THE HON'BLE SRI JUSTICE [ENTITY] WRIT PETITION No.6375 of 2015 15-07-2015 M/s.[ENTITY]. Petitioner The [ENTITY], Rep.by its Principal Secretary to the Consumer Affairs, Food and Civil Supplies, Secretariat Building, Hyderabad, and others.Respondents Counsel for petitioner: Learned Senior Counsel Sri [ENTITY]. Counsel for the Respondents : GP for Civil Supplies for Respondent No.1. Sri [ENTITY] for respondent Nos.2 & 3 Learned Senior Counsel Sri [ENTITY] for respondent No.4. <Gist: >Head Note: ? CITATIONS: 1. (1993) 1 SCC 71 2. (1995) 1 SCC 478 3. (2009) 11 SCC 9 4. (2008) 16 SCC 215 5. (2007) 14 SCC 517 6. (1990) 2 SCC 486 7. AIR 1990 SC 958 8. 1995 (1) ALT 161 9. AIR 1979 SC 1628 10. (2001) 2 SCC 451 11. (2011) 5 SCC 103 THE HON'BLE SRI JUSTICE [ENTITY] WRIT PETITION No.6375 of 2015 ORDER:
Heard learned Senior Counsel, Sri [ENTITY] for petitioner, Sri [ENTITY] for respondent Nos.2 and 3, and the learned Senior Counsel, Sri [ENTITY], for respondent No.4.
In this case, the facts are not in dispute. The petitioner was a transport contractor for transportation of food grains and other essential commodities of the second respondent Corporation. While so, the second respondent Corporation called for tenders for transportation of food grains, pulses or any other commodities from various places within and outside the district to various places within and outside the district under Stage-I excluding the transportation to fair price shop points for the year 2015- 2016 (01.04.2015 to 31.03.2016) vide tender notification No. PDS 2/Movt./FG-5(1)/Stage-I Tenders/2015-16/TS dated 28.02.2015. The schedule of filing and opening of tenders is as follows:
Bid Document Downloading Start Date 01.03.2015 at 11.30 am onwards Bid Document Downloading End Date 10.03.2015 at 11.00 am Last Date & Time for Receipt of online Bids 10.3.2015 at 12.00 pm Last Date & Time for Receipt of hard copies of technical bids along with Samples 10.03.2015 at 1.00 pm Technical Bid Opening Date And Time (Qualification and Eligibility Stage) 10.3.2015 at 2.00 pm Financial Bid Opening Date and Time (Financial Bid Stage) 10.3.2015 at 3.30 pm The petitioner along with the fourth respondent participated in the tenders. The tenders were opened on 10.03.2015. The petitioners tender was rejected on the ground that the petitioner had not produced the permit certificate for lorry bearing No.AP 13X 3012. The fourth respondent was declared as the successful tenderer.
The relevant tender condition on the basis of which the tender of the petitioner was rejected is clause 16(f) and it reads as follows:
f) The copies of RC Books, latest Form 24 B (Registered abstract), Fitness Certificate and valid permits of own/hired vehicles declared in the tender along with hire agreement in case of hired vehicles, shall be furnished along with hard copies as per the time schedule. These documents need not be uploaded in eprocurement.
Clause 26, which reads as follows, is also relevant for the purpose of the present case.
26. Tenderers should at least have 18 trucks of 10/17 Mts. capacity preferably 17 Mts. capacity each (owned/hired). Out of this, minimum 9 vehicles should be owned by the tenderer and the remaining 9 vehicles can be owned or hired. In case of hired vehicles, the tenderer should furnish hire agreement with the owners for a minimum period of one year otherwise they are not eligible to participate in tenders. Trucks involved in 6A cases/diversion cases and/or other trucks belonging to their owners should not be hired. Vehicle details should be furnished in the Tender form. Tenders found without vehicle details and/or copies of the vehicle RC Books along with copy of valid RTA permits stands automatically disqualified.
(a) The successful Tenderers have to utilize his/her/their own and hired vehicles which were declared in tenders for movement of food grains under Stage I in addition to engaging other vehicles without fail.
It is the case of the petitioner that it is having 12 own vehicles and 6 hired vehicles and has permit certificate for all the vehicles. It also submitted Earnest Money Deposit of Rs.15.00 lakhs and quoted the lowest price i.e., -5.03% on the existing rates. The allegation is that the tender of the petitioner was rejected with an intention to help the fourth respondent.
Respondent Nos.2 and 3 filed a counter affidavit stating that tenders were called for 10 districts and in respect of tender notice for all the districts, as many as 23 tenders were received and after due technical verification, 22 tenders were found qualified. In respect of [ENTITY], only two tenders were filed and both the tenders were technically qualified. Since both the tenderers had quoted more than 10% rates compared to rates for the year 2014-2015, the tenders for [ENTITY] were recalled. The re-tender notification was issued on 28.02.2015 for [ENTITY] and as many as 5 tenderers had participated. The petitioner participated in the tender and the tenders were opened on 10.03.2015. In the said process the petitioner was declared disqualified for submitting the expired permit certificate of one lorry and the remaining 4 tenders were declared technically qualified and financial bids were opened. The fourth respondent and one [ENTITY] quoted -4.54%. After taking average, it was evaluated and found that the fourth respondent was the L1 tenderer. However, the tender of the petitioner was rejected on the ground that the permit certificate for vehicle No.AP 13X 3012 was not valid due to its expiry as on the date of submission of tender.
However, this Court, in the present Writ Petition, passed an interim order on 12.03.2015 enabling the petitioner to produce the permit certificate before the second respondent and on production of such certificate, the second respondent was directed to consider the tender application of the petitioner subject to its fulfilling requisite conditions. The petitioner submitted the original permit certificate along with the orders passed in [CASE NUMBER]. On receipt of interim order along with the permit certificate of the petitioner, it was noticed that the permit certificate produced by the petitioner for the vehicle is valid up to 23.10.2019.
Later on, the fourth respondent got impleaded on 01.04.2015 and the Writ Petition was ultimately allowed on 01.06.2015 by relying on [PRECEDENT] and holding that the disqualification of the petitioner was on purely technical ground without affording an opportunity to produce the genuine certificate and awarding the contract to the fourth respondent cannot be said to be the result of a fair decision making process nor was it in the interest of the second respondent Corporation. The said order was challenged before a Division Bench, which allowed the Writ Appeal preferred by the fourth respondent by remanding the matter to the learned single Judge for fresh consideration of all issues on fact and law and dispose of the Writ Petition, on the ground that the alleged compliance of tender conditions pursuant to the interim order dated 12.03.2015 and such acceptance of ex post facto compliance was required to be examined from more than one perspective.
In view of the order of remand of the Division Bench, the matter is taken up for final disposal with the consent of the parties.
Learned Senior Counsel appearing for the petitioner contended that the non-enclosure of a permit certificate, which has validity up to 23.10.2019, has no consequence and the tender of the petitioner ought not to have been rejected on that simple ground. He further submitted that there is difference in the value of tender quoted by the petitioner and that of the fourth respondent, which factor also should have been taken by the second respondent while accepting the tender of the fourth respondent.
It is submitted by the learned Standing Counsel for respondent Nos.2 and 3 that the petitioner did not enclose the valid permit certificate in respect of a vehicle within the time schedule and hence its tender was rejected, by not opening the financial bid as it was disqualified at the technical stage itself.
Learned Senior Counsel appearing for the fourth respondent submitted that the present Writ Petition was filed on 12.03.2015, while the tenders were opened on 10.03.2015, by which time the fourth respondent became L1 tenderer. The interim order was passed on a later date allowing the petitioner to submit the permit certificate. He further submitted that it is not open to the petitioner to rectify the defect, which was found at initial stage of submitting the tender and though it may have a valid permit certificate up to 23.10.2019 in respect of vehicle No. AP 13X 3012, such certificate cannot be taken into consideration after opening of the tender on 10.03.2015. He relied on [PRECEDENT] and [PRECEDENT] .
Now the point for consideration in the present case is whether a tender can be rejected on the ground of non- compliance with the conditions of tender and whether the same can be rectified by enabling the rejected tenderer to cure the defect.
The issue relating to the non-compliance with the tender conditions and the scope of judicial review is no longer res integra. The Supreme Court in [PRECEDENT] delineated the scope of judicial review in contractual matters by considering the earlier decisions on the point and held as follows:
22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made 'lawfully' and not to check whether choice or decision is 'sound'. When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions.
Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions :
i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone.
OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say :
the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached.
ii) Whether public interest is affected.
If the answers are in the negative, there should be no interference under [SECTION]. Cases involving black-listing or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.
With regard to the point relating to non-observance of terms and conditions of tender, the law is well settled. The Supreme Court in [PRECEDENT] considered the issue. In the said case, the tender consisted of two parts and [SECTION] included actual tender i.e., tender form and bill of quantity. It would indicate the tender amount offered by the contractor (tenderer). This would be kept in a sealed envelope by the tenderer bearing his name and address indicating that it is [SECTION]. [SECTION] comprised among others the following conditions:
"(ii) The tenderer has to submit solvency certificate of Collector. The tender will be opened of those whose status will be of more that 4 lakhs.
Detailed particulars of property should be furnished in solvency certificate. The security will remain with the department as mortgaged during the period of contract.
(viii) The tenderer will have to submit good character certificate of the Collector, where the resides. This certificate should not be before May 25, 1987. All the certificates attached with tender should not be more than three months."
It was further stated that [SECTION] of the tender would be opened when all the conditions of [SECTION] and tender had been complied with, and if this is not so, [SECTION] would not be disclosed. In that case, the tender of the fourth respondent therein was accepted and the tender of the appellant was not opened on the ground that he had not submitted the solvency certificate from the Collector and also the relevant character certificate as mandatorily required under the said tender conditions. He applied before the Tahsildar for renewal and for issuance of solvency certificate, the Tahsildar recommended and forwarded the same to the Collector and the Collector granted those certificates some time on August 28, 1981. The certificates were filed after receipt of the same on September 2, 1987. The Commissioner decided upon the tenders on November 2, 1987 and as such the certificates were already there as on the decision and the tender could not have been rejected on mere technical defect. In those circumstances, the Supreme Court observed as follows:
2. We have considered these submissions of the learned counsel for the appellant and we have also considered the terms and conditions of the tender notice. It is quite clear that the tender form that was submitted by the appellant did not fulfill all the requirements of the tender notice, that is, the solvency certificate which was filed was more than three months old and the new solvency certificate duly granted by the Collector was not filed within the time specified in the tender notice, that it, on August 25, 1987. But it was filed much later on September 2, 1987. The Commissioner has already considered the validity of the tender filed by the appellant in accordance with the direction made by the High Court pursuant to the order made in [CASE NUMBER] and the Commissioner by his order dated May 10, 1988 has held that the appellant did not comply with this mandatory condition, namely, filing of solvency certificate within the last date of submission of the tender as well as character certificate and so the Commissioner did not open the tender form submitted by the appellant on this ground. We do not want to interfere with this order in an application under [SECTION] of the [ACT]. Furthermore, learned counsel, Mr.[ENTITY], for respondent 4 states before us that his client is ready and willing to pay a sum of Rs.2,41,000 per annum for leasing out this particular ferry. The appellant will file an undertaking through his counsel, Mr.[ENTITY] within two weeks from today to this effect. The appeal is thus dismissed. There will be, however, no order as to costs in the special facts and circumstances of the case.
In [PRECEDENT] the petitioner before the Supreme Court was an unsuccessful writ petitioner before the High Court. The Karnataka Power Corporation Limited invited tenders for a work. Six parties applied for tender books and were scrutinized with reference to the pre-qualifying requirements and data on experience, work done etc., as furnished by each of the applicants. Four firms were found to be pre-qualified by the Chief Engineer and tender books were issued to them. Only three of them submitted completed tender books within the specified date. Those tenders were examined by the Chief Engineer as well as by an independent firm of Engineering Consultants. Both the Chief Engineer as well as the Engineering Consultants found that the tender of the Mysore Construction Company was the lowest and eligible. It was contended before the High Court and the Supreme Court by the petitioner that paragraphs I and V of the notification inviting tenders specified certain pre- qualifying requirements and unless those requirements were fulfilled, the contractor was not even entitled to be supplied with a set of tender documents. It was submitted that the Mysore Construction Company did not comply with those requirements and hence its application for tender forms should have been rejected at the outset. In that context, the Supreme Court held as follows:
15. Secondly, whatever may be the interpretation that a Court may place on the NIT, the way in which the tender documents issued by it has been understood and implemented by the KPC is explained in its "note", which sets out the general procedure which the KPC was following in regard to NITs issued by it from time to time. Para 2.00 of the "note" makes it clear that the KPC took the view that para I alone incorporated the "minimum prequalifying/eligibility conditions" and the data called for under para V was in the nature "general requirements". It further clarifies that while tenders will be issued only to those who comply with the prequalifying conditions, any deficiency in the general requirements will not disqualify the applicant from receiving tender documents and that data regarding these requirements could be supplied later. Right or wrong, this was the way they had understood the standard stipulations and on the basis of which it had processed the applications for contracts all along. The minutes show that they did not deviate or want to deviate from this established procedure in regard to this contract, but, on the contrary, decided to adhere to it even in regard to this contract. They only decided, in view of the contentions raised by the appellant that para V should also be treated as part of the prequalifying conditions, that they would make it specific and clear in their future NITs that only the fulfillment of prequalifying conditions would be mandatory. If a party has been consistently and bona fide interpreting the standards prescribed by it in a particular manner, we do not think this Court should interfere though it may be inclined to read or construe the conditions differently. We are, therefore, of opinion that the High Court was right in declining to interfere.
The said decision was followed by a learned single Judge of this Court in [PRECEDENT] . In an unreported judgment in [CASE NUMBER], dated 26.09.1994, a Division Bench of this Court held as follows:
The learned single Judge has, in our view, rightly taken the view that the Court cannot compel the authorities concerned to relax or substitute the tender conditions in individual cases. As pointed out by the Supreme Court in [PRECEDENT] , the State and its instrumentalities are bound to conform to the standard or norm laid down in the notice inviting tenders unless the standard or norm prescribed is unreasonable or discriminatory. The need to satisfy the conditions of eligibility has been highlighted by the Supreme Court in that decision. In the present case, admittedly the appellant has not complied with the mandatory condition regarding the deposit of earnest money by way of Demand Draft. The appellant took a risk on its own volition in furnishing a Demand Draft for part of the amount and bank guarantee for the balance which is substantial amount. He has no right to ask for relaxation of this condition of eligibility merely because the tender schedule was issued and the first part of the tender was opened. The mistake committed by the concerned authority in issuing the tender schedule cannot be pressed into service to seek exemption or relaxation of one of the preliminary conditions of the tender, more so, when the competent authority entrusted with the responsibility of finalizing the tender has declined to grant such exemption or relaxation. Countenancing such ad-hoc relaxation of eligibility conditions would pave the way for arbitrariness and misuse of discretion and the disadvantages of such adhocism will far outweigh the advantage if any that might accrue in a few cases. In the absence of any specific provision for relaxation in the tender notice, it is not possible to accede to the contention of the learned counsel for the appellant that such relaxation could be done in individual cases. Moreover, as pointed out by the Supreme Court in [ENTITY] case (supra), if the tender of the appellant which admittedly did not conform to the condition of eligibility had been accepted, it would have amounted to discrimination, since it excluded other persons similarly situate from tendering for the contract. The possibility of some others responding to the tender notification had they known that they need not deposit a substantial amount in cash towards earnest money cannot be ruled out In Sorath Builderss case (supra) the Supreme Court was considering a case of terms and conditions of bid for which the pre-qualification documents were required to be sent by 27.11.2008, but were sent on 01.12.2008. When the said bid was not taken into consideration, the aggrieved party filed a Writ Petition before the High Court of Gujarat and the Division Bench of the High Court held that the University acted arbitrarily and accordingly allowed the Writ Petition. When the case went before the Supreme Court, the Supreme Court considered the previous decisions on the point and held as follows:
27. Following the aforesaid legal principles laid down by this Court, we are of the considered opinion that the respondent no. 1 was negligent and was not sincere in submitting his pre qualification documents within the time schedule laid down despite the fact that he had information that there is a time schedule attached to the notice inviting tenders. Despite being aware of the said stipulation he did not submit the required documents within the stipulated date. Pre-
qualification documents were received by the respondent no. 2 University only after time schedule was over. The terms and conditions of the tender as held by the Supreme Court are required to be adhered to strictly, and therefore, the respondent no. 2 University was justified in not opening the tender submitted by respondent no. 1 on 01.12.2008, which was late by three days. According to us no grievance could also be made by the respondent no. 1 as lapse was due to his own fault.
28. The High Court proceeded to interfere with the entire process as if acting as an appellate authority over Page 11 of 12 the decision of the University which was beyond the jurisdiction of the Court. The High Court was not justified in accepting the contentions of respondent no. 1 and thereby upsetting the entire process of inviting tenders by interfering with the terms and conditions of inviting the tenders and by rescheduling and directing the process of re- tendering, which would only cause further delay and would increase the burden on the exchequer of the University.
In [PRECEDENT] the Supreme Court, negating the request for rectifying the material mistake of fact in the bid, observed as follows:
The controversy in this case has arisen at the threshold. It cannot be disputed that this is an international competitive bidding which postulates keen competition and high efficiency. The bidders have or should have assistance of technical experts. The degree of care required in such a bidding is greater than in ordinary local bids for small works. It is essential to maintain the sanctity and integrity of process of tender/bid and also award of a contract. The appellant, respondent Nos.1 to 4 and respondent Nos.10 & 11 are all bound by the [ACT] which should be complied with scrupulously. In a work of this nature and magnitude where bidders who fulfill prequalification alone are invited to bid, adherence to the instructions cannot be given a go-bye by branding it as a pedantic approach otherwise it will encourage and provide scope for discrimination, arbitrariness and favouritism which are totally opposed to the Rule of law and our Constitutional values. The very purpose of issuing Rules/instructions is to ensure their enforcement lest the Rule of law should be a casualty. Relaxation or waiver of a rule or condition, unless so provided under [ACT], by the State or its agencies (the appellant) in favour of one bidder would create justifiable doubts in the minds of other bidders, would impair the rule of transparency and fairness and provide room for manipulation to suit the whims of the State agencies in picking and choosing a bidder for awarding contracts as in the case of distributing bounty or charity. In our view such approach should always be avoided. Where power to relax or waive a rule or a condition exists under the Rules, it has to be done strictly in compliance with the Rules. We have, therefore, no hesitation in concluding that adherence to [ACT] or Rules is the best principle to be followed, which is also in the best public interest.
In [PRECEDENT] the Supreme Court rejected the argument of the tenderer that a document, which is valid and active, can be submitted even at the time of signing the memorandum of understanding, when the terms and conditions of tender require them to be produced along with the bid document a copy of the quality certificate which is valid and active on the date of submission of the bid.
In view of the above clear position of law, the submission of permit certificate later to the opening of bid on 10.03.2015 pursuant to the interim order of this Court cannot make the bid of the petitioner valid. Such a course of action of the petitioner cannot be allowed to take place in view of the clear terms and conditions of tender. However, it is a different case when the employer himself chooses to relax the non-essential conditions and allows the bid to be accepted. But, in this case, the bid of the fourth respondent, who fulfilled the terms and conditions of the notice inviting tenders, was accepted and the price bid of the petitioner was not opened at all.
Hence, the Writ Petition is liable to be dismissed, and is, accordingly, dismissed. The miscellaneous petitions pending in this Writ Petition, if any, shall stand closed. There shall be no order as to costs.
[ENTITY], J) 15.07.2015