Madras High Court
M/S.Doshion Veolia Water vs Indian Railway Catering And on 16 February, 2010
N THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 16 .02.2010
CORAM
THE HONOURABLE MR. JUSTICE K.VENKATARAMAN
Writ Petition Nos.27074 of 2009
and 1059 of 2010 and
M.P.Nos.1 and 2 of 2010
W.P.No.27074 of 2009:
1 M/S.DOSHION VEOLIA WATER [ PETITIONER IN ]
SOLUTIONS PVT. LTD. BOTH W.PS.
OFFICE AT PLOT NO.24-
26 PHASE II GIDC VATVA
AHMEDABAD 382 445
GUJARAT THROUGH ITS
GENERAL MANAGER LEGAL
NARESHMUKUND SANGANI
Vs
1 INDIAN RAILWAY CATERING AND [ RESPONDENTS ]
TOURISM CORPN. LTD. IN BOTH W.PS.
THORUGH ITS MANAGING
DIRECTOR 9TH FLOOR BANK
OF BARODA BUILDING
16 PARLIAMENT STREET
NEW DELHI-1
2 CHIEF PLANT MANAGER/RNP
INDIAN RAILWAY CATERING
AND TOURISM CORPN.
LTD. SOUTH ZONE 6A
THE RAIN TREE PLACE NO.
9 MC NICHOLS ROAD
CHETPET CHENNAI-31
3 THE SECRETARY
RAILWAY BOARD
MINISTRY OF RAILWAYS RAIL
BHAWAN NEW DELHI
4 M/S.ION EXCHANGE INDIA LTD.
TIECICON HOUSE DR.E.MOSES ROAD
MAHALAXMI MUMBAI-11
Writ petition No.27074 of 2009 has been filed under Article 226 of the Constitution of India to issue a writ of mandamus forbearing the respondents 1 & 2 from taking any step in furtherance of the tender No. IRCTC/SZ/RNP/P&M/2009/02 dated 3.8.2009 issued by the 2nd respondent by receiving any performance of the works as detailed in para 6 of teh Technical Bid of the said tender from the 4th Respondent and further direct Respondent Nos. 1 to 3 to award the tender in favour of the Petitioner being the lowest bidder.
Writ petition No.1059 of 2010 has been filed under Article 226 of the Constitution of India to issue a writ of certiorari to Call for the records of the 2nd Respondent in letters Nos.IRCTC /SZ/RNP/ P&M/2009/02/S dated 17.12.2009 IRCTC/SZ/RNP/ P&M/ 2009/02/E&C dated 17.12.2009 & IRCTC/SZ/RNP/ P&M/2009/02/O&M
dated 17.12.2009 and quash the same.
For petitioner : Mr.AL.Somayaji, S.C.,
for Mr.Karthik Mukundan,
in both the writ petitions.
For respondents : Mr.Amarendar Sharan, S.C., and
Mr.R.Thiagarajan, S.C., for
Mr.V.G.Suresh Kumar, and
Mr.Saurav Agarval,
for R.1 and R.2 in both W.Ps.
Mr.N.R.Chandran, S.C., for
M/s.Surana & Surana, for R.4
COMMON ORDER
Writ Petition No.27074 of 2009 was filed for a mandamus forbearing respondents 1 and 2 from taking any steps in furtherance of the tender dated 3.8.2009 issued by the second respondent by receiving any performance of the works as detailed in the Technical Bid of the said tender from the fourth Respondent and further directing respondents 1 to 3 to award the tender in its favour being the lowest bidder.
2. Writ Petition No.1059 of 2010 was filed challenging the order of the second respondent dated 17.12.2009 accepting the tender of the fourth respondent.
3. The short matrix of the matter as put forth by the petitioner in the affidavits in support of the writ petitions, in nutshell, is set out here under:-
(a) The petitioner is a private limited company incorporated under the provisions of the Companies Act, 1956. In February, 2009, respondents 1 and 2 floated a two part tender dated 18.02.2009 for setting up a turnkey project for Design, Engineering, Supply, Installation, Commissioning, Operation and Maintenance of Packaged Drinking Water Bottling Plan under the name of "Rail Neer", at Palur near Chennai.
(b) The petitioner and the fourth respondent participated in the tender with their bids. The technical bid was opened on 30.03.2009. The Tender Committee declared three bidders as successful and thereafter, the price bids were opened on 26.06.2009. The petitioner's bid was the lowest one. However, respondents 1 and 2 decided to scrap the entire tender process by proceedings dated 27.07.2009 and the same was informed to the petitioner also.
(c) The petitioner immediately protested against the said cancellation of the tender, by its letter dated 31.07.2009 to the first respondent. Later, respondents 1 and 2 called a meeting of all the three bidders on 29.07.2009 and a consultation was held in the office of the first respondent. In the said meeting, it was explained that the earlier tender was cancelled due to lack of clarity and information on certain aspects and hence, the tender was re-floated.
(d) Within seven days of cancellation of the first tender, respondents 1 and 2 subsequently re-floated a new tender dated 03.08.2009. The petitioner and the fourth respondent submitted their bids. After scrutinizing the technical bids, the price bids were opened on 27.08.2009 in the presence of the representatives of all the parties. When the price bids were opened, the price offered in the price bid was Rs.18.65 Crore by the petitioner and Rs.18.66 Crore by the fourth respondent. There were certain apparent discrepancies in the price bid of the fourth respondent, which are violative of the specific terms of the tender document and the same was brought to the notice of the second respondent by a letter dated 27.08.2009, the date on which the tender was opened.
(e) There were additions in the tender submitted by the fourth respondent and the following discrepancies were found in the tender submitted by the fourth respondent, viz.,
(i) The fourth respondent failed to indicate the total excise duty amount separately.
(ii) The tender submitted by the fourth respondent shall be considered as void in terms of clause 1.12 of the tender document.
(iii) There was violation of clause 1.3 of the tender document.
(iv) The tender document does not allow anything to be added after stamp is affixed, whereas the fourth respondent has put its stamp and signature on the right hand side of the page as well as in the middle of the page and the stamp has not been put on the bottom of the page. Even after the signature on the stamp, several lines have been added and thus, the bid as made by the fourth respondent should not have been considered.
(f) Pursuant to the opening of the price bid, the petitioner by its letters dated 28.09.2009, 03.09.2009 and 10.09.2009 pointed out several discrepancies in the bid as submitted by the fourth respondent. Further, the representatives of the petitioner company met the first respondent on 11.09.2009 and pointed out the discrepancies in the price bid submitted by the fourth respondent. A letter dated 11.09.2009 was written to the first respondent pointing out that the commercial bid as submitted by the fourth respondent was incomplete and requested the first respondent to declare the price bid submitted by the fourth respondent as void and to award the tender to the petitioner.
(g) Ignoring the discrepancies pointed out by the petitioner, it was found that respondents 1 and 2 acting in an arbitrary, discriminatory and highhanded manner, had awarded the tender to the fourth respondent. The fact of having awarded the tender to the fourth respondent was orally communicated to the petitioner by the second respondent. But, however, the copy of the order was not served on the petitioner.
(h) The petitioner, therefore filed a writ petition in W.P.No.27074 of 2009 for a mandamus forbearing the respondents from taking any steps in furtherance of the tender dated 03.08.2009 issued by the second respondent by receiving any performance of the works of the Technical Bid of the tender from the fourth respondent and for awarding the tender in its favour.
(i) On 05.01.2010, respondents 1 and 2 filed a detailed counter in the said writ petition, wherein it was pointed out by respondents 1 and 2 that letter of acceptance has been issued on 17.12.2009 to the fourth respondent. In view of the said fact, the petitioner has filed another writ petition in W.P.No.1059 of 2010 challenging the said proceedings of the second respondent dated 17.12.2009.
4. Counter affidavits were filed on behalf of respondents 1 and 2, wherein the following averments have been made:-
(a) It was noticed that the bidders had submitted their conditional bids with varying terms and conditions, in contrast to the tender document, having varying financial implications in respect of taxes and duties, supply of raw materials for bottling, etc. Therefore, the tender committee was of the opinion that since all the bidders were well established in the business, there would not have been a clear and unambiguous understanding of the bid resulting in variations and anomalies in the bids. The tender committee recommended for discharge of the tender in exercise of clause 1.16 of the tender document and invitation of fresh tender after incorporating all the relevant revisions in the tender document to avoid anomalies. The said recommendation was duly accepted by the Accepting Authority and thereafter, the bidders were duly informed about the cancellation of the tender on 27.07.2009.
(b) Number of changes have been made in the new tender including changes so as to deal with the causes that led to the cancellation of the previous tender. The petitioner and the fourth respondent were the two bidders, who participated in the bidding process. Though the petitioner had earlier objected to the cancellation of the earlier tender, it participated in the fresh tender. In the second round of the tender, both the parties have substantially reduced their quotes towards O & M. However, coming to price of plant and equipment, while the fourth respondent has marginally reduced its price, the petitioner has substantially increased the same.
(c) The technical bids were duly opened on 24.08.2009 and upon scrutiny of their technical bids, the tender committee recommended opening of the financial bids, which was accepted by the Accepting Authority. The financial bids were opened on 27.08.2009 in the presence of the representatives of both the bidders. It was noticed that the petitioner had quoted a total price of Rs.18.65 Crore whereas the fourth respondent quoted a price of Rs.18.66 Crore and also quoted a discount of 1% on the total price.
(d) The tender committee had deliberated in detail over the issue of the net price quoted after adjusting the discount offered by the fourth respondent. Considering that the discount quoted was unconditional, across the board and was part of the financial bid at the time of opening of the bid, the net price quoted by the fourth respondent was considered for evaluation.
(e) The bidders were required to quote an all inclusive price. There was no separate column / place for indicating the excise duty which has been included in the quoted price nor it was one of the bidding criterion or part of the bid evaluation. No infirmity therefore, could be found with the bid of the fourth respondent on this count.
(f) The tender committee in view of the objections raised by the petitioner had deliberated over this aspect at length and ultimately concluded that the excise duty amount was not to be reckoned for bid evaluation. The offer of the fourth respondent was accepted after considering the relevant issues.
Thus, the counter affidavits sought for the dismissal of the writ petitions.
5. Counter affidavits were filed on behalf of the fourth respondent, which contain the following facts:-
(a) Cancellation of earlier tender was accepted by all the bidders including the petitioner. Having participated in the fresh tender, the petitioner is estopped from stating that the earlier tender should not have been cancelled.
(b) The price bids were opened by the officials of respondents 1 and 2 in the presence of the representatives of the petitioner and the fourth respondent. The discount referred to in the price bid of the fourth respondent was clearly read out when its price bid was opened. The discount offered by the fourth respondent is clearly referred to in the letter dated 27.08.2009 written by the petitioner to the second respondent. In the letter dated 27.08.2009 written by the petitioner to the first respondent, the petitioner clearly admitted that the price bid of the fourth respondent contained the handwritten discount in the price. Thus, it is clear that the price bid was opened in the presence of the representatives of the petitioner and the fourth respondent which contains the discount of 1% referred to in the price bids. When there is no specific term prohibiting such discount or restrictions in quoting any price and then giving a discount, the discount offered by the fourth respondent cannot be faulted with.
(c) The excise duty benefit that would accrue to the second respondent in terms of the second tender has been clearly stated in percentage terms and there is no ambiguity for the same. In any event, the excise duty could not have been part of the bid evaluation process.
(d) At no point of time, after opening of the tender, was there any change in the rates as submitted by the fourth respondent in its bid. The overall price bid of the fourth respondent was considered by respondents 1 and 2 and only thereafter, the tender was awarded to the fourth respondent. There is no applicability of clause 1.12 in respect of the current case, since there was no deviation or any change in the rates, after the opening of the tender. The price bid as submitted by the fourth respondent was valid and has been rightly considered by respondents 1 and 2.
Thus, the counter affidavit sought for the dismissal of the writ petition.
6. Reply affidavit was filed on behalf of the petitioner for the counter affidavits filed by respondents 1 and 2 as well as the fourth respondent, which in nutshell, is set out here under:-
(a) The petitioner had adhered to the conditions in the tender and had quoted a price inclusive of all taxes and duties unlike the fourth respondent. On the contrary, the fourth respondent has violated the terms and conditions of the tender. The earlier tender was cancelled by the competent authority arbitrarily with a mala fide intention and the power to discharge the tender as per clause 1.16 was exercised with an ulterior motive to deny the tender to the petitioner, though it was the highest bidder.
(b) There was no provision for providing discount in the tender form nor was it discussed and permitted in the pre bid meeting of all the bidders and respondents 1 and 2. Therefore, the tender of the fourth respondent is liable to be rejected.
(c) Since representation was sent pointing out the arbitrary and discriminatory cancellation of the earlier tender, the question of waiver will not arise. The discount offered by the fourth respondent by an handwritten insertion well below the seal affixed on that page, would clearly indicate that such insertion was an after thought and the same was made with an ulterior motive to deny the tender to the petitioner. The handwritten insertion also does not satisfy the requirement of clause 1.11, Part I of the tender viz, Instructions to Bidders. In such circumstances, the tender submitted by the fourth respondent is void as per clause 1.12 and therefore, respondents 1 and 2 ought not to have processed the same.
(d) If the fourth respondent can quote a discount when there is no provision for the same in the tender by an handwritten insertion, in the same manner, it could have indicated the excise duty amount anywhere in the price quote. The fourth respondent has not indicated the amount pertaining to excise duty as required under Note II as well as clause 2.2 of the commercial bid. However, respondents 1 and 2 have undertaken an exercise to process the incomplete bid submitted by the fourth respondent and arrived at the amounts after applying the percentage / rates as indicated by the fourth respondent. There cannot be any discount on the excise duty payable which has to be 8.24% on the actual value of plant and machinery. As the fourth respondent has not quoted ED amount, the tender committee has undertaken the exercise on behalf of the fourth respondent to arrive at the ED amount and the exercise is clearly irrational, arbitrary, mala fide. The conditions of the tender have to be strictly complied with.
(e) It is denied that the decision of the respondents 1 and 2 in awarding the tender to the fourth respondent is in public interest. The tender has been awarded to a party which did not comply with the tender conditions as stipulated, thus rendering its bid void. Therefore, there is no merit in the bid submitted by the fourth respondent and it cannot be said that the interest of the public money has been safeguarded while awarding the tender to the fourth respondent.
7. Mr.AL.Somayaji, learned Senior Counsel appearing for the petitioner in both the writ petitions, Mr.Amarendar Sharan, learned Senior Counsel and Mr.R.Thiagarajan, learned Senior Counsel appearing for respondents 1 and 2 and Mr.N.R.Chandran, learned Senior Counsel appearing for the fourth respondent have made their submissions based on the pleadings referred to above.
8. The broad submissions made by the learned Senior Counsel appearing for the petitioner are on three folds viz.,
(i) The cancellation of earlier tender was not valid.
(ii) There were lot of discrepancies in the bid submitted by the fourth respondent and hence, the price bid of the fourth respondent ought not to have been accepted.
(iii) The price bid of the fourth respondent is in violation of the specific terms of the tender document and hence, its bid should not have been considered.
9. The broad submissions made on behalf of the respondents are on four folds viz.,
(i) The cancellation of the earlier tender was made since the offers received from the bidders were conditional with anomalies and complex situation and hence, it was not possible to evaluate the offers and decide inter-se position of the bidders in an objective manner. Hence, number of changes have been made in the tender so as to deal with the causes that led to the cancellation of the earlier tender.
(ii) The petitioner having participated in the second tender, cannot now question the cancellation of the earlier tender.
(iii) The price bid of the fourth respondent is not violative of any terms of the tender document and hence, the acceptance of the tender offered by the fourth respondent has been accepted by respondents 1 and 2.
(iv) There are no discrepancies in the bid submitted by the fourth respondent warranting refusal of the same.
10. On the above said submissions, let me now deal with those issues.
11. The first issue is, whether the cancellation of the earlier tender was valid or not ?
12.1. The first and foremost submission that was made on behalf of the petitioner, by the learned Senior Counsel appearing for the petitioner, is that the cancellation of the earlier bid was not valid. According to the learned Senior Counsel, when the petitioner's bid was the lowest one, respondents 1 and 2 ought to have accepted the same and the failure to do so, is totally unacceptable. However, I am not inclined to accept the said contention of the learned Senior Counsel appearing for the petitioner for more than one reasons viz.,
(i) It was urged on behalf of respondents 1 and 2 that the offers received from the bidders were conditional with anomalies and complex situation and hence, it was not possible for respondents 1 and 2 to evaluate the offers and decide the inter-se position of the bidders in an objective manner. Therefore, the tender committee was of the opinion that since all the bidders were established in the business, there would not have been a clear and unambiguous understanding of the bid resulting in variations and anomalies in the bids and recommended for discharge of the tender. The said cancellation was duly accepted by the Accepting authority and the bidders were duly informed about the cancellation of the bid.
(ii) The power of discharging the tender is inconsonance with clause 1.16 of the tender document. Clause 1.16 of the tender document reads as follows:-
" 1.16. IRCTC does not bind itself, to accept the lowest or any tender or to assign any reason thereof and also reserves the right to accept or reject any or all the tenders, in whole or in part without assigning any reason for doing so. The part acceptance will not violate the terms and conditions of the contract and the tenderer will execute the work at the specified rates without any extra charges or compensation within the stipulated period."
Thus, the authorities are vested with the power to discharge a tender, as per clause 1.16 of the tender document.
(iii) Number of changes seem to have been made in the new tender including the changes so as to deal with causes that led to the cancellation of the earlier tender. The major changes that have been made in the fresh tender were set out in paragraph 15 of the counter affidavit of respondents 1 and 2. As many as 24 changes have been made in the fresh tender.
(iv) Even assuming that the cancellation of earlier tender was bad, the petitioner, who has participated in the second tender, cannot now be heard to say that the cancellation of the earlier tender was bad. Having accepted to participate in the second tender and having lost in the game, now the petitioner cannot take a stand that cancellation of the earlier tender is bad.
Thus, summing up the entire controversy, I am of the considered view that the petitioner cannot be heard to say that the cancellation of the earlier tender is bad.
13. The second issue, whether there exists any lot of discrepancies in the bid submitted by the fourth respondent ? and the third issue, whether the bid of the fourth respondent is in violation of the specific terms of the tender document warranting rejection of its bid ? are liable to be considered.
13.1. In this connection several infirmities in the tender submitted by the fourth respondent was made.
The first and foremost infirmity that was pointed out is that the fourth respondent failed to indicate the total excise duty amount separately which is contemplated under the tender document and thereby violated the terms and conditions of the tender document.
13.2. Before adverting to the said contention, raised on the side of the petitioner, it would be useful to extract note II of tender document (part II Commercial Bill. It states --
"Vendor should indicate the total excise duty amount included in above prices (for Plants and Equipments)"
13.3. The fourth respondent, according to the petitioner only indicated "Excise Modvat gate pass will be provided on material for which ED is applicable". The fourth respondent included the excise duty at 8.24%, but it did not indicate the amount in figures. Thus, according to the petitioner, since the fourth respondent failed to indicate the total excise duty amount separately, violated the terms and conditions of the document.
13.4. The said contention raised on the side of the petitioner has to be rejected on the following grounds namely,
(i) There is neither separate column or place for indicating the excise duty, which has been included in the quote price, nor it was one of the bidding criteria or part of the bid evaluation.
(ii) The fourth respondent had indicated the excise duty at 8.24%, though it did not indicate the amount in figures. Note II referred above did not require that the amount of excise duty has to be indicated in rupee terms only. No such requirement is found in Note II of the tender document.
(iii) Respondents 1 and 2, in para 30 of the counter affidavit, have stated that the tender committee had deliberated over the issue of excise duty in great deal and have unanimously concluded that the excise duty amount was not a criteria of bidding evaluation. The bidders were only required to indicate the amount of excise duty included in the price quoted for plant and machinery and quotation of rates / percentage of excise duty was sufficient as by quoting the percentage of excise duty, the rupee amount could be ascertained and the bid could not have been disqualified.
13.5. When such stand was made by respondents 1 and 2 in the counter affidavit, who are manned by the technical experts, this Court, which is not an expertise over such issue, cannot be deliberated for failure to indicate the total exercise amount and hold it is in violation of the terms and conditions of the tender document.
14.1. The next discrepancy that was pointed out was that Clause 1.3 of the tender document was not followed by the fourth respondent. Before adverting to the said contention raised on the side of the petitioner, it would be useful to extract the said clause which is extracted here under:
The tender documents filled in prescribed format only and complete in all respects are to be submitted as per instructions 14.2. It is contended on behalf of the petitioner that the fourth respondent, deviating from the said clause submitted its bid manually mentioning one percent discount on the price quoted by it at the end of the bid. Deviation itself in the bid submitted by the fourth respondent, is void and liable to be rejected as the fourth respondent failed to comply with the prescribed format of the tender.
14.3. The said contention raised on behalf of the petitioner is liable to be rejected as contended by the respondents for the following reason namely, the discount of one percent quoted by the petitioner was not conditional. Since, the fourth respondent had offered discount unconditionally, there is no reason to put the said fact against the respondent.
15.1. The next point put against the petitioner is that Clause 1.11 of the Technical tender (Part I) mandates that every page of the tender document shall be signed and stamped properly and if there is any defect, it shall be rejected. Since, the fourth respondent has put its stamp and signature on the right hand side of the page as well as in the middle of the page and stamp has not been put on the bottom of the page, its bit should not have been accepted.
15.2. Before, adverting to the said contention raised in this regard, it would be useful to extract Clause 1.11 of the Technical tender (Part I):-
1.11 Every page of the tender document shall be signed on the left hand side bottom corner and stamped properly by the authorized person or persons submitting the tender in token of his/their having acquainted himself/themselves with the general conditions of contract, technical specifications etc. as laid down. Any tender is liable to be treated as defective and is liable to be rejected if any of the documents is not signed. The initials of the tenderer must attest all erasures and alterations made while filling the tender. Over writing of figures is not permitted. 15.3. Further, it is contended that Clause 1.12 of the tender document states that failure to comply with either of these conditions will render the tender void. No advice of any change in rate after opening of the tender will be entertained.
15.4. The said contention has to be rejected, as contended by the respondents for the following reasons:
(i) All the figures in the price schedule as well as the discount that were hand written is said to have been read out to the representatives of the bidders and encircled by both the tender opening officials at the time of opening of the bid in presence of the bidders.
(ii) All the figures in the price schedule as well as discount were hand written and it has been properly endorsed with the signature of the bidder. The fact that the petitioner was aware of the same at the time of opening of the bid would be borne out by his own letter dated 27.08.2009, which was submitted to the second respondent immediately after opening of the bid. It would be useful to extract the contention of the said letter.
With reference to the above mentioned tender the competitor has submitted the Price Bid with the handwritten discount price as Special Discount which is not as per the tender conditions & hence is not acceptable to us.
Hence we hereby request you to look into the matter with immediate effect & take stern action
(iii) The said handwritten was duly attested and duly stamped.
15.5. In view of the above stated position, the contention of the learned Senior Counsel appearing for the petitioner that Clause 1.11 of the Technical tender (Part -I) was violated by the fourth respondent is liable to be rejected.
16. One more contention that was raised in this regard is that there is manipulation / subsequent insertion found in the tender document submitted by the fourth respondent. The said contention is liable to be rejected for the following reasons:
(i) that the allegation of manipulation / subsequent insertion had been made for the first time in this writ petition. The petitioner never made such allegation when he has written a letter to the second respondent, requesting him not to accept the bid submitted by the fourth respondent.
(ii) that when the bid was opened, such hand written matters were in existence which could be seen from the petitioner's own letter dated 27.08.2009 itself.
(iii) that there is no over-writing in the bid document which has been perused by this Court and hence there is no question of manipulation or subsequent insertion.
17. Thus, summing up the entire controversy, the price bid of the fourth respondent is not violative of the specific terms of the tender document and there are no discrepancies in the bid submitted by the fourth respondent, warranting the denial of the acceptance of the bid submitted by the fourth respondent.
18.1. In this connection, the learned Senior Counsel appearing for the petitioner relied on few decisions which are as follows:-
(i) (2006) 11 SCC 548, B.S.N.Joshi & Sons Ltd. v. Nair Coal Services Ltd.
Citing the said judgment, the learned Senior Counsel appearing for the petitioner submitted that, when the Hon'ble Apex Court has held when the requirement in the tender, stipulates certain conditions which are essential, the authority issuing the tender may be required to enforce them rigidly. Since, in the given case on hand, according to the learned Senior Counsel appearing for the petitioner certain conditions in the tender referred to above are essential conditions, the authorities cannot deviate from them. However, I am of the considered view that even in the said judgement, their Lordships of the Hon'ble Supreme Court have held that if the conditions are not essential but merely ancillary or subsidiary with the main object to be achieved by such condition, it is open to the authorities that some may not be ordinarily be interfered with.
(ii) The next decision that was cited by the learned Senior Counsel appearing for the petitioner is reported in the case of Sorath Builders v. Shreejikrupa Buildcon Limited and another - (2009) 11 Supreme Court Cases 9. Citing the said judgment the learned Senior Counsel appearing for the petitioner submitted that the terms and conditions of the tender are required to be adhered to strictly. Absolutely, there is no second view about it, but if the conditions are not essential and it is only ancillary or subsidiary, there need be no strict adherence of the said condition.
(iii) The next decision that was reported by the learned Senior Counsel appearing for the petitioner is reported in 2006 Writ L.R. 144, M/s.Karnataka Commercial and Industrial Corporation Private Limited v. The Airport Authority of India & others. More emphasis was placed on paras 16 and 18 of the said judgement which are usefully extracted here under:
16. Keeping the law laid down by the Apex Court, the facts pleaded in this case shall be considered. The conditions of tender are binding on both the tenderer as well as the authority inviting the tender. According to clause 2 of the general information/guidelines of the tender notice, a tenderer must submit two sealed envelopes relating to the technical bid in envelope 'A' and the financial bid in envelope 'B' and that both the envelopes are to be sealed in the master envelope. Envelope 'A' shall contain the basic documents specified in that clause. The issue relates to non-filing of the last financial year's filed income tax return. The relevant sub-clauses are extracted in the earlier portion of the order. The petitioner had submitted the balance sheet and the other annexures for the year 2005-2006 without the filed income tax return in the prescribed format. As per the second part of clause 3(iv), a tenderer must enclose the last financial year's filed income tax return including the documents mentioned in sub clauses (a) to (g). There is no dispute that the petitioner did not enclose the filed and verified income tax return in the prescribed format for the last financial year, though it had enclosed other documents including the balance sheet.
18.It is the specific case of the respondents that the petitioner had not furnished the last financial year's filed and verified income tax return in the prescribed format, and the same is also not disputed by the petitioner. However, it is the case of the petitioner that the furnishing of the last financial year's filed income tax return is only a formality and inasmuch as the petitioner had enclosed all other documents as required under the second part of clause 3(iv) of the guidelines, it should be construed that the petitioner had made 'substantial compliance' of the tender conditions. In my opinion, the question of substantial compliance in the matters of tender cannot be accepted in view of the categorical dictum of the Apex Court on the law. For the purpose of opening of the financial bid, the documents which are required for the clearance of the technical bid must have been enclosed for scrutiny as per the tender conditions. In the event of failure to enclose all the relevant, required and valid documents as per the conditions of tender, the technical bid is liable to be rejected in terms of clause 5 of the guidelines, whereby a right is given to the authority to reject the tender submitted by the tenderer in case the tender did not accompany all or any of the documents as per the second part of clause 3(iv). In the circumstances, I do not find any merits in the challenge to the impugned order, whereby the technical bid of the petitioner has been rejected on the ground of non-compliance of the tender conditions. On the facts of the given case, I do not find any arbitrary action on the part of the respondents. As the technical bid of the petitioner was not accepted in terms of and for non-compliance of the tender conditions, I find no unreasonableness or arbitrariness in the action of the respondents in rejecting the tender. For the same reasons, the submission as to the mala fide is also liable to be rejected. The decision making process of the respondents cannot be the subject matter of judicial review, as this Court does not act as a Court of appeal to review such decisions, especially in the absence of arbitrariness, unfairness, discrimination and mala fide. 18.2. The question that arises in the said judgement was whether the failure to submit the Income Tax returns is a substantial compliance or not since the balance sheet alone was submitted. It has been held that failure to submit Income Tax return is not substantial compliance and hence the rejection of tender is perfectly valid.
18.3. Further, the said judgment may not be of any use to the petitioner, since I have already held that there was substantial compliance made by the fourth respondent and infirmities pointed out by the petitioner is only of trivial nature and the reasons givenabove will establish the same.
18.4. The other judgment that has been cited by the learned counsel appearing for the petitioner is reported in AIR 1972 SC 1004, The State of Haryana and others v. Rajendra Sareen. That is the case where a Government Servant was terminated. The said judgment does not in any way come to the rescue of the petitioner.
19. Learned Senior Counsel appearing for respondents 1 and 2 cited the following decisions:-
(i) Becil v. Arraycom India Limited and others (2010) 1 Supreme Court Cases 139, wherein in para 11 the Hon'ble Apex Court has held as follows:-
" 11. In administrative matters, the scope of judicial review is limited and the judiciary must exercise judicial restraint in such matters, as held by this Court in Tata Cellular v. Union of India. Moreover, the view of Prasar Bharti also appears reasonable because Prasar Bharti has to pay the amount inclusive of sales tax, since there are no concessional forms. If Prasar Bharti has taken up one possible interpretation, the High Court should not have intervened. The scope of judicial review in administrative matters is limited."
(ii) Poddar Steel Corporation v. Ganesh Engineering Works and others (1991) 3 Supreme Court Cases 273. In paragraph 6 of the said judgment, the Hon'ble Apex Court has held as follows:-
" 6. It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the State Bank clause 6 of the tender notice was not obeyed literally, but the question is as to whether the said non-compliance deprived the Diesel Locomotive Works of the authority to accept the bid. 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 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. This aspect was examined by this Court in C.J. Fernandez v. State of Karnatakaa case dealing with tenders. Although not in an entirely identical situation as the present one, the observations in the judgment support our view. The High Court has, in the impugned decision, relied upon Ramana Dayaram Shetty v. International Airport Authority of India but has failed to appreciate that the reported case belonged to the first category where the strict compliance of the condition could be insisted upon. The authority in that case, by not insisting upon the requirement in the tender notice which was an essential condition of eligibility, bestowed a favour on one of the bidders, which amounted to illegal discrimination. The judgment indicates that the court closely examined the nature of the condition which had been relaxed and its impact before answering the question whether it could have validly condoned the shortcoming in the tender in question. This part of the judgment demonstrates the difference between the two categories of the conditions discussed above. However it remains to be seen as to which of the two clauses, the present case belongs. "
(iii) Jagdish Mandal v. State of Orissa (2007) 14 Supreme Court Cases 517. In paragraph 22 of the said judgment, the Hon'ble Apex Court has held as follows:-
" 22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. 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, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The 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 succour to thousands 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 reasonably 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 blacklisting 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."
20. The above pronouncements make it very clear that in administrative matter, the scope of judicial review is very limited and that judiciary must exercise judicial restraints in such matters. Further, it has been held by the Hon'ble Apex Court that judicial review of administrative action is extended only if there exists arbitrariness, unreasonableness, bias and mala fide. Its purpose is to check whether the choice or decision is made lawful and not to check whether the choice or decision is sound.
21. Even in the decision cited by the learned Senior Counsel appearing for the petitioner reported in (2006) 11 SCC 548, B.S.N.Joshi & Sons Ltd. v. Nair Coal Services Ltd., para 66 clearly stipulates that when a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers and if successful bidders substantially complied with the object for which essential conditions were laid down, the same may not be ordinarily interfered with. Further, it has been held where a decision is taken purely on public interest, the Courts ordinarily should exercise judicial restraint. It would be useful to extract Para 61, 66 of order made there under:
61. Law on the similar term has been laid down in Poddar Steel Corpn. v. Ganesh Engg. Works in the following terms:
6. It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the State Bank clause 6 of the tender notice was not obeyed literally, but the question is as to whether the said non-compliance deprived the Diesel Locomotive Works of the authority to accept the bid. 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, 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 with the condition in appropriate cases.
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 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.
22. Even in the other decision cited by the learned Senior Counsel appearing for the petitioner reported in 2006 Writ L.R. 144, M/s.Karnataka Commercial and Industrial Corporation Private Limited v. The Airport Authority of India & others, this Court has held that the decision making process of the respondents cannot be subject matter of judicial review since this Court does not act as Court of appeal to review such decisions.
23. In the given case on hand, only vague allegations that the respondents have acted manifestly, unreasonably, arbitrarily has been made and it has not been substantiated by any materials. Vague allegations in this regard has to be rejected totally. In the absence of any proof of arbitrariness, unreasonableness, discrimination and mala fide, this Court cannot interfere with the decision making process of the respondents 1 and 2. Judicial review of such matters is too limited, especially when there is no proof that the respondents 1 and 2 have acted arbitrarily and their action is tainted with mala fide.
24. Thus, summing up the entire discussions made above, the following conclusions have been arrived at by this Court:-
(i) The cancellation of the earlier bid is on sound footing and hence, the same is valid.
(ii) The cancellation of the earlier tender cannot be questioned by the petitioner since the petitioner has accepted the same and participated in the second tender.
(iii) The price bid of the fourth respondent is not in violation of any specific terms and conditions of the tender document, warranting respondents 1 and 2 to refuse acceptance of the same.
(iv) There were no material discrepancies in the bid submitted by the fourth respondent and hence, the acceptance of the bid submitted by it cannot be invalid.
(v) The authorities concerned have considered all the relevant factors and have taken a decision in the proper perspective, which does not require any interference by this Court.
(vi) The authorities concerned have taken a decision considering the public interest which cannot be tested by this Court unless there exists any arbitrariness, colourable exercise of power, bias and mala fide in their action.
(vii) The petitioner has not proved any arbitrariness, bias, colourable exercise of power and that the action of respondents 1 and 2 is tainted with mala fide.
In fine, both the writ petitions stand dismissed. However, there is no order as to costs. Consequently, connected miscellaneous petitions are closed.
16 .02.2010 Index:Yes Internet:Yes sbi/pgp To 1 INDIAN RAILWAY CATERING AND TOURISM CORPN. LTD.
THORUGH ITS MANAGING DIRECTOR 9TH FLOOR BANK OF BARODA BUILDING 16 PARLIAMENT STREET NEW DELHI-1 2 CHIEF PLANT MANAGER/RNP INDIAN RAILWAY CATERING AND TOURISM CORPN.
LTD. SOUTH ZONE 6A THE RAIN TREE PLACE NO.
9 MC NICHOLS ROAD CHETPET CHENNAI-31 3 THE SECRETARY RAILWAY BOARD MINISTRY OF RAILWAYS RAIL BHAWAN NEW DELHI K.VENKATARAMAN, J sbi W.P.Nos.27074 of 2009 and 1059 of 2010 DATED: 16 .02.2010