B.K. Enterprises vs Food Corporation of India and Others

N. Kotiswar Singh, J.—Heard Mr. N. Surendrajit, learned counsel for the petitioner, Mr. S. Rupachandra, learned ASG for the FCI and Mr.Khalid, for the respondent No. 2.

The present writ petition has been filed seeking for a direction to the respondents to award the contract work in favour of the petitioner being the lowest tenderer in terms of the NIT No. 06/2013-14 dated 4.4.2014, which has been resisted by the respondents by contending that though the petitioner may be the lowest tenderer, since he had submitted the bid in the wrong format, it cannot be accepted and the tender should be refloated.

Certain relevant facts for adjudication of the issues involved in this writ petition may be stated.

The FCI authorities issued the Notice Inviting e-Tender No. 06/2013-14 dated 4.4.2014 for transportation of food grains from the FSD/CWC Dimapur to Manipur State Govt Godown, Koirengei with the estimated value of the contract as Rs. 22,43,45,873/-. In terms of the aforesaid NIT, the petitioner as well as the private respondent No. 2 submitted their tenders. It seems that though both the petitioners and respondent No. 2 were technically qualified, before the financial bid could be opened, one of the bid openers retired because of which the price bid could not be opened. Accordingly, the FCI authority requested both the petitioner and the respondent No. 2 to re-submit the price bids at the Central Procurement Portal, vide letter dated 24.6.2014 (Annexure-A/2). In terms of the aforesaid offer for re-submission of price bid, the petitioner re-submitted his e-tender, which was accepted by the FCI authorities, as evident from the communication dated 26.6.2014 issued in favour of the petitioner. By the said communication the petitioner was informed that his bid with ID 39658 had been successfully submitted on 26.6.2014 and directed the petitioner to get in touch with the tender inviting authority for further information (Annexure-P/2). The case of the petitioner is that even though the petitioner''s price bid was successfully submitted, the authorities without assigning any reason, did not award the tender in favour of the petitioner, which led him to file a writ petition, being WP(C) No. 828 of 2014 which was disposed of on 26.11.2014 with the direction to the petitioner to submit a detailed representation to the FCI authorities to be considered by the FCI in accordance with law. In terms of the aforesaid direction of the Court, the FCI authorities issued the letter dated 29.12.2014 to the petitioner disposing of his representation by rejecting the same. In the said representation it has been mentioned that though the bid of the petitioner was accepted, he had submitted the price bid in the wrong format number and date. Being aggrieved, the petitioner approached this Court again for a direction to the respondents to award the tender in his favour claiming to be the lowest tenderer.

The FCI authorities have filed their affidavit-in-opposition contesting the claim of the petitioner. The case of the FCI authorities is that the petitioner had submitted his bid in the wrong format and in view of that the FCI authorities invoked the right to reject the tender without assigning any reason as provided in the NIT. It is the case of the respondent authorities that consideration of the bid of the petitioner would entail rejection in view of the fact that such a bid submitted by the petitioner in the wrong format was being seriously objected to by the other bidders and accordingly the FCI authorities scrapped the said tender and as such, it has been submitted that since the decision to scrap the said tender was taken for administrative reasons, no case has been made out for issue of the writ as sought for by the petitioner.

Mr. Khalid, learned counsel appearing for the respondent No. 2 also has taken the same stand as that of the respondent authorities. Mr. Khalid, further submitted that it was clearly known to the bidders that the bidders had to access the official website and were to download the necessary format and the bidders had to submit their bid only in accordance with the format made available in the portal. In the present case, it is an undisputed fact that the petitioner did submit his price bid in a format meant for the earlier tender, not for the fresh tender. According to Mr. Khalid, the correct tender number which was to be quoted by the petitioner in his fresh bid was 6-A/2013-14 dated 23.6.2014 which was issued by the authorities for re-submission, whereas the tender number actually quoted by the petitioner in his fresh bid was 6/2013-14 dated 4.4.2014. Since the petitioner did not submit in the correct format of the new tender No. 06-A/2013-14 dated 23.6.2014, he cannot be said to have submitted a valid tender, and if the tenderer does not submit the valid tender number, his tender cannot be said to be valid and acceptable and no wrong can be said to have been committed by the authorities in rejecting the said tender of the petitioner submitted in the wrong format.

Mr. Rupachandra, learned ASG, further submits that after scrapping of the said second tender, which is in issue in the present writ petition, the authorities had floated another (third) tender on 25.7.2014. He also mentioned that pursuant to the aforesaid re-tender, no one has submitted any bid. In response to this, counsel for the petitioner has stated that the aforesaid action of the authorities cannot be said to be bona fide and is, in fact, arbitrary. In this connection, Mr. Surendrajit, learned counsel for the petitioner has drawn attention of this Court to the proceeding of the tender committee which held its meeting on 27.6.2014 after opening of the price bid in respect of the second tender, to which the respondent No. 2 and others had submitted their tenders. In the said proceeding, the Committee had made the following recommendations.

"The following recommendations can be considered

1) The rate quoted by M/s. B.K. Enterprises i.e. Rs. 19,81/- is the lowest among the bidders. But since M/s. B.K. Enterprises submitted the Price Bids in the earlier NIT No. 06/2013-14 dated 04.04.14 format. This office may get an undertaking from the tenderer that the same quoted rate is valid for the new NIT No. 06-A/2013-14 dated 23.06.14. After obtaining the undertaking this office may offer the appointment letter to M/s. B.K. Enterprises.

2) M/s. Khireko Enterprise has raised a complaint against M/s. B.K. Enterprise wherein it has been informed that the Price Bid using other format than the Provided Price Bid format for the particular tender was used by M/s. B.K. Enterprise. The clause of MTF page No. 21 point No. 5 and Page No. 20 point No. 1 and 2 has also been mentioned by M/s. Khireko Enterprise while filing the complaint."

The aforesaid recommendation makes it clear that the bid submitted by the petitioner is the lowest. It was also observed that, since the petitioner had submitted the price bid in the earlier NIT No. 06/2013-14 format, the office may get an undertaking from the tenderer that the same quoted rate is valid for the new NIT No. 06-A/2013-14 and after obtaining the undertaking the office may offer the appointment letter to the petitioner.

Tender Committee also noted the serious objection raised by the respondent No. 2 herein, that it is not permissible to use the defective format.

According to Mr. Surendrajit, learned counsel for the petitioner, though the tender committee had made the said recommendation to give an offer to the petitioner being lowest bidder for giving an undertaking as mentioned above no such offer was made to the petitioner. But the authorities proceeded to scrap the tender as mentioned above, which according to the petitioner is quite arbitrary.

Mr. Surendrajit, learned counsel for the petitioner further submits that from the letter dated 24.6.2014 issued by the FCI authorities for re-submission of tender, it is clear that the bid amount has to be re-submitted in response to the earlier tender and accordingly, the petitioner merely re-submitted a fresh tender in the earlier format. Hence, it has been submitted that it is a mere lapse which cannot invalidate the tender submitted by the petitioner.

Mr. Surendrajit, learned counsel for the petitioner by referring to the decision of the Hon''ble Supreme Court in B.S.N. Joshi and Sons Ltd. Vs. Nair Coal Services Ltd. and Others, submitted that if a tenderer substantially satisfies the requirements of tender, such tender cannot be rejected merely because of certain minor defects. The Hon''ble Supreme Court held in the aforesaid judgment as follows.

"66. 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, ordinarily 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.

While saying so, however, we would like to observe that that having regard to the fact that a huge public money is involved, a public sector undertaking in view of the principles of good corporate governance may accept such tenders which is economically beneficial to it. It may be true that essential terms of the contract were required to be fulfilled. If a party failed and/or neglected to comply with the requisite conditions which were essential for consideration of its case by the employer, it cannot supply the details at a latter stage or quote a lower rate upon ascertaining the rate quoted by others. Whether an employer has power of relaxation must be found out not only from the terms of the notice inviting tender but also the general practice prevailing in India. For the said purpose, the court may consider the practice prevailing in the past. Keeping in view a particular object, if in effect and substance it is found that the offer made by one of the bidders substantially satisfies the requirements of the conditions of notice inviting tender, the employer may be said to have a general power of relaxation in that behalf. Once such a power is exercised, one of the questions which would arise for consideration by the superior courts would be as to whether exercise of such power was fair, reasonable and bona fide. If the answer thereto is not in the negative, save and except for sufficient and cogent reasons, the writ courts would be well advised to refrain themselves in exercise of their discretionary jurisdiction."

Relying on the decision of the Hon''ble Supreme Court, Mr. Surendrajit, submits that in the present case, the defect was a minor defect of quoting an incorrect format only and there was no other substantial defect in terms of the nature of work or the price or the credentials of the petitioner. He submits that this mistake of not submitting in the new format cannot be said to be substantial as to disqualify the tender of the petitioner.

Mr. Surendrajit, learned counsel for the petitioner has further relied on the decision of the Hon''ble Supreme Court in Noble Resources Ltd. Vs. State of Orissa and Another, , wherein it has been held that public interest demands that the authority must act in the non arbitrary manner without any favouritism.

It has been submitted that in the present case, in spite of the recommendation made by the tender committee which was also fully aware of the various terms and conditions and of the tender process, the authority without adequate reason and informing the petitioner and contrary to the recommendation made by the tender committee decided to scrap the tender, which according to the petitioner is nothing but an arbitrary action.

Mr. Khalid, learned counsel for respondent No. 2 however, submits that there was no obligation on the part of the authorities to inform the reason for cancellation. He submits that if there is any defect in the tender process, it is sufficient enough to disqualify any tender and there is no need to inform the petitioner to rectify any such defect and as such this decision of the authority cannot be said to be arbitrary.

Having heard the learned counsel for the for the parties and on perusal of the pleadings on the record, this Court finds that the issue involved in this writ petition revolves around the rejection of the tender of the petitioner on the ground that the petitioner had not submitted his tender by quoting the correct format. The question which arises for consideration in this petition is whether such non submission of tender in the new format amounts to a fatal lapse on the part of the petitioner which would disqualify him from the tender process or whether, such a defect can be said to be substantial to warrant disqualification or a minor one which can be overlooked by the authorities concerned.

In the present case what has been observed is that the petitioner''s second bid was accepted by the competent authority to be substantially correct as evidenced from the communication dated 26.6.2014 issued by the authorities in which it has been stated that the bid of the petitioner has been successfully submitted. That apart, the Tender Committee, which was also fully aware of the terms and conditions of the tender had not felt the wrong quotation of the format/tender number to be substantial enough to disqualify and made the recommendation to offer to the petitioner, who was lowest bidder to give an undertaking that the quoted rate is valid for the new NIT No. 06-A/2013-14 dated 23.6.2014, as mentioned in the Tender Committee proceedings. This would indicate that the Tender Committee did not consider this shortcoming to be a fatal or substantial one to be disqualified. This Court has taken into consideration the fact that since the petitioner was asked to re-submit, in respect of the same work, he did so by quoting earlier tender number as the work was same with similar terms and conditions. Therefore, this Court is also of the view that the defect in submitting the fresh tender by not quoting the correct tender number/format, which is insisted upon by the authorities as well as by the respondent No. 2, cannot be said to be a substantial defect in nature so as to disqualify the petitioner. The consequence will be that the petitioner''s lowest bid cannot be rejected by the authorities on this ground alone.

This Court is of the view that the recommendation made by the Tender Committee on 27.6.2014 should have been acted upon by the competent authorities and proceeded accordingly in accordance with law.

Before we part with the case, it may be mentioned that the even though the petitioner has not challenged the rejection of the tender of the petitioner, he had approached this Court by filing WP(C) No. 828 of 2014 with the prayer to award the contract in his favour even though he has not directly assailed the rejection order. In the said writ petition he had pleaded that the rejection of his representation was not in accordance with law. In para 11 of the said writ petition, he had specifically pleaded that the rejection of the price bid of the petitioner is not sustainable. Accordingly, this Court is of the view that even if the petitioner had not formally sought for quashing of the rejection order, this petition cannot be rejected on that ground.

In the result, the writ petition is allowed. The respondent authorities are directed to act upon the recommendation No. 1 made by the Tender Committee in the meeting held on 21.07.2014 and proceed in accordance with law. While disposing this writ petition, this Court has noted the submission made by Mr. Rupachandra, learned counsel for the FCI that even after the third tender had been floated in respect of the same item, no bid has been submitted so far by any party. In view of the above, the third tender so floated by the authorities need not be acted upon till the exercise as directed above is undertaken and completed by the authorities within a period of one month from the receipt of a certified copy of this order.