Delhi High Court
Sumitomo Chemical India Pvt. Ltd. vs Union Of India & Ors. on 26 July, 2010
Author: Dipak Misra
Bench: Chief Justice, Manmohan
* HIGH COURT OF DELHI AT NEW DELHI
Judgment Reserved on: 15th July, 2010
% Judgment Pronounced on: 26th July, 2010
+ WP(C) No.4196/2010 & CMs 8327/10 & 8466/10
SUMITOMO CHEMICAL INDIA PVT. LTD. ..... Petitioner
Through: Mr. Akhil Sibal, Adv. with
Mr. Deepak Khurana, Ms. Mihira
Sood, Mr. Pradeep Chiinndra, Advs.
Versus
UNION OF INDIA AND OTHERS ..... Respondents
Through: Mr. Jatan Singh, Central Govt.
Standing Counsel for R-1
Mr. Parag P. Tripathi, ASG with
Mr.Anuj Bhandari, Mr. Pragyan P.
Sharma, Mr. Rupesh Gupta, Advs. for
Respondent No.2
Ms. Mini Pushkarna, Standing
Counsel for Respondent No.3/MCD
Mr. Mukul Rohtagi, Mr. Neeraj K.
Kaul, Sr. Advs. with Ms. Kanika
Agnihotri, Mr. Darpan Wadhwa,
Mr.Aseem Chaturvedi, Mr. Vaibhav
Agnihotri, Advs. for Respondent No.7
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE MANMOHAN
1. Whether reporters of the local papers be allowed to see the judgment? Yes
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in the Digest? Yes
WP(C) 4196/2010 Page 1 of 52
DIPAK MISRA, CJ
The present lis, though frescoes a picture and depicts a scenario at the
very nucleus level pertaining to the stem principles in the realm of award of
contract inclusive of the undeniable concept of the element of public interest
regard being had to the essential power of flexibility bestowed on the owner
called „allowable free play in the joints‟, yet the said inherent features were
differently graduated and calibrated to the arena of competition and no-
competition, owner‟s role in the field of adaptability due to necessity on one
hand and guillotining of the same on the other by bending the norms with an
undue sense of generosity and mal-adroit propensity of impropriety and
malice judged on the scale of balance. Thus, the duty cast is to adjudge
whether the decision taken by the respondents, in the ultimate eventuality,
stands on the terra-firma or collapses like a pack of cards.
2. HLL Lifecare Ltd., the second respondent herein, floated tender No.
HLL/PCD/MCD-01-10-11/BTI inviting bids for purchase of larvicide
Baccilus thuringiensis var israealensis (Bti) (AS) in the quantity of 2,75,000
litres or 343.75 MT on 29.03.2010. The Invitation For Bids (IFB) was
compartmentalized into two parts, namely, the Techno-commercial Bid and
Price or Financial Bid. The IFB indicated that the Municipal Corporation of
Delhi (MCD) intended to procure the items used for anti malaria operations
for the year 2010-11 through the procurement and consultancy service
division of M/s HLL Lifecare Ltd. It was stipulated that a complete set of
bidding documents could be purchased by an interested eligible bidder on
WP(C) 4196/2010 Page 2 of 52
the submission of a written application. In the Instructions to Bidders (ITB),
it was postulated that the bid documents shall be read in conjunction with the
Press Tender Notice dated 29.3.2010 which was annexed as part of the
tender document. Clause 1 of the ITB stipulated the content of bidding
documents which included the technical specifications and the qualification
criteria. It also postulated various other aspects which included what a
bidder is required to do and what would constitute a disqualification. Clause
5 dealt with documents comprising the bid, namely, Techno-
commercial/Technical Bid and Price Bid prepared by the bidder. Clause
5(a) dwelled upon what should be included in the Technical Bid and clause
(b) dealt with the Price Bid. Clause 7 provided about the Documents
Establishing Bidders‟ Eligibility and Qualification. Clause 16 dealt with
Clarification of Bids and Clause 17 dealt with Preliminary Examination.
Clause 18 stipulated that the purchaser would evaluate and compare the bids
on the basis of techno-commercial/technical evaluation followed by the price
bid evaluation.
3. Section III of the IFB dealt with General Conditions of Contract and
Section IV dealt with Special Conditions of Contract (SCC). Clause 4 of
SCC provided for Qualification Criteria. Clause 5 dealt with Performance
Statement. Section V provided the Schedule of Requirements (SOR) and
Section VI dealt with Technical Specifications. Clause 2 of the same
provides the criterion as regards the quality and storage of the product.
Section VII is a section which is devoted to Qualification Criteria (QC). In
WP(C) 4196/2010 Page 3 of 52
the said section, there is a reference to Clause 7.2(b) of ITB. Section VIII
provides for Proforma-Sample Forms and there is a proforma in the same
which relates to performance statement.
4. The petitioner, a company registered under the provisions of the
Companies Act, 1956, is engaged in the business of import, sale and
marketing of insecticides, larvicides, bio-larvicides, etc. The larvicide
Bacillus thuringiensis var israealensis (Bti)(AS) (hereinafter referred to as
the product) is manufactured by Valent Bio Sciences Corporation, a
company incorporated in the United States. The said product is marketed by
the petitioner - company under the brand name „Vectobac 12 AS‟. The
petitioner had obtained a registration certificate to import/sell to market the
larvicide by the Registration Committee of Central Insecticide Board (CIB)
which is a body constituted under the Insecticides Act, 1968 under the
Ministry of Agriculture. Be it noted, the initial certificate was granted in
favour of M/s Aventis Crop Science India Ltd. and eventually, there was an
endorsement in favour of the petitioner on 15.7.2004. The registration
certificate issued to the petitioner for importing and marketing „Vectobac 12
AS‟ approved that the product can be stored between temperature 15OC to
25OC. Subsequently, the temperature range for storage of the petitioner‟s
product was modified and approved by the Registration Committee of CIB
to 1.9OC to 44.9OC in its meeting held on 20.10.2009. It is urged in the
petition that the product of the petitioner fulfills the entire criteria and
parameters which are necessary as mandated by the National Vector Borne
WP(C) 4196/2010 Page 4 of 52
Diseases Control Programme (NVBDCP). The product has been approved
by the Technical Advisory Committee (TAC) which has the authority to
consider the bio-efficacy of the product and the TAC had given the approval
in that regard. It is contended that as per the requirement of the IFB, to
fulfill the criteria, the product of a bidder should be registered and approved
by CIB, TAC and NVBDCP under the National Programme and the product
can be stored at a temperature not exceeding 42.5OC and, further, should be
suitable for storage in Delhi. As pleaded, on 28.4.2010, the petitioner
submitted the Techno-commercial/Technical Bid along with the requisite
documents. It had also submitted the satisfactory performance certificate
and the documentary proof that it has supplied more than 25% of the
quantity for the specified product in any one year during the last three years
prior to the date of bid opening. After the submission of the bid, the
petitioner received a letter on 21.5.2010 from the second respondent asking
whether the TAC had approved the aforesaid modification in the
temperature range to 1.9OC to 44.9OC as endorsed by the CIB and RC for
storage of the product of the petitioner. It is put forth that the said
clarification came as a complete surprise inasmuch as the TAC was required
to approve only the use of the product and not the storage temperature of the
product. That apart, vide the said letter, the respondent No.2 further asked
the petitioner to furnish satisfactory performance certificate from its clients
for the supplies made after the modification of the storage temperature. On
the same date, the second respondent entered into correspondence with the
Director, NVBDCP seeking a clarification as to whether the modified
WP(C) 4196/2010 Page 5 of 52
storage temperature range of the petitioner‟s product from 1.9 OC to 44.9OC
was approved by the TAC. The petitioner replied to the aforesaid letter
meeting all the queries made by the second respondent. The NVBDCP also
sent its reply vide letter dated 26.5.2010 stating that the product of the
petitioner is registered with the CIB and RC with all specifications as per the
registration certificate. It was further mentioned therein that the TAC only
approves the use of the product as per the specifications and changes made
by the CIB. It is contended that the correspondence would show that the
TAC has no role in approving the storage temperature range of the product.
Temperature and other parameters are to be approved by the CIB and RC. It
is set forth that the registration certificate issued to the petitioner by the CIB
and RC specified „Use Recommendation‟ under a separate heading from
„Storage Temperature Range‟ and thus, the distinction is quite clear. It is the
case of the petitioner that to circumvent the aforesaid clarification issued by
the NVBDCP vide letter dated 26.5.2010, the second respondent on
27.5.2010 wrote a letter to the Director, NVBDCP seeking a clarification
with regard to the earlier letter whether it is stated by the NVBDCP that each
and every change made by the CIB and RC in a registration certificate is
consequently required to be approved by the TAC. When the matter stood
thus, on 4.6.2010, the petitioner communicated to the second respondent
highlighting that it had satisfactorily replied to the queries raised by the
second respondent by letter dated 21.5.2010 and if there is any pending
issue, the said respondent should communicate to the petitioner before
taking any decision on the bid submitted by the petitioner.
WP(C) 4196/2010 Page 6 of 52
5. As is evident from the factual matrix, the respondent No.2 vide letter
dated 8.6.2010 rejected the technical bid of the petitioner as non-responsive
without giving any reason for the same. It is averred that the respondent
No.2 did not open the financial bid and has taken the view that the technical
specifications in the tender document that the product should be TAC
approved requires the modification in the storage temperature range of the
petitioner‟s product to be approved by the TAC even though the same is not
in the domain of the TAC. Reference has been made to the modifications in
the storage temperature as regards the petitioner‟s product to highlight that
the same is more than the range specified in the tender document. It is put
forth that when the product of the petitioner was approved to be used in the
National Programme in the year 2005, the approved storage range of the
temperature of the product was 15OC to 25OC and when a clarification letter
has been issued by the NVBDCP on 9.6.2010 that the TAC only approves
the use of the product as per the specifications or "changes made in the use"
by the CIB and nothing more than that, there was no justification to take the
same as a ground to reject the technical bid. It is contended the conduct of
the respondent No.2 is extremely arbitrary and discriminatory and it
contravenes the instructions issued vide Office Memorandum of Ministry of
Health and Family Welfare dated 29.8.2007 which provides that in case of a
single responsive tender, retendering should be ordered with broad based
similar specifications but in the case at hand, the second respondent instead
of ordering for retendering has deliberately awarded the contract in favour of
WP(C) 4196/2010 Page 7 of 52
the respondent No.7 with mala fide intentions. It is urged that the petitioner
fulfilled all the technical criteria and parameters as set out in the tender
documents but the second respondent has rejected the same on flimsy
grounds. The ground which has been taken recourse to by the second
respondent which basically pertained to the approval of the storage
temperature range of the product by the TAC was never a part of the tender
document and, hence, the whole approach is mala fide and perverse. It is
also asseverated that it was obligatory on the part of the respondent No.2 to
seek clarification from the petitioner before taking any decision as per the
terms and conditions of the IFB and not reject his bid in extreme haste which
smacks of arbitrariness. The respondent No.2 sought to modify the
conditions prescribed in the IFB as far as the supply to the extent of 25% of
the quantity concerned in respect of the petitioner by treating that the change
in the storage temperature range constituted change in the composition of the
petitioner‟s product. As the product of the petitioner can be stored between
the temperature range of 1.9OC to 44.9OC, the requirement as per the tender
which is 42.5OC is met with and, therefore, there was no warrant to reject the
technical bid. It is alleged that the respondent No.2 has acted mala fidely
and also against the public interest inasmuch as the financial burden is more
on the acceptance of the bid of the respondent No.7, for the petitioner‟s
financial bid is much lower.
6. In this backdrop, prayer has been made for issue of a writ of certiorari
for quashment of the decision taken by the respondent No.2 rejecting the
WP(C) 4196/2010 Page 8 of 52
technical bid of the petitioner which has been communicated to it by letter
dated 8.6.2010 and also further quash the acceptance of the financial bid of
the respondent No.7 and to issue a writ of mandamus to accept the technical
bid of the petitioner and open the financial bid and award the contract as per
the terms and conditions of the contract.
7. A counter affidavit has been filed by the respondent No.2 contending
inter-alia that in terms of the tender, the said respondent analyzed the bid of
the petitioner as per Clause 7 of Section II of the tender (Instructions to
Bidders) and as per the said clause, the petitioner was required to supply
complete documents with its bid to the tender and the said documents were
subject to the complete satisfaction of the purchaser. As per Clause 7.2(b),
the bidder/petitioner was required to satisfy the criteria stipulated in Section
VII (Qualification Criteria) of the tender document. To satisfy the said
condition, it was incumbent on the petitioner to submit documentary
evidence in proof of the fact that it had actually supplied to the extent of
atleast 25% of the tendered quantity of the tendered product in any one year
during the last three years prior to the date of bid opening. The said proof
was required to be submitted to the respondent No.2 as per the performance
statement but the petitioner failed to comply with the said mandatory
requirement and chose to submit the work order/consignments issued in its
favour. The petitioner failed to attach the certificate as per the tender
requirement from the said alleged purchasers/consignees confirming that the
said larvicide was actually supplied by the petitioner/bidder and the same
WP(C) 4196/2010 Page 9 of 52
was duly accepted by the purchasers/consignees to their entire satisfaction.
It is also contended that another condition which finds mention in the tender
is that the product should be stable when stored at ambient temperature (not
exceeding 42.5OC), but the petitioner got changes made in the condition No.
5 of its registration certificate on 27.11.2009 from the CIB whereby the
storage temperature range was modified from 1.9 OC to 44.9 OC. Based on
the details given by the petitioner in the bid documents, its performance was
not found to meet the qualification criteria of satisfactory supply of 25% of
the product by the petitioner. Alternatively, it is put forth that prior to
27.11.2009, even if the satisfactory supply of the product of the petitioner is
calculated for any one year of the past three years prior to the date of bid
opening, it still failed to qualify due to non-submission of the required
documents from the respective purchasers/consignees of the product. The
petitioner was called upon to submit copies of the orders for the required
quantity, if any, received by him after 27.11.2009 along with the certificate
confirming the said supply and acceptance by the purchaser/consignee, but
the petitioner failed to submit the same which led to rejection of the Techno-
commercial bid as non-responsive. Emphasis has been laid on Clause 7.3 of
the Instructions to Bidders to highlight that the petitioner has not satisfied
the qualification criteria and, therefore, its bid has been rightly rejected.
8. It is the stand of the respondent No.2 that the bid of the respondent
No.7 had been approved and a formal contract had already been entered into
with the respondent No.7 on 5/8.6.2010 as it had acted fairly and in a
WP(C) 4196/2010 Page 10 of 52
transparent and justified manner. It is its further stand that the said
respondent has not acted in haste by placing at least three months
requirement order for the present to meet out urgent requirement of larvicide
for effective control of mosquito breeding for prevention of malaria and
dengue during summer and rainy season in Delhi region keeping in view the
Commonwealth Games which is going to be organized in the month of
October, 2010. It is denied that the petitioner submitted the requisite
documents with the Techno-commercial bid. The petitioner did not submit
the satisfactory performance certificate documentary proof that it had
supplied more than 25% of the quantity of the specified product as per
Section VII of the tender. It is further put forth that the content of the letter
dated 26.5.2010 has been erroneously interpreted by the petitioner. The
clarification was sought as the CIB changed the storage temperature range
on 27.11.2009 and that compelled the respondent No.2 to seek the
clarification. It is set forth that the product of the petitioner required TAC
approval as per the registration certificate and as per the tender and,
accordingly, clarification was sought from the respondent No.6 which was
replied by the respondent No.6 by letter dated 26.5.2010 the contents of
which are self explanatory. It is contended that the stand urged that the
petitioner was not intimated the reasons for non-acceptance of its Techno-
commercial bid is not tenable as it was not obligatory on the part of the
second respondent to seek any further clarification from the petitioner as the
tender conditions were plain and clear. The ground of treating the
respondent No.7 in a different manner on extraneous considerations has been
WP(C) 4196/2010 Page 11 of 52
categorically denied. It is the stand of the respondent that the bid process is
completely fair, transparent, competitive and justified and does not require
any interference in exercise of power of the judicial review.
9. A rejoinder affidavit has been filed by the petitioner to the counter
affidavit filed by the respondent No.2 contending, interalia, that the said
affidavit does not answer the issues raised by the petitioner, namely, that no
reason was ascribed while treating the technical bid of the petitioner as non-
responsive and, second, the directive issued by the Ministry of Health and
Family Welfare dated 29.8.2007 with regard to the single responsive tender
has not been dealt with. Highlighting on these two aspects, it is averred that
in a Welfare State, when the competent authority rejects the bid, it has an
obligation to explain the reason for the same and, second, the non-reply to
the directive issued by the Ministry of Health and Family Welfare reflects
the blatant bias, discrimination and malafide. It is asserted that the plea
taken with regard to the non-fulfillment of the performance statement is
totally erroneous inasmuch as the petitioner had duly and completely
fulfilled the condition as it had supplied a total quantity of the product in
question from April 2007 to March 2007 which is well excess of even the
total tender quantity. Detailed enumeration has been made as to how the
petitioner satisfied the said criterion and how it had filed the performance
statement at the time of submitting the bid. It is urged that the certificate
supplied subsequently by the respondent No.7 is not in conformity with the
prescribed format of the performance statement. It is highlighted that there
WP(C) 4196/2010 Page 12 of 52
is no requirement at all that the satisfaction certificates of the purchasers /
consignees should be over 25% of the tender quantity in respect of any one
year as the clause relating to the same only mentions "sizeable value both in
quantity and cost". It is urged that the respondent No.2 had afforded an
opportunity to the respondent No.7 to submit the satisfaction certificate
while the same had not been returned but similar opportunity was not
afforded to the petitioner and that smacks of arbitrariness and discrimination.
The determination of cut-off date qua the petitioner as 27.11.2009 is totally
unacceptable as the product that was sought to be supplied remained the
same and the modification in the storage temperature of the petitioner‟s
product from 15OC - 25OC to 1.9 OC - 44.9OC was approved and endorsed by
the CIB & RC and had nothing to do with the product. The plea of the
respondent No.2 that the product should be stable when stored at an ambient
temperature not exceeding 42.5OC and the petitioner got modification at a
later stage is fundamentally a misreading of the terms and conditions of the
tender specification specifically in para 2 of Section VI which when properly
appreciated clearly indicates that there is a stipulation that the product
should be stable when stored at an ambient temperature not exceeding
42.5OC but there is no requirement at all in para 2 of the Section VI that this
particular feature or property of the product offered should be set out either
in the TAC approval or in the CIB registration certificate. The petitioner‟s
product is stable at an ambient temperature of 42.5 OC and, therefore, the
petitioner‟s bid could not have been rejected on that ground. The TAC
approval is merely in respect of the capability of the use of the product
WP(C) 4196/2010 Page 13 of 52
offered as a larvicide and the said approval has nothing to do with the
condition of storage of the product in question. Quite apart from the above,
it is contended that the performance statement need not be confined only to
the items which are absolutely identical with the product but can include the
products which are similar to those products as the employment terms have
been implied in the terms and conditions of the tender. Reliance has been
placed after the study conducted in 2002 in respect of the product of the
petitioner that it was found to be stable at 42.5OC and, hence, the ground put
forth by the respondent No.2 is absolutely unsustainable and, in fact,
exposes total discrimination. Various other averments have been made with
regard to the undue hasty action taken by the respondent No.2 though there
was no urgency for opening of the tender bids. It is further urged that the
comparison made by the said respondent as regards the product of the
petitioner is not within its authority and it cannot clothe itself with the
powers to analyse the bid. Thus, it is also put forth that the assertions made
in the said counter affidavit in respect of the petitioner are totally
unwarranted and, in fact, have no nexus with the controversy raised.
10. The respondent No.2 has not brought on record the letter dated
21.5.2010 written by it to the respondent No.7 whereas the communication
dated 21.5.2010 to the petitioner has been brought on record. It is
discernible from the said letter that the petitioner was only afforded an
opportunity to supply performance certificate after the opening of the bid in
respect of the supplies made after 27.11.2009 and not given any opportunity
WP(C) 4196/2010 Page 14 of 52
to file documents to satisfy the factum of supply of 25% of the tender
quantity for any one year in the last three years. Had such an opportunity
been extended, it would have been in a position to comply with the said
requirement. Thus, denial of equal opportunity tantamounts to total
unfairness and if the same is done in the process of negotiation, it will also
take the colour of arbitrariness. The documents that have been brought on
record will go a long way to show that the respondent No.7 had not satisfied
the condition as regards the production of performance certificate but he was
treated in a different way than the petitioner thereby making the whole
decision making process absolutely unfair. The communication dated
26.5.2010 issued by the MCD in favour of the respondent No.7 makes it
quite clear that it had not satisfied the condition.
11. The insistence for production of performance certificate at the time of
submission of the bid is contrary to Clause 5 of Section IV of the special
conditions of contract inasmuch as the performance statement is to be given
for the last three years as per the format given in Section VII in respect of
same or similar items satisfactorily executed to sizeable value and the
petitioner did comply with the said condition precedent and, therefore, his
bid could not have been treated as non-responsive. The stand of the
respondent No.2 that the performance statement for 25% of the quantity in
any one year was required to be submitted because of Clause 4 in Section
VII cannot be read into Clause 5 of Section VII as such a combined reading
WP(C) 4196/2010 Page 15 of 52
is not permissible inasmuch as Section IV itself makes a distinction between
the qualification criteria and the performance statement.
12. It was obligatory on the part of the respondent No.2 to expressly state
in the tender document the requirement of the performance statement failing
which he cannot be permitted to introduce any requirement contrary to the
plain language implied in the tender document.
13. The petitioner had provided performance certificates for 53,660 ltrs.
of the product (approximately 20% of the tender quantity) as against the
alleged requirement of 68,750 ltrs. (25% of the tender quantity) for the
period 22.9.2008 to 1.9.2008. Quite apart from the above, a year has to be
construed as a financial year and not a calendar year, or 12 months period as
the same would be counter to the basic meaning of the term „year‟ and
thereby creating confusion which is impermissible. The stand of the
respondent No.2 that the petitioner has not submitted performance certificate
for one year is nowhere appositely stipulated and, therefore, deserves to be
rejected as the purchaser cannot interpret the terms of the contract at its
whim and fancy. The restriction imposed on the petitioner by fixing the cut-
off date to 27.11.2009 has nothing to do with the performance certificate or
ability to supply and, in fact, is untenable, for the simple reason that the
Central Insecticides Board and the Registration Committee had endorsed
such a modification without altering the registration certificate and the said
modification has been further endorsed by the Director, National Vector
WP(C) 4196/2010 Page 16 of 52
Borne Diseases Control Programme. The respondent No.2 has failed to
exercise its discretion since the qualification criteria makes a reference to
Clause 7.2(b) of Instruction to Bidders and Clause 4 of Section VII requires
supply of 25% of the quantity of the specified product in any one year in the
last three years without any prescribed documents required to be submitted.
Clause 4 which refers to Section VII indicates furnishing of documentary
evidence but the same is subject to further determination. Under these
circumstances, it has been alleged that non-acceptance of tender of the
petitioner by the respondent No.2 would tantamount to non-exercise of its
discretion in terms of Clause 7.2 as a consequence of which the decision
making process has been vitiated. The petitioner had submitted work orders
along with dates and quantity of actual supplies but the same was not
considered and no clarification was sought which is a deliberate
abandonment of the procedure for affording an opportunity to the bidder
which leads the tendering process to the path of vitiation.
14. Mr. Akhil Sibal, learned counsel appearing for the petitioner, has
raised the following submissions:
(a) That the notice inviting tender is compartmentalized into various
sections and Sections 1 and 2 which incorporate Clause 7 under the
heading „Documents Establishing Bidder‟s Eligibility and
Qualification‟ especially Clause 7.2(a), (b) and (c) does not precisely
state the nature of the document and further the production of
documentary evidence to the satisfaction of the purchaser/owner
WP(C) 4196/2010 Page 17 of 52
would only arise at a later stage but not at the stage as has been
conceived by the respondent No.2. To elaborate; it is urged by him
that once the documents have been filed, the same have to be
scrutinized by the respondent No.2 and if anything is wanting, the
bidder has to be afforded an opportunity to satisfy the same as such a
discretion is vested with the purchaser.
(b) The clause occurring under the heading „Late Bids and
Modifications/withdrawal of Bids‟ and „the clarification of bids and
preliminary examinations‟ as well as Clauses 17.3, 17.4, 17.5 and 18.1
go a long way to show that there is a process for determination and
determination in its conceptual essentiality would not entitle the
owner to reject the bid without determining, and determination means
an expression of opinion after affording an opportunity to the bidder
and the same cannot be crucified in an arbitrary manner.
(c) The qualification criteria which occur under the special conditions of
contract specifically refers to Clause 7.2(b) of Instructions to Bidders
(in short "ITB") and Clause 0.4 therein also clearly postulates that the
manufacturer must be in the business in similar or identical goods and
the petitioner has been dealing with similar and/or identical goods,
and, therefore, his bid could not have been rejected.
(d) The reference to 25% of the quantity for the specific project indicated
in Section 5 in one year during the last three years prior to the date of
bid opening cannot be singularly treated as a condition precedent as
WP(C) 4196/2010 Page 18 of 52
the language employed in Clause 7.2(b) and the qualification criteria
are quite different.
(e) The performance statement, as has been stipulated, does not prescribe
that there has to be supply of 25% in one year and the same would
throw immense light that the supply of 25% in one year is not to be
treated as a condition precedent but is to be taken into consideration at
a later stage, since a bidder has a right to produce the documents at a
later stage and the purchaser is bound to consider the same.
(f) Assuming for the sake of argument that the clauses pertaining to the
eligibility criteria are treated as conditions precedent yet when the
purchaser was required to use his discretion to seek clarification and
the same has been given an indecent burial, it destroys the very base
of the decision making process.
(g) The petitioner had the licence w.e.f. 2002 and he was engaged in
manufacturing of the product and was granted benefit on the basis of
an application dated 23rd November, 2009 which has also been ratified
by National Vector Borne Diseases Control Programme but the
purchaser without taking note of the same by letter dated 21 st May,
2010 has restricted the period of supply after 27 th November, 2009
without unfathomable reason and the same creates a concavity in the
decision making process.
(h) The reasons given by the respondent no. 2 that the bid of the petitioner
was not responsive because of failure to submit performance
certificates to the extent of at least 25% of the quantity of the specific
WP(C) 4196/2010 Page 19 of 52
product indicated in Section V (Schedule of Requirements) in any one
year during the last three years prior to the date of bid opening is
highly arbitrary and unfair inasmuch as the respondent no. 2 by its
communication had asked the petitioner to produce the performance
certificate after 27.11.2009.
(i) The respondent No. 2 has treated the petitioner and the respondent
No. 7 unequally since the respondent No. 7 was afforded an
opportunity by letter dated 21.5.2010 with time limit up to 26.5.2010
whereas the said opportunity was not given to the petitioner.
15. Mr. Parag Tripathi, learned Additional Solicitor General for the
respondent No.2, has raised the following proponements:
(i) The ITB does not permit that the bid documents are to be read in
separation; on the contrary, it is quite vivid that they have to be read
in conjunction with the press tender documents and with any other
instructions appended elsewhere in the NIT inasmuch the language
employed in the ITB clearly stipulates that the bid documents should
be read in conjunction with the Press Tender Notice / IFB No.
HLL/PCD/MCD-01/10-11 dated 29.3.2010 and all the clauses are to
be read in conjunction with the instructions given elsewhere in the
document on the same subject matter.
(ii) The qualification criteria which finds place in Section VII of the
tender that specified the satisfaction of supply of at least 25% of the
WP(C) 4196/2010 Page 20 of 52
quantity of the specific product (Bti) in any one year during the last
three years prior to the date of bid opening has to be read along with
the NIT. Similarly, the performance statement which finds mention in
Section VII of the tender cannot be alienated or isolated from the
compartment of tender notice regard being had to the purposive
understanding of the tender documents and the requirement of the
purchaser.
(iii) The format of performance statement clearly mandates that the
certificates are to be produced from the purchasers / assignees and the
same to be attached with the bid confirming the supply and
acceptance of the stores with a further stipulation that there has to be
cross reference of order, date, value and confirmation of supply and
acceptance of stores and it has its own imperative purpose and
sanctity and does not allow any kind of deviance.
(iv) The submission advanced on behalf of the petitioner that the
conditions prescribed in the notice inviting tender was vague and
ambiguous does not stand to reason, for it was clearly provided in the
notice inviting tender that documentary evidence was required to be
produced, and the colossal complaint that production of documentary
evidence itself was not adequate enough has to pale into
insignificance when the same is read in conjunction with other
conditions which deal with what types of documents are requisite to
be filed. The emphasis laid on order, date, value and confirmation of
WP(C) 4196/2010 Page 21 of 52
supply and acceptance has to be followed in stricter sense. That apart,
when the bidder had understood the conditions stated in the tender as
it had clearly mentioned that it had qualified and produced the
requisite certificates, it cannot take a somersault and propound to suit
its convenience.
(v) The total quantity to be supplied was 275,000 liters and 25% thereof
came to 68,750 liters but the actual evidence of the quantity supplied
by the petitioner bidder did not specify the said criterion. The
purchaser had the right to reject the bid if it failed to comply with the
qualification criteria and when the petitioner had not satisfied the
requisite criteria, the ingenious subterfuge taken recourse to that the
year was not defined has no legs to stand upon.
(vi) It was obligatory on the part of the purchaser to determine the
substantial responsiveness of each bid on the base of the bidding
documents. In the case at hand, the techno-commercial bid of the
petitioner being not substantially responsive, the same was not
accepted and, hence, no fault can be found in the decision making
process of the respondent No.2.
(vii) The grievance that uniform treatment was not given to the petitioner
and the respondent No.7 is sans substance inasmuch as representatives
of both the bidders had attended the pre-bid conference called by the
purchaser on 6.4.2010 and they were extended the right to ask for any
clarification in respect of the bid document; that both the bidders were
WP(C) 4196/2010 Page 22 of 52
declared preliminary responsive in the first phase of evaluation; that
both the parties were given opportunity to furnish certain information
regarding performance by letter dated 21.5.2010 stipulating the
deadline, that is, 26.5.2010 for submission of requisite information;
that the respondent No.2 did not submit details as required while the
respondent No.7 submitted the documents as asked for; that the
petitioner was required to produce goods acceptance certificate for
68750 liters quantity from the consignee / purchaser whereas he could
produce documentary certificate only for 38900 liters as a
consequence of which there was non-satisfaction of Clause 4 of the
qualification criteria.
(viii) The techno-commercial responsive bid of the respondent No.7 was
opened on 5.6.2010 and it was found that he had offered the price of
Rs.7,45,192.31 per MT plus CST@4% as against their quote of
Rs.953080.00 plus CST @4% per MT against the previous tender
which is 21.81% less than the last purchased price. Keeping the same
in view, a three months supply contract was awarded to the
respondent No.7 as per the requirement of MCD with the purchaser
reserving the right to purchase the tendered quantity at the price, terms
and conditions of the subject tender within one year.
(ix) The decision taken by the respondent is in consonance with the fair
procedure and totally bereft of any kind of malafide and, in fact, it is
WP(C) 4196/2010 Page 23 of 52
in accord with the element of public interest and, hence, this court in
exercise of the power of judicial review should not interfere.
(x) The conditions had been imposed to ensure that the bidder has the
capacity and resources to execute the work and when the petitioner
had not produced the performance certificate, the purchaser had valid
reasons to discard him and the same cannot be treated as unreasonable
or unfair or against the conceptual element of public interest.
16. The learned counsel for the respondent No.3 supported the stance put
forth by the respondent No.2.
17. Mr. Mukul Rohtagi and Mr. N.K. Kaul, learned senior counsel
appearing for the respondent No.7, resisting the submission put forth by
learned counsel for the petitioner, submitted that:
(a) The bidder on whose behalf the bid is being made as per Clause 7.2
(b)(4) has to be a manufacturer of the product itself and must be in the
business of similar and / or identical goods for at least last three years
and must have manufactured and supplied to the extent of at least 25%
of the quantity of the specific product indicated in Section V of the
schedule of requirements but in the case at hand, the petitioner is not a
manufacturer. The terms „manufactured‟ and „supplied‟ have to be
read in a cumulative manner and not in a segregable way because the
WP(C) 4196/2010 Page 24 of 52
tender condition has a definite purpose keeping in view the nature of
supply and the problem that is required to be sought.
(b) The petitioner as per own showing had not satisfied the performance
criterion inasmuch as from the chart filed by the petitioner, it becomes
clear crystal that it had supplied only 56,660 liters of the product
whereas it was incumbent upon him to have supplied 68,750 liters
(25% of the tendered quantity of 275,000 liters) in any of the three
preceding years.
(c) The tender conditions read in a holistic manner would convey that it
had used the terms „sizeable‟ which if understood in the common
parlance regard being had to logical sense would convey that it should
be fairly large portion but the purchaser has restricted it to 25% only
to have the bidders and not to hit the bidders at bay and, therefore, the
mercurial plea that the bid clauses in the bid were vague does not
deserve any acceptation.
(d) The terms and conditions of the tender postulates that the products
should be stabled when stored at an ambient temperature (not
exceeding 42.5oC) but the CIB registration of the petitioner mandates
that the product must be stored at a temperature range of 15 to 25 oC.
The product as per the latest Material Safety Data Sheet (MSDS)
issued by the manufacturer (Valent Biosciences) on 13.8.2009
indicated that the product should be stored between 15 oC to 30oC.
The local environment has been kept in view by the respondent No.2
WP(C) 4196/2010 Page 25 of 52
and, hence, no fault can be found in accepting the bid of the
respondent No.7.
(e) The commercial transaction of the present nature requires expertise
and the experts have weighed the material and keeping in view the
requirement which is in accord with the terms and conditions of the
co-tender had accepted the bid and, therefore, this Court, in exercise
of its power of judicial review, should not substitute the view as
certain matters do remain in the domain of experts. The asseveration
that the discretion was not used to ask for clarification from the
petitioner is totally sans substratum as the same cannot be claimed as
a matter of right since such a right does not flow from the tender
documents more so when the petitioner had not satisfied the
conditions precedent.
18. At this juncture, it is worthwhile to mention that in the course of
hearing, the learned counsel for the respondent No. 2 has produced the
original file and the bid documents for our perusal.
19. In this factual backdrop, we think it apposite, before dwelling upon
the facts that have emerged from the pleadings, to appreciate the rival
submissions raised at the bar to refer to certain citations in two spheres,
namely, the law relating to acceptance or rejection of a tender, the essential
conditions in a notice inviting tender, the ancillary conditions in the domain
WP(C) 4196/2010 Page 26 of 52
of tender, etc. and the role of a owner or a purchaser and secondly, the duty
of the court while scrutinising the tender documents.
20. First, we shall refer to the authorities which deal with the principles
relating to the acceptance and other aspects of tender and, thereafter, we
shall delineate in regard to the construction of a tender document.
21. In Poddar Steel Corporation v. Ganesh Engineering Works & Ors.,
(1991) 3 SCC 273, a two-judges Bench of the Apex Court has held as
follows:
"......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."
22. In Sterling Computers Ltd. V. M.N.Publications Ltd., (1993) 1 SCC
445 = AIR 1996 SC 51, the Apex Court, while dealing with the concept of
judicial review in respect of contracts entered into on behalf of the State, had
expressed the view as follows: -
WP(C) 4196/2010 Page 27 of 52
"18. While exercising the power of judicial review, in
respect of contracts entered into on behalf of the State,
the Court is concerned primarily as to whether there has
been any infirmity in the "decision making process." By
way of judicial review the Court cannot examine the
details of the terms of the contract which have been
entered into by the public bodies or the State. Courts
have inherent limitations on the scope of any such
enquiry. But at the same time as was said by the House of
Lords in the aforesaid case, Chief Constable of the North
Wales Police v. Evans (supra), the Courts can certainly
examine whether "decision making process" was
reasonable, rational, not arbitrary and violative of Art.
14 of the Constitution.
19. If the contract has been entered into without ignoring
the procedure which can be said to be basic in nature
and after an objective consideration of different options
available into account the interest of the State and the
public, then Court cannot act as an appellate authority
by substituting its opinion in respect of selection made
for entering into such contract."
23. In New Horizons Ltd. & Anr. v. Union of India & Ors., (1995) 1
SCC 478, the Apex Court in para 17 opined thus:
"17. ..... The decision of this Court, therefore, insist that
while dealing with the public, whether by way of giving
jobs or entering into contracts or issuing quotas or
licenses or granting other forms of largesse, the
Government cannot act arbitrarily at its sweet will and
like a private individual, deal with any person it pleases,
but its action must be in conformity with the standards or
norms which are not arbitrary, irrational or irrelevant. It
is, however, recognized that certain measure of "free
play in the joints" is necessary for an administrative body
functioning in an administrative sphere [See : Ramanna
Dayaram Shetty v. The International Airport Authority of
India, (1979) 3 SCC 489; Kasturi Lal Lakshmi Reddy v.
State of J&K : (1980) 4 SCC 1; Fasih Chaudhary v.
Director General, Dooradarshan (1989) 1 SCC 89;
Sterling Computers Ltd. v. M&N Publications Ltd. and
WP(C) 4196/2010 Page 28 of 52
Anr. (supra); Union of India v. Hindustan Development
Corporation, (1993) 3 SCC 499."
It is worth noting that in the said case, their Lordships ruled that the
terms and conditions of a tender should be construed from the standpoint of
a prudent businessman and the terms of the offer of the tenderer should be
first considered and if found suitable, then only its credentials and ability to
perform the work should be considered from a practical point of view.
24. In Tata Cellular v. Union of India, AIR 1996 SC 1, the Apex Court
has laid down as follows: -
"94. The principles deducible from the above 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.
WP(C) 4196/2010 Page 29 of 52
However, the decision must not only be tested by the
application of Wednesbury principle of reasonableness
(including its other facets 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.
25. In Asia Foundation and Construction Ltd. V. Trafalgar House
Construction (I) Ltd. And Others, (1997) 1 SCC 738, it has been held that
the principles of judicial review cannot be denied to be applicable to
contractual powers of government bodies but it is intended to prevent
arbitrariness or favouritism and it is to be exercised in the larger public
interest.
26. In Raunaq International Ltd. v. I.V.R. Construction Ltd., (1999) 1
SCC 492, the Apex Court, while laying emphasis on public interest and
commercial consideration in the award of contract, expressed thus:
"11. 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....."
And again:
".....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
WP(C) 4196/2010 Page 30 of 52
under Article 226 in disputes between two rival
tenderers."
In the said case, their Lordships also emphasised upon the fact that an
expert committee has special knowledge which plays a decisive role in
deciding as to which is the best offer. The past record of the tenderers, the
quality of the goods or services which are offered and the assessment of such
quality on the basis of the past performance of the tenderer have an
important role in deciding to whom the contract should be awarded.
27. In Air India Ltd. V. Cochin International Airport Ltd., (2000) 2 SCC
617, their Lordships expressed the view that the award of a contract, whether
by a private party or by the State, is essentially a commercial transaction. It
was held therein that when even some defect is found in the decision making
process, the Court must exercise its discretionary powers under Article 226
of the Constitution with great caution and should exercise it only in the
furtherance of public interest. Emphasis was laid, apart from legal point, on
public interest. The Apex Court has observed that in the matters of award of
contract, the larger public interest has to be kept in view and when it is vivid
that public interest commands that there has to be interference, then the
Court should interfere.
28. In M/s Moarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar
Municipal Corporation and others, AIR 2000 SC 2272, the Apex Court
held that if a term of the tender is deleted after the players entered into the
WP(C) 4196/2010 Page 31 of 52
arena, it is like changing the rules of the game after it had begun and,
therefore, if the Government or the Municipal Corporation was free to alter
the conditions, fresh process of tender was the only alternative permissible.
By reason of deletion of a particular condition, the wider net will be
permissible and a larger participation or more attractive bids could be
offered.
29. In Centre for Public Interest Litigation & Another v. Union of India
& Others, (2000) 8 SCC 606, after referring to a passage from Kasturi Lal
Lakshmi Reddy v. State of J&K, (1980) 4 SCC 1, it has been held thus:
"20. It is clear from the above observations of this
Court that it will be very difficult for the courts to
visualise the various factors like commercial/technical
aspects of the contract, prevailing market conditions,
both national and international and immediate needs of
the country etc. which will have to be taken note of while
accepting the bid offer. In such a case, unless the court is
satisfied that the allegations leveled are unassailable and
there could be no doubt as to the unreasonableness, mala
fide, collateral considerations alleged, it will not be
possible for the courts to come to the conclusion that
such a contract can be prima facie or otherwise held to
be vitiated so as to call for an independent investigation,
as prayed for by the appellants. Therefore, the above
contention of the appellants also fails."
30. In W.B. State Electricity Board v. Patel Engineering Co. Ltd. & Ors.,
(2001) 2 SCC 451, the Apex Court emphasised on maintaining the sanctity
and integrity of the process of tender / bid and also the award of a contract.
WP(C) 4196/2010 Page 32 of 52
Adherence to the instructions cannot be given a go-by as the very purpose of
issuing rules / instructions is to ensure their enforcement, lest the rule of law
should be a casualty.
31. In State of NCT of Delhi & Anr. v. Sanjeev (alias Bitto), (2005) 5
SCC 181, while dealing with the scope of judicial interference in matters of
administrative decisions, the Apex Court has held that the authority must act
in good faith, must have regard to all relevant considerations and must not
be influenced by irrelevant considerations, must not seek to promote
purposes alien to the letter or to the spirit of the legislation that gives it
power to act, and must not act arbitrarily or capriciously.
32. In Laxmi Sales Corporation v. Bolongir Trading Co. & Ors., AIR
2005 SC 1962, the Apex Court disallowed the order passed by the High
Court which had held that the rejection of the offer made by the second
respondent therein was arbitrary and unfair. The Apex Court took note of
the fact that the necessary documents were not filed along with the tender
form solely on the ground that the same were not mandatory. Thereafter,
their Lordships proceeded to state that on a reading of the various conditions
in the tender form and the annexures annexed thereto, it was quite clear that
proof of turnover of the firm over the last two relevant years with supporting
documents were to be filed.
WP(C) 4196/2010 Page 33 of 52
33. In M/s. B.S.N.Joshi and Sons Ltd. V. Nair Coal Services Ltd., AIR
2007 SC 437, their Lordships reiterated the principles of judicial review
which have been developed for interference in contractual matters. The
Apex Court summarized the principles as follows:
"(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 of 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."
WP(C) 4196/2010 Page 34 of 52
34. In Jagdish Mandal v. State of Orissa and Others, 2007 (8) SCJ 359,
the Apex Court opined that the power of judicial review in administrative
action is intended to prevent arbitrariness, irrationality, unreasonableness,
bias and malafides. It was further opined that when exercising the power of
judicial review in the matters relating to tender or award of contract, certain
special features should be kept in mind regard being had to the fact that a
contract is a commercial transaction. Emphasis was laid on the fact that it is
essential to consider whether the process adopted or the decision taken is so
arbitrary or irrational that it could be said with certitude that no responsible
authority acting reasonably and in accordance with the relevant law would
have reached such a conclusion. In the said decision, the concept of public
interest was reiterated.
35. In Reliance Energy Ltd. and another v. Maharashtra State Road
Development Corpn. & Ors., (2007) 8 SCC 1, their Lordships laid emphasis
on level playing field to all bidders and the reasonableness of the State
action.
36. In Siemens Public Communication Networks Pvt. Ltd. And another
v. Union of India and Others, 2009 (1) SCJ 634, it has been held as under:
"..... A contract is a commercial transaction and
evaluating tenders and awarding contracts are
essentially commercial functions. In such cases
principles of equity and natural justice stay at a distance.
If the decisions relating to award of contracts is bonafide
WP(C) 4196/2010 Page 35 of 52
and is in public interest, Courts will not exercise the
power of judicial review and interfere even it if is
accepted for the sake of argument that there is a
procedural lacuna."
37. In Sorath Builders v. Shreejikrupa Buildcon Limited & Anr., (2009)
11 SCC 9, it was laid down that it was obligatory on the part of the bidder to
submit his pre-qualification documents within the time schedule.
38. In Meerut Development Authority vs. Association of Management
Studies, (2009) 6 SCC 171, it has been held as follows:
"27. The bidders participating in the tender process
have no other right except the right to equality and fair
treatment in the matter of evaluation of competitive bids
offered by interested persons in response to notice
inviting tenders in a transparent manner and free from
hidden agenda. One cannot challenge the terms and
conditions of the tender except on the above stated
ground, the reason being the terms of the invitation to
tender are in the realm of the contract. No bidder is
entitled as a matter of right to insist the Authority
inviting tenders to enter into further negotiations unless
the terms and conditions of notice so provided for such
negotiations."
39. In Triveni Engineering & Industries Ltd. v. D.J.B. & Anr., 2009 (5)
AD Delhi 265, the necessity to satisfy the essential pre-condition of the
minimum eligibility requirement to participate in the tender and the nature of
the necessity was dealt with and the Bench expressed the view that the
nature of the project needed work experience and the petitioner had not
WP(C) 4196/2010 Page 36 of 52
satisfied the mandatory minimum eligibility criteria in respect of the work
experience and was, therefore, not entitled to be considered.
40. Presently, we shall refer to the principles with regard to the
construction to be placed on a deed / document or a contract.
41. Before adverting to the principle, it is condign to refer the introduction
that occur Instruction to Bidder (ITB). It reads as follows:
"This bid documents should be read in conjunction
with the Press Tender Notice / IFB No.
HLL/PCD/MCD-01/10-11 dated 29.03.2010, „a copy
of which is enclosed in this documents and all clauses
to be read in conjunction with any other instruction
given elsewhere in this document, on the same subject
matter of the clause."
Keeping the aforesaid guidance in view, we shall refer to certain
authorities which do act as a laser beam on this score.
42. In Union of India v. The Central India Machinery Manufacturing
Co. Ltd. and others, AIR 1977 SC 1537, their Lordships, while dealing with
the construction of a contract, expressed thus-
"29...... A correct construction, in turn, depends on a
reading of the Standard and Special conditions as a
whole. It would not be proper to cull out a sentence
here or a sub-clause there and read the same in
isolation. What is required is not a fragmentary
examination in parts but an overall view and
understanding of the whole. Again, it is the substance
WP(C) 4196/2010 Page 37 of 52
of the documents constituting the contract, and not
merely the Form which has to be looked into.
30. The real intention of the contracting parties is
primarily to be sought within the four corners of the
documents containing Standard and Special
Conditions of the Contract......"
[emphasis supplied]
43. In M/s Hindustan Shipyard Ltd. V. State of Andhra Pradesh, AIR
2000 SC 2411, the Apex Court has also emphasized the need of looking into
the substance and not merely the factum of the contract. Their lordships also
stated that the terms and conditions of the contract should be read as a
whole.
44. In Ramdev Food Products Pvt. Ltd. v. Arvindbhai Rambhai Patel &
Ors., AIR 2006 SC 3304 their Lordships expressed thus-
"31. In Delta International Ltd. v. Shyam Sundar
Ganeriwalla [(1999) 4 SCC 545], this Court noticed:
"17. For construction of contracts between the parties
and for the interpretation of such document, learned
Senior Counsel, Mr. Desai has rightly relied upon some
paragraphs from The Interpretation of Contracts by Kim
Lewison, Q.C. as under:-
"1.03 for the purpose of the construction of
contracts, the intention of the parties is the
meaning of the words they have used. There is no
intention independent of that meaning.
6.09 Where the words of a contract are
capable of two meanings, one of which is lawful
and the other unlawful, the former construction
should be preferred.
WP(C) 4196/2010 Page 38 of 52
Sir Edward Coke [Co. Litt. 42a] expressed
the proposition thus:
„It is a general rule, that whensoever the
words of a deed, or of one of the parties without
deed, may have a double intendment and the one
standeth with law and right, and the other is
wrongful and against law, the intendment that
standeth with law shall be taken.‟ "
32. It is further stated:
"For that purpose, he referred to the following
observations of Buckley, J. from the paragraphs which
are sought to be relied upon from The Interpretation of
Contracts by Kim Lewison, Q.C.: "My first duly is to
construe the contract, and for the purpose of arriving at
the true construction of the contract, I must disregard
what would be the legal consequences of construing it
one way or the other way"."
33. Moreover, the document is to be read as a whole. It is
equally well settled that the deed has to be construed keeping in
view the existing law.
34. It is now a well-settled principle of law that a document
must be construed having regard to the terms and conditions as
well as the nature thereof. [Union of India v. M/s Millenium
Mumbai Broadcast Pvt. Ltd. 2006 (5) SCALE 44]"
45. In view of the aforesaid enunciation of law, there cannot be trace of
doubt that the said principles would be attracted while dealing with the
tender document as the tender document is basically and fundamentally a
singular document.
46. The present factual matrix has to be tested on the touchstone of the
aforesaid principles of law which we have categorized into two
compartments. The main thrust of the submission of Mr. Sibal is that the
WP(C) 4196/2010 Page 39 of 52
respondent No.2 could not have read certain eligibility criteria into the
sphere of acceptance of the techno-commercial bid as they occur in different
Sections. As is demonstrable, the Municipal Corporation of Delhi desired to
procure certain items for anti malaria operations for the year 2010-11
through M/s HLL. The said advertisement reads as follows:
"Date : 29.03.2010
IFB No. : HLL/PCD/MCD-01/10-11
Brief description of Required Bid Security
item (s) Quantity (in Rupees)
Bacillus thuringiensis
var israelensis
(Bti)(AS) (For 2,75,000 Litres
polluted water)
OR
OR 68,15,000.00
343.75 M.T.
Bacillus thuringiensis
var israelensis
(Bti)(WP) (For
polluted water)
47. Clause 7 which occurs in Section II deals with the documents
establishing the bidder‟s eligibility and qualification and reads follows:
"7. DOCUMENTS ESTABLISHING BIDDER'S
ELIGIBILITY AND QUALIFICATION:
7.1 The Bidder shall, furnish, as part of its Bid, documents
establishing the Bidder‟s qualifications to perform the contract
if its Bid is accepted.
7.2 The documentary evidence of the Bidder‟s qualifications
to perform the contract if its Bid is accepted, shall establish to
the Purchaser‟s satisfaction:
WP(C) 4196/2010 Page 40 of 52
(a) that, in the case of a Bidder offering to supply Goods
under the contract which the Bidder did not manufacture
or otherwise produce, the Bidder has been duly
authorised by the Good‟s manufacturer or producer to
supply the Goods. In this regard, the Bidder should
submit an Authority Letter from their manufacturers as
per Proforma given in Section VIII.
(b) The Purchaser will determine to his satisfaction whether
the Bidder selected is qualified as per requirement of
minimum qualifying criteria stipulated in Section VII, to
satisfactorily perform the contract;
(c) The determination will take into account the Bidder‟s
financial, technical and production capabilities. It will
be based upon an examination of the documentary
evidence of the Bidder‟s qualifications submitted by the
Bidder as well as such other information as the
Purchaser deems necessary and appropriate;
Notwithstanding anything stated above, the Purchaser
reserves the right to assess the capability and capacity of
the Bidder to perform the contract, should the
circumstances warrant such as assessment in the overall
interest of the Purchaser.
7.3 Techno Commercial Bid and Price Bid should be
complete in all respects without any iniquity. Techno
Commercial Bid incomplete in any respect will be rejected
without further reference to the bidder and their Price Bid will
be unopened."
[Emphasis added]
48. Clause 17 of Section II deals with preliminary examination. It reads
as follows:
"17. PRELIMINARY EXAMINATION:
17.1 The Purchaser will examine the Bids to determine
whether they are complete, whether any computational errors
have been made, whether required sureties have been
furnished, whether the documents have been properly signed,
stamped and whether the Bids are generally in order.
WP(C) 4196/2010 Page 41 of 52
17.2 Arithmetical errors will be rectified on the following
basis: - If there is a discrepancy between the unit price and the
total price that is obtained by multiplying the unit price and
quantity, the unit price shall prevail and the total price shall be
corrected if the supplies does not accept the correction of the
errors, its Bid will be rejected. If there is a discrepancy
between words and figures, the amount in words will prevail.
17.3 The Purchaser may waive any minor informality or non-
conformity or irregularity in a bid, which does not constitute a
material deviation, provided such a waiver does not prejudice
or offers the relative ranking of any Bidder.
17.4 Prior to the detailed evaluation, pursuant to ITB Clause
18, the Purchaser will determine the substantial responsiveness
of each bid to the bidding documents. For purposes of these
Clauses, a substantially responsive bid is one, which conforms
to all the terms and conditions of the bidding documents
without material deviations. Without prejudice to the
generality of the foregoing deviations from or objections or
reservations to critical provisions such as those concerning
Performance Security (GCC Clause 6), Warranty (GCC Clause
26), Force Majeure (GCC Clause 17), Applicable law (GCC
Clause 22) and Taxes & Duties (GCC Clause 24), will be
deemed to be material deviation. The Purchaser‟s
determination of a bid‟s responsiveness is to be based on the
contents of the bid itself.
17.5 If a bid is not substantially responsive, it will be rejected
by the purchaser."
49. Clause 18 of Section II which deals with evaluation and comparison
of bids reads as follows:
"18. EVALUATION AND COMPARISON OF BIDS:
18.1 The Purchaser will evaluate and compare the Bids on the
basis of techno commercial/technical evaluations followed by
price bid evaluation.
49-A. It is extremely apposite to refer to certain Clauses of Section IV which
deal with Special Conditions of Contract (SCC). They read as follows:
WP(C) 4196/2010 Page 42 of 52
"4. Qualification Criteria (QC):
Qualifying minimum requirements (For Insecticides /
Larvicides) (To be supported with documentary
evidence). Refer to Section - VII.
5. Performance Statement:
Bidders should give performance statement for last 3
years, as per Format given in Section VIII, of orders for
same and / or similar items satisfactorily executed to
sizeable value both in quantity and cost in comparison to
item offered in the price bid."
50. The Schedule of Requirements (SOR) occurring in Section V is as
follows:
"SCHEDULE OF REQUIREMENTS (SOR)
Brief description of Required Quantity Bid Security
item (s) (in Rupees)
Bacillus thuringiensis
var israelensis
(Bti)(AS) (For polluted 2,75,000 Litres
water)
OR
OR 68,15,000.00
343.75 M.T.
Bacillus thuringiensis
var israelensis
(Bti)(WP) (For
polluted water)
Note: -
1) All the materials should be well packed to avoid any breakage
during transit.
2) Terms of Delivery - Free delivery at the consignees and i.e.
freight and all other levies pre paid up to destination at
consignees end.
3) Delivery period - 91667 Litres of BTI(AS) or 114.584 MT of
BT(WP) should be offered for Inspection & Testing within 10
WP(C) 4196/2010 Page 43 of 52
days from the date of issue of Notification of Award or earlier.
The remaining quantity is to be offered for Inspection &
subsequently supplied as per the requisition from the
Purchaser.
4) Available shelf life at the time of supply should be 5/6th of the
CIB approved shelf life.
5) Stores should be suitable for storage and use in Delhi.
6) Consignee list is as enclosed at Section IX."
[Underlining is ours]
51. Clause 2 occurring in Section VI (Technical Specifications) reads as
follows:
"2. Bacillus thuringlensis var israelensis (Bti), Sero-type, H-14
(AS): -
Description of Stores : Bacillus thuringiensis var
israelnsis (Bti), Sero-type, H-
14 AS (TAC approved). As per
specifications given in CIB
registration certificate.
For use in NVBDCP the product should be registered with
Central Insecticide Board.
The packaging of the product should conform of the
specifications of CIB
The product should have cleared the long term trials by/under
the supervision of ICMR Institutes, NICD for 1 year / following
common protocols published by MRC-VCRC.
The product should be stable when stored at ambient
temperature (not exceeding 42.5oC)."
[Emphasis supplied]
52. The Qualification Criteria (QC) in Section VII wherein Clause 7.2(b)
of ITB has been referred lays the following postulates:
"QUALIFICATION CRITERIA (QC)
(refer to clause 7.2 (b) of ITB)
WP(C) 4196/2010 Page 44 of 52
01. The bidder must be a manufacturer or his authorized
agent (specifically against this invitation for bid for the subject
goods) and had successfully executed contracts for similar
and/or identical goods at least for the past 3 years prior to the
date of bid opening.
02. Bidders, meeting the above requirements except for
successful execution of contracts for last three years, may also
participate in the bidding process provided they have valid on
going collaboration agreement with a manufacturers, who in
turn, fully meets the criteria specified in clause 01, above and
provided also the bidder furnishes an undertaking jointly
executed by it and the collaborator for satisfactory designs,
manufacture and performance of the goods and services offered
including all warranty obligations.
Bidders who are subsidiaries and have recently
established production line in India for the product for which
bids are invited, can also be considered as meeting with the
criteria, provided the parent company (Principals) meets with
the above criteria in full and agrees to furnish (either jointly
with the bidders (subsidiary) or separately (a) a legally
enforceable undertaking to guarantee quality, timely supply,
performance and warranty obligations as specified for the
contract; and (b) performance security as stipulated in GCC &
SCC.
03. The bidder shall furnish a brief write-up, packed with
adequate data explaining and establishing his available
capacity/capability (both technical and financial) to perform
the contract (if awarded) within the stipulated time period, after
meeting all its current/present commitments. The bidder shall
also furnish details of equipment and quality control in the
enclosed proforma „B‟.
04. Notwithstanding anything state above, the purchaser
reserves the right to assess the bidder‟s capability and capacity
to perform the contract satisfactorily before deciding on award
of contract should circumstances warrant such an assessment
in the overall interest of the purchaser.
The bidder on whose behalf the bid is being made, must
be the manufacturer of the product itself and must be in
business of similar and/or identical goods for at least last three
years and must have manufactured and supplied to the extent of
at least 25% of the quantity for the specific product indicated in
WP(C) 4196/2010 Page 45 of 52
Section-V Schedule of Requirements in any one year during the
last three years prior to the date of Bid opening."
[Emphasis supplied]
53. The performance statement occurring in Section VIII (Proforma-
Sample Forms) reads as follows:
PERFORMANCE STATEMENT
[Proforma for Performance Statement (for a period of last three years)]
Name of item offered ______________________________Date of Opening
_________________ Time __________ Hours ______________
Name of the Firm
________________________________________________
Order Order Description Value Date of Remarks Has the Attach a
placed by No. and of completion of indicating stores been certificate
(full name and quantity of order delivery reasons satisfactorily from the
and date ordered for late supplied? Purchaser /
address of stores delivery, Consignee)*
purchaser) if any
As per Actual
contract
1 2 3 4 5 6 7 8
Signature and seal of the bidder
* The certificate must incorporate a cross-reference of Order No., date and
value of the total order confirming supply and acceptance of stores by the
purchaser/ consignee to their entire satisfaction". [emphasis added]
WP(C) 4196/2010 Page 46 of 52
54. We have referred to the various documents forming part of the tender
document to appreciate whether there was any ambiguity in the tender
process or when the documents, read as a whole, clear the basic factum of
requirement. As is evident, the bidder was required to furnish documents to
establish its qualification. The „documentary evidence‟, as is manifest from
Clause 7.2 occurring in Section II, clearly stipulates that the documentary
evidence must have the potentiality to establish the purchaser‟s satisfaction
if the bid is accepted. The purchaser is required to evaluate and compare the
bids on the basis of the techno-commercial and technical evaluations
followed by the price bid evaluation. Logically and sequentially put, a
bidder has to first qualify in the techno-commercial / technical evaluation
bid and thereafter its price bid would come within the domain of evaluation
or for that matter comparative assessment. The purchaser is also required to
take into consideration the bidder‟s financial, technical and production
capabilities which would be based on bidder‟s qualification. That apart, the
said satisfaction would also depend upon such other information as the
purchaser would deem necessary and appropriate. Clause 7.3 occurring in
Section II clearly provides that techno-commercial bid incomplete in any
respect will be rejected without further reference to the bidder. The
Schedule of Requirement (SOR) in Section V provides that the stores should
be suitable for storage and use in Delhi. There is also a provision in Clause
2 of Section VI (Technical Specifications) that the product should be stable
when stored at ambient temperature (not exceeding 42.5o C). The
WP(C) 4196/2010 Page 47 of 52
Qualification Criteria, as referred in Sections IV, VII and VIII, specifically
refers to Clause 7.2 of ITB and in categorical terms lays down a postulate
that the bidder must be in business of similar and/or identical goods for at
least three years and must have manufactured and supplied to the extent of at
least 25% of the quantity for the specific product indicated in Section V
(Schedule of Requirements) in any one year during the last three years prior
to the date of bid opening. In addition to that, the performance statement
also requires a bidder to incorporate, in an indubitable manner, a cross-
reference of Order No., date and value of the total order confirming supply
and acceptance of the stores by the purchaser/consignee to their entire
satisfaction.
55. In this backdrop, it is to be seen whether the petitioner had satisfied
the techno-commercial bid. The performance statement furnished by the
petitioner relates to April, 2006 to March, 2007, April, 2007 to March, 2008
and April, 2009 to March, 2010. The same has been brought on record as
Annexure-Q to the writ petition. On a scrutiny of the same, it is perceptible
that the performance statement has been provided by way of a chart as
required. Column No.7 of the said chart requires the bidder to state "has the
stores been satisfactory supply" and column No.8 requires the purchaser to
"attach certificate from the purchaser/consignee". The said chart has been
made according to performance statement provided in the tender document.
The note appended, as has been highlighted earlier, requires incorporation of
WP(C) 4196/2010 Page 48 of 52
cross-reference of Order No., date and value of the total order confirming
supply and acceptance of stores by the purchaser/consignee to their entire
satisfaction. A bare glance at column No.8 of the chart furnished by the
petitioner for the year 2006-07 would show that 5 certificates were attached
whereas 17 orders were attached. In respect of 2007-08, 16 orders and 7
certificates were enclosed. For the year 2009-10, 17 orders and 15
certificates were enclosed.
56. As per the requirement of the tender stipulations, the petitioner was
required to produce goods acceptance certificate for 68,750 litres quantity
from the purchaser/consignee whereas the petitioner could only produce
documents in respect of 38,900 litres. It is not disputed by Mr. Sibal,
learned counsel for the petitioner, that the petitioner had not filed the
certificates though there were work orders and supply was made. It is urged
by him that it was incumbent on the part of the petitioner to determine
whether it is a responsive or non-responsive bid. As has been indicated
earlier, the techno-commercial bid and price bid were required to be
complete in all respects without any ambiguity and if the techno-commercial
bid is incomplete in any respect, the same was liable to be rejected. To build
the edifice of the said submission, it is canvassed by Mr. Sibal, learned
counsel for the petitioner, that when there was a postulate for determination
a discrimination was inherent in the tender document to afford an
opportunity to be satisfied.
WP(C) 4196/2010 Page 49 of 52
57. The term „determination‟ has to be understood in the context it is
used. To elaborate: when the techno-commercial bid as well as the price
bid/financial bid are found to be in order, the purchaser has the responsibility
under the tender documents to determine regard being had to various
aspects. But such a situation did not emerge in the case at hand. The
petitioner on its own showing did not file the requisite performance
certificate. What is structured by Mr. Sibal is that the petitioner was
required to show the supply from 27.11.2009 as per the communication
dated 21.5.2010. The said proponement on a first blush appears to be quite
attractive but on a studied scrutiny, it melts into insignificance because the
respondent No.2 wanted the same as an additional information which is in
tune/accord with the conditions of the contract. Quite apart from the above,
what is more important is that the 2nd respondent wanted the product to be
stored at a particular temperature. The product of the petitioner did not have
the potentiality to be stored at the said temperature. What is urged by Mr.
Sibal is that the product did not change and that has been clarified by the
documents issued by the authorities. The same, as we understand, is in a
different realm altogether. The performance statement clearly postulated
confirmation of supply and acceptance of stores by the purchaser/consignee
to their entire satisfaction. Read cumulatively, the filing of certificate in its
ambit and sweep engulfs „the satisfaction‟. It is the warrant. The same was
not adhered to. Thus, the essential condition was not satisfied. The
pronouncements in the field can go a long way to highlight that when there
is infirmity in the decision making process which relates to ignoring the
WP(C) 4196/2010 Page 50 of 52
procedures that are basic in nature and further the action of the purchaser is
not in consonance with essential condition of the NIT and a deviation has
been made then there can be interference by the Court. As is evincible, the
essential condition that has been postulated in the NIT has not been satisfied.
The same is imperative in character and is not relaxable as it has a purpose.
The purpose was to procure adequate quantity to eradicate the epidemics
spread of the disease of malaria and dengue which have been geometric leap
in the rainy season. It was incumbent on the part of the authorities to take
efficient, responsible, expeditious and scientific precautionary measures to
annihilate the spread so that the people do not suffer from the disease or
eventually succumb to it. The age old saying „prevention is better than cure‟
comes into full play. That serves a public interest in the completest sense. It
safeguards the health of the citizens. It makes a genuine effort to destroys
the fear in the heart of a citizen in respect of such dangerous diseases.
58. Another aspect, as we find, cannot be lost sight of. The agreement has
not been entered into with the respondent No.7 for one year. Initially it has
been entered into for three months reserving the right to place the order for
full tendered quantity keeping in view the requirement. Thus, the
conception of satisfied supply gains further acceptation.
59. Another aspect which has been highlighted by Mr. Sibal is that the
petitioner was not given equal opportunity than that was afforded to the
respondent No.7. It has been brought to our notice that the respondent No.7
WP(C) 4196/2010 Page 51 of 52
was asked to clarify with regard to the certificates. It is undisputed that the
respondent No.7 had supplied the product earlier to the MCD. The
respondent No.2 has been appointed as the agent to finalise the tender on
behalf of the respondent No.3, the Municipal Corporation of Delhi, which is
the user and, in fact has the more responsibility to see that the diseases do
not spread and eventually are eradicated. The certificates from MCD were
filed. Hence, it had a different contour altogether. Judged from both the
spectrums, it is clear as noon day that the petitioner did not satisfy the
requisite/essential conditions and the element of public interest, in certitude,
tilts in favour of the decision making process of respondent No.2.
60. Ex consequenti, the writ petition, being sans substratum, stands
dismissed without any order as to costs.
CHIEF JUSTICE
MANMOHAN, J.
JULY 26, 2010 pk WP(C) 4196/2010 Page 52 of 52