Delhi High Court
Gammon India Ltd. vs Union Of India (Uoi) And Ors. on 11 November, 2002
Equivalent citations: 2003(1)ARBLR353(DELHI)
Author: A.K. Sikri
Bench: A.K. Sikri
JUDGMENT A.K. Sikri, J.
1. Vide NIT dated 14.12.2001 respondent No. 1 i.e. the Government of India, Ministry of defense through the Director General, Project Sea Bird invited bids for pre-qualification for the construction of Ship Lift Civil Works for the Project Sea Bird of the Indian Navy at the Karwar Port situated in Karnataka. Four parties submitted their tenders which included the petitioner, respondent 2 and 3 as well as M/s. AFCONS Infrastructure Ltd.. Pre-bid meeting was convened on 2nd and 3rd July, 2002 which was attended by all the four bidders. Many points and queries raised by the bidders were clarified in this meeting. Minutes thereof were also recorded. Last date for submitting the tenders was 20.9.2002. The tenders were to be submitted before 1100 hrs on that date and were to be opened by the respondent No. 1 at 1130 hrs on the same day. As already pointed out above, aforesaid four parties submitted their bids which were opened at scheduled time in alphabetical order. Tender of AFCONS Infrastructure Ltd. was opened first, followed by the tenders of the petitioner, respondent No. 2 and respondent No. 3. The price quoted by respondent No. 3 was found to be the lowest. A Record Form recording opening of these tenders was filled wherein price quoted by the bidders were also mentioned and it was signed by the parties. This Record Form contained the following endorsement:
"Certified that above four in no. tenders and no other tenders were received by 1130 hrs on 20 Sep. 2002 and that these were opened in our presence at 1130 hrs on 20 Sep. 2002 and no departure from the authorised procedure has occurred in the manner of receipt of the above tenders".
2. Thereafter all the four parties signed the same as witnesses. Signatures of the officers of respondent No. 1 also appeared therein.
3. At this stage it is appropriate to point out that bids of respondents 2 and 3 had covering letters which, inter alia, included certain points described by respondent No. 2 as "assumptions" and by respondent No. 3 as "deviations/exceptions and assumptions". Before opening the tenders of respondents 2 and 3, the Chairman of the Tendering Panel of the first respondent desired that the same be withdrawn by these respondents before tender is opened. Both respondents 2 and 3 agreed to the same and made endorsement to this effect on the same covering later. They also agreed to forward formal letter withdrawing the stated assumptions. Thereafter, their tenders were opened. The minutes of tender were recorded and the factum of the withdrawal of list of assumptions in respect of respondent No. 2 is stated in these minutes in the following manner:
"However, it was observed that the tender covering letter included a list of assumptions, which have been used for deriving the quoted price. The Chairman informed the firm's representative that the price bid is required to be unconditional for correct and fair comparison and award of the contract to the lowest bidder. The assumptions mentioned in the tender document therefore, need to be withdrawn before opening of the tender. Mr. M.A. Ashok, the firm's representative agreed to withdraw the stated assumptions and made an endorsement to this effect on the same covering letter withdrawing all the conditions. He also agreed to forward a formal letter withdrawing the stated assumptions, signed by the power of attorney holder, on return. Only then the committee with the consent of other bidders decided to open the tender schedules."
4. Almost identical statement is made while recording the minutes relating to opening of bid of respondent No. 3. Thereafter, as noted above, the Record Form and certification thereon was signed by all concerned.
5. However, on the next date i.e. 21st September, 2002, petitioner No. 1 sent fax lodging its protest in the manner respondents 2 and 3 were allowed to withdraw the said "assumptions" stating that these assumptions were nothing but conditions attached to their bids and being conditional tenders and not in conformity with the tender conditions should have been rejected as by doing so their tenders materially deviated and hence became substantially non-responsive. Respondent No. 1 replied to the same vide letter dated 30.9.2002 refuting the allegation of the petitioner by, inter alia, stating that these covering letters did not link the stated assumptions/requests with the contract price and thus the total contract value quoted by respondents 2 and 3 remained unconditional. It was also alleged in this reply that the petitioner's representative had not voiced any objection/apprehension/reservation during the course of the meeting till the end even when specifically asked. The process was, therefore, not considered violative of the Clause 24 of the "Instructions to Tenderers".
6. Obviously the aforesaid reply did not satisfy the petitioner, who filed the present petition, inter alia, praying for a direction to the first respondent to reject the tenders of respondents 2 and 3 as not being inconformity with the tender specifications, quashing reply dated 30.9.2002 and directing first respondent to grant the contract to the petitioner.
7. While issuing notice to show cause for 23.10.2002, interim order was passed to the effect that till the next date contract be not finalised. Keeping in view the urgency of the matter, with the consent of parties, final hearing commenced on 28.10.2002 which continued on 29.10.2002 and 30.10.2002 when the judgment was reserved.
8. The relevant facts mentioned in brief above unfold the nature of controversy. It is the case of the petitioner that bid submitted by the tenderers had to be in conformity with the tender conditions and those bids wherein there was material deviation and which were non-responsive had to be rejected. By putting conditions of various kinds along with their bids, the bids submitted by respondents 2 and 3 were not in conformity with the tender conditions and, therefore, there were no bids in the eyes of law and in any case these were conditional bids. Many conditions were attached which had direct bearing on the price quoted by these respondents. The very fact that before their bids could be considered, the Chairman of the Tender Committee asked them to withdraw these letters which was a pointer to the fact that these assumptions were nothing but the conditions and in fact the minutes of meeting dated 20.9.2002 described them to be so. Even the endorsement made on these letters by respondents 2 and 3 respectively would show that these nothing but conditions. Thus such bids merited outright rejection and respondent No. 1 had no right to process the same.
9. Elaborating the aforesaid submissions, Mr. A.S. Chandihok, learned senior counsel appearing for the petitioner referred to various clauses appearing in the "Instructions to Bidders" stressing that bids had to be in accordance with these clause. His submissions were that:
(i) there was no denial of the fact that such covering letters were enclosed along with the bids submitted by respondents 2 and 3 which contained "assumptions and requests". These were in fact "conditions" which were allowed to be withdrawn in a manner contrary to the procedure laid down in tender conditions, inasmuch as, as per Clause 24 of the tender conditions the tenderer could modify or withdraw is tender after its submissions only by giving a written notice to this effect to respondent No. 1 and that too prior to deadline for submission of tenders. Not only this such modification or withdrawal notice had to be prepared, sealed, marked and delivered in accordance with the provisions of Clause 21 i.e. in the same manner in which tender was to be submitted with the endorsement "modification" or "withdrawal" appearing on the envelope. No tender could be modified after the deadline for submission of tenders. In the present case not only the respondents 2 and 3 were allowed to withdraw the covering letters without following the aforesaid procedure, it was after the deadline for submission of tenders and furthermore the withdrawal was at the instance of the Chairman of the Tendering Committee and not by them voluntarily.
(ii) The assumptions/deviations contained in these letters were clearly "conditions" which was apparent from the following:
(a) It is so described in the minutes dated 20.9.2002 (already reproduced above).
(b) The endorsement of withdrawal on the covering letter is also to the same effect. For example the endorsement of respondent No. 2 is in the following words:
"All assumptions & conditions vide our Assumption Paragraph stands withdrawn".
Similarly endorsement of respondent No. 3 is to the following effect:
"All assumptions conditions stipulated in our point (e) (list of deviation/exceptions to assumptions) of letter No. 3010/BU 1:004/2002 dated 19th September 2002 is withdrawn. Our offer thus stands unconditional".
As per the aforesaid endorsement, the learned counsel argued, the bids had become unconditional only after withdrawal thereof and thus even respondents 2 and 3 admitted that the assumptions and deviations which were contained in the covering letters were nothing but "conditions".
(c) Most of the assumptions had direct linkage with the price quoted by the respondents 2 and 3 and thus price quoted by them did not remain firm. It was submitted that had any of these conditions, assumptions been accepted, the effect would have been the revision in the quoted price.
(d) Most of the assumptions/deviations added in the covering letters were stated notwithstanding the fact that the clarification in respect thereof had already been given in the pre-tender meeting held on 2nd/3rd July, 2002. Even when the particular aspect was amply clarified, submitted the learned counsel, still these respondents in their "assumptions" included the same in the covering letters clearly implying that what was intended was to put the same as "conditions".
The learned counsel endeavored to demonstrate this by pointing out the various clarifications issued and the so called assumptions/deviations in the covering letters. It would be appropriate to reproduce those assumptions which were referred to by the learned counsel for the petitioner. In the covering letter of respondent No. 2 these are:
" Assumptions:-
We wish to state that the following Clarifications/Assumptions have been considered in our bid and they are deemed to form an integral part of our offer:
1. Utilisation of Existing Weigh Brides:
We have assumed that the existing Weigh Bridges available with the Breakwater Contractor will be used by us for this work also. Due to this, we have not provided for separate/additional Weigh Bridges in this contract. We request you to grant us permission for using the existing Weigh Bridges and we assure you that the works will not be affected either for Breakwater Contract or for this Shiplift Works. Our offer has been made on this basis only.
2. Foreign Currency Requirement:-
Based on the specifications for various materials and methodology needed for executing this contract, we find that there is a huge requirement of Foreign Currency needed for procurement of these materials/services. On a rough assumption we have estimated that 15% (Fifteen percent) of the total contract value needs to be paid to us in US $/EUROs for import of materials as well as for services for the execution of this contract. The exchange rate shall be based on official exchange rate of RBI as on the date of opening this tender i.e. 20th September 2002. A detailed list of all the items, which need foreign exchange, will be submitted to you on award of the contract. A tentative list has been indicated in Schedule 9 of Volume VI of bid documents.
3. Low Absorptive Concrete Admixture:-
Our offer considers the usage of "Caltite" additive to produce low absorptive concrete as specified in your tender documents. We note that this additive is very costly and we propose an alternative product" PROOF MARINE"
manufactured by M/s. Master Builders Technology (MBT) India Pvt. ltd., which is an equivalent to Caltite as indicated in the tender documents. In case we are allowed to use "PROOF MARINE" in our concreting works in lieu of Caltite, we are pleased to offer you a rebate of INR 85,000,00/- on our quoted lump sum price.
4. Access Road to Site:
We shall be provided motorable access roads from the National Highway to our site of works. These roads shall be provided to us free of charge including maintenance of the same during the pendency of the same during the pendency of our contract.
All other roads within our work site will be provided by us at our cost".
Referring to assumption No. 2 above, it was submitted that respondent No. 2 stipulated that exchange rate shall be based on official exchange rate of RBI as on the date of opening of the tender i.e. 20.9.2002. Thus this was clearly contrary to Clause-15 of the 'Instructions' which was to the following effect:
"The Lump Sup prices and rates in all schedules shall all be quoted by the tenderer in Indian currency (Indian Rupees (INR))."
Pointing out to the minutes of pre-tender meeting, it was submitted that it was emphasised that all payments would be in INR and the contract must make all allowances dealing with exchange rate calculations on account of imported goods.
In respect of assumption No. 3, it was stated that the respondent No. 2 had suggested an alternative product "PROOF MARINE" in place of "CALTITE" and offered a rebate of INR 85,000,000/- on the quoted lumpsum price if the product "PROOF MARINE" is used in lieu of 'CALTITE' in concreting works. This according to learned counsel had bearing on the price quoted and the quotation did not remain firm.
The relevant assumptions/deviations as stipulated by respondent No. 3 in the covering letter are to the following effect:
" Extension of Time & Client's issue materials:-
Tender provides for extension of completion time for reasons beyond the control of the contractor and for delay in providing Client's issue materials without providing any compensation in terms of costs. The Bidder requests for inclusion of suitable provisions in the Contract whereby the contractor be eligible for compensation in addition to extension of completion time in the event of delay not attributable to the contractor and for delay in providing materials by the Employer under the Contract. The pre-bid response on this issue raised by us was that any claim on costs would be dealt under the relevant clauses of the Contract. In view of the above, the bidder requests for deletion of Clause 11C of GCC, "No claim in respect of compensation or otherwise, howsoever arises, as a result of extensions granted under conditions (A) & (B) above shall be admitted."
Local Taxation and Contract Sum:-
Our bid is prepared on the consideration that the Contract Price shall include all prevailing taxes and duties in accordance to the present laws and regulations as of the date of 28 days prior to the closing date for submission of the Tender excluding karnataka Sales Tax on Works Contract strictly in accordance with Clause 88 of CPA. In view of the volatility of the current market conditions, it is very difficult to assess the change in tax structures during the tenure of the contract at this stage. Under the circumstances, we request the Employer for inclusion of a clause of subsequent legislation whereby, "If after the date 28 days prior to the latest date for submission of tenders for the Contract there occur in the country in which the Works are being or are to be executed changes to any National or State Statute, Ordinance, Decree or other Law or any regulation or bye-law of any local or other duly constituted authority, or the introduction of any such State Statute, Ordinance, Decree, Law, regulation or bye-law which causes additional or reduced cost to the Contractor, in the execution of the Contract, such additional or reduced cost shall, after due consultation with the Employer and Contractor be determined by the Engineer and shall be added to or deducted from the Contract price".
Accordingly, the last sentence of Clause 104.2, P-16 of 25, "No claim in respect of Sales tax, excise duty, Whether existing or future shall be entertained by the Government" needs to be amended.
Foreign Exchange Variation:-
The work involves an import of substantial amount towards procurement of various bought-out items. In view of the uncertainty in the rate of exchange of Foreign currency(ies) involved, it is extremely difficult to anticipate a variation and provide for the same in the contract price. Accordingly the bidder has considered that exchange variation for forex portion based on import content stated by the bidder would be reimbursed by the Employer in INR at actual on production of documentary evidences. The component of price and currency particulars towards such imported items as well as the exchange rate considered to effect reimbursement of exchange fluctuations as encountered during execution of works are furnished below:-
Currency Exchange rate considered Pound Sterling (UK) 1 GBP = INR 73 Australian Dollar 1 Aus $ = INR 27 Singapore Dollar 1 Sing$ = INR 28 Euro 1 Euro = INR 46 US Dollar $ 1 USD = INR 48 Arbitration:-
We request you to modify the clause whereby all disputes without any exceptions arising out of the Contract shall be arbitrable and such disputes if not amicably settled, shall be referred to a panel of three Arbitrators and settled in accordance to the Indian Arbitrators & Conciliation Act, 1996 & any statutory modification thereof. This would be commensurate with the magnitude of works and fair to both the parties.
Limitation of Liability:-
We request inclusion of provision in the Contract whereby "The aggregate liability of Contractor to the Employer (whether based on Contract, indemnity, warranty, guarantee, including negligence and strict or absolute liability, or arising out of a breach of statutory duty or otherwise) arising out of or in connection with the work under the Contract shall not exceed 50% of the Contract price."
Regarding suggestion relating to 'Extension of Time and Client's issue materials' the respondent No. 3 had requested for deletion of Clause 11C of GCC which according to learned counsel made the bid condition conditional. Similarly, in respect of Clause relating to 'Local Taxation and Contract Sum' the respondent No. 3 had stated that Clause 104.2 needed to be amended by incorporating that no claim in respect of sales-tax, excise duty, whether existing or future shall be entertained by the Government. It was also argued that although the bidder was to quote in Indian rupees, the respondent No. 3 demanded introduction of 'Foreign Exchange Variation Clause' depending on the exchange fluctuation and with such a clause, price quoted by respondent No. 3 would not remain firm. Likewise by seeking to change 'Arbitration Clause' and introduction of 'Limitation of Liability Clause" the bid of respondent No. 3 was a conditional bid.
(iii) The learned counsel further argued that the aforesaid deviations and assumptions were added that too after the matter was adequately clarified in the pre-tender meeting on the queries raised by respondents 2 and 3 which was clear from the following relevant clarifications:
6.2.3 Evaluation and Comparison of Tender (ITI Clauses 18, 1, 31, 2 & 31, 3) Covered previously
- Alternative Tenders will be rejected as not substantially responsive.
6.2.4 Contract Document (GCC Clause 3) Any extension of time and/or claim for costs will be covered by the appropriate clauses in the Contract.
6.5.7 Compensation for Delay (GCC Clause 50) No Change.
6.5.12 Site Data (III Clause 4.1, GCC Clause 4, CPA Clauses 82 & 108) Any extension of time and/or claim for costs will be covered by the appropriate clauses in the contract.
6.2.14 Currency of Tender & Payment (III Clause 15 and CPA Clause 77) All payments will be in INR and the Contractor must make his own allowance for dealing with exchange rate calculations on account of any imported goods. The employer emphasised that maximum possible indigenous content was expected. The Contractor should go for import only of those items when equivalents are not available indigenously.
6.2.15 Extension of Time (GCC Clause 11) Any claim for costs will be dealt with under the Contract.
6.2.25 Limitation of Liability - The proposal is not accepted. Liability is as covered in the Contract.
6.2.26 Consequential Damages - The proposal is not accepted. There will be no changes to the Contract conditions with regard to consequential damages.
(iv) In any case, it was the next submission of learned counsel for the petitioner, the tender was an "alternate" tender which was liable to be rejected in view of the provisions contained in the 'Instructions to Tenderers'.
On the basis of these submissions it was argued that the bids submitted by respondents 2 and 3 were not even proper bids/offers and, therefore, should have been rejected outright. At least these were conditional or alternate bids and, therefore, should have been rejected as non-responsive. Further, although there was no power to relax any of the conditions, still the conditional officers were made unconditional at the instance of Chairman of the Tender Committee who was not authorised to do so.
The learned counsel also relied upon the following passage from the judgment of the Apex Court in the case of Tata Cellular v. Union of India :
"A tender is an offer. It is something which invites and is communicated to notify acceptance. Broadly stated, the following are the requisites of a valid tender:
1. It must be unconditional.
2. Must be made at the proper place.
3. Must conform to the terms of obligation.
4. Must be made at the proper time.
5. Must be made in the proper form.
6. The person by whom the tender is made must be able and willing to perform his obligations.
7. There must be reasonable opportunity for inspection.
8. Tender must be made to the proper person.
9. It must be of full amount."
The learned counsel also placed great emphasis on the following observations in the judgment of the Supreme Court in the case of W.B. State Electricity Board v. Patel Engineering Co. Ltd. and Ors. 2001 (2) SCC 451:
"24. The controversy in this case has arisen at the threshold. It cannot be disputed that this is an international competitive bidding which postulates keen competition and high efficiency. The bidders have or should have assistance of technical experts. The degree of care required in such a bidding is greater than in ordinary local bids for small works. It is essential to maintain the sanctity and integrity of process of tender/bid and also award of a contract. The appellant, Respondents 1 to 4 and Respondents 10 and 11 are all bound by the ITB which should be complied with scrupulously. In a work of this nature and magnitude where bidders who fulfill pre-qualification alone are invited to bid, adherence to the instructions cannot be given a go-by branding it as a pedantic approach, otherwise it will encourage and provide scope of discrimination, arbitrariness and favoritism which are totally opposed to the rule of law and our constitutional values. The very purpose of issuing rules/instructions is to ensure their enforcement lest the rule of law should be a casualty. Relaxation or waiver of a rule or condition, unless so provided under the ITB, by the State or its agencies (the appellant) in favor of one bidder would create justifiable doubts in the minds of other bidders, would impair the rule of transparency and fairness and provide room for manipulation to suit the whims of the State agencies in picking and choosing a bidder for awarding contracts as in the case of distributing bounty or charity. In our view such approach should always be avoided. Where power to relax or waive a rule or a condition exists under the rules, it has to be done strictly in compliance with the rules. We have, therefore, no hesitation in concluding that adherence to the ITB or rules is the best principle to be followed, which is also in the best public interest".
(v) It was submitted at the end that insofar as bid of the petitioner is concerned, although the counter-affidavit of respondent No. 1 alleged that the same was considered non-responsive on the alleged ground that number of technical details as required as per tender documents had not been provided by the petitioner even after seeking clarifications, these allegations were clearly wrong inasmuch as clarifications were sought by the respondent No. 1 only vide letter dated 27.9.2002, which was duly replied to by giving necessary information vide letter dated 1.10.2002 and perusal of letter dated 27.9.2002 would show that no clarifications on technical aspects were demanded at all.
10. Mr. K.K. Sud, learned Additional Solicitor General, appeared for respondent No. 1. His submission was that the covering letters of respondents 2 and 3 containing therein assumptions/deviations did not make their offers conditions inasmuch as all these assumptions were in the nature of 'requests' made by respondents 2 and 3 and it was for the respondents No. 1 to accept or not to accept the same. As far as price is concerned, both the respondents had quoted firm price. The requests of respondents 2 and 3 were not accepted and they were asked to withdraw these requests before their bids are opened and respondents 2 and 3 complied. These assumptions, in any case had no linkage with price and, therefore, mention thereof did not make their bids conditional. It was also submitted that covering letters were withdrawn in the presence of all the parties including the petitioner and with their consent. The petitioner did not raise any objection and rather gave certificate to the effect that in opening the tender the due procedure was complied with. Therefore, the petitioner was estopped from raising objections afterwards.
It may be mentioned that at the time of arguments a statement covering few pages was produced wherein certain arguments raised by the petitioner were answered with reference to documents on record and the pages where these documents are appended. The learned Additional Solicitor General also stated that he had prepared compilation of the relevant documents culled out from the record of the case for the convenience of the Court. However, immediately after the arguments the statement was taken back with assurance that after making reference of the pages as per compilation both the compilation and the statement would be re-submitted. We regret to point out that no such statement and compilation was thereafter submitted with the result we undertook the exercise of digging into the records ourselves with reference to the arguments submitted by the parties.
11. Mr. Arun Jaitely, learned senior counsel appearing for respondent No. 3 also highlighted that the deviations/assumptions were only in the nature of 'requests' as was clear from the language used therein and, therefore, it was of no consequence. His further submission was that all relevant clauses of 'Instructions to Tenderers' as well as clarifications issued thereon were to be read harmoniously to understand and appreciate the implications thereon. In this behalf he referred to Clause 31.2 and 31.3 of 'Instructions to Tenderers' which enabled the bidders to put deviations/exceptions in their tenders. Drawing attention to letter dated 1.7.2002 sent by respondent No. 3 to the respondent No. 1 after NIT was issued in which respondent No. 2 had raised certain queries, he submitted that in respect of evaluation and comparison of tender, the respondent No. 3 had specifically stated:
"Bidder understands as per Clause 31.2 & 31.3 that he is eligible to put deviations/exceptions or alternative offer as deemed necessary to him which may be accepted by the Employer or the Employer may ask to withdraw the same.
However, Clause 18.1, pg-8 of 15 stipulates that alternative Tenders may be rejected by the Employer for not being responsive. Further, as per Tender Schedule-16:
Statement of Conformance, the Tenderer has to undertake that his Tender conforms to the requirement of the Contract. In view of the above, the bidder has considered that the bid can be submitted with the deviations / exceptions or alternate offer (if any) without any material deviation in terms of Clause 28.2 of ITT."
In response to the above queries, in Pre-tender Committee Meeting the clarification as contained in Clause 6.2.3 which was issued was to the effect that alternate tenders will be rejected as not substantially responsive. Mr. Jaitely argued that cumulative reading of the aforesaid documents would clearly spell out that in its queries, the respondent No. 3 stated that it understood Clause 31.2 and 31.3 to convey that it was eligible to put 'deviations/exceptions' or 'alternate offer' as deemed necessary with specific stipulation that employer could accept the same or ask it to withdraw the same. In response, what was clarified, was that only alternate tenders would be rejected. Therefore, on combined reading of Clauses 31.2 and 31.3 along with query of the respondent No. 3 and clarification issued, it was apparent that insofar as 'deviations/exceptions' were concerned, there was no embargo thereon and bidder could put the same along with his bid and it was up to the respondent No. 1 to either accept the same or ask the bidder to withdraw the same. The tender was thus submitted by respondent No. 3 with this understanding.
12. It was next contended that as far as price quoted by respondent No. 3 was concerned, it was a firm price and the assumptions/deviations did not convert the offer into non-firm offer. He submitted that as far as Clause 28 of 'Instructions to Tenderers' is concerned, it is only that tender which was not substantially responsive, which could be rejected and a reading of Clause 28.2 would show that a tender would become non-responsive only if there were material deviations or reservations as defined therein and none of the deviations or reservations of the respondent No. 3 were covered thereby. He further submitted that reading of Clauses 31.2 and 31.3 would amply clarify that the tender price quoted by bidder could change only if any corrections in respect of arithmetical were to be made or when the deviations/exceptions as accepted by the employer' were to be added to the cost. The expression "accepted by the employer' would mean that deviations/exceptions could be suggested and it was for the employer to accept or reject the same. This was further made specifically clear in Clause 31.3. Therefore, submissions of deviation/variation was not foreign to the contract and rather it was specifically permissible under the contract. Strong reliance was placed on the judgment of the Supreme Court in the case of G.J. Fernandez v. State of Karnataka and Ors. .
13. It was further submitted by Mr. Jaitely that although the employer could consider these assumptions/variations/deviations, the respondent No. 1 adopted uniform practice/policy in deciding not to consider these variations of any of the parties and in these circumstances asked respondents 2 and 3 to withdraw the same. Therefore, in adopting this course of actin everybody was treated equally by following non-discriminatory policy. The respondents 2 and 3 agreed to withdraw their covering letters and only thereafter their bids were opened, read out and entered in the Record Forum. All the process was treated in conformity with the procedure laid down in the 'Instructions to Tenderers' and everybody including the petitioner certified that there was no departure from the authorised procedure in opening the tenders. The petitioner had acquiesced with this procedure and, therefore, it was not permissible for it to raise such an objection which was nothing but an after thought plea.
Mr. Jaitely concluded his submissions by arguing that in such matters the public interest was paramount and further that when it was found that there was no procedural error and official respondent had acted fairly and bonafide, the petitioner could not make the process faulty by raising technical objections as public interest would outweigh such technical pleas inasmuch as the difference between the price quoted by the respondent No. 3 and the petitioner was almost Rs. 14 crores.
14. Mr. S. Guru Krishna Kumar, ld. counsel appearing for respondent No. 2 adopted the submissions made by learned counsel for respondents 1 and 3. In addition, he submitted that Clause-24 of the 'Instructions to Tenderers' was not attracted in this case as that clause was applicable in the cases where tenderer on his own volition, wanted to modify or withdraw his tender after submission of this tender. In the instant case the employer exercising its right as available in NIT wanted the bidders to remove the covering letters containing assumptions/deviations. Therefore, according to him, reliance on Clause-24 was totally misplaced. His next submissions was that the official respondent had acted in a non-discriminatory manner by treating everybody equally and thus on prejudice was caused to the petitioner. Lastly, he submitted that para-3 of the 'assumptions' submitted by respondent No. 2 regarding 'Low Absorptive Concrete Admixture' could not be treated as 'condition' at all as respondent No. 2 had only offered rebate of Rs. 8.50 crores in case it was allowed to use 'MARINE' in place of 'CALTITE' and this course was clearly opened to the respondent as held by the Apex Court in the case of Kanhaiya Lal Agrawal v. Union of India and Ors. wherein the Supreme Court observed as under:
"Bureaucratic delay is a notorious fact and delay in finalising tenders will cause hardship to the tenderer. In such circumstances, if a hardened businessman makes an attractive offer of concessional rates if tender is finalized within a shorter period, it cannot be said that the rates offered are subject to conditions. The rates offered are clear and the time within which they are to be accepted is also clear. As long as such offer does not militate against the terms and conditions of inviting tender it cannot be said that such offer is not within its scope. All that is required is that offer made is to be kept open for a minimum period of 90 days. Offer in compliance of that term has been made by the appellant. The concession or rebate given is an additional inducement to accept the offer expeditiously to have a proper return on the investment made by the tenderer in the equipment and not keeping the labour idle for long periods which is part of commercial prudence. The commercial aspect of each one of the offers made by the parties will have to be ascertained and thereafter a decision taken to accept or reject a tender.
The Division Bench of the High Court proceeded on the basis that the offer of concession is contrary to the terms of tender but we demonstrated to the contrary.
Now the appellant made his offer of concessional rates along with the tender while respondent No. 5 made such offer after opening of the tenders. It is difficult to conceive that the respondent No. 5 who is a prudence businessman would not be aware of commercial practice of giving rebate or concession in the event of quick finalization of a transaction. What the appellant offered was part of the tender itself while the respondent No. 5 made such offer separately and much later. There was nothing illegal or arbitrary on the part of Railway Administration in accepting the offer of the appellant, which was made at the time of submitting the tender itself."
15. Mr. A.S. Chandiok, learned senior counsel appearing for the petitioner in his rejoinder refuted the aforesaid submissions by emphasising that the grievance of the petitioner was that the covering letters of respondents 2 an 3 made their bids non-responsive and, therefore, such letters should not have been allowed to be withdrawn and it is this action which was challenged. there was no averment in the counter-affidavit of the respondent No. 1 that the respondent No. 1 had right to ask the bidders to withdraw the same. Likewise reliance on Clause 31.3 of 'Instructions to Tenderers' was misplaced inasmuch as employer's right to accept or reject variations/deviations etc. would come only after crossing the stage mentioned in Clause 31.2 i.e. only when it was found to be substantially responsive. It was not open for the official respondent to make any bid responsive by allowing the bidder to withdraw the conditions attached to it. He reiterated that most of the assumptions were added notwithstanding clarifications given in the pre-bid meeting. If in spite of the clarifications such assumptions were to be in the bids, the bids had to be treated as conditional. Refuting the plea of waiver, it was submitted that such a plea was not available to the Government as it was its duty to adhere to the instructions issued by it in considering the bids, more over on the very next date the petitioner had objected to the course of action adopted by the respondent and, therefore, there was no question of waiver either.
16. We have considered the matter in depth and have also gone to the facts. The gravamen of the petitioner's charge is that the covering letters of respondents 2 and 3 in their bids stating assumptions/deviations amounted to imposing conditions or submitting alternate bids which were not permissible and which made their two bids non-responsive. Therefore, the matter needs examination from two angles, namely, (i) what is the nature of two covering letters i.e. whether the assumptions and deviations in these letters made the bids submitted by respondents 2 and 3 conditional or alternate bids and (ii) whether writing of these covering letters was in conformity with tender conditions or violative of 'Instructions to Tenderers'.
17. As per Clause 19.2 of the 'Instructions to Tenderers' the tenderer has to comply with the requirement of tender submissions and failure to do so would make the tender documents liable for rejection. However, it may be noted that Clause 19.2 consciously uses the expression 'substantially responsive'. Thus as per this clause only those bids would suffer rejection which are not substantially responsive to the requirement of tenders documents. Clause 18.1 specifically stipulates that alternate tenders may be rejected by the employer as not substantially responsive and refers to Clause 28.2 and 28.3. Clause 28 deals with preliminary evaluation of tenders and determination of responsiveness as per which prior to detailed evaluation of tenders it is to be examined, inter alia, as to whether tender is substantially responsive to the requirement of tender documents. A substantially responsive tender is defined in Clause 28.2 to be the one which conforms to all the terms, conditions and specifications of the tender documents without material deviations or reservations. A deviation falling in any of the following category would be treated as material deviations or reservations:
"(i) which affects in any substantial way the scope, quality or performance of the works.
(ii) which limits in any substantial way, inconsistent with the Tender Documents the Employer's rights or the Tenderers obligations under this Contract or
(iii) whose rectification would affect unfairly the competitive position of other Tenderers presenting substantially responsive tenders or
(iv) which, in the opinion of the Employer or Engineer acting on behalf of the Employer, is not capable of meeting the scheduled times for completion due to insufficient resources proposed to be deployed by the tenderer".
Clause 28.3 stipulates that a tender which is not substantially responsive may be rejected and would not be allowed to be made responsive by correction or withdrawal of deviation or unconforming deviation or reservation. As per Clause 31, only those tenders are to be evaluated which are substantially responsive in accordance with Clause 28.
18. Thus in the first instance, the respondent No. 1 was required to see as to whether each tender submitted is substantially responsive or not on preliminary evaluation thereof, and only those tenders which are substantially responsive are to be evaluated. Those which were not substantially responsive were to be rejected outright.
19. It may be pointed out at this stage that 'Instructions to Tenderers' permitted the tenderers to submit deviations/assumptions. Therefore, merely because respondents 2 and 3 had included certain assumptions/deviations in the covering letters would not by itself make these bids as non-responsive. In pre-tender meeting, on queries raised by the bidders, it was clarified that only alternate bids would be rejected. Thus, if certain assumptions or deviations were stated in the covering letters, these would not make the bids substantially non-responsive per se. Mr. Jaitely appears to be correct in his submission that the instructions to bids are to be read as a whole along with clarifications given in the pre-tender meeting. In its letter dated 1.7.2002 respondent No. 3 specifically stated its understanding of Clause 31.2 and 31.3 to the effect that it was eligible to put deviations/exceptions or alternate offer. In reply to this query the answer given by respondent No. 1 was that only alternate offer was liable for rejection from which respondent No. 3 understood that as nothing was stated about deviation/exceptions it could state these deviations/exceptions in its bid and tender was submitted with this understanding.
20. Moreover, these deviations/assumptions/exceptions as stated in the covering letters of respondents 2 and 3 neither make the tenders conditional nor alternate. The language of these assumptions (already reproduced above) would make it abundantly clear that certain 'requests' were made by these tenderers in respect of certain clauses. Thus while submitting firm bids, the respondents 2 and 3 wanted respondent No. 1 to consider some of the tender clauses. They did not submit the tender on the 'conditions' that their bids were submitted with the 'conditions' mentioned in covering letters. These were merely requests and it was for the respondent No. 1 to accept or not to accept all or any of those requests. No doubt in respect of some of the 'assumption' clarifications had already been issued in the pre-tender meeting. However, if the respondents 2 and 3 still reiterated these 'requests' that would not make the same as conditional or alternate bids.
The dictionary meaning of the word 'Conditional' is:
"(1) dependent contingent, relative, subject to, based upon, iffy. (2) restrictive, restricted, qualified, with reservations, limitative, limiting;
stipulatory, provisory, provisional, provisionary, probationary".
Thus the bid submitted by respondent Nos. 2 and 3 would have been conditional only if it was made subject to the condition that what was stated in the covering letter in the form of assumptions/deviations will have to be agreed by the respondent No. 1. It is not so. In the bid document firm bid was made conforming to the requirements of tender conditions. In the covering letter certain assumptions were stated and 'request was made' if respondent No. 1 could agree to these assumptions/deviations. The language of the covering letter clearly states that the bid contained in tender document was not made subject to these assumptions. It was not contingent upon respondent No. 1 agreeing to this. No such restriction, qualification or reservation was stipulated. On the contrary only a request was made whereby something was pleaded or solicited. Such a course of action was open as per 'Instructions to Tenderers' and it was for the employer to accede to these requests or not.
21. The matter can be examined in the context of provisions of Indian Contract Act as well. It is well known that an NIT is invitation to bidder to make offer i.e. it is invitation to offer. An offer or proposal is defined in Section-2(a) of the Indian Contract Act which reads as under:
"2(a) When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal."
We may point out that there is no concept of "conditional offer" in the law of the Contract. offer has to be on certain terms. The 'acceptance' thereof should be absolute or unconditional (Section 7 of the Contract Act) to make it a concluded contract. A conditional acceptance becomes counter offer and it is for the offerer to accept it or not. However, it is well known that in Government contracts, tenders offers are invited invariably, nay, always with pre-determined/stipulated conditions of contract which would govern the contract, once it is entered into with a particular party. That is the reason that offers are invited in specified forms and detailed instructions are issued to the tenders in this behalf to enable them to submit bids in conformity with these instructions. Bids which deviate there from would be non-responsive and are loosely called "conditional" bids or offers.
It cannot be denied that the bids of respondents 2 and 3 amounted to proposal as per the aforesaid definition. However, this proposal was to be made in accordance with instructions issued by respondent No. 1 titled 'Instructions to Tenderers. May be respondent Nos. 2 and 3 in their covering letters made requests for change of certain standard terms on which the contract was to be ultimately accepted. However, this remained in the realm of request only. What would be the position if these assumptions are ignored or rejected and the firm offer contained in the bid document is evaluated and tender is accepted. Obviously, request would be of no consequence unless respondent No. 1 acts upon the same or agreeding to accept any of these requests. However, in order to clarify the matter beyond doubt, the respondent No. 1 in its wisdom decided that as such requests are not going to be considered, it would be better if respondent Nos. 2 and 3 withdraw these assumptions/deviations. This course of action was by way of abundant caution which did not alter the legal position.
22. Thus once we find that there was provision for making these assumptions/deviation and it was for the employer to consider the same and after consideration accept or reject then, the bid would not become unresponsive. What is more important is that the 'assumptions' should be such which are 'material deviation or reservations' of the nature specified in Clause 28.2. We have already reproduced above Clause 28.2 as per which only material deviation or reservation of the nature specified therein would make the bid as substantially non-responsive. The assumptions made in the covering letters do not fall in any of the category of such material deviations or reservations. The Supreme Court in the case of G.J. Fernandez v. State of Karnataka and Ors. has held:
"Thirdly, the conditions and stipulations in a tender notice like this have two types of ocnsequences. The first is that the party issuing the tender has the right to punctiliously and rigidly enforce them. Thus, if a party does not strictly comply with the requirements of para III, V or VI of the NIT, it is open to the KPC to decline to consider the party for the contract and if a party comes to court saying that the KPC should be stopped from doing so, the court will decline relief. The second consequence, indicated by this Court in earlier decisions, is not that the KPC cannot deviate from these guidelines at all in any situation but that any deviation, if made, should not result in arbitrariness or discrimination. It comes in for application where the non-conformity with, or relaxation from, the prescribed standards results in some substantial prejudice or injustice to any of the parties involved or to public interest in general. For example, in this very case, the KPC made some changes in the time frame originally prescribed. These changes affected all intending applicants alike and were not objectionable. In the same way, changes or relaxations in other directions would be unobjectionable unless the benefit of those changes or relaxations were extended to some but denied to others. The fact that a document was belatedly entertained from one of the applicants will cause substantial prejudice to another party who wanted, likewise, an extension of time for filing a similar certificate or document but was declined the benefit. IT may perhaps be said to cause prejudice also to a party which can show that it had refrained from applying for the tender documents only because it thought it would not be able to produce the document by the time stipulated but would have applied had it known that the rule was likely to be relaxed. But neither of these situations is present here. Shri Vaidyanathan says that in this case one of the applicants was excluded at the preliminary stage. But it is not known on what grounds that application was rejected nor has that party come to court with any such grievance. The question, then, is whether the course adopted by the KPC has caused any real prejudice to the appellant and other parties who had already supplied all the documents in time and sought no extension at all? It is true that the relaxation of the time schedule in the case of one party does affect even such a person in the sense that he would otherwise have had one competitor less. But, we are inclined to agree with the respondent's contention that while the rule in the case of Ramana Dayaram Shetty v. International Airport Authority of India, will be readily applied by courts to a case where a person complains that a departure from the qualifications has kept him out of the race, injustice is less apparent where the attempt of the applicant before court is only to gain immunity from competition. Assuming for purposes of argument that there has been a slight deviation from the terms of the NIT, it has not deprived the appellant of its right to be considered for the contract; on the other hand, its tender has received due and full consideration. If, save for the delay in filing one of the relevant documents, MCC is also found to be qualified to tender for the contract, no injustice can be said to have been done to the appellant by the consideration of its tender side by side with that of the MCC and in the KPC going in for a choice of the better on the merits. The appellant had no doubt also urged that the MCC had no experience in this line of work and that the appellant was much better qualified for the contract. The comparative merits of the appellant vis-a-vis MCC are, however, a matter for the KPC (counselled by the TCE) to decide and not for the courts.
We were, therefore, rightly not called upon to go into this question".
23. Moreover, we find from the minutes that before the bids of respondents 2 and 3 were even opened, they were asked to withdraw these assumptions. Thus the respondent No.1 took the stand that it is not going to allow any of the bidders to make these assumptions or consider these requests. A uniform policy was adopted in this respect and everybody was treated equally.
24. Once we hold that the assumptions/deviations contained in the covering letters of respondents 2 and 3 were permissible as per the instructions to tenderers and further that these were only requests and did not make the tender conditional or alternate and did not come within the mischief of Clause 28.2 and further that it was open to the respondent No.1 to accept or not to accept these requests, the entire edifice of the arguments of the petitioner labelling these requests as 'conditional offer' or 'non-responsive offer' falls flat. Consequently, the petitioner is not correct in his submission that the respondent No.1 could not direct the bidders to withdraw these assumptions in the covering letters. Further merely because in the minutes or in the endorsement by respondents 2 and 3, while withdrawing the assumptions/deviations, in the covering letter the word "conditions" is stated, loosely, will not alter the real character of these assumptions/deviations/exceptions. The petitioner is also not correct in his submission that it amounted to modification of the tender which could be done prior to deadline for submission of tenders and that too by the tenderer and not at the instance of the employer. For the same reason, we also do not agree with the petitioner when it is contended that by stating such assumptions the bids of respondents 2 and 3 did not remain firm. Firm price was quoted by the two respondents and merely by making certain requests which were not conditions, it cannot be said that it had made the price of bid as non-firm when it was still open to the respondent No.1 to reject these assumptions/deviations and in fact it did so.
25. Examining the matter in the aforesaid perspective would further clear that gloss in respect of the proceedings which took place at the time of opening the tenders when the respondent No.1 asked the respondents 2 and 3 to withdraw the covering letters before the bids were opened and it was done and everybody including the petitioner accepted this course of action and further it was recorded in the minutes which demonstrates t he transparency in the whole process of opening tenders. The procedure followed at that time was acceptable to all the Record Form was signed by everybody containing the certificate to the effect that "no departure from the authorised procedure has occurred in the manner of receipt of the above tenders". These words are to be read in the context and when so read they clearly convey that recording of such a certificate after allowing the respondents 2 and 3 to withdraw the covering letters before opening of the bids and recording the price quoted by the bidders in the Record Form, would clearly show that the petitioner had accepted the fact that the respondents 2 and 3 could be asked and permitted to withdraw the assumptions/deviations contained in the covering letters.
26. It is needless to mention that in exercise of our judicial review of such an action, we have to only examine the decision making process on well established principles. To put it simply, what is to be seen is that the action does not lack fairness and is not arbitrary or malafide.
27. In Air India Ltd v. Chochin International Airport Ltd. and Ors.
it was held that:
"7.....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....."
28. In Tata Cellular case (supra), the Apex Court has held:
"The principles deducible are:
(1) The modern trend points to judicial restraint in administrative action.
(2) The Court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the administrative decision.
If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) 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.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."
29. Further, in the case of Raunaq International Ltd. v. I.V.R. Construction Ltd and Ors the Supreme Court observed as under:
"When a writ petition is filed in the High Court challenging the award of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the court would ultimately effect in public money by deciding the dispute in favor of one tenderer of the other tenderer. Therefore, unless the court is satisfied that there is a substantial amount of public interest, or the transaction is entered into mala fide, the court should not intervene under Article 226 in disputes between two rival tenderers".
xxxxx "Where the decision-making process has been structed and the tender conditions set out the requirements, the court is entitled to examine whether these requirements have been considered.
However, if any relaxation is granted for bona fide reasons, the tender conditions permit such relaxation and the decision is arrived at for legitimate reasons after a fair consideration of all offers, the court should hesitate to intervene".
xxxxx "It is unfortunate that despite repeated observations of this court in a number of cases, such petitions are being readily entertained by the High Courts without weighing the consequences. In the case of Fertilizer Corpn. Kamgar Union (Regd.) v. Union of India ".
30. One may also refer to the judgment of the Apex Court in the case of Asia Foundation & Construction Ltd. v. Trafalgar House Construction (I) Ltd. and Ors. .
31. Keeping in view the aforesaid legal position and having contextual reading thereof insofar as facts of the present case are concerned, we do not find any mala fides or unfairness in the manner in which the bids were opened. Keeping in view the highly technical nature of contract even for evaluation experts from abroad are appointed for the purpose. This would also dispel any allegation of arbitrariness. The bids are yet to be evaluated. At this stage, we do not find any reason to interfere in the matter. More particularly, when we notice that bid of respondents No.3 is less by almost Rs. 14 crores.
32. The writ petition is, accordingly, dismissed. However, there shall be no orders as to costs.