Patna High Court - Orders
M/S B.B.Q Construction vs The State Of Bihar & Ors on 11 July, 2014
Author: Anjana Mishra
Bench: Anjana Mishra
IN THE HIGH COURT OF JUDICATURE AT PATNA
Letters Patent Appeal No.558 of 2014
In
Civil Writ Jurisdiction Case No. 3208 of 2014
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1. M/S B.B.Q. CONSTRUCTION HAVING ITS PLACE OF
BUSINESS AT SHAH MANJIL, KHALIFA BAGH,
BHAGALPUR THROUGH IT'S PROPRIETOR SYED KHWAJA
MOHIUDDIN S/O KHWAJA FAKHRUDDIN R/O SHAH
MANJIL, KHALIFA BAGH, BHAGALPUR
.... .... Appellant
Versus
1. THE STATE OF BIHAR THROUGH THE PRINCIPAL
SECRETARY, DEPARTMENT OF MINES AND GEOLOGY,
NEW SECRETARIAT, BAILEY ROAD, PATNA
2. THE DIRECTOR, MINES AND GEOLOGY DEPARTMENT,
GOVERNMENT OF BIHAR, PATNA
3. THE DIVISIONAL COMMISSIONER, BHAGALPUR
4. THE DISTRICT MAGISTRATE -CUM- COLLECTOR, BANKA
5. THE MINING OFFICER, BANKA
.... .... Respondents
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Appearance :
For the Appellant : Mr. Y. V. Giri, Senior Advocate
Mr. Pranav Kumar, Advocate
For Intervenor : Mr. Ashish Giri, Advocate
For Res. Nos. 1 to 5 : Mr. D. K. Sinha, Senior Advocate
Mr. Rajendra Prasad, Advocate (Mines)
Mr. Alok Kumar Rahi, AC to AAG 2
For intervenor : Mr. Ashok Kumar Singh, Senior Advocate
Mr. Priyank Deepak, Advocate
Mr. Prem Ranjan Raj, Advocate
CORAM: HONOURABLE MR. JUSTICE I. A. ANSARI
AND
HONOURABLE JUSTICE SMT. ANJANA MISHRA
CAV ORDER
(Per: HONOURABLE MR. JUSTICE I. A. ANSARI)
7 11-07-2014For settlement of mining rights of sand from river beds, in the State of Bihar, its Department of Mines and Geology, issued, on 05.12.2013, Notice Inviting Tender, which is hereinafter referred to as "NIT".
2. The tenders, so invited, were to be submitted Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 2 in two parts. While Part-A consisted of technical bid, Part-B involved financial bid. While the papers/documents/ materials, which formed part of the technical bid, were required to be put inside an envelope to be marked „A', the papers/documents/materials, which formed part of the financial bid, were required to be put inside an envelope to be marked „B'. Both these envelopes were required to be put inside a third envelope, which was to be marked „C'.
3. Thus, both the bids, namely, technical as well as financial, were required to be kept separately in two different envelopes marked A and B respectively and while envelope, marked A, was required to contain all the papers/documents/materials relating to the technical bid, envelope, bearing the mark B, was to contain all the papers/documents/materials relating to financial bid and, then, both the envelopes, namely, A and B, were to be put in a third envelope to be marked „C'.
4. In terms of the NIT, envelope „A' was required to contain, apart from other documents relating to technical bid, a bank draft of 10 per cent of the value of the bid amount as earnest money along with a certificate to be issued by the bank concerned stating therein that the bank draft had been prepared from the amount available in the account held by the tenderer concerned.
Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 3
5. Coupled with the above, while Clause 5(4) of the NIT, dated 05.12.2013, required that on all the envelopes, name and address of the bidder shall be mentioned, Clause 5(5) of the NIT stated, in clear terms, that no separate documents would be considered except the envelopes aforementioned, namely, „A', „B' and „C'.
6. Clause 7 of the NIT, dated 05.12.2013, aforementioned embodied the conditions of selection of successful bidder and Clause 7 (1) thereof stated, "The financial bid, only of the persons/Society/Company, who qualify in the technical qualifications bid and whose bid is not less than reserved price will be opened for taking part in the auction and will be given opportunity to participate in the auction", making it clear, thus, that financial bid of a tenderer would be opened only and only if the tenderer is one, who qualifies in the technical bid and whose bid is not less than the reserved price.
7. In other words, for taking part in the auction, a tenderer was required to qualify in both the bids, namely, technical bid as well as financial bid and one, who was disqualified in technical bid and whose bid was found less than reserved price, could not have been permitted to participate in the financial bid and, consequently, in auction.
Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 4
8. In short, the financial bid of a tenderer, who did not qualify in the technical bid, was not to be opened at all.
9. Bearing in mind the condition of the NIT, dated 05.12.2013, aforementioned that no tenderer, who failed to qualify in the technical bid, would be allowed to participate in the financial bid, let us proceed with further details of the tender process.
10. The date of submission of tender documents was 18.12.2013 till 5:00 PM. While the date of opening of the technical bid was 19.12.2013 at 11:00 AM, the date of opening of the financial bid was 20.12.2013 at 11:00 AM and it was on the day of the opening of the financial bid, i.e. 20.12.2013, at 12 O‟clock, that public auction of the sand ghats were scheduled to take place.
11. The appellant, in order to obtain settlement of sand ghat for Banka Group No. III, purchased tender documents. The appellant claims to have submitted, on 18.12.2013, its tender documents. However, the appellant had not, admittedly, submitted the requisite bank draft and certificate from the bank as were required under the NIT. The appellant‟s explanation is that there was an all India strike by banks and the appellant could not, on account of the strike, obtained the bank draft. The appellant, then, Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 5 made an application before the Divisional Commissioner, Bhagalpur, by his letter, dated 18.12.2013, requesting the latter to grant time to deposit the bank draft until opening of the financial bid on the ground that the appellant could not prepare the bank draft due to all India strike of the banks on 18.12.2013. The Divisional Commissioner, Bhagalpur, wrote to the District Magistrate, Banka, to take necessary action in the matter. The appellant submitted a copy of the said representation, dated 18.12.2013, in the Office of the District Magistrate, Banka, for doing the needful, but no action was taken thereon. However, on 19.12.2013, the respondents published a notification extending the last date of submission of the tender documents to 19.12.2013 till 5:00 PM and accordingly extended the last date of opening of the technical bid from 19.12.2013 at 11:00 AM to 20.12.2013 at 11:00 AM. The respondents also extended, in the light of the changes, which had taken place as indicated hereinbefore, the last date of opening of the financial bid to 21.12.2013 at 11:00 AM and the auction came to be re-scheduled on the same day, i.e. on 21.12.2013, at 12 noon.
12. On 19.12.2013, the appellant got a bank draft for Rs. 9,50,000/- issued in favour of the appropriate authority, but when the appellant approached the Mining Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 6 Officer, Banka (who was the appropriate authority), with the bank draft, for the purpose of getting the same accepted as a part of the technical bid of the appellant, the same was rejected on the ground that the bank draft had not been enclosed with the papers/documents/materials of the technical bid, contained in Envelope A, as was the requirement of the NIT. The appellant also approached the District Magistrate, Banka, on 20.12.2013, with a request to accept the bank draft, but his request was not entertained.
13. In short, the appellant herein was treated as disqualified in the technical bid and was, therefore, dealt with as a tenderer, who was not eligible to participate in the financial bid.
14. The appellant alleges that the respondents have, unreasonably and arbitrarily, rejected the technical bid of the appellant despite their knowledge that the appellant could not have obtained the bank draft on 18.12.2013 and had, therefore, obtained the same on 19.12.2013 and offered to deposit the same, on 19.12.2013, as a part of the appellant‟s documents relating to technical bid in the Envelope marked A.
15. It was submitted before a learned single Judge of this Court, on behalf of the appellant, that due to Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 7 reasons beyond control of the appellant, the appellant could not submit the bank draft along with the documents of the technical bid inside Envelope A, on 18.12.2013, inasmuch as there was strike, on 18.12.2013, in the banks, and the bank draft was submitted separately on the extended date, i.e., on 19.12.2013 and that the whole purpose of shifting or extending the date for submission of the tender documents to 19.12.2013 from 18.12.2013 would be frustrated if the bank draft were not accepted.
16. Resisting the writ petition, it was pointed out before the learned single Judge by the respondents herein that the NIT had been published 13 days prior to the last date and that the fact that the banks would be on strike, on 18.12.2013, had also been announced well in advance and, thus, there was no reason for the appellant not to have obtained the bank draft and submit the same before the due date, i.e., on 18.12.2013, and though taking into account the bank strike, the last date for the submission of the tender documents had been extended by a day, there was no such stipulation that the bank draft would be separately submitted inasmuch as all the documents, including the bank draft, meant for technical bid, were to be placed inside Envelope A and then and then only Envelope A, containing all the papers/documents/ Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 8 materials relating to technical bid including bank draft, ought to have been submitted, as a whole, either on 18.12.2013 or on 19.12.2013; whereas the appellant had not submitted, in Envelope A, the requisite bank draft.
17. Thus, according to the respondents herein, the appellant had not complied with the requirements of the NIT inasmuch as all the papers/documents/materials, relating to technical bid including requisite bank draft, were not put inside Envelope A, though Envelope A was submitted on 18.12.2013, and, hence, the Mining Officer had rightly refused to accept the bank draft.
18. Having considered the case, as had been set up by the present appellant, and the response of the respondents herein, the learned single Judge of this Court passed an order, on 21.02.2014, pointing out therein that there is no dispute that the information, as regards the strike having been called, had been made available well in advance and the tender notice had also been published well in advance and, hence, the plea that the situation was beyond control of the appellant to obtain bank draft and submit the same, along with other documents of technical bid, on the last date, is not acceptable and if the appellant was not in a position to file the tender documents with all essential papers on 18.12.2013, then, the filing of such Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 9 documents, on 18.12.2013, ought to be considered as a futile exercise.
19. The learned single Judge also noted that since the respondents had thoughtfully extended the last date of submission of tender documents by a day, it was for the appellant to have taken all the steps (after his earlier lapse in the matter in getting the bank draft prepared prior to 18.12.2013) to have ensured that the tender documents were submitted, in accordance with the terms and conditions of the NIT, on 19.12.2013, but the appellant had failed to do so and the bank draft, sought to be separately filed, could not have been legally accepted.
20. The learned single Judge, therefore, concluded that no right had accrued in favour of the petitioner (i.e., appellant herein) to have its tender documents accepted on the basis of the facts as had surfaced from the record and the writ petition was devoid of merit. With the conclusions so reached, the writ petition was dismissed by order, dated 21.2.2014, aforementioned.
21. Aggrieved by the order aforementioned, the appellant is before us with the present appeal.
22. It is submitted, on behalf of the appellant, that although Clause 6 of the NIT reads, "No document shall be received after the due date nor any chance will be Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 10 given to rectify any error after opening of technical tender", yet the expression, "No document shall be received after the due date" would indicate that there was no bar to the acceptance of a document submitted until the last date and it was, therefore, not impermissible to accept the bank draft, though the bank draft had not been put inside Envelope A, which was to contain papers/documents/ materials relating to technical bid.
23. Repelling the submissions made on behalf of the respondents, the respondents have contented, in a nutshell, as under:
(i) The appellant was legally and validly disqualified, because the appellant had not satisfied one of the conditions of the technical bid, the condition being mandatory in nature inasmuch as Clause 5 (5) of the NIT, dated 05.12.2013, made it clear that no document will be accepted except the above envelopes aforementioned.
(ii) Coupled with the above, Clause 7 of the NIT, dated 05.12.2013, aforementioned embodied the conditions of selection of successful bidder and Clause 7 (1) thereof stated, "The financial bid, only of the persons/Society/Company, who qualify in the technical qualifications bid and whose bid is not less than reserved price will be opened for taking part in the auction and will Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 11 be given opportunity to participate in the auction", making it clear, thus, that financial bid of a tender would be opened only and only if the tenderer is one, who qualifies in the technical bid and whose bid is not less than the reserved price.
(iii) Supporting the impugned order, the respondents herein have submitted that when the bank draft had not been obtained by the appellant on 18.12.2013, how can the appellant be said to have validly submitted, on 18.12.2013, appellant‟s tender documents, including the technical bid, which were to be all enclosed inside Envelope A, and, hence, the appellant‟s exercise of filing its tender documents (including papers/documents/ materials relating to technical bid) on 18.12.2013, was wholly futile and did not cloth the appellant with a right to demand that the appellant‟s bank draft, which had been obtained on 19.12.2013, be accepted, when the said bank draft had not been put inside Envelope A, as was required to be done, and the learned single Judge acted, therefore, in accordance with the law in dismissing the writ petition.
(iv) It is the contention of the respondents that the terms of NIT are in the realm of State‟s discretion and the Court should not interfere with the same. The technical bid, according to the respondents, required putting of bank Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 12 draft, along with other documents, detailed in the NIT, inside envelope „A', which was meant to contain all papers/documents/materials relating to technical bid of the tenderer concerned and that only when a tenderer was successful in the technical bid that he could have been allowed to participate in the financial bid.
(v) In other words, the respondents contend that if the technical bid of a tenderer suffers from omission to comply with, or does not fulfill, the requirements of technical bid, the tenderer was not to be allowed to participate in the financial bid, especially, when Clause 5 (5) of the NIT, dated 05.12.2013, mandated that no document would be accepted except the documents, which have been enlisted in the NIT, and Clause 7(i) of the NIT, dated 05.12.2013, made it clear that financial bid of a tender would be opened only and only if the tenderer was one, who had qualified in the technical bid and whose bid was not less than the reserved price.
(vi) It is reiterated by the respondents that it was within the realm of the State to fix the terms and conditions of the NIT and the learned single Judge could not have, in terms of the NIT, directed acceptance of the bank draft as a part of the technical bid of the appellant. Hence, the impugned order does not suffer from any infirmity of Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 13 law.
(vii) Yet another submission, made on behalf of the respondents, is that the omission to include, inside envelope „A', requisite bank draft could not have been permitted to be corrected unless the condition, requiring every tenderer to put his bank draft in envelope „A', is treated as a condition, which was not an essential condition of the NIT, because the case, which the writ petitioner had set out, would allow the writ petitioner to participate in the financial bid, though the writ petitioner, otherwise, stood disqualified from participating in the financial bid.
24. Let us, now, examine the merit of the rival submissions made before us and determine the reliefs, if any, which any of the parties to this appeal is entitled to.
25. It is trite that judicial review by High Court under Article 226 of the Constitution of India cannot be exercised as an appellate authority over the administrator‟s decision, which may be a wrong decision. A mere erroneous decision is not amenable to High Court‟s extraordinary jurisdiction under Article 226 of the Constitution of India unless the decision is unreasonable, arbitrary, mala fide or reached on consideration of factors, which ought to have been kept excluded or by ignoring such factors, which ought to have been taken into Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 14 consideration before arriving at the decision.
26. While considering the present appeal, what needs to be noted, at the very outset, is that a governmental contract, even if commercial in nature, involves, broadly speaking, four stages. The first stage relates to the floating of tenders by publishing notice inviting tenders. At this stage, the authority concerned is required to formulate the terms and conditions subject to which the tenders would be invited and also the terms and conditions of the contract, which, if entered into, govern the parties. These terms and conditions will obviously include all the eligibility criteria for a person to participate in the tender process.
27. After the notice inviting tender is published and the tenders are received, the second stage of such a contract commences. This stage involves the process of taking of the decision to allot the contract or not to allot the contract at all and cancel the entire process. This stage would include selection of the person or the party to whom the contract shall be allotted. The process of selection may, in turn, consist of several stages of selection, such as, technical bid, financial bid, etc. The second stage, thus, ends with the allotment of the contract or with the decision not to allot the contract at all and Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 15 cancel the entire tender process.
28. The third stage of the contract essentially covers the stage of performance of the contract. This stage would include commencement of the performance of the allotted contract and would, normally, end with the completion of the allotted contract. During the third stage, there may arise the question of breach of contract, because of non-fulfillment of the terms and conditions of contract by either party to the contract.
29. The fourth stage of such a contract arises, when, on completion of his part of the contract, a contractor or supplier raises his demand for making payment of his bills. This fourth stage can, however, be divided into two categories. There may be a case, where the amount demanded is not disputed and yet the dues of the contractor are not paid compelling thereby the contractor to seek avenues for obtaining payment of his dues. In this fourth stage, there may, however, be a case, where the correctness of the demand for payment raised by the contractor is disputed, denied or challenged by the authority, who had allotted the contract. In such a case, too, the contractor may be driven to take recourse to such avenues as may be open to him, in law, for the purpose of enabling him to obtain his dues in terms of the demand Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 16 that he may have made.
30. It may, now, be pointed out that at the first stage of a contract, which requires the authorities concerned to formulate the terms and conditions subject to which the tenders would be invited or the contract would be allotted, many factors are taken into account. The decision as to what terms shall be included in the tender is really a policy decision, for, it is the authority, issuing the NIT, which is the best judge to determine as to what terms and conditions would be required for successful completion of the work or the project concerned. Thus, it is, primarily, for the authority, issuing the NIT, to decide what particular terms and conditions should be incorporated in the NIT.
31. To put it differently, while settling the terms to be incorporated in the invitation to tender, the authorities concerned must have complete freedom, for, the terms of the tender are in the realm of the freedom to contract and it is for the authorities concerned to decide as to what would be the terms of the contract. But when the authorities concerned award the contract, the decision- making process, leading to the decision to allot the contract, gets open to judicial review provided that there is an element of public interest involved in the case.
32. The question, however, which, now, Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 17 arises for consideration, is this: If any of the terms and conditions embodied in an NIT is arbitrary, discriminatory, mala fide, irrational, whimsical, capricious or actuated by bias, whether the hands of the High Court would be tied and the High Court would, in exercise of its power of judicial review, refuse to interfere with the terms and conditions of the NIT howsoever arbitrary, discriminatory, mala fide, whimsical, capricious or biased the terms and conditions may be ?
33. While considering the above aspect of the case, it may be pointed out that in TATA Cellular v. Union of India, reported in (1994) 6 SCC 651, the Supreme Court observed that the terms of the invitation to tender are not open to judicial review, for, the invitation to tender is in the realm of the freedom to contract. However, what needs to be pointed out is that in TATA Cellular (supra), no issue was raised, directly or indirectly, as to whether the power of judicial review would be attracted if the terms of an invitation to tender are in themselves arbitrary, irrational, whimsical, mala fide, capricious or actuated by bias. In its subsequent decision, in Directorate of Education and others v. Educomp Datamatics Ltd. And Others reported in (2004) 4 SCC 19, the Supreme Court, while taking note of the observations made, in TATA Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 18 Cellular (supra), that 'the terms of the invitation to tender can not be open to judicial review', has, however, clarified that the terms, incorporated in a tender, can, indeed, be interfered with by the Court if the terms are in themselves arbitrary, discriminatory, mala fide or actuated by bias. (See also Sumeet Enterprises (M/s) v. Union of India and Others, [2005 (4) GLT 227)].
34. In short, the merits of a particular term or condition, incorporated in the NIT, is not open to judicial review; but constitutionality or very legality of such a term is not entirely beyond the scope of judicial review. Similarly, the decision to award a contract to a person is not subject to judicial review, though the decision-making process is subject to judicial review.
35. However, when the invitation to tender is floated, the second stage, which consists of the process of selection of the person for awarding the contract, commences and this process comes to an end, when a decision either awarding the contract or cancelling the entire tender process is taken. The decision to award the contract is not open to judicial review; but the decision making process, which leads to the ultimate decision, is, according to the law laid down in TATA Cellular (supra), open to judicial review.
Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 19
36. In fact, in Raunaq International Ltd. Vs. IVR Construction Ltd. and Ors., [(1999) 1 SCC 492], the Supreme Court has made it abundantly clear that though the decision to award a contract is not open to judicial review, the decision-making process, which leads to the ultimate decision, is, indeed, open to judicial review provided that there is an element of public interest involved in the case requiring a review of the administrative decision by the Court.
37. Sounding a note of caution and clarifying the scope of judicial review of administrative action, the Supreme Court, in Jagdish Mandal and Another v. State of Orissa & Others, reported in (2001) 2 SCC 451, observed :
"22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 20 commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes."
(Emphasis is supplied)
38. Before proceeding to examine the rival contentions of the parties, we need to further point out that judicial review means Court's power to review action of other branches or levels of the Government. In the judicial review of a contractual matter, the writ Court will not sit as an appellate Court or as an appellate forum over the decision of the administrative authority concerned to award the contract in favour of any tenderer unless the decision- making process is unfair, non-transparent, arbitrary, motivated, biased, or contrary to the provisions of law and/or public interest. Judicial review, in such a case, is not against the decision, but the decision-making process. So long as it is found that an administrative decision has been reached by taking into consideration all such factors, which were relevant, and by keeping excluded from the purview Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 21 of consideration all such factors, which were irrelevant, the decision cannot, ordinarily, be interfered with by taking recourse to Article 226 of the Constitution of India unless the decision suffers from infraction of law. Judicial review is aimed at preventing arbitrariness and favoritism and is required to be exercised in larger public interest, or, when a decision, brought to the notice of the Court, reveals that the power has been exercised for a collateral purpose.
39. It is also well settled that essential conditions of the NIT must be adhered to by all the tenderers and if there is no power of general relaxation, no relaxation shall be granted. It can also not be disputed that the principle of strict compliance would be insisted, where it is possible for all the parties to a tender process to comply, fully and completely, with a given condition, particularly, when the condition is mandatory in nature. Whether any condition, or part thereof, embodied in the NIT, is an essential condition or not, shall have to be examined bearing in mind the object, which is sought to be achieved by the condition so imposed, and the consequences flowing from non-compliance of such a condition of the NIT. (See Poddar Steel Corporation v. Ganesh Engineering Works and Others, reported in (1991) 3 SCC 273).
40. There can be no doubt that an authority Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 22 would, ordinarily, be fully justified in rejecting a tender if the tenderer does not fulfill the conditions required for submission of a valid tender. Insistence upon fulfillment of the conditions, embodied in a tender notice, ensures quality in the tenderers and the deletion of any condition(s) or relaxation of any condition(s), in favour of any tenderer, would, ordinarily, result in discrimination not merely amongst the tenderers, but also amongst the persons, who would have applied and/or participated in the tender process, had they known that such a relaxation would be permitted. [See TATA Cellular (supra) and Asia Foundation & Construction Limited v. Trafalgar House Construction (I) Ltd., [MANU/SC/1028/1997: (1997) 1 SCC 738].
41. Bearing in mind the principles of law indicated above, let us, now, revert to the facts of the case at hand.
42. From a reading of Clause 5, what becomes clear is that no paper could have been taken into consideration except the papers contained in the envelopes, which were to be marked „A´, „B‟ and „C‟. To the extent, therefore, the contention of the respondents that no paper other than the papers, already enclosed in Envelope A, could have been accepted, is correct, and since the Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 23 requisite bank draft was not placed inside Envelope A, the petitioner-appellant‟s technical bid was bound to be rejected.
43. What needs to be borne in mind is that in the light of the terms and conditions of the NIT, the process of selection of a successful bidder was required to pass through several stages. Broadly speaking, these stages consisted of becoming successful at the stage of examination of the technical bid to be followed by examination of financial bid and one, who was successful at the stage of technical bid, could only acquire the right of consideration of his financial bid and one, who passed through both the stages, namely, the stage of technical bid as well as the stage of financial bid, would have acquired the right to participate in the auction. These three stages of the selection process were distinct and separate from each other.
44. It was, thus, imperative that the examination of the technical bid be done by keeping the stage of technical bid completely separated from the financial bid. These two stages were, thus, required to be kept separated in watertight compartments. One, who passed the stage of technical bid, could have entered the stage of financial bid, and one, who failed at the stage of Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 24 technical bid, would have been out of the race inasmuch as his financial bid could not have been opened.
45. In order to, therefore, examine if a tenderer had passed the requirements of technical bid, no material could have been looked into other than what the tenderer concerned had furnished in envelope „A‟. The question, therefore, of opening of a tenderer‟s envelope „B‟, which was to contain all materials relating to financial bid, did not arise unless the tenderer, on the basis of the materials available in envelope „A‟, successfully competed in the technical bid and became thereby eligible to the consideration of his financial bid, contained in envelope „B‟, along with similarly situated other tenderers.
46. The above impression gets strengthened from a bare reading of Clause 7 of the NIT, embodied in the notification, dated 05.12.2013, aforementioned, which we reproduce hereinbelow:-
"7. SELECTION OF SUCCESSFUL BIDDER
(i) The financial bid of only those tenderers shall be opened who (Person/Committee/ Company) succeed in the Technical bid and whose Financial bid is not less than reserved price and only they shall be given opportunity to participate in auction.
The highest bidder in the auction shall be considered as the successful Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 25 tenderer.
(ii) Financial bid below the reserved price shall be invalid and they shall not be allowed to participate in auction.
(iii) On refusal of the settlement by the highest Tenderer/Bidder or not completing other formalities within the prescribed period, their earnest money shall be forfeited.
(iv) For bidding more than 1 ½ times, 2 times, 2 ½ times of the reserved price, the bidder shall have to deposit 5 per cent of the reserved price separately at every stage as additional earnest money, through Bank draft/Cash, at the time of bidding itself.
(v) In case of receipt of single tender, short tender notice shall be invited without opening the said tender and keeping it pending if no tenderer comes forward for the second time also, then the Divisional Commissioner/Collector shall open the single tender and ensure that the amount mentioned is more than the reserved price.
Thereafter, he shall send it to the
department with his recommendation and
after obtaining prior approval of the
department, the settlement of sand ghat, shall be made in favour of the single tenderer."
(Emphasis is supplied)
47. A reading of the contents of sub-clause
(i) of Clause 7 shows that the financial bid of a tenderer Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 26 could be opened only and only if the tenderer was one, who had qualified in the technical bid and whose bid was not less than the reserved price, meaning thereby that if a tenderer did not qualify in the technical bid and whose bid was not less than the reserved price, he was not to be treated as entitled to examination of his documents relating to financial bid. The word „and‟ appearing between the expression, "The financial bid, only of the persons/Society/Company, who qualify in the technical qualifications bid" and the expression, "whose bid is not less than reserved price will be opened for taking part in the auction", has to be read disjunctively inasmuch as a tenderer, who did not qualify in the technical bid, would have been disqualified even if his bid was higher than the reserved price.
48. Similarly, a tenderer, who might have qualified in the technical bid, would not have been entitled to consideration of his financial bid if his price bid was found to be less than the reserved price.
49. Clause 7(i) of the NIT clearly shows that the technical bid contained some financial aspects, such as, the bid amount, which was required to be indicated in the materials to be furnished in envelope „A‟.
50. Let us, now, turn to the tender Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 27 documents. The relevant part of the tender documents read as under: -
"(A)/(ka) In the First part, in envelope „A‟, following documents are required to be given in the technical bid:
(i) xxx xxx xxx
(ii) xxx xxx xxx
(iii) Earnest money (Bank draft prepared
through the Bank Account of the tenderer).
In proof thereof, certificate issued by the concerned Bank is compulsory.
(iv) xxx xxx xxx
(v) xxx xxx xxx
(vi) xxx xxx xxx
(vii) xxx xxx xxx
(viii) xxx xxx xxx
(ix) xxx xxx xxx
(x) xxx xxx xxx
(xi) xxx xxx xxx
(xii) xxx xxx xxx
(B)/(Kha) xxx xxx xxx
(C)/(Ga) xxx xxx xxx
(D)/(Gha) First envelope „A‟ will be opened
on the date fixed. The Persons/Society/
Company, who will be successful in the
technical bid, only their financial bid will be opened on the fixed date in presence of their representatives.
(E)/(Angha) The Person/Committee/
Firm/ Company not succeeding in
technical tender shall be informed
accordingly and their earnest money
deposit shall be refunded.
(F)/(Cha) xxx xxx xxx
2. xxx xxx xxx
3. xxx xxx xxx
Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 28
4. xxx xxx xxx
5. xxx xxx xxx
6. No document shall be received after the due date nor any chance will be given to rectify any error after opening of technical tender.
(Emphasis is added)
51. It can be easily noticed from the above contents of the tender documents that sub-Clause (Gha) of Clause (1) of the tender documents embodies what Clause 7(1) of the NIT had conveyed, namely, that a bidder‟s financial bid would be opened only if he qualifies in the technical bid.
52. Thus, the technical bid was wholly separate from financial bid. No paper/document/material, enclosed in envelope „B‟, could have been looked into for the purpose of determining if a tenderer could be held to have qualified in technical bid or not.
53. In other words, a tenderer was to pass or fail on the basis of the examination of the papers/documents/materials contained in envelope „A‟. Consequently, no papers/documents/materials, produced/ submitted/deposited could have been considered for the purpose of determining if a tenderer, such as, the writ petitioner-appellant, had or had not qualified in the Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 29 technical bid.
54. The above conclusion gets reinforced, when one takes into account sub-clause (Angah) of Clause (1) of the tender documents, which reads, "The Persons/Society/Company, who will not be successful in the technical bid „A‟, their earnest money will be returned with intimation," meaning thereby that one, whose papers/ documents/materials, enclosed in envelope „A‟, failed to satisfy the preconditions of the technical bid, would not have been entitled to consideration of his financial bid and his earnest money would have to be, in such a case, returned.
55. The conclusion, which is irresistible to arrive at and we do arrive at, is that the condition, to enclose the bank draft by a tenderer in envelope „A‟, was an essential condition, which could not have been relaxed/ignored, more so, when the omission, to put bank draft in envelope „A‟, had the penal consequence of putting the tenderer concerned out of race at the stage of evaluation of the technical bid itself.
56. In the present case, too, as the writ petitioner-appellant stood disqualified at the stage of technical bid, the writ petitioner-appellant could not have been allowed any further to participate in the tender Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 30 process.
57. What may, now, be noted is that Annexure-3 of the tender documents provided a check list. This check list also shows that a tenderer was required to check if he has enclosed the documents, which were relevant and material, before submitting his tender. This shows that if one were careful, he would have been aware as to what papers/documents/materials were required to be furnished in envelope A and what papers/documents/ materials were required to be enclosed in envelope B. When read carefully, it becomes abundantly clear that Annexure-3 of the tender documents demanded that all essential papers/ documents/materials, relating to technical bid, be placed inside Envelope A. This would logically mean that one shall be careful and ought not to have waited for the bank strike to take place, when it is not in dispute before this Court, and had not been in dispute before the learned single Judge, that the fact that the bank would be on strike was known well in advance.
58. In a case of present nature, the decision, rendered in W.B. State Electricity Board v. Patel Engineering Co. Ltd. And Others, reported in (2001) 2 SCC 451, is quite relevant, wherein the Court had found that the error was not a mere human error; Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 31 rather, the error was nothing, but absolute carelessness and negligence. The Supreme Court pointed out, in W. B. State Electricity Board (supra), that the sanctity and integrity of the process of tender/bid as well as the award of contract shall be maintained.
59. In the circumstances mentioned above, the petitioner-appellant could have obtained the bank draft, along with requisite certificate of the bank, well ahead in time, and if the petitioner-appellant had not obtained the requisite bank draft and also the requisite certificate of the bank, its tender documents were incomplete and could not have been submitted on 18.12.2013 and, in these circumstances, the petitioner-appellant‟s technical bid, contained in Envelope A, did not vest, in the petitioner- appellant, any right to demand that the petitioner-appellant be allowed to participate in the tender process.
60. When the NIT, in the present case, had, undisputedly, mentioned that the bank draft ought to be kept in envelope „A‟, envelope A could not have been submitted without the bank draft having been put inside envelope A.
61. It was, as rightly observed by the learned single Judge, wholly meaningless and futile, on the part of the petitioner-appellant, to have deposited its Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 32 tender documents, on 18.12.2013, without having completed the entire formalities of enclosing bid in Envelope A the papers/documents/materials relating to technical of the tender documents. The appellant‟s act of depositing the tender documents, especially Envelope A, without the bank draft and the requisite bank certificate, was sufficient to disqualify the petitioner-appellant from participating any further in the tender process; more so, when the bank certificate, which was required to be enclosed along with tender documents, was admittedly, obtained (in the light of the materials placed on record by none other than the appellant) on 22.01.2014, which was far beyond the last date of submission of tender documents.
62. Even if one were to allow the petitioner- appellant to submit the bank draft, it would have still made the petitioner-appellant ineligible to participate in the tender process, when its tender documents did not include requisite certificate from the bank, which was obviously required for the purpose of satisfying the respondents herein that the bank draft had been obtained by the tenderer from the tenderer‟s own bank account and thereby the possibility of somebody, other than the tenderer, participating in the tender process, could have been Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 33 avoided. This apart, bank certificate would have also shown that the earnest money had been deposited out of the money for which tax had been paid.
63. Poddar Steel Corporation v. Ganesh Engineering Works and Others, reported in (1991) 3 SCC 273) was a case, wherein, in terms of Clause 6 of the tender notice, a tenderer was required to submit, along with his tender, earnest money, by cash or by demand draft, drawn at the State Bank of India, whereas the appellant, Poddar Steel Corporation, had, as earnest money, sent a cheque of the Union Bank of India, drawn on its own branch and not on the State Bank of India. This was treated as non-compliance of the requirement of the tender notice. The question, raised in Poddar Steel Corporation (supra), was as to whether the said non-compliance of the requirements of the tender notice deprived the authority concerned from accepting the appellant‟s bid. The Supreme Court pointed out, "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 Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 34 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".
64. What transpires from the above observations, made in Poddar Steel Corporation (supra), is that there is no rule of universal application that an authority, inviting tenders, is bound to give effect, in meticulous detail, to every term mentioned in the notice and is not entitled to waive even a technical irregularity of little or no significance; rather, 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 may be merely ancillary or subsidiary to the main object sought to be achieved by the condition. In the former case, while the authority, issuing the tender, may be required to enforce the condition rigidly, it shall remain open, in the case of the latter, to the authority concerned to deviate from, and not to insist upon, the strict literal compliance of the condition in appropriate cases.
65. In the above factual background, the Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 35 decision of the authority, accepting the tender of the appellant, was upheld in Poddar Steel Corporation (supra). The relevant observations, appearing, in paragraph 8 of Poddar Steel Corporation (supra), read as follows:
"The certified cheque of the Union Bank of India drawn on its own branch must be treated as sufficient for the purpose of achieving the object of the condition and the Tender Committee took the abundant caution by a further verification from the bank. In this situation it is not correct to hold that the Diesel Locomotive Works had no authority to waive the technical literal compliance of clause 6, especially when it was in its interest not to reject the said bid which was the highest."
66. In a competitive bidding, such as, the present one, it was not unfair, unjust, unreasonable, irrational or arbitrary, on the part of the State respondents, when they disqualified the writ petitioner-appellant in the technical bid. This decision cannot be said to be wholly unreasonable, irrational or arbitrary; rather, sanctity and integrity of tender process compelled the State respondents to hold the writ petitioner-appellant as a tenderer, who stood disqualified in the technical bid.
Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 36
67. When the decision, in present case, had been taken in terms of the requirements of a condition, embodied in the NIT, which was essential in nature, the question of relaxing the requirement and allowing the writ petitioner-appellant to participate in the tender process would have been wholly illegal.
68. To sum up, one can say that there can be no doubt that an authority, issuing tender, shall, ordinarily, be treated bound to give effect to every terms and conditions mentioned in the NIT and is not entitled to waive or deviate. Nonetheless the terms and condition, incorporated in an NIT, can be divided into two categories, namely, (i) essential or mandatory and (ii) directory or ancillary. So far as the essential term or condition is concerned, the same shall be enforced with all rigidity. The authorities, in a case of compliance of essential condition, cannot deviate from the condition or cannot refuse to insist upon strict compliance. However, when a condition is meant to subserve a given purpose, such a condition cannot be treated as mandatory, but must be treated as directory. Non-compliance of a term/condition, which is directory, and cannot bar a tenderer to seek correction nor would it divest the authority concerned from allowing a correction to be made or a defect to be removed. In the Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 37 cases of non-essential term/condition of NIT, the authority concerned may relax the compliance of such a condition and may not debar or exclude a tenderer from the purview of its consideration. The former part of Clause 6, which the appellant relies upon and which reads „no document shall be received after the due date nor any chance will be given to rectify any error after opening of technical tender‟ is meant for correction of such error, which will not go to the extent of waiving or relaxing any essential term and condition embodied in the NIT.
69. In the circumstance indicated above, if any of the documents of the technical bid was not found in envelope 'A' on opening of the technical bid, a tenderer would stand, in the light of the terms and conditions of the NIT, dated 05.12.2013, read with the conditions embodied in the tender documents, wholly disqualified and could not have been allowed to insist that he be allowed to participate in the tender process. When there is a punitive clause in the terms and conditions incorporated in the NIT, dated 05.12.2013, it stands to reason that the State insists, as it has done in the present case, that the eligibility of a tenderer would be determined on the basis of the materials available in envelope 'A'.
70. One, who fails to qualify at the stage of Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 38 technical bid, cannot be allowed to enter into the zone of opening of financial bid even for the purpose of making him qualify in the technical bid; or else, it will intermingle the stage or zone of technical bid with the stage or zone of financial bid, which is not the intendment of the NIT in the present case. One, who stood disqualified for omission to place, inside envelope 'A', any paper/document/material relating to his technical bid, could not have been allowed to go to the stage of financial bid.
71. Coming to the contention of the writ petitioner-appellant that allowing the writ petitioner- appellant to participate in the tender process will widen the scope of selection to the Government, suffice it to point out that the State, which issues NIT, cannot be allowed to twist and turn the terms of the NIT in order to widen the scope of selection of bidders unless the State can show that such relaxation is provided within the terms of the NIT itself or is permissible within the given set of terms and conditions incorporated in the NIT. Merely, therefore, on the ground of widening the scope of selection, a term and/or condition, embodied in the NIT, which was otherwise essential, cannot, in the absence of any such authority being available within the NIT, be allowed to be relaxed.
72. In the case at hand, submission of the Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 39 earnest money was an essential condition. Since submission of the earnest money, in the form of a bank draft, was a part of the technical bid and was required to be placed inside envelope „A', the question of giving freedom to a tenderer to offer bank draft later on, and that too, without the requisite certificate from the bank concerned, could not have been permitted.
73. In the circumstances mentioned above, it was incumbent, on the part of the writ petitioner, i.e. the appellant herein, to ensure that all the papers/documents/ materials, in tune with the terms and conditions of the NIT, including the bank draft and requisite certificate of the bank, be placed inside envelope „A'. This has, admittedly, not been done and there is no pleading that omission to place bank draft was despite due diligence and care, which writ petition-appellant had taken; more so, when we find that even on 19.12.2013, the requisite bank certificate had not been issued to the writ petitioner-appellant and the petitioner-appellant was, therefore, not eligible, even on 19.12.2013, to participate in the tender process. The question, therefore, of allowing a tenderer, such as the present appellant, to participate in the technical bid, on 20.12.2013, did not arise.
74. On 18.12.2013, when the appellant Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 40 submitted its tender documents, the appellant was well aware of the fact that its tender documents were incomplete and, hence, submission of the tender documents, on 18.12.2013, by the appellant was, as rightly observed by the learned single Judge, an exercise in futility. Though the date of submission of the tender document was extended to 19.12.2013 till 5:00 PM, yet even on 19.12.2013, the present appellant had not obtained requisite bank certificate in terms of the NIT and, hence, even on 19.12.2013 till 5:00 PM, the present appellant was not qualified to participate in the tender process.
75. To put it a little differently, even on 19.12.2013, till 5:00 PM, all essential documents had not been produced and could not have been produced by the petitioner-appellant inasmuch as the bank certificate, which formed an essential part of the entire selection process, was not even available with the tenderer, on 19.12.2013, and the requisite certificate became available to the petitioner-appellant as late as on 22.01.2014.
76. It is extremely important to note that it was averred, in the writ petition by the appellant, that the petitioner (i.e., the appellant herein) had been given a certificate (Annexure-3 to the writ petition) by the bank stating to the effect that appellant had obtained the bank Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 41 draft. The certificate from the bank is, however, dated 22.01.2014. This shows, we may reiterate, that till 22.01.2014, the petitioner‟s tender documents were still incomplete inasmuch as the tender documents were required to include, according to the terms and conditions of the NIT, a certificate from the bank concerned stating therein that the bank draft had been prepared from the amount available in the account held by the tenderer concerned.
77. It has been repeatedly submitted, on behalf of the appellant, that Clause- 6 of the NIT, read, inter alia, that "no document shall be received after the due date" and it would mean that there was no bar in submission of a document before the due date. While considering Clause 6 of the NIT, it needs to be noted that this clause is prohibitive in nature meaning thereby that no document, relating to the tender process, could have been accepted on expiry of the due date. It, however, did not mean that a document, which was to have been placed in any of the three envelopes, namely, A, B and C, could have been produced without being placed inside the relevant envelopes within the due date. At best, the expression "no document shall be received after the due date", can be taken to mean, as already pointed out above, that any Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 42 letter or document, making some clerical correction, in the number of a document, or date or such other matter, could have been given addressed to the authority concerned; but this could not have meant that a document, which ought to have been placed inside any of the three envelopes, namely, A, B and C, could have been separately given before the due date. If such an interpretation is attributed to the expression "no document shall be received after the due date", it would defeat the very condition of requiring a tenderer to place his documents separately in three different envelopes, namely, A, B and C, according to what the NIT required.
78. Above all, as the writ petition itself discloses, the tender documents, submitted by the appellant were incomplete inasmuch as not only that the earnest money had not been deposited by way of requisite bank draft, but also the certificate from the bank concerned became available with the appellant herein as late as on 22.01.2014.
79. Because of what has been discussed and pointed out above, we do not find that the appropriate authority had committed any such error, which could call for interference by this Court in exercise of its extra- ordinary writ jurisdiction under Article 226 of the Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 43 Constitution of India.
80. While considering the above aspect of the tender process, in question, it needs to be borne in mind that a Writ Court does not sit as an appellate authority on the decision of the authority inviting tender. Consequently, as the decision in the present case, is a reasonable decision, legal, fair, just and proper, no interference with the decision, taken by the authority concerned is called for.
81. Coupled with the above, the learned single Judge has, we may reiterate, correctly observed that appellant‟s contention that he could not submit all the essential papers and documents required to be submitted, for reasons beyond his control, is wholly incorrect and that his submission of tender documents, on 18.12.2013, being admittedly incomplete, was a futile exercise. It needs to be further noted that in the affidavit, which the appellant has submitted to the Divisional Commissioner, Bhagalpur, the appellant has stated as follows:
"I, B.B.Q. Construction Prop-Syed Khawaja Mohiuddin, am submitting this affidavit, that I could not prepare the DD for participating in the tender process of the sand ghats due to all India strike of banks, and therefore, I may be given time till opening of the Financial bid."
82. From what has been written above, it can Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 44 be clearly seen that the appellant had stated that since the demand draft could not be prepared, the appellant should be given time till opening of the financial bid so that the appellant can participate in the tender process.
83. We have already pointed out above that the bank draft, relating to the earnest money with requisite certificate of the bank, was required to be put inside Envelope A meant for technical bid and not in financial bid. The appellant never requested the Divisional Commissioner, Bhagalpur, for consideration of his technical bid along with the bank draft, which the appellant wanted to submit separately; rather, the appellant requested that the appellant may be granted time till opening of the financial bid so that the appellant can participate in the tender process. This was obviously done by the appellant, because of the fact that the appellant did not have the requisite bank certificate until 22.01.2014 and, therefore, the appellant knew very well that even if the appellant‟s bank draft was allowed to be considered along with the appellant‟s technical bid, the appellant‟s tender documents were still incomplete.
84. In the face of what have been pointed out above, it was not open to the authority concerned to accept the bank draft separately and since the authority concerned Patna High Court LPA No.558 of 2014 (7) dt.11-07-2014 45 did not find the bank draft, with requisite certificate of the bank, on opening of the technical bid of the appellant, they held the appellant not fit to participate in the financial bid and rightly rejected the technical bid of the appellant. We find no infirmity in the decision so taken by the respondents.
85. What crystallizes from the above discussion is that the State respondents acted within the ambit of the powers vested in them in holding the writ petitioner-appellant as a person not qualified to participate in the financial bid. This decision, being entirely fair, just and proper, cannot be interfered with in exercise of extra- ordinary jurisdiction under Article 226 of the Constitution of India.
86. In the result and for the foregoing reasons discussed above, we find this appeal devoid of merit. This appeal accordingly stands dismissed.
87. No order as to costs.
(I. A. Ansari, J.) Anjana Mishra, J.: I agree (Anjana Mishra, J.) Prabhakar Anand/ NAFR U √