* THE HON’BLE Ms. JUSTICE G. ROHINI + WRIT PETITION No. 20108 OF 2009 % 02/09/2010 # M/s. Paidala Thirupathi Reddy & Brothers, represented by its Managing Partner, P.Thirupathi Reddy … Petitioner Vs. $ The Engineer in Chief, Roads and Buildings, Administration & N.H. Erramanzil, Hyderabad and others. … Respondents < Gist > Head Note: ! Counsel for the petitioner : Sri Harender Pershad ^ Counsel for the respondent : Govt. Pleader for Roads & Buildings Sri P. Sreenivasulu Cases referred : - N I L - THE HON’BLE Ms. JUSTICE G. ROHINI WRIT PETITION No. 20108 OF 2009 Dated: 2.9.2010 Between : M/s. Paidala Thirupathi Reddy & Brothers, represented by its Managing Partner, P.Thirupathi Reddy … Petitioner And The Engineer in Chief, Roads and Buildings, Administration & N.H. Erramanzil, Hyderabad and others … Respondents The Court made the following:- THE HON’BLE Ms. JUSTICE G. ROHINI WRIT PETITION No. 20108 OF 2009 ORDER: This writ petition is filed seeking a declaration that the action of the 2nd respondent in rejecting the petitioner’s technical bid in respect of the work called ‘Improvements to Nirmal – Apparaopet road from Km 14/0 to 24/700 in Adilabad District (Work in km 17/3 to 22/6)’, is arbitrary and illegal. The material available on record shows that the 1st respondent invited tenders for the work of Improvements to Nirmal to Apparaopet road from km 14/0 to 24/700 in Adilabad District (Work in km 17/3 to 22/6) vide e-CTN No.3/CRF/DEF2/AEE2 (CRF) 09-10 dated 07.07.2009 on e-procurement platform. The estimated value of the contract was Rs.2,74,00,468/- and the work was to be executed within a period of 15 months. The date of opening the technical bids was 25.07.2009 and the date of opening the price bids was 30.07.2009. Pursuant to the said notice, the petitioner as well as the 4th respondent herein submitted their bids. The technical bids were opened on 25.07.2009 at 4.30 P.M. and on evaluation of the same, it was found that the petitioner was not qualified as the bank guarantee furnished by him for Rs.2,74,100/- towards Earnest Money Deposit (EMD) was not in the specified standard format. The price bids of the other tenderers, who had satisfied the qualification requirements specified under the bid document, including the 4th respondent, were opened on 01.08.2009 and the price quoted by the 4th respondent at 4.98% excess over the Estimated Contract Value, being the lowest was recommended for acceptance. At that stage, the present writ petition has been filed contending that the action of the 2nd respondent in disqualifying the petitioner was arbitrary and illegal. It is pleaded that on 03.08.2009 the petitioner was informed that the bank guarantee furnished by it was not in the prescribed format and immediately on the very same day, the petitioner submitted a representation stating that the petitioner had submitted the bank guarantees in the same format for number of works and the same were never rejected on the ground that they were not in the prescribed format. The petitioner also expressed his willingness to pay additionally 1 % EMD in the shape of a demand draft before opening the price bid. A request was also made to seek clarification from the 3rd respondent-Commissionerate of Tenders as to whether the bank guarantee furnished by the petitioner was proper or not. In response to the same, the 2nd respondent by letter dated 05.08.2009 informed the petitioner that his tender was rightly rejected as the same was not in proper format and that there was no need to seek any clarification from the 3rd respondent. It was also stated that the tenders were strictly evaluated as per G.O.Ms.No.94, Irrigation and CAD (PW-COD) Department, dated 01.07.2003. Aggrieved by the same, the present writ petition has been filed contending that as there was no difference between the bank guarantee submitted by the petitioner and the format annexed to the (NIT), Notice Inviting Tenders, the 2nd respondent ought not to have rejected the petitioner’s technical bid. It is also contended that as the petitioner had quoted 1.89% excess over the Estimated Contract Value, which is lower than the price quoted by the 4th respondent, it would be in public interest to accept the petitioner’s technical bid without standing on technicalities. It is also contended that the action of the 2nd respondent in rejecting the petitioner’s bid without seeking the necessary clarification from the respondents 1 and 3, is arbitrary and illegal. I have heard the learned senior counsel appearing for the petitioner, the learned Government Pleader for the Transport (R & B) for the respondents 1 to 3 and the learned counsel appearing for the 4th respondent. As noticed above, the Estimated Contract Value of the work in question is Rs.2,74,00,468/-. It is not in dispute that as per the tender conditions, the tenderers are required to pay EMD at 1% of the estimated contract value. The tender notice shows that the 1% EMD shall be paid by way of Bank Guarantee in favour of Superintending Engineer (R & B) Circle, Adilabad obtained from any Nationalized Bank or Scheduled commercial Bank in the standard format annexed to the bid document or in the shape of demand draft in favour of Pay and Accounts Officer obtained from any Nationalized Bank or Scheduled commercial Bank valid for six months from the date of NIT. The material available on record shows that different formats have been prescribed for the Bank Guarantee for Earnest Money Deposit, Bank Guarantee for Balance EMD, Bank Guarantee for Additional Further Security and Bank Guarantee for Mobilization Advance. Admittedly, the above said bank guarantees are required to be furnished at different stages. So far as the bank guarantee for EMD is concerned, it has to be furnished at the time of the filing of the bid itself, whereas the bank guarantee for the balance EMD has to be furnished by the successful tenderer at the time of entering into contract. It is apparent from the formats of the bank guarantees that the conditions prescribed for each bank guarantee are different. So far as the bank Guarantee for EMD is concerned, the conditions are as under: “1. If after tender opening the tenderer withdraws or modifies his Bid during the period of bid validity specified in the form of tender. 2. If the tenderer having been notified of the acceptance of his bid by the department during the period of validity. (a) fails or refuses to execute the form of agreement in accordance with the Instructions to tenderers, if required, or (b) fails or refuses to furnish the balance EMD and additional performance security in accordance with the instructions of tenderers.” In the instant case, the petitioner did not furnish the bank guarantee for EMD in the above said proforma. Admittedly, the bank guarantee furnished by him was in the format applicable for the balance EMD. In the counter affidavit filed on behalf of the respondents 1 to 3 it is explained that the Bank Guarantee proforma for EMD was prepared suitably to encash the bank guarantee in the event the tenderer withdraws or modifies his bid during the period of bid validity or where the tenderer having notified his acceptance fails or refuses to execute the form of agreement in accordance with the instructions to tenderers or where the tenderer fails or refuses to furnish the balance EMD and additional performance security in accordance with the instructions to the tenderer. It is also explained that in case bank guarantee furnished by the petitioner is accepted, there is every possibility that the Bank may refuse to pay the guranteed amount as the Bank Guarantee furnished by the petitioner carries the obligations of contract conditions and not the tender conditions. It is also explained that the Bank Guarantee for balance EMD which has to be furnished at the time of entering into contract by the successful bidder and which can be encashed in the event of non-performance of the contract as per the terms and conditions of the contract cannot be equated with the Bank Guarantee that has to be furnished by the tenderer at the time of participation in the tender process. It is also relevant to note that the tender notice dated 07.07.2009 was issued in terms of the Government instructions vide G.O.Ms.No.94, Irrigation and CAD (PW-COD) Department, dated 01.07.2003. Clause 10 of G.O.Ms.No.94, made it clear that the EMD shall be in the shape of bank guarantee in the standard format enclosed (1% of the estimated contract value). Apparently, the same condition has been prescribed in the tender notice dated 07.07.2009 and all the tenderers are bound to comply with the same. However, it is contended on behalf of the writ petitioner that the objection raised by the respondents is too technical and that the 2nd respondent was not justified in refusing to waive the said condition since the same was not an essential condition of eligibility. In support of the said contention, the learned senior counsel appearing for the petitioner relied upon a decision of the Appex Court in Poddar Steel Corporation vs. Ganesh Engineering Works and Others[1], wherein it was held that so far as the requirements in a tender notice which were merely ancillary or subsidiary with the main object to be achieved are concerned, it was open to the tender inviting authority to deviate and not to insist upon the strict literal compliance. As noticed above, the condition that the Bank Guarantee for EMD should be furnished in the prescribed format annexed to the bid document has been prescribed in terms of G.O.Ms.No.94, Irrigation and CAD (PW-COD) Department, dated 01.07.2003 with an object to achieve a specific purpose i.e., to meet the contingency in the event of the tenderer withdrawing or modifying his bid during the period of bid validity or where the tenderer having notified his acceptance fails or refuses to execute the form of agreement or fails or refuses to furnish the balance EMD and additional performance security in accordance with the instructions to the tenderers. If the bank guarantee is furnished in a different format, the said object cannot be achieved and therefore the petitioner’s contention that the condition in question is a non-essential condition cannot be accepted. It is also relevant to note that pursuant to the representation made by the petitioner dated 03.08.2009 the matter was considered by the 3rd respondent-Commissionerate of Tenders in the meeting held on 14.09.2009 and it was opined that the bank guarantee should be furnished in the prescribed format as mentioned in the tender document. Since the petitioner had admittedly furnished the bank guarantee in a different format, which was not applicable to the bank guarantee to be furnished by the tenderer at the time of filing the bid, the same was not valid and his technical bid was rightly rejected. On the other hand, the 4th respondent had furnished the Earnest Money Deposit in the shape of demand draft and the price quoted by him was found to be the lowest and therefore, the same was recommended for acceptance. As the petitioner’s technical bid was rejected, the mere fact that the price quoted by him was the lowest is immaterial. As a matter of fact, unless the conditions specified in the bid document are satisfied, the price bids of the tenderers cannot be opened. Since the petitioner could not reach that stage, the question of considering the price quoted by him does not arise at all. For the aforesaid reasons, the impugned action of the respondents 1 to 3 in rejecting the technical bid of the petitioner cannot be held to be arbitrary or illegal. In the result, the Writ Petition is dismissed. Needless to mention that the interim order dated 18.09.2009 in W.P.M.P.No.26221 of 2009 stands vacated. No costs. _____________ G. ROHINI, J Date: 02.09.2010 Ivd Note- LR copy to be marked. (B/o) gbs [1] (1991) 3 Supreme Court Cases 273