considered to be an essential term of the tender process. The Apex
Court, in a Judgment reported in (1991) 3 SCC 273 in the case of
Poddar Steel Corporation vs. Ganesh Engineering Works and others,
has observed at paras 6 and 8, thus :
“6. It is true that in submitting its tender accompanied
by a cheque of the Union Bank of India and not of the
State Bank clause 6 of the tender notice was not
obeyed literally, but the question is as to whether the
said non-compliance deprived the Diesel Locomotive
Works of the authority to accept the bid. 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 cases it
must be open to the authority to deviate from and not
to insist upon the strict literal compliance of the
condition in appropriate cases. This aspect was
examined by this Court in C.J. Fernandez v. State of
Karnataka (1990) 2 SCC 488, a case dealing with
tenders. Although not in an entirely identical situation
as the present one, the observations in the judgment
support our view. The High Court has, in the impugned
decision, relied upon Ramana Dayaram Shetty v.
International Airport Authority of India (1979) 3 SCC
489, but has failed to appreciate that the reported case
belonged to the first category where the strict
compliance of the condition could be insisted upon.
The authority in that case, by not insisting upon the
requirement in the tender notice which was an
essential condition of eligibility, bestowed a favour on
one of the bidders, which amounted to illegal
discrimination. The judgment indicates that the court
closely examined the nature of the condition which
had been relaxed and its impact before answering the
question whether it could have validly condoned the
shortcoming in the tender in question. This part of the
judgment demonstrates the difference between the two
categories of the conditions discussed above. However
it remains to be seen as to which of the two clauses,
the present case belongs.
8. In the present case the certified cheque of the Union
Bank of India drawn on its own branch must be treated
as sufficient for the purpose of achieving the object of
the condition and the Tender Committee took the
abundant caution by a further verification from the
bank. In this situation it is not correct to hold that the
Diesel Locomotive Works had no authority to waive
the technical literal compliance of clause 6, specially
when it was in its interest not to reject the said bid
which was the highest. We, therefore, set aside the
impugned judgment and dismiss the writ petition of
respondent 1 filed before the High Court. The appeal is
accordingly allowed with costs throughout.”
In the present case, considering the purpose for which the earnest
money is being deposited, we find that it is not an essential term of the
tender process. On going through the terms of the tender, it appears
that the earnest money would be adjusted as security deposit if the bid
of the tenderer is accepted. Hence, once the tender documents, along
with the demand draft, were accepted by the respondent-Corporation, it
was not open to the respondent-Corporation to unilaterally reject the
bid of the petitioner. In such circumstances, we find that the rejection
of the bid of the petitioner cannot be sustained and deserves to be
quashed and set aside.
IN THE HIGH COURT OF BOMBAY AT GOA
WRIT PETITION NO. 79/2016
Sudha Facility Management Service,
V/s.
The Managing Director,
Citation: 2016(6) MHLJ 96
Heard Mr. S. Samant, learned Counsel appearing for the
petitioner, Ms. P. Bhandari, learned Additional Govt. Advocate
appearing for the respondents No.1 and 2 and Mr. Shivan Desai,
learned Counsel appearing for the respondent No.3.
2. Rule. Learned Counsel appearing for the respondents
waive service. Heard forthwith, with the consent of the learned
Counsel.
3. The petitioner by this petition, inter alia, prays to declare
the petitioner as the successful bidder in respect of the tender dated
27/10/2015 for washing and cleaning of buses of Kadamba Transport
Corporation (“Corporation” for short). A further direction sought by
the petitioner is, inter alia, to quash and set aside the new bid process
which took place on 25/1/2016 in respect of the cleaning and washing
of such buses.
4. Briefly, the facts of the case, are as under :
The respondent No.1 issued a Notice inviting tender for
cleaning and washing of the Corporation buses for the period from
1/12/2015 to 30/11/2016. It is further their case that the petitioner
filed their bid, through the tendering process on 14/11/2015.
Similarly, two other contractors also submitted such a bid. It is further
their case that the time to submit the bid was extended by the
Corporation and the last date for submitting such tender was fixed as
16/11/2015 and the last date for opening was fixed as 18/01/2016. It is
further the contention of the petitioner that the petitioner was the
lowest for most of the rates, being less than half. It is further their
case that they maintained the audit trial of their financial bid and found
that they had complied with all the tender terms and conditions. It is
further the case of the petitioner that the petitioner was required to
deposit the earnest money in a sum of Rs.75,000/- vide a Demand Draft
of State Bank of India or any other Schedule or Nationalized Bank.
Accordingly, when the petitioner submitted their tender by e-tender
they also scanned such demand draft and produced it along with the
requisite documents to the concerned authorities at the time of
submitting their bid. It is further their case that the petitioner was the
most eligible tenderer and they fulfilled all the conditions of the tender
and as the letter of appointment was not forthcoming, they issued a
notice dated 28/12/2015 before the bids were opened. It is further their
case that as the terms of the bid had allegedly not been complied, the
superior authorities of the respondents took a decision to reject the bid
of the petitioner. It is also their contention that the Board of Directors
found that experienced tenderer would carry out the work in a better
manner and, as such, scrapped the tender process and issued a notice
inviting fresh tender.
5. Mr. Samant, learned Counsel appearing for the petitioner
has pointed out that the terms specified in the tender document clearly
point out that there were two modes to pay the earnest money. One of
the modes was to transfer the money through e-tender and the other
mode was to pay by a Demand Draft drawn in the name of the
Corporation from the State Bank of India or any Schedule or
Nationalized Bank. The learned Counsel further submits that
accordingly, the petitioner got such a demand draft issued and in fact,
scanned the demand draft and submitted it with their e-tender on
14/11/2015. The learned Counsel further submits that the receipt
received by the petitioner, clearly discloses that the payment of earnest
money has been duly complied with. The learned Counsel further
points out that before opening the tender, the petitioner tendered the
original demand draft which was received by the Committee appointed
by the Corporation and only thereafter the tenders were opened and the
petitioner was found to be the lowest bidder in respect of three depots.
The learned Counsel further points out that the Committed had
awarded the tender to the petitioner, subject to confirmation by the
superior Authorities. The learned Counsel further submits that only
when fresh tenders were issued on 15/1/2016, the petitioner learnt that
the earlier tender process had been scrapped. The learned Counsel
further points out that the petitioner, thereafter, immediately filed the
above petition and came to know that out of the three tenderers, besides
the petitioner, there was only one tenderer who was a successful
tenderer only in respect of one depot. The learned Counsel further
points out that the respondents with mala fide intention has changed
the tender terms thereafter in the fresh tender process only to exclude
the petitioner at the instance of the third tenderer on untenable grounds.
The learned Counsel further points out that the bid of the petitioner has
been unlawfully rejected and, as such, the fresh tender process initiated
by the respondents has no legal effect. The learned Counsel, as such,
submits that the petitioner be, accordingly, held to be the successful
tenderer. The learned Counsel, in support of his submissions, has relied
upon a Judgment of the Apex Court reported in 2012 (5) ALL MR 813
in the case of Jai Laxmi Constructions & Ors. V/s. The State of
Maharashtra and ors..
6. On the other hand, Mr. Shivan Desai, learned Counsel
appearing for the respondent No.3 submits that this Court, in exercise
of jurisdiction under Article 226 of the Constitution of India cannot
interfere in the tender process, unless there is total disregard to the
relevant provisions and the tender terms in the decision making
process. The learned Counsel further points out that this Court cannot
interfere with the decision taken by the respondents when there is no
flaw committed in the decision making process with that regard. The
learned Counsel further points out that accepting a tender is merely a
decision and as such, according to him, there is no reason for
interference by this Court under Articles 226 and 227 of the
Constitution of India. The learned Counsel further points out that
once the terms of the tender have not been fulfilled by the petitioner,
there is no question of granting any liberty to the petitioner to rectify
the mistake. The learned Counsel has, thereafter, taken us through the
terms of the tender to point out that there was a breach committed by
the petitioner to pay the deposit or to deposit the earnest money and, as
such, according to him, the petitioner cannot be accepted in the tender
process and, as such, the bid of the petitioner has been rightly rejected
by the Committee. The learned Counsel further points out that the
Board of Director, after re-examining the matter, has come to the
conclusion that the Tender Committee could not have accepted the
Demand Draft in breach of the terms and conditions of the e-tender
process. The learned Counsel further points out that as the other
tenderer has raised an objection to the acceptance of the Demand
Draft, the Board of Directors had to take the decision and drop the
tender process by rejecting the bid of the petitioner. The learned
Counsel, as such, submits that the petition be accordingly rejected. The
learned Counsel, in support of his submissions, has relied upon a
Judgment of the Apex Court reported in (2008) 16 SCC 215 in the case
of Siemens Public Communication Networks Private Limited and
another vs. Union of India and ors..
7. We have considered the submissions of the learned
Counsel and we have also gone through the record. The proposition
advanced by Shri Shivan Desai, learned Counsel appearing for the
respondent No.3 to the effect that this Court cannot, in a petition
under Article 226 of the Constitution of India, interfere with the 8
awarding of the tender, cannot be faulted. But, however, it is not
disputed that when there is a patent flaw in arriving at such a decision
making process, there is no bar for this Court to interfere with such
decision under Article 226 of the Constitution of India. In such
circumstances, we propose to examine whether the rejection of the bid
of the petitioner can be justified in the present case. Clause 26 with
regard to payment of earnest money reads thus :
“26. An Earnest Money Deposit of Rs.25,000/- for
each depotwise Margao, Porvorim, Vasco, & Panaji
Depots in the form of Deposit at Call Receipt/Demand
Draft drawn on State Bank of India or any
schedule/Nationalized Bank in Favour of Managing
Director Kadamba Transport Corporation Ltd., payable
at Panaji is required to be deposited in this Office.
The same should be valid for a period of three months.
In case of successful Tenderer the E.M.D., will be
converted into Security Deposit.”
Another clause in the Notice Inviting Tender in connection with the
payment of earnest money deposit, reads thus :
“Mode of Payment towards cost of Tender
Document and Earnest Money Deposit :
To be paid online through e-payment mode via
NEFT/RTGS/OTC/debit card facility/net banking with
pre-printed challans available on e-tendering website
http;//www.etender.goa.gov.in.
www.tenderwizard.com/GOA and directly credit the
amount to ITG account as generated by challans for
NEFT/RTGS/OTC.”
Yet, another clause in the Notice Inviting Tender in connection with
the payment of earnest money deposit, reads thus:
“The Earnest Money Deposit (EMD), cost of tender form
and tender processing fee should be deposited along with
the tenders in the appropriate form as given in the detailed
tender notice.”
On perusal of the said terms referred to herein above, which are part
of the e-tender process for the subject-work, we find that there is an
ambiguity with regard to such clauses, as earnest money deposit can
be made by net banking by e-payment mode, as well as by demand
draft from the State Bank of India or any other Scheduled Bank. In
the present case, it is not disputed that the petitioner had obtained
the demand draft for the earnest money deposit and scanned them
while submitting the tender to the concerned Department within the
time prescribed. It is well settled that any ambiguity in such
documents is to be construed unfavourable to the drafter of such
documents. In such circumstances, the contention of the learned
Counsel appearing for the respondent No.3 that the payment had to be
effected only by e-payment and not by demand draft, cannot be
accepted. An ambiguity, if any, would have to be considered to the
benefit of the petitioner herein. In the present case, it is not disputed
that the earnest money deposit was effected by a demand draft of the
concerned Bank and on submitting the tender form along with scanned
copy of such a demand draft, receipt of acceptance was issued by the
respondent No.3 on 14.11.2015. In such circumstances, we find that
the petitioner has complied with the terms of the tender process for
payment of the earnest money deposit. It is also not in dispute that the
original demand draft was tendered by the petitioner before opening
the tender. When the Demand Draft was received by the Tender
Committee, there was no objection raised by any of the other tenderers.
But, however, only after the bids were opened and it was found that the
petitioner was the lowest tenderer in some of the depots, there was
objection by the other tenderer. It is to be noted that besides the
petitioner, there was only one tenderer whose bid was found to be in
order. Bid of the third tenderer was rejected as it did not meet the
eligibility criteria. In the present case, it is not disputed that the
petitioner met the eligibility criteria and the bids were in fact accepted
by the Tender Committee. But, however, thereafter the Board of
Directors, in their meeting, found that the Tender Committee was not
justified to receive the Demand Draft on the date of opening of the
tender. We find that said decision of the Board of Directors cannot be
sustained and deserves to be quashed and set aside.
8. Apart from that, the payment of earnest money cannot be
considered to be an essential term of the tender process. The Apex
Court, in a Judgment reported in (1991) 3 SCC 273 in the case of
Poddar Steel Corporation vs. Ganesh Engineering Works and others,
has observed at paras 6 and 8, thus :
“6. It is true that in submitting its tender accompanied
by a cheque of the Union Bank of India and not of the
State Bank clause 6 of the tender notice was not
obeyed literally, but the question is as to whether the
said non-compliance deprived the Diesel Locomotive
Works of the authority to accept the bid. 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 cases it
must be open to the authority to deviate from and not
to insist upon the strict literal compliance of the
condition in appropriate cases. This aspect was
examined by this Court in C.J. Fernandez v. State of
Karnataka (1990) 2 SCC 488, a case dealing with
tenders. Although not in an entirely identical situation
as the present one, the observations in the judgment
support our view. The High Court has, in the impugned
decision, relied upon Ramana Dayaram Shetty v.
International Airport Authority of India (1979) 3 SCC
489, but has failed to appreciate that the reported case
belonged to the first category where the strict
compliance of the condition could be insisted upon.
The authority in that case, by not insisting upon the
requirement in the tender notice which was an
essential condition of eligibility, bestowed a favour on
one of the bidders, which amounted to illegal
discrimination. The judgment indicates that the court
closely examined the nature of the condition which
had been relaxed and its impact before answering the
question whether it could have validly condoned the
shortcoming in the tender in question. This part of the
judgment demonstrates the difference between the two
categories of the conditions discussed above. However
it remains to be seen as to which of the two clauses,
the present case belongs.
8. In the present case the certified cheque of the Union
Bank of India drawn on its own branch must be treated
as sufficient for the purpose of achieving the object of
the condition and the Tender Committee took the
abundant caution by a further verification from the
bank. In this situation it is not correct to hold that the
Diesel Locomotive Works had no authority to waive
the technical literal compliance of clause 6, specially
when it was in its interest not to reject the said bid
which was the highest. We, therefore, set aside the
impugned judgment and dismiss the writ petition of
respondent 1 filed before the High Court. The appeal is
accordingly allowed with costs throughout.”
In the present case, considering the purpose for which the earnest
money is being deposited, we find that it is not an essential term of the
tender process. On going through the terms of the tender, it appears
that the earnest money would be adjusted as security deposit if the bid
of the tenderer is accepted. Hence, once the tender documents, along
with the demand draft, were accepted by the respondent-Corporation, it
was not open to the respondent-Corporation to unilaterally reject the
bid of the petitioner. In such circumstances, we find that the rejection
of the bid of the petitioner cannot be sustained and deserves to be
quashed and set aside. Consequently, the order passed by the Board
of Directors of the respondent No.3 with that regard deserves to be
quashed and set aside. Once, rejection of the bid of the petitioner is
set aside and having regard to the fact that the tender was for cleaning
of buses, we find that the respondent-Corporation shall have to take a
fresh decision with regard to the tender process initiated pursuant to the
tender notice dated 27/10/2015, in accordance with law. In such
circumstances, the second tender process initiated by the respondents
would not survive. Hence, the decision dated 18/01/2016 deserves
to be quashed and set aside, and the respondents be accordingly
directed to take a fresh decision in the said tender process.
9. In view of the above, we pass the following :
O R D E R
(I) The impugned decision dated 18/01/2016 is quashed and
set aside.
(II) Respondents are, accordingly, directed to take a fresh
decision with regard to the tender process initiated on 27/10/2015,
afresh in the light of the observations made herein above, in
accordance with law.
(III) Rule is made absolute in the above terms.
K.L. WADANE, J. F.M. REIS, J.
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