S.K. Singh, J.
1. Petitioner is a partnership firm engaged in the business of publication of books. Respondent No. 1, the Bihar Text Books Publishing Corporation Ltd. (hereinafter referred to as 'the Corporation') is an undertaking of Government of Bihar. The Corporation issued notice dated 14-11-2000 inviting Bids/Tenders from eligible Printers and Publishers for supply of different Text Books for District Primary Education programme described as DPEP-III, for the year 2001. The petitioner is aggrieved by rejection of his bid for printing, publishing and supply of different items of text books. Through this writ petition the petitioner seeks quashing of the award of contract given by respondent No. 1 in favour of respondent Nos. 3 to 10. It has also prayed for a mandamus directing respondent No. 1 to award the contract to the petitioner wherever it has tendered the lowest price.
2. In view of nature of the controversy and urgency, since the contracts are of supply of text books for the year 2001, the writ petition has been heard in detail and is being finally disposed of at the admission stage itself.
3. The material facts for adjudication of the relevant issues lie within a narrow compass. The notice inviting tender has been annexed as Annexure-1 and for the purpose of better facility of perusal the same has been submitted separately also in the form of a Book-let. As per notice the bid reference is No. DPEP-III. The sale of bidding document commenced on 14-11-2000 and the last date for such sale was 14-12-2000 which was subsequently extended to 5-1-2001. Initially the last date for receipt of bids and opening of bids was 15-12-2000 but the same was amended and fixed as 6-1-2001. The tender notice or the bidding document contains XV sections of which the most relevant for the purpose of present controversy is Section-II which contains 36 clauses as instructions to bidders (ITB). Hereinafter clause refers to clause in Section II.
4. Admittedly, petitioner's bid has been rejected on the ground that his bid was not secured in accordance with Clauses 15.1 and 15.3. It is not in dispute that petitioner was awarded a similar tender by respondent No. 1 for the year 1998-99 and he printed and supplied 57 lakhs text books within given time frame. For the year 1999-2000 the petitioner's bid was second lowest and hence the order was not awarded to him. It is also not in dispute that in the present bid for the year 2001 the petitioner's bid was lowest for various items as compared to the second lowest bid submitted by one or the other respondent Nos. 3 to 10 with the total price difference coming approximately to Rs. 40/- lakhs. A comparative chart showing the difference of amount between the bids of petitioner and respondent bidders has been annexed as Annexure-2.
5. The basic issue raised on behalf of the petitioner is whether rejection of his bid for alleged want of proper Bid Security is valid and in accordance with law or not. A secondary issue has also been raised that some of the respondent bidders who had not submitted necessary documents to establish their eligibility and qualifications as required by Clause 13 and more particularly under Clause 13.2 (b)(iv) have wrongly been treated as eligible bidders and awarded contracts. Initially a third issue was also raised that some of the bidders were wrongly treated to be eligible and qualified when they had offered alternative bids contrary to eligibility criteria laid down in Clause 13.2 (b)(iii), but this last issue was given up in view of fact that no bidder alleged to have offered alternative bids was allowed with contract/supply order.
6. As per significance, the first issue needs to be considered first. For this issue the relevant clauses are:-- 9.1, 15, 15.3, 16.1, 23.1, 24.2, 24.4 and 24.5. Clause 15 contains only the heading -- Bid Security. On a perusal of the relevant clauses specially Clauses 9, 15 and 16 in their entirety it is apparent that a Bid Security furnished in accordance with Clause 15 is required to be filed as a document comprising the Bid. The amount of the security as well as its format is provided along with a requirement that the Bank guarantee should be valid for 45 days beyond the validity of the bid. The amount of the bid is specified in Clause 15.1. The format and period of validity is specified in Clause 15.3. As per Clause 15.4 any bid not secured in accordance with Clauses 15.1 and 15.3 wilt be rejected by the purchaser as non-responsive in pursuance of Clause 24. Clause 15.7 provides the events when the Bid Security may be forfeited. Clause 16.1 requires that the bids must remain valid at least for 90 days after the date of bid opening prescribed by the purchaser. Clause 16.2 provides that in exceptional circumstances the purchaser may seek Bidder's consent to an extension of the period of validity of Bids and in such a case the Bid Security provided under Clause 15 shall also be suitably extended. Opening of bids is governed by Clause 22 which provides that no bid shall be rejected at bid opening except late bids which shall be returned un-opened. Clause 23 provides that during evaluation of bids the Purchaser may ask the bidders for a clarification but the request for clarification and the response should be in writing and it should bring no change in prices or substance of the bids. A preliminary examination of the bids is provided under Clause 24. At that stage it is permitted to see as appears from Clauses 24.4 and 24.5, whether a bid is substantially responsive or not and if a bid is not substantially responsive, it is required to he rejected by the purchaser and thereafter the bid cannot be made responsive by the bidder by correction of the non-conformity. Clause 26 provides for a detailed evaluation and comparison of bids which have been found to be substantially responsive at the stage of preliminary examination as per Clause 24.
6A. The materials on record particularly Annexure-C/1 to the counter-affidavit of respondent Corporation show that the Technical Committee for screening of the bids (preliminary examination) held meetings up to 1st February, 2001 at 12 noon and rejected bids of five bidders including that of the petitioner on the ground that the Bank guarantee submitted towards Bid Security was not valid for the required period of 135 days in term of Clause 15.3 and hence the bids were rejected in terms of Clause 15.4. Thereafter the Bid Evaluation Committee in its meeting held on 2-2-2001 recommended to award contracts to the lowest evaluated bidders the respondent Nos. 3 to 10. The said recommendation was approved by the Board of Directors of the Corporation in its meeting held on 4-4-2001 vide a resolution contained in Annexure C/2 which also dealt with reasons for rejecting petitioner's bid. The writ petition was filed in this Court on 12-4-2001.
7. In the back-ground of aforesaid facts and the relevant terms and conditions, it has to be now seen whether rejection of petitioner's bid for the reasons assigned by the respondents is legal or not and whether this Court in exercise of writ jurisdiction should interfere with the award of contracts in favour of respondents 3 to 10 or not. The main submission on behalf of the petitioner are as follows :-- A Bid Security was finalised by the petitioner for the proper amount and in the format prescribed, as would appear from Annexure-3. The period of validity of the bank guarantee was rightly mentioned in words in the last paragraph as required by the format. The only defect found in the bank guarantee on account of third line from the top which runs as follows ;--
'Bank guarantee cover from 3-1-2001 to 2-2-2001', according to learned counsel for the petitioner was a mistake by the bank which should have been ignored by the Purchaser in view of last paragraph in the guarantee which clearly mentions that the guarantee will remain in force up to and including fortyfive (45) days after the period of the bid validity. In the alternative it was submitted that the discrepancy regarding period of validity, if any, should have been resolved on the basis of Clause 24.2 and the clear expression in words in the last paragraph should have been given preference over the period of guarantee cover mentioned in the third line in numericals. Another alternative submission was advanced that even if the guarantee cover was found to be vague or incorrect with regard to period of validity, the purchaser could seek clarification under Clause 23.1 because the matter did not relate to prices or substance of a bid. According to learned counsel for the petitioner in a bid for supply of books, as in the transactions in question, the period of validity of Bid Security could not be treated as a matter of substance; the purpose of Bid Security as appearing from Clause 15.7 clearly demonstrates that before the event of forfeiture of Bid Security could arise, it was not a matter of substance and any confusion, deficiency or defect with regard to validity period of Bid Security could be cured. According to petitioner the defect if any was actually cured by the bank through letter dated 22-1-2001 addressed to respondent No. 1 as contained in Annexure-4.
8. Relying to aforesaid contentions Mr. Ram Balak Mahto, learned Senior Counsel appearing for respondent No. 1 submitted that a comparison of bank guarantee contained in Annexure-3 with the prescribed Bid Security form shows that the third line mentioning period of guarantee cover was introduced against the prescribed format reducing the period of validity of the Bid Security and hence the bid security furnished was clearly not in accordance with Clause 15.3 and therefore as per the mandate of Clause 15.4 the Purchaser had no option but to reject the bid as non-responsive at the stage of preliminary examination (Clause 24). He also referred to Clause 24.5 to submit that once a bid is found to be not substantially responsive it has to be rejected by the purchaser and subsequently the bid cannot be made responsive by the bidder by correction of the defect (non-conformity).
9. On a comparison of Annexure-3, the bank guarantee and the prescribed format for bid security, this Court finds that the third line makes the bank guarantee defective as not conforming to the required format. The defect is not clerical or insignificant and submissions to this effect are not fit to be accepted. The Bid Security as per Clause 9.1 comprises the Bid itself and the bank guarantee furnished as Bid Security had to be in the prescribed format as well as of requisite validity, Thus, the bank guarantee furnished was not in accordance with Clause 15-3, The other submissions on behalf of the petitioner that the discrepancy between the third line in the bank guarantee and the last paragraph was required to be resolved as per Clause 24.2 by accepting the period of validity mentioned in words is also not acceptable. Clause 24.2, as has been rightly submitted on behalf of the respondents, deals only with arithmetical errors relating to price and only the 'amount' in words is to prevail over that in figures. The discrepancy relating to period of validity of Bid Security cannot be treated to be a discrepancy with regard to any amount. However, final conclusions cannot be arrived at without considering the last submission advanced on behalf of petitioner that since the Bid Security does not relate to price or quality or to any matter which may be termed as substance of the Bid, the Purchaser, in this case a Governmental Agency and an instrumentality of the State, had to be conscious of its duty to obtain best goods for the lowest price and therefore, a clarification from the petitioner or from the bank ought to have been asked for in accordance with Clause 23.1. It has further to be considered that since necessary clarification had been submitted by the petitioner's banker accepting the validity of the banks guarantee for the requisite period, therefore, on the final date of preliminary examination under Clause 24, whether the petitioner's bid was secured in accordance with Clause 15.3 or not,
10. After going through all the relevant clauses dealing with Bid Security including Clause 15.7 laying down the events when the Bid Security may be forfeited and Clauses 16 and 16.3 providing for further extension of the period of validity of Bid Security in exceptional circumstances, this Court is of the considered opinion that any defect in the Bid Security does not relate to price or substance of a bid in a case of the present nature the mistake of the banker must be treated as one in relation to a peripheral or collateral matter amenable to clarification as per Clause 23.1. Fairness as well as public interest required granting of an opportunity to remove such mistake before rejection of Bid under Clause 24. On grant of such opportunity if the defect is removed before the crucial stage of preliminary examination under Clause 24 is over, the bid cannot be treated as one not secured in accordance with Clause 15.3. Since such examination has to be only at the stage of Clause 24, if a bid is permitted to be secured in accordance with Clause 15 before the stage of preliminary examination is concluded, the rejection as required by Clause 15.4 will not be attracted at all and the bid, after it has been secured, cannot be treated as non-responsive. Such an interpretation of relevant provisions of the tender notice/ Bidding document will not lead to violation of any of the relevant clauses and shall also serve the very purpose of calling for competitive Bids. The aforesaid view is supported by the view taken by the Apex Court in paragraph 144 of its Judgment in the case of Tata Cellular v. Union of India reported in (1994) 6 SCC 651 : (AIR 1996 SC 11).
11. Apparently the aforesaid interpretation was not in the mind of the purchaser, respondent No. 1 and hence it gave no opportunity of clarification either to the petitioner or to some other bidders whose bids have been rejected on the same very ground that the validity of the Bid Security was not of the required duration. In such circumstances, this Court has to consider whether any interference in exercise of writ jurisdiction be made or not. However, before considering this aspect of the matter it may be more convenient to first consider the second issue raised on behalf of the petitioner that some of the respondent bidders had not submitted necessary documents as required by Clause 13.2 (b)(iv) and hence they were not eligible and qualified and their bid has been wrongly accepted.
12. As per Clause 13 some documentary evidence of bidder's eligibility to bid are required to be submitted at the time of submission of bid. As per Clause 13.2(b)(iv) duly authenticated evidence in support of minimum production (not installed) capacity of 200 M.T. per day of the Paper Mill from whom paper is proposed to be procured by the bidder is required to be submitted for establishing to the Purchaser's satisfaction that the Bidder has the production capability necessary to perform the contract. Necessary document is required to be included in the bid itself.
13. Before considering the aforesaid issue further, it may be useful to note certain facts. Admittedly respondent No. 4 has not been placed with any order of supply. Respondent No. 2, Shreyan Industries is a paper mill whose minimum production capacity has been disputed by the petitioner. According to petitioner the minimum production capacity as required by Clause 13.2(b)(iv) can never mean the installed capacity as is clear from use of the word 'not installed' which has been used to emphasise that the minimum production capacity can refer to and mean only actual production capacity of paper mill concerned and there must be reliable documentary evidence submitted alone with the bid to show that the production capacity was not less than 200 M.T. per day. According to petitioner respondent Nos. 6, 7 and 8 submitted papers relating to Shreyan Industry and on that basis they have been granted contracts/ supply orders ignoring the fact that those documentary evidences do not establish the minimum production capacity of respondent No. 2 to be 200 M.T. per day. Petitioner has placed reliance upon Annexure-7, an annual report of respondent No. 2 relating to the year 2000 to submit that as per Company's own papers its paper production was about 130 M.T. per day. Such objection appears to have been conveyed by the petitioner to some of the concerned authorities through its letter dated 27-2-2001 (Annexure-9). Since the arguments of learned counsel for respondent No. 1 was adopted by learned counsel appearing for other respondents hence the stand of the respondents may be treated to be common. As per such stand respondent Nos. 6, 7 and 8 had submitted the required document showing minimum production capacity of respondent No. 2, the Sheryan Industry which are Annexures H and I to the supplementary affidavit of respondent No. 1. Annexure-H dated 2-11-2000 and Annexure-I dated 3-11-2000 are letters issued by an Under Secretary to the Government of India in the Ministry of Industries. addressed to respondent No. 2 which merely acknowledge receipt of a memorandum from respondent No. 2 and 88 per the memorandum of respondent No. 2 the installed capacity of paper unit at village Banah was 33,000 tonnes and of the unit at village Ahmed Garh was 8500 tonnes raised to 33,000 tonnes. The respondent No. 1 did not appear to be confident regarding production capacity of respondent No. 2 as well as other mills and hence its Managing Director sought confirmation of per day capacity of paper mills through a letter dated 18-1-2001 (Annexure-K) from the same Under Secretary, Government of India, Ministry of Industry who replied through letter dated 31-1-2001 (Annexure-L) that the production capacity of the paper mills may be assessed on the basis of Industrial Licence/D.G.T.D.R./STAR including production memorandum held by them or on the basis of monthly production returns. Peculiarly, with regard to respondent No. 2 alone a letter by the same Under Secretary to respondent No. 2 dated 22-1-2001 was enclosed. Both those letters of the Under-Secretary are annexures L & M. Annexure-M refers to production memorandums of respondent No. 2 (without disclosing figures of actual production) and shows that on that basis the respondent No. 2 was allowed to manufacture 66000/- M.T. of paper in its two units. The figures of actual production as per production memorandum were neither furnished by the Under Secretary nor by respondent No. 2. The facts and the documents clearly reveal that respondent No. 1 had no documentary evidence to show that respondent No. 2 had the minimum production capacity of 200 M.T. per day. The installed capacity of respondent No. 2 was used for arriving at a presumption that the minimum production capacity of respondent No. 2 was 200 M.T. per day. For this also a presumption appears to have been drawn that the factory must have closed its production for few days. The best evidence for minimum production capacity could be the production memorandum of respondent No. 2 for the previous year but that was not produced nor any certificate of production from respondent No. 2 was called for. In fact the annual report of respondent No. 2 for the year 2000 clearly shows that the production capacity of respondent No. 2 with regard to paper at both the units was much-less than 200 M.T. per day. Since the report for next year could not have been completed at the time of submission of bids this report remains relevant and no reliable material has been brought on record by the respondents concerned to show that the minimum production capacity (not the installed capacity) of respondent No. 2 was 200 M.T. per day. Thus, it is found that respondent Nos. 6, 7 and 8 did not fulfill the requirements of Clause 13.2 (b)(iv) and therefore were not having the requisite qualification and eligibility to be a bidder. Their bids have been accepted improperly and against the terms contained in the bidding document/tender notice and hence the contract/supply orders awarded to them are illegal. It is not possible to accept the contention of the respondents that requirement of Clause 13.2(b)(iv), although it relates to eligibility and qualification, should be treated as directory only because there is no explicit provision laying down the effect of non-compliance with the eligibility and qualification clauses.
14. In view of aforesaid findings relating to both the issues, it has to be seen now as to whether this Court should interfere in the matter or not. The law is well laid down that in the matters of grant of largesses/contracts/tenders etc. the State of its instrumentalities are governed by Article 14 of the Constitution of India. Before grant of contract, the concerned authority is required to act fairly and as per terms in the tender notice or in the bidding document and if a tenderer or bidder is wrongly prevented from competing although he is qualified or if the contract is granted to a person who did not fulfil the requisite qualifications the action of the authority can be questioned in writ Jurisdiction on account of arbitrariness which is accepted to be anti-thesis of Article 14 of the Constitution of India. A reference in this regard may usefully be made to the Judgment of the Apex Court in the case of Ramana Dayaram Shetty v. International Airport Authority of India, AIR 1979 SC 1628.
15. On behalf of respondents reliance was placed upon a judgment of the Apex Court in the case of Rating International Ltd. v. L.V.R. Construction Ltd., reported in (1999) 1 SCC 492, to submit that even if respondent No. 1 has faltered in its wisdom, no Judicial review should be exercised to interfere with its decision if it has acted fairly. With particular reference to paragraphs 21, 22, and 23 of that judgment it was further submitted that judicial review of contractual transactions is permissible only to prevent arbitrariness, favouritism or use of power for collateral purposes. It may also be permissible in appropriate cases on the basis of Wednesbury principles of unreasonableness. i.e. a decision is so unreasonable that no sensible person would have arrived at such a decision.
16. Applying the aforesaid principle laying down the parameters for judicial review of contractual transactions by State of its instrumentalities, this Court, is of the opinion that the terms of the tender notice/bidding document were wrongly interpreted and arbitrarily implemented so as to prevent the consideration of petitioner's bid on merit when he was prepared to rectify the defect in the bank guarantee submitted as Bid Security and when the bank had already issued some communications to that effect. The Purchaser, respondent No. 1 also acted arbitrarily to treating respondents Nos. 6, 7 and 8 to be qualified bidders by wrongly accepting the minimum production capacity of respondent No. 2 to be 200 M.T. per day. in such circumstances, the requirements of Article 14 of the Constitution of India and fairness require the interference of this Court. This Court is conscious that some of the suppliers have already completed the required supply and some have made substantial supply with only part of the order remaining to be supplied. As per a statement of supply showing supply position till 25-7-2001 (Annexure-K) against total order for 77.88 lakhs of books, 46.38 lakhs had been supplied and balance to be supplied was 31.05 lakhs. According to another statement of supply produced through a chart on the last day of arguments, till 30th July, 2001, 50.30 lakhs books had been supplied and the balance was 27.58 lakhs. There is every likelihood that the balance to be supplied might have been reduced further during the pendency of this matter after conclusion of hearing on 31-7-2001. Justice requires that this aspect of the matter be kept in mind and also the fact that respondents suppliers might have kept published books ready for supply. Such books should not be allowed to go waste causing national loss. Hence instead of quashing forthwith the contracts/supply orders issued to individual suppliers on the basis of their bids which had been made subject to result of this writ petition as per order dated 19-4-2001, the supply orders/contracts made with respondents suppliers are ordered to be treated as invalid or inoperative after one week from today. Whatever supply will be made by the suppliers during that period of one week may be accepted by respondent No. 1 as per earlier terms and conditions of supply but thereafter no supply shall be accepted from any supplier and an intimation of the supply position along with balance quantity remaining to be supplied shall be made to this Court through an affidavit to be filed on the eighth day. For the balance quantity, if any, the respondent No. 1 is directed to reconsider the bids of only the qualified bidders in accordance with this order at the earliest and preferably within two weeks. It will be open for respondent No. 1 to ask the qualified bidders to furnish fresh bid Security or other securities or to ask for extending the validity of bank guarantees already furnished by them as securities. Thereafter, on the basis of fresh evaluation in accordance with the terms and conditions in the original bidding document fresh supply orders/contracts may be awarded to deserving bidders within a further period of one week so that supply of remaining books may not be delayed unnecessarily. The writ application is allowed to the aforesaid extent with costs assessed at Rs. 5,000/- payable to petitioner by respondent No. (2).