generated through GeM including General Terms and Conditions (GTC), Special Terms and Condition (STC) including Service Level Agreement (SLA) and Additional Terms and Conditions (ATC) which are Bid/RA specific.
The first portion of this clause makes it clear that the Terms and Conditions stipulated in the Special Terms and Conditions(STC) and Service Level Agreement (SLA) will supersede those in the General Terms and Conditions (GTC). To this extent, there is no problem. Page 17 of 25
2025:JHHC:18993-DB But it goes further in the later part of the last para therein and states that Terms and Conditions stipulated in Additional Terms and Conditions (ATC) will supersede those in General Terms and Conditions (GTC) and Special Terms and Conditions (STC) in case of any conflict.
Since the Service Level Agreement (SLA) is included in the Special Terms and Conditions (STC), in view of Clause 5, the Additional Terms and Conditions (ATC) would prevail over the Service Level Agreement (SLA) as well.
52. Therefore, notwithstanding the fact that Clause 4.6 of the Service Level Agreement (SLA) dealing with Additional Performance Security is struck off, such striking off would have no effect since the ATC would prevail over the Service Level Agreement (SLA) in the Special Terms and Conditions(STC); and so Clause 23.6 of the ATC which specifically mandates in the 2nd paragraph that if the Bid is below 15% of estimated value/cost, Additional Performance Security has to be given , will continue to operate.
53. Therefore the action of the respondent No.s 3 and 4 in not asking the respondent no.6 to give such Additional Performance Security though it's bid was below 15% of the estimated value/cost is clearly in the nature of a relaxation of the said essential condition, though the respondent No.s 3 and 4 deny that they have given such a relaxation/waiver.
54. The plea in the counter affidavit filed by the Respondent 3 in paragraph 22 at page 15 that the Service Level Agreement (SLA) would override the General Terms and Conditions (GTC) does not assist the 3rd respondent because the requirement of providing of Additional Page 18 of 25 2025:JHHC:18993-DB Performance Security is contained in the ATC; and as per Clause 5 of GTC of GeM, the ATC will prevail over the Service Level Agreement (SLA).
55. The further plea of counsel for respondent no.6 that it is stated in the Specimen Work Order (Annexure-XIII to the Additional Terms and Conditions (ATC) of the Tender Document), that Performance Security, Retention Money and Additional Performance Security, if any, would be as per the relevant clause of General Terms and Conditions of Service Level Agreement (SLA) and so it need not be insisted upon, cannot be accepted for the reason that it is only a proforma/specimen copy which is subject to suitable modification. A clause in a proforma cannot supersede the clause 23.6 of the ATC.
56. The importance of the Clause 23.6 of the ATC which requires providing of Additional Performance Security if the bid price is below 15% of the estimated vale/cost is that many times bidders quote abnormally low bids with a view to ensure that the business opponents do not get the contracts. Later, after securing the contract with the lowest bid, they fail to execute the contract, thereby causing loss to the exchequer and retendering has to be done to complete the work. So the Additional Performance Security will compensate such loss. The requirement to give such Additional Performance Security is thus undoubtedly in public interest.
57. That is why, though the 1st paragraph in Clause 23.6 states that for abnormally low bids, there may not be a provision for Additional Security Deposit, in the very next paragraph it is clarified that if the bid price is below 15%, then the Additional Performance Security would be applicable.
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58. The respondent no.3 cannot rely on the first para in clause 23.6 and ignore its second para and justify its action in not asking the respondent no.6 to give Additional Performance Security.
59. We are of the opinion that undoubtedly, public interest would be compromised if the Additional Performance Security of Rs.337 crores as mandated in Clause 23.6 of the Additional Terms and Conditions (if the bid price is below 15% of the estimated value/cost) is not insisted upon by respondent no.3 and 4 to a person like the respondent no.6. There is no justification for exempting the respondent no.6 of complying with the said requirement and undoubtedly this action on part of respondents 3 and 4 is not bonafide, and is arbitrary, illegal, unreasonable and violates Art.14 of the Constitution of India.
60. There has to be level playing field for all bidders and favoritism cannot be shown by respondent No.s 3 and 4 to respondent no.6 after it made a bid below 15% of the estimated cost/value, thus becoming the lowest bidder, and they cannot thereafter clandestinely grant a relaxation of the said condition of giving Additional Performance Security.
61. In Reliance Energy Ltd. v. Maharashtra State Road Development Corpn. Ltd.,7 it was held:
"Standards applied by courts in judicial review must be justified by constitutional principles which govern the proper exercise of public power in a democracy. Article 14 of the Constitution embodies the principle of "non-discrimination".
However, it is not a free-standing provision. It has to be read in conjunction with rights conferred by other articles like Article 21 of the Constitution. The said Article 21 refers to "right to life". It includes "opportunity". In our view, as held in the 7 (2007) 8 SCC 1, at page 21 Page 20 of 25 2025:JHHC:18993-DB latest judgment of the Constitution Bench of nine Judges in I.R. Coelho v. State of T.N.3, Articles 21/14 are the heart of the chapter on fundamental rights. They cover various aspects of life. "Level playing field" is an important concept while construing Article 19(1)(g) of the Constitution. It is this doctrine which is invoked by REL/HDEC in the present case. When Article 19(1)(g) confers fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of "level playing field". We may clarify that this doctrine is, however, subject to public interest. In the world of globalisation, competition is an important factor to be kept in mind. The doctrine of "level playing field" is an important doctrine which is embodied in Article 19(1)(g) of the Constitution. This is because the said doctrine provides space within which equally placed competitors are allowed to bid so as to subserve the larger public interest. "Globalisation", in essence, is liberalisation of trade. Today India has dismantled licence raj. The economic reforms introduced after 1992 have brought in the concept of "globalisation". Decisions or acts which result in unequal and discriminatory treatment, would violate the doctrine of "level playing field" embodied in Article 19(1)(g). Time has come, therefore, to say that Article 14 which refers to the principle of "equality" should not be read as a stand alone item but it should be read in conjunction with Article 21 which embodies several aspects of life. There is one more aspect which needs to be mentioned in the matter of implementation of the aforestated doctrine of "level playing field". According to Lord Goldsmith, commitment to the "rule of law" is the heart of parliamentary democracy. One of the important elements of the "rule of law" is legal certainty. Article 14 applies to government policies and if the policy or act of the Government, even in contractual matters, fails to satisfy the test of "reasonableness", then such an act or decision would be unconstitutional."
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62. Again in Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium)8, this principle of 'level playing field' was reiterated as under:
" 38. In G.J. Fernandez v. State of Karnataka9 both the principles laid down in Ramana Dayaram Shetty ( 4 supra) were reaffirmed. It was reaffirmed that the party issuing the tender (the employer) "has the right to punctiliously and rigidly" enforce the terms of the tender. If a party approaches a court for an order restraining the employer from strict enforcement of the terms of the tender, the court would decline to do so. It was also reaffirmed that the employer could deviate from the terms and conditions of the tender if the "changes affected all intending applicants alike and were not objectionable". Therefore, deviation from the terms and conditions is permissible so long as the level playing field is maintained and it does not result in any arbitrariness or discrimination in Ramana Dayaram Shetty ( 4 supra) sense."
(emphasis supplied)
63. The plea of respondents that the petitioner did not come to the Court immediately after the price bid was opened on 28.04.2025 and waited till the contract was awarded to file the writ petition, and so it is guilty of laches, cannot be accepted.
Only in the Letter of Acceptance dt.2.7.2025, it came to light that the respondent no.6 was exempted by respondent No.s 3 and 4 of the requirement of furnishing Additional Performance Security. The Writ was filed on 1.7.2025 (and registered on 10.7.2025) suspecting such conduct on part of respondent Nos. 3 and 4. 8 (2016) 8 SCC 622 : (2016) 4 SCC (Civ) 106, at page 633 : 9
(1990) 2 SCC 488 Page 22 of 25 2025:JHHC:18993-DB It is not the case of the respondents that they had proclaimed this exemption by notice to all bidders much before 01.07.2025 or at the time of opening of the price bid on 28.4.2025 intending to bid below 15% of the estimated contract price.
64. It may be that in the pre-bid meeting no query in regard to furnishing of Additional Performance Security for bidders quoting less that 15% of the estimated value/cost was raised by petitioner. Unless a bidder has benefit of foresight and is clairvoyant, it cannot always anticipate all events/issues which might occur after the pre bid meeting, and raise them in such a meeting. There can be no acquiescence inferred on petitioner's part to the conduct of respondent no.3 and 4 from such failure to raise the issue in the pre bid meeting. It also does not give an excuse to respondent Nos. 3 and 4 to clandestinely waive an essential condition which is in public interest to favor the respondent no.6.
65. The tender was issued on 05.12.2024 and the respondents had taken almost 07 months to issue the Letter of Acceptance to the respondent no.6 on 2.7.2025. The duration of the contract according to the Tender Document is 07 years and 360 days and by now not even one month from the date of issuance of Letter of Acceptance has elapsed. So no great prejudice is caused to respondents if this Court interferes with the arbitrary and illegal act of the respondent no.3 and 4 in granting clandestinely relaxation of an essential condition i.e giving of Additional performance Security as per clause 23.6 of the ATC since its bid was below 15% of the estimated value/cost .
66. The mere fact that the bid of the respondent no.6 is less than Rs.500.00 Crore than what is quoted by the petitioner is of no avail, Page 23 of 25 2025:JHHC:18993-DB because the respondent no.3 was not bound to accept the lowest bid, when such a bid made by the respondent no.6 is 18.9% below the estimated contract price and it had not been asked to give the Additional Performance Security of Rs.337 crores.
67. As pointed out above public interest may be jeopardized if the respondent no.6 walked out after making such a low quotation without giving an Additional Performance Security.
68. There is also no merit in the contention of the respondent no.6 that the petitioner acted male fide by delaying filing of the writ petition after the price bid was opened on 28.04.2025. It was not known then that respondent no.3 and 4 would waive clandestinely an essential condition which is in public interest to favor the respondent no.6.
69. We also do not accept the contention of the 3rd respondent that it had acted in accordance with law and its action cannot be said to be unjust, unfair, arbitrary or unreasonable or capricious or in colourable exercise of powers.
70. In our opinion, the 3rd respondent had undoubtedly shown favouritism to the respondent no.6 by waiving the requirement of giving Additional Performance Security in spite of the bid of the 6th respondent's bid being below 15% of the estimated contract price and in spite of Clause 23.6 of the ATC making it necessary for the 6th respondent to give Additional Performance Security.
71. No doubt, the petitioner had inter alia also contended that some of the clauses in the tender were ambiguous, though we do not deem it appropriate to go into it. But such a plea is in conformity with the law laid down by the Hon'ble Supreme Court in Reliance Energy Ltd. (7 supra), in which the Supreme Court held at paragraph 38 that when Page 24 of 25 2025:JHHC:18993-DB tenders are invited, terms and conditions must indicate with legal certainty, norms and benchmarks; that this legal certainty is an important aspect of the rule of law; and if there is vagueness or subjectivity in the said norms, it may result in unequal and discriminatory treatment and violate the doctrine of "level playing field"
72. The judgment in Agmatel India Private Limited v. Resoursys Telecom and Others10 cited by the counsel for the respondent no.6 is distinguishable since it turns on different facts. In that case, there was a question - "whether the words "smart-phones" and "Tablets" have to be taken a similar category product for the tender process or not?". Observations of the Supreme Court made in such a context have no applicability to cases like the instant case.
73. For all the aforesaid reasons, the Writ petition is allowed and, the Letter of Acceptance dt. 02.07.2025 and Work order issued by the respondent No.3 in favour of the respondent no.6 for the subject tender are both set aside; and the respondents are directed to invite a fresh tender for the same work and then take an appropriate decision in accordance with law. No costs.
74. Pending Interlocutory Applications, if any, stand disposed of.
(M.S. Ramachandra Rao, C.J.) (Rajesh Shankar, J.) N.A.F.R. Manoj/-
10
(2022) 5 SCC 362 Page 25 of 25