Judgment:
(This writ petition is filed under Articles 226 and 227 of The Constitution of India praying to call for the records and direct in the nature of mandamus declaring that the action of R2 opening the price bid of R3 on 10.11.12 is illegal and ab-initio void;
Direct in the nature of mandamus declaring that the action of the R2 opening price bid of the R3 without there being proper tender from R3 is without jurisdiction and illegal;
Direct in the nature of mandamus declaring that the petitioner is the only qualified bidder in the tender pursuant to the notice inviting tender dated 24.5.12 vide annx-d; etc.)
Oral Judgment (Dilip B. Bhosale, J.)
In this writ petition, the petitioner is seeking the following reliefs :
i) issue appropriate writ or order or direction in the nature of mandamus declaring that the action of the 2nd respondent in opening the price bid of the 3rd respondent on 10.11.2012 is illegal and ab-initio void, in the interest of justice.
ii) Issue appropriate writ or order or direction in the nature of mandamus declaring that the action of the 2nd respondent in opening the price bid of the 3rd respondent without there being a proper tender from the 3rd respondent is without jurisdiction and illegal.
iii) Issue appropriate writ or order or direction in the nature of mandamus declaring that the petitioner is the only qualified bidder in the tender pursuant to the notice inviting tender dated 24.05.2012, a copy of which is herein produced as ANNEXURE - D.
iv) Issue appropriate writ or order or direction in the nature of mandamus directing the 2nd respondent to accept the bid of the petitioner and award the work in its favour.
2. Briefly stated the facts leading to this writ petition are as under:
The 2nd respondent invited tenders by issuing a Notification on 10.8.2010 for the work of shaft construction (sinking and lining), furnishing and equipping of a new vertical shaft of 6.0 mts. finished dia and 940 mts. depth complete with winding installations, on TURNKEY basis at the Hutti Gold Mines Co. Ltd., District Raichur, State of Karnataka. In response thereto, several parties participated in the tender process and ultimately the petitioner and one another remained in the race. The another party had to file an appeal and after succeeding in the appeal, it was also held to be qualified in the first round. This entire process took about 1½ years and hence respondent no. 2 - the Tender Inviting Authority (for short `the TIA') cancelled the said tender notification, without opening the price bids. Thereafter, once again a Tender Inviting Notice (for short "NIT") was issued on 24.5.2012. The bids were invited through e-portal system as provided for in the Karnataka Transparency Public Procurement Act, 1999 (for short ‘the Transparency Act’) from bonafide and experienced contractors for the very same work on turnkey basis.
3. As per NIT dated 24.5.2012 the last date for submission of bids in two covers (i.e. technical and price) was 25.7.2012 and the date for opening the bids was 28.7.2012. A pre-bid meeting was scheduled to be held on 22.6.2012,as indicated in the NIT. Eight participants including the petitioner and respondent no.3 attended the pre-bid meeting. In the said meeting, TIA received 44 queries in all from different parties to which clarification was up-loaded in the e-portal on 2.7.2012 as addendum - I. Subsequently, 14 more queries were received and they were also considered and clarification thereto was up-loaded as addendum-II in e-portal on 27.7.2012.
Considering the quantum of queries and the time consumed in clarifying the queries, the TIA, vide corrigendum dated 24.7.2012, extended the last date for submission of tender till 10.8.2012 and for opening the tender it was extended to 14.8.2012. Once again the dates were extended to 27.8.2012 and 31.8.2012.
Though the tenders were to be opened on 31.8.2012, the Tender Scrutiny Committee (for short ‘the Committee’) met only on 14.9.2012 to open the technical bids. In the first round (i.e. technical bid stage) the petitioner and respondent no.3 only were held to be successful by the Committee. Both were, therefore, invited for discussion and accordingly the meeting was held on 20th and 21st Sept. 2012. The said meeting, was, however, attended by the petitioner alone. In that meeting the petitioner was requested to furnish clarifications on 42 points raised by the Committee. Since the 3rd respondent could not attend the meeting on the 20th and 21st Sept., they were invited for discussion on 1.10.2012. During this meeting the 3rd respondent was requested to clarify 33 points raised by the Committee. The meeting dated 1.10.2012 was attended by the petitioner also. Neither the petitioner nor respondent No.3 raised any objection against each other at any point of time till filling of the writ petition. The Committee thereafter met on 12.10.2012 to consider the replies furnished by the petitioner and respondent no.3. During the meeting, petitioner requested, in writing, to permit them to revise the price bid. The permission was however refused.
4. Subsequently, the matter was placed before the Board in its meeting dated 18.10.2012. The Board noted the recommendations of the Committee, qualifying both the bidders, having complied all the requirements of NIT. Thereafter, the matter was placed before the Board in its meeting held on 18.10.2012. The Board after detailed discussion resolved to open price bids and authorized the Managing Director to open and send proposal to the Government for approval. The price bids were, accordingly opened on 10.11.2012 and on comparison it was found that the price quoted by the 3rd respondent was lower by about Rs.36 crores.
5. After evaluation of the price bids, a statement of the price quoted was prepared and proposal was submitted to the Government for approval where the matter is still pending. The Government has yet not taken final decision.
6. This writ petition has been filed by the petitioner on 17.11.2012, challenging the decision of the 2nd respondent to open the price bid of the 3rd respondent. The petitioner also seeks declaration that he is the only qualified bidder and that the 2nd respondent be directed to accept their bid and award the work in their favour.
7. I have heard learned counsel for the parties at considerable length. The challenge in the writ petition is on the ground that the condition to submit a copy of the registered Memorandum of Understanding (for short ‘the MoU’) entered into by parties along with the technical bid was not complied by respondent no.3. The condition to submit registered MoU, according to the petitioner, was mandatory as was clarified in the pre-bid meeting. Admittedly, respondent no.3 while submitting their tender did not enclose / submit registered MoU. While submitting the technical bid, a notarized copy of the MoU was submitted by respondent no.3 and the registered MoU was submitted on 11.10.2012, i.e. before the price bids were opened.
8. Mr. Holla, learned senior counsel appearing for the petitioner vehemently submitted that the condition to submit a registered MoU being mandatory in nature, the TIA ought to have rejected the technical bid submitted by respondent no.3. In support of this contention, he invited my attention to various terms and conditions incorporated in the NIT - Part II - instructions to tenderers. He submitted that the degree of care required in such bidding, which is in the nature of global tender, is greater than in ordinary local bids for small works and that it is essential to maintain the sanctity and integrity of process of tender / bid and also award of contract. In a work of this nature and magnitude, he submitted that the bidder who fulfills pre-qualification alone should be invited to bid, and in any case adherence to the instructions cannot be given a go bye, by branding it as a pedantic approach encouraging and providing scope for discrimination, arbitrariness and favouritism which is totally opposed to the rule of law and our constitutional values. In support of this contention he placed reliance upon the judgment of the Supreme Court in W.B. STATE ELECTRICITY BOARD versus PATEL ENGINEERING CO. LTD AND OTHERS - (2001) 2 SCC 451. Mr. Holla then invited my attention to the Judgment of the Supreme Court in GLODYNE TECHNOSERVE LIMITED Versus STATE OF MADHYA PRADESH AND OTHERS - (2011) 5 SCC 103 to submit that the TIA ought to have rejected the bid document of respondent no.3 solely on the ground that they did not submit registered MoU along with their technical bid and that they should not have relaxed the conditions because such discretion was not vested in it by the NIT or under Rules 26 or 27 of the Transparency Rules. In support of this contention, he placed reliance upon the Judgment of this Court in M/S GAGANA vs. PRL. SECRETARY TO GOVERNMENT, ENGINEERING DEPARTMENT and ORS. - ILR 2005 KAR. 3973.
9. On the other hand, Mr. M.R.C. Ravi learned counsel for the TIA submitted that the petitioner did not raise any objection of whatsoever nature, when the technical bids were opened or during pre-bid meetings or any time before price bids were opened. He submitted that as a matter of fact, even the respondent's bid was also liable to be rejected solely on the ground that he sought permission to revise the price bid in contravention of clause 4 (3) in the TIA. He submitted that as the TIA over-looked the letter issued by petitioner seeking permission to revise the price bid they allowed respondent no.3 also to place on record registered MoU in the place of notarized MoU. In any case this was not a mandatory or essential condition as argued. The TIA did not disqualify both, the petitioner and respondent no.3 with an intention to have healthy competition and to avoid further delay. He then invited my attention to the statement of objections filed by them and submitted that seeking clarification on 42 points raised by the Committee from the petitioner and on 33 points from respondent itself indicates that the technical bids were suffering from certain deficiencies and they were allowed to be rectified. In the circumstances, it is not open for the petitioner now turn around and to seek the prayers as made in the present writ petition.
10. Mr. K.G. Raghavan, learned senior counsel for respondent no.3 at the outset invited my attention to the Judgment of the Supreme Court in G.J.FERNANDEZ VS. STATE OF KARNATAKA and ORS -1990 SCR (1) 229 and 13 submitted that even if it is assumed that there was an irregularity in the technical bid submitted by respondent no.3, that itself cannot be a ground for rejecting their bid. The decision to open the price bid of respondent no.3, despite the fact that registered MoU was not submitted along with the technical bid, has not caused any prejudice to the petitioner who had supplied registered MoU along with their technical bid. On the contrary, the TIA by accepting the technical bids of both, the petitioner and respondent no.3, kept the fair competition alive which is the objective of inviting tenders. In any case, a participant such as the petitioner cannot oppose the decision of the TIA to gain immunity from competition. He then submitted, it cannot be held that the TIA was not entitled to waive even a technical irregularity of little or no significance and that it was not open to the TIA to deviate from and not to insist upon the strict literal compliance of the said condition. He placed reliance upon the Judgments of the Supreme Court in PODDAR STEEL CORPORATION vs. GANESH ENGINEERING WORKS – AIR 1991 SC 1579. Next he submitted that in any case the impugned decision cannot be held to be vitiated by malafides, unreasonableness and arbitrariness. In other words, the impugned decision cannot be stated to be of such a nature where this court should exercise its discriminatory power under Article 226 of the Constitution of India. The power under this Article needs to be exercised with great caution and it should be in furtherance of public interest and not merely on the making out of a legal point. In support he placed reliance upon the judgments of the Supreme Court in AIR INDIA LTD. vs. COCHIN INTERNATIONAL AIRPORT LTD. and ORS - AIR 2000 SC 801; M/S.B.S.N.JOSHI and SONS LTD vs. NAIR COAL SERVICES LTD. and ORS- AIR 2007 SC 437; SIEMONS PUBLIC COMMUNICATION PVT. LTD vs. UNION OF INDIA and ORS. - AIR 2009 SC 1204; and W B STATE ELECTRICITY BOARD (supra).
11. Learned AGA appearing on behalf of respondent no.1 submitted the present petition is premature since the Government has yet not taken final decision and that the possibility of cancelling the entire tender process initiated on the basis of NIT dated 24.5.2012 cannot be ruled out, having regard to the powers of the Government to cancel the tender process and invite fresh bids. Next he submitted that the petitioner cannot be granted the reliefs, as prayed, at such a belated stage, i.e. after opening of the price bid.
12. At the outset, I would like to look into the law referred to by learned counsel for the parties. My attention was invited to the judgment of the Supreme Court in W.B. STATE ELECTRICITY BOARD (supra) in support of the contention that the nature of tender in the present case is like an international competitive bid which postulates keen competition and high efficiency. My attention was specifically drawn to paragraph 24 of the judgment which reads thus:
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, respondents 1 to 4 and respondents 10 and 11 are all bound by the ITB which should be complied with scrupulously. In a work of this nature and magnitude where bidders who fulfil prequalification alone are invited to bid, adherence to the instructions cannot be given a go-by 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 ITB, 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 ITB or rules is the best principle to be followed, which is also in the best public interest.
In GLODYNE TECHNOSERVE LIMITED Versus STATE OF MADHYA PRADESH AND OTHERS - (2011) 5 SCC 103 the bidders were expected to possess a valid quality certificate in the Capability Maturity Model (CMM level 3 or above). In addition, the partners of the consortium were expected to submit current ISO 9001:2000 certificate as qualifying document. The question in that case for decision was whether on account of the corrigendum, whereby the provisions of section 3 of the tender document and section 7 of the bidder's check list were amended, the appellant was disqualified from consideration, in view of the fact that along with the tender document, it had filed through inadvertence or otherwise a copy of the ISO 9001:2000 certificate of the previous year, instead of the current year, although it did have the said valid ISO 9001:2000 certificate at the time of making of the bid. In that case, the technical bid was rejected solely on the ground that the current ISO certificate was not produced. The Supreme Court upheld the decision rejecting the bid of the appellant. The relevant observations to which my attention was drawn in paragraphs 46 and 47 reads thus:
"46. The above provision obliges a tenderer to produce along with the bid document a copy of the quality certificate which is valid and active on the date of submission of the bid and it does not enable a bidder to withhold the copy of such quality certificate. Where the quality certificate will be expiring shortly and is due for renewal, the bidder is also obliged to produce the renewed certificate at the time of signing of the contract. The appellant calimed to have a vlid and active ISO 9001:2000 certificate at the time of submission of the bid, but did not produce a copy of the said certificate along with the bid document.
47. The submissions made on behalf of the appellant proceeds on the basis that it was entitled, almost as a matter of right, not to submit the documents required to be submitted along with the bid documents on the supposition that, even if such documents were valid and active, they could be submitted at the time of signing of the memorandum of understanding. The appellant had a valid and active ISO 9001:2000 certification which it did not submit along with the bid documents, may be due to inadvertence, but "whether such explanation was to be accepted or not lay within the discretionary powers of the authority inviting the bids". The decision taken to reject the technical bid of the appellant cannot be said to be perverse or arbitrary......
In Glodyne Technoservice Ltd., the challenge was to the decision to reject the bid for non-submission of ISO Certificate and while dealing with the challenge the Supreme Court observed that the concerned authority was within the discretionary powers and their decision cannot be said to be perverse or arbitrary, which is not a case in the present petition.
My attention was also invited to paragraph of the judgment of this Court in M/S GAJANANA ENGINEERS vs THE PRINCIPAL SECY. TO GOVERNMENT ENERGY DEPARTMENT AND OTHERS - ILR 2005 KAR 3973. The relevant paragraph reads thus:
"If we carefully peruse the Certificates produced by the appellant and the contesting respondents 4 to 6, extract above, the Certificates produced by respondents 4 to 6 cannot be said to be the Certificate in proof of the qualifying condition of financial capacity As on the date of submission of tender, in terms of the tender conditions incorporated in the Tender Notification, the tenderers should have the minimum capacity to spend Rs. 40 lakhs, which the appellant has as per the Certificate issued by the State Bank of India, whereas the contesting respondents 4 to 6 did not have. There can be no relaxation of the conditions by the Tender inviting Authority because such discretion is not bested in it by the Tender Notification or under the Rules 27 and 28 of the Rules. The condition requiring the proof of Financial capacity to an extent of Rs. 40 lakh cannot be regarded as a subsidiary or ancillary condition. The prescription that a tenderer should produce the proof of Financial capacity of Rs. 40 Lakhs to spend is undeniably an essential tender condition to ensure that a tenderer would carry out the work effectively and without any default, it ultimately the contract is awarded to such tenderer. There can be no relaxation of the condition by the Tender inviting Authority in view of the condition specified in the Tender Notification and also in view of the Rules 27 and 28 of the Rules. (emphasis supplied)
In G.J. FERNANDEZ (supra) the contract pertained to construction of Main Station Building of a Power House at the Raichur Thermal Power Plant. It appears that six parties had applied for tender books. On scrutiny with reference to pre-qualifying requirements and data of experience, work done, etc. four of the firms were found to be pre-qualified by the Chief Engineer. The principal argument advanced on behalf of the petitioner in the case was that paragraph I and V of the NIT specified certified pre-qualification requirements and unless they were fulfilled the contractor was not even entitled to be supplied with a set of tender documents. It was submitted that MCC did not comply with those requirements and hence their application ought to have been rejected. The learned Single Judge and so also the Division Bench in appeal rejected the argument advanced on behalf of the petitioner. The Supreme Court while dealing with the appeal observed that it would be difficult to accept the view of the learned single Judge of the High Court that it is only paragraph I that stipulates pre-condition and that all the documents referred to in the other paragraphs can be supplied at any time before final award of the contract. Despite such observation, the Supreme Court refused to interfere with the view taken by the High Court. The relevant observations in the Judgments read thus:
"It will be too extreme to hold that the omission to supply every small detail referred in para V would affect the eligibility under para I and disqualify the tenderer. The question how far the delayed supply, or omission to supply, any one or more of the details referred to therein will affect any of the prequalifying conditions is a matter which it is for the K.P.C. to assess. We have seen that the documents having a direct bearning on para I viz. regarding output of concrete and brick work had been supplied in time. The delay was only in supplying the details regarding "hollow cement blocks" and to what extent this lacuna effected the conditions in para I was for the K.P.C. to assess. The minutes relied upon show that, after getting a clarification from the General Manager (Technical), the conclusion was reached that "the use of cement hollow block masonry may not be required at all and instead the brick masonry may be used". In other words, the contract was unlikely to need any work in hollow cement blocks and so the document in question was considered to be of no importance in judging the pre-qualifying requirements. There is nothing wrong with this particularly as this document was eventually supplied".
(emphasis supplied)
..............
"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 N.I.T.s that only the fulfilment 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 question, then, is whether the course adopted by the K.P.C. has caused any real prejudice to the appellant and other parties who had already supplied all the documents in time and sought no extension at all? It is true that the relaxations of the time schedule in the case of one party does affect even such a person in the sense that he would otherwise have had one competitor less. But, we are inclined to agree with the respondent's contention that while the rule in Ramana's case (supra) will be readily applied by Courts to a case where a person complains that a departure from the qualifications has kept him out of the race, injustice is less apparent where the attempt of the applicant before Court is only to gain immunity from competition".
(emphasis supplied)
In PODDAR STEEL CORPORATION VS. GANESH ENGINEERING WORKS- AIR 1991 AIR SC 1579 the Supreme Court observed thus:
"As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories- those which lay down the essential conditions of eligibility, and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other case 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." (emphasis supplied)
Similarly, in SEIMONS PUB. COMMUNICATION NETWORKS (supra) the Supreme Court observed thus:
"21. In Jagdish Mandal Vs. State of Orissa and Ors. 2006 (14) SCALE, 224, the scope of limited power of judicial review in tender and award of contracts was also lucidly stated in paragraph 19 as follows:-
"19. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides. 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 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 succor 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 reasonable 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 Article 226. 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.
(emphasis supplied)
In B.S.N. JOSHI and SONS LTD. (supra) the Supreme Court observed thus:
"59. In Jagdish Swarup's Constitution of India, 2nd Edition, page 286, it is stated: 27
"It is equally true that even in contractual matters, a public authority does not have an unfettered decision to ignore the norms recognized by the Courts, but at the same time if a decision has been taken by a public authority in a bona fide manner, although not strictly following the norms laid down by the Courts, such decision is upheld on the principle that the Courts, while judging the constitutional validity of executing decisions, must grant a certain measure of freedom of "play in the joints" to the executive."
60......... Even when some defect is found in the decision-making process, the court must exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point.
68. We are also not shutting our eyes towards the new principles of judicial review which are being developed; but the law as it stands now having regard to the principles laid down in the aforementioned decisions may be summarized as under:
i) If there are essential conditions, the same must be adhered to;
ii) If there is no power of general relaxation,
the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully;
iii) If, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing
iv) The parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance of another part of tender contract, particularly when he was also not in a position to comply with all the conditions of tender fully, unless the court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction.
v) When a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may not ordinarily be interfered with.
(vi) The contractors cannot form a cartel. If despite the same, their bids are considered and they are given an offer to match with the rates quoted by the lowest tenderer, public interest would be given priority.
(vii) Where a decision has been taken purely on public interest, the Court ordinarily should exercise judicial restraint. (emphasis supplied)
In AIR INDIA LTD. (supra) the Supreme Court observed thus:
"The award of contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the Court can examine the decision making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision making process the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should intervene".
(emphasis supplied)
13. Mr. Holla, learned senior counsel appearing for the petitioner while commenting on the judgments relied upon by learned counsel for the respondents submitted that in none of those cases pre-bid meetings were held and a clarification, as sought in the pre-bid meeting in the present case, was sought and that the request made by the bidders, to allow them to submit registered MoU subsequently was rejected. Mr. Raghaven, on the other hand, submitted, that even if it is assumed that there was a defect in the technical bid submitted by respondent no.3, this Court should not exercise its discretionary power under Article 226 since the decision was not malafide and it is not against the public interest. In other words, he submitted that even when some defect is found in the decision making process, the High Court must exercise its discretionary power with great caution and should exercise it only in furtherance of public interest and not merely on the making out of legal point. He therefore, submitted that the judgments relied upon by the learned senior counsel for the petitioner would not apply to the facts of the present case.
14. In the present case, the tenders were invited in the two covers bid system as per the transparency Act and it was to be submitted through e-portal. The parties having joint venture / consortium, were also allowed to participate in the tender process subject to their registration with the Government of Karnataka e-procurement portal prior to tender application. The tenders were to be accepted through electronic tendering mode only with tender processing fees as per e-portal norms. Before I proceed further, it would be relevant to have a glance at the relevant clauses in the NIT which stipulates conditions to be complied with for participating in the tender process.
15. The NIT provided that tenderers should have completed at least one work of shaft sinking of depth not less than 800m with high speed shaft sinking method and achieved an average advance of more than 60m per month in shaft sinking and its allied works; designed a shaft system for carrying men, material and ore for shaft of depth not less than 800 m in the last ten years including lining; designed, manufactured/supplied and installed a suitable conventional double drum winding system (Man/Material Winding), for an operating depth of more than 1000m and a friction winder (Ore Hoisting) for similar depth in the last 10 years; and the tenderer or lead member in case of a Joint venture Company Consortium should have a consistent turnover of $150 crores or equivalent, in the last 5 years, and a net worth of $200 crores or equivalent, during the last 5 years.
Under clause 1.4 of the instructions to tenderers the NIT made it clear that the incomplete tenders will be rejected. The next relevant condition in the NIT under clause 1.5 reads thus:
"No page of the Tender document shall be removed or altered and the whole set of Tender document given must be submitted after being filled in and signed by the Tenderer himself or his authorized signatory, in which case, poof of such authorization should be submitted along with the Tender. Failure to comply with this instruction may result in rejection of the Tender".
Clause 2 of the Instructions deals with eligibility criteria. It would be useful to reproduce this clause to appreciate the arguments advanced by learned counsel for the parties. Clause 2 reads thus:
2.1 The Tenderers should have successfully planned, designed and implemented similar projects preferably under conditions similar to those prevailing in India. The Tenderers should be experienced in the following:
i) Should have completed at least one work contract in high speed shaft sinking and associated works and should have achieved an average advance of more than 60 meters per month in shaft sinking for a minimum depth of 800m. during the last 10 years.
ii) Should have designed and executed a shaft system for carrying men, material and ore for shaft of depth not less than 800m. in the last 10 years
iii) Should have designed and executed shaft lining and insets for a shaft of depth not less than 800m. in the last 10 years
iv) Should have designed, manufactured/ supplied and installed a suitable conventional double drum winding system (Man / material Winding), for an operating depth of 1300 m. and a friction winder (Ore Hoisting) for similar depth in the last 10 years. The Winders should be of the following make only:
a) M/s. ABB, Switzerland/Sweden; b) M/s. Inco, Czech Republic; c) M/s. Davy Markham, UK; d) M/s. Siemag, Germany; e) M/s. Siemens, Germany; and f) M/s Hepburn Engineering, Canada
v) The bidder or lead member in case of a Joint venture Company/Consortium should have a consistent turnover, of 150 crores of equivalent, in the last 5 years, and a net worth of 200 crores or equivalent, during the last 5 years. Documentary evidence in the form of a signed photocopy of work order or similar document proving compliance for (i) to (iv) and signed photocopy of audited balance sheet proving compliance for (v) should be submitted along with the Tender.
This clause provides eligibility criteria for tenderers to participate in the tender process. From the very nature of the conditions prescribed in this clause, it is clear that they are not only essential conditions but they are mandatory in nature having regard to the nature of work that will be allotted to the successful bidder and the quantum of the tender amount. In short, on the face of these conditions, it is further clear that these conditions, in any circumstances, cannot be relaxed, and that perhaps is the reason why the compliance of these conditions is made mandatory in clause 2.3 which deals with Consortium.
Clause 2.3 of the instructions to tenderers provides that a consortium may also along with copy of satisfactory performance report issued by the customer, submit tenders. Either of the members or combination of members together should meet the eligibility criteria as specified for joint venture company in cl. 2.1, (i) to (iv). It further provides that in case successful tenderer is a Consortium, all Consortium members shall be the signatories to the contract. In addition thereto, some more conditions were prescribed under cl. 2.3 for the Consortium to comply with. Sub-cl. (vi) in cl. 2.3 provides a copy of the registered MoU entered into by the Consortium members shall be submitted with the tender containing division of work of each member. Their joint and several responsibility, which shall be followed by a firm agreement of becoming a successful tenderer is to be submitted along with the security deposit. In case of Consortium, it further provides that tender must be supported by a certified copy of MoU among the consortium members satisfying clause 2.1 (i) and 2.1 (v). Thus from clause 2.3 which deals with Consortium make it clear that unless eligibility criteria as specified for joint venture company in clause 2.1 is complied with, their tender shall not be considered. In other words, from bare perusal of clause no.2.1 and 2.3 it is clear that the conditions prescribed in clause 2.1 are mandatory in nature and / or essential conditions for participating in tender process. It is true that in the present case in reply to the clarification sought by some of the tenderers, it was made clear that registered MoU should be submitted with the tender and that this condition has been relaxed in case of respondent no.3. I will deal with this aspect little later. From perusal of clause 2.1 and 2.3 it appears that TIA was more concerned and focused about the eligibility criteria. Insofar MoU is concerned, they were also concerned about the division of work of each member of the consortium and that their joint and several responsibilities, followed by a firm agreement. In other words, a copy of the MoU was required along with the tender so as to verify whether it contains division of work of each member and that there is a firm agreement between the members of the Consortium. It is also relevant that members of Consortium should satisfy all the conditions prescribed in cl. 2.1 (i) to cl. 2.1 (v).
Clause 3.3. provides that the commercial part shall consist of commercial terms and conditions - the original tender document issued to the tenderer duly signed by the authorized signatory on all the pages as proof of accepting the conditions of contract (excluding the price bid). The next relevant clause 4.3 provides that any request from the tenderer in respect of the additions, alterations, modifications, corrections, etc. of their terms and conditions or rates of his tender, after opening of the tenders would lead to rejection of their tender.
16. In the present case, the second respondent had initially invited tender by issuing Tender Notification on 10.8.2010. In response to the said notice, several parties including the petitioner had submitted tenders and ultimately petitioner alone remained in the race. This Court is informed by learned counsel for the TIA that one of the participant whose technical bid was rejected on the ground that he did not submit registered partnership deed along with their tender had approached the appellate authority under section 16 of the Transparency Act and the appeal was allowed and in view thereof, petitioner and that party remained in the race. However, in this process about 1½ years time elapsed and therefore, TIA decided to cancel the tender process without opening the price bids.
Thereafter, they issued another NIT on 25.4.2012. In response thereto eight companies participated in the process including the petitioner and respondent no.3. The last date that was extended to submit the tender was 27.8.2012 and the Tender Scrutiny Committee opened the technical bids on 14.9.2012. On scrutiny only 2 bidders viz. the petitioner and respondent no.3 were declared successful / qualified and they both were invited for discussion in the meetings scheduled on 21st and 22nd Sept. 2012 and once again on 1st October, 2012 since respondent no.3 could not remain present on 20th and 21st. During those meetings the TIA sought clarification from the petitioner as well as from respondent no.3 on certain points. The petitioner did not raise any objection of whatsoever nature against the decision of holding respondent no.3 qualified either in the meeting held on 20th and 21st September, 2012 or in the meeting held on 1st Oct. 2012.
17. It is true that respondent no.3 had not submitted registered MOU along with technical bid and he was allowed to submit the registered MoU on 11.10.2012, i.e. before opening the price bid. Apart from this deficiency no other deficiency, worth noticing was pointed out by the petitioner in the course of hearing of the petition. Similarly, it was specifically pointed out that the petitioner also had not submitted signed copy of NIT, duly accepting the terms and conditions therein. The petitioner supplied copy of the NIT duly signed by the authorized person on 8.10.2012. Though the petitioner claims that they had up-loaded the signed copy of NIT along with the technical bid, apart from oral submission, nothing was placed on record to show that such a copy of NIT was uploaded. On the contrary, the documents produced on record show that the signed copy of NIT as demanded by the Tender Scrutiny Committee was supplied on 8.10.2012. It has also come on record that when technical bid of the petitioner was opened, it was found that they had not uploaded signed copy of NIT and it was uploaded with price bid which was also a deficiency in submitting the tender.
18. Moreover, the petitioner after opening of the price bid had requested vide their letter dated 28.9.2012 seeking permission to revise price bid. This letter subsequently was withdrawn by the petitioner vide their letter dated 26th Oct. 2012. In view thereof, it was submitted that the petitioner also had committed a breach of the terms and conditions in the NIT and his bid was also liable to be rejected. Clause 4.3 in the NIT provides that any request from the tenderer in respect of the additions, alterations, modifications, corrections, etc. of their terms and conditions or rates of the tender, after opening of the tenders lead to rejection of the tender. Thus it appears, the TIA in case of the petitioner also overlooked their letter seeking revision of the price bid and so also non-compliance on the part of respondent no.3 in submitting a registered MoU. Learned counsel for the TIA submitted that they accepted technical bids of both despite certain irregularities which were of technical nature and allowed them to rectify the same. He submitted that insofar as the petitioner is concerned, apart from allowing them to place signed NIT on record subsequently, they also ignored the letter whereby they sought permission to revise the price bid and insofar as respondent no.3 is concerned, they were allowed to place on record a registered MoU before opening the price bids to which neither petitioner nor respondent no.3 objected to.
19. It is pertinent to note that the petitioner made grievance of holding respondent no.3 qualified only after opening of the price bids and having found that the rates quoted by them were on the higher side by almost 36 crores. Moreover the petitioner while withdrawing their request for revised price bid had requested to open the price bid at the earliest and expedite the tender process vide letter dated 26.10.2012. Till this date and / or till filing of the writ petition, no grievance was made by the petitioner for having opened the price bid holding respondent no.3 qualified despite the fact that they had not tendered registered MoU along with the technical bid.
20. It is against this backdrop the TIA seems to have exercised their discretion and allowed the petitioner and respondent no.3 to compete and therefore, opened their price bids. The entire process which began with the NIT dated 10.8.2010 got delayed for number of reasons and the TIA was, therefore, apprehending further escalation of costs of the project. They opened the price bids of both the tenderers so as to have fair competition and till they were opened no objection of whatsoever nature was raised by either of them for holding them qualified. The process adopted by the TIA or decision made by them cannot be stated to be malafide or intended to favour respondent no.3. the decision has been taken in a bonafide manner, and therefore, I am satisfied that no error of law was committed in relaxing the technical and / or ancillary conditions in case of both, the petitioner and respondent no.3.
21. The requirements in a tender notice can be classified into two categories - those which lay down the essential conditions of eligibility, and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other case 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 (See PODDAR STEEL). The TIA in the present case has exercised its discretion in ignoring the ancillary or subsidiary condition in order to achieve the main object. I am satisfied that the TIA did not compromise in seeking strict compliance of the essential conditions of eligibility.
22. It is now well settled that wherever there is a dispute between two tenderers, the Court must be very careful to see if there is any element of public interest involved in the litigation or the Court must be satisfied that there is some element of public interest involved in entertaining such a petition. It is important to bear in mind that by Court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the Court would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the Court is satisfied that there is a substantial amount of public interest, or the transaction entered into is malafide, the Court should not intervene under Article 226 in a dispute between two rival tenderers. The Court has to satisfy itself that the public interest in holding up the project far outweighs the public interest in carrying out within a reasonable time. The Court must also take into account the cost involved and whether the public would stand to benefit by incurring such cost. (See RAUNAQ INTERNATIONAL LTD. vs. IVR CONSTRUCTION LTD. - AIR 1999 SC 393). Further, it is true that if there is no power of general relaxation, ordinarily same shall not be exercised. If, however, a deviation is made in relation to other participant/s, in regard to any of the conditions, ordinarily again a power of relaxation may be held to be existing. In such event, the party who has taken the tender on such relaxation should not ordinarily be allowed to take a different stand in relation to compliance of another part of tender contract or the condition, particularly when he was also not in a position to comply with all the conditions of tender fully, unless the Court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction. [See M/s B.N. JOSHI and SONS LTD. (supra) ]. The Court is also expected to examine whether any relaxation is granted for bonafide reasons. In the present case, relaxation of certain conditions, which, as observed earlier, was for the benefit of the petitioner also, and therefore, they cannot take a different stand in relation to compliance of any condition, of ancillary nature, in case of respondent no.3.
23. Thus, it is settled that if the decision relating to award of contract is bonafide and is in public interest, the Court will not, in exercise of the power of judicial review, be permitted to revoke the decision to protect private interest at the cost of public interest, or to decide contractual disputes. In any case, in the present case the process adopted or decision made cannot be stated to be arbitrary and irrational that the Court can say that no responsible authority acting reasonably or in accordance with relevant law could be reached. As settled by the Supreme Court, the High Court is not expected to exercise its discretionary power under Article 226 of the Constitution of India unless the public interest is affected. In other words, the Courts are expected to exercise their discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. It is true that even in contractual matters, a public authority does not have an unfettered decision to ignore the norms recognized by the Court, but at the same time if a decision has been taken by a public authority in a bonafide manner, although not strictly following the norms laid down by the Courts, such decision is upheld on the principle that the Courts while judging the constitutional validity of executive decisions, must grant a certain measure of freedom of "play in the joints" to the executive. In my opinion, this is not a fit case where the Court should exercise its discretionary powers under Article 226 of the Constitution of India to interfere with the decision of the TIA which allowed the petitioner as well as respondent no.3 to cure the defects of ancillary nature and then to open their price bids.
In the circumstances, the petition is dismissed.