Khazana Projects and Industries Private Limited vs Rail India Technical and Economic Services Limited

Ruwa Pal, J.—The challenge in this writ application is to the acceptance of the tender of M/s. Sahu Construction, the Respondent No. 5, by the Respondent authority.

The Respondent authority namely M/s. Rail India Technical and Economic Services Limited (RITES) issued a tender for and on behalf of M/s. Mahanadi Coalfields Limited for execution of works at Kalinga Railway Siding at Talcher in the State of Orissa. The work involved was divided into three parts covered separately by tender Nos. 73, 74 and 75. The time as originally fixed for submission of the tender was extended to February 17, 1998.

According to the Petitioner all the tenders were opened on February 17, 1998 and it was found that the Petitioner had quoted the lowest rate in respect of Tender No. 74 and that this was also announced by the Assistant Manager of RITES. It is the Petitioner''s allegation that after opening of the tenders, on a subsequent date M/s. Sahu Construction offered a rebate of 5.5% on his quotation. It is alleged that this discounted rate was accepted by the Respondent authorities clandestinely without giving an opportunity to other tenderers to also revise their offers.

The Respondents have denied the allegation. It is stated that the Respondent No. 5, Sahu Construction, had submitted its tender on February 17, 1998 under cover of a letter which reads as follows:

I am herewith submitting the above tender with EMU Rs. 2,000.00/- (two lakhs) favouring Rites, Calcutta payable at Calcutta drawn on State Bank of India, Calcutta Branch vide D.D. No. 240117 dt. 2.2.98. My offer is reasonable and as a goodwill I offer an unconditional rebate of 5.5% (five half percent) on my quoted rates. I abide by all the conditions and stipulations mentioned in the tender documents. I will be sincerely looking forward to do this job.

According to the Respondents there was as such no question of any subsequent negotiations. The Respondents have also relied upon the tender opening register in support of their submission that the rebate offered by Sahu Construction was included with its offer and was considered at the time of opening of the tender on February 17, 1998. The Respondents have also produced a letter of another tenderer, R. Balarami Reddy and Co., dated April 17, 1998 which reads as follows:

We have participated in all the tenders viz. tender number 73, 74 and 75.

We have received back the earnest money for tender No. 73 and 74 which was deposited alongwith our offers.

On enquiry from site we have come to know that work orders have already been issued to the lowest offerers in the above two tenders.

Tender No. 73 the lowest offerer Shri Balaji Engicons and tender No. 74 lowest offerer Sahu Construction.

At the time of opening the lowest offer for tender No. 73 was Shri Balaji Engicons, for tender No. 74 was Sahu Construction and for tender No. 75 was me.

Hence being the lowest offerer in tender No. 75 we were also anxiously waiting for orders. But no order has been issued to us till date. We request you to kindly issue us order, so that we can also commence the work immediately.

The records produced also contain other letters written by other tenderers viz. Shree Balaji Engicons, M/s. P.D. Agarwal, M/s. B.S. Agarwal and Ramesh Chandra Samai, inter alia, confirming that Sahu Construction was the lowest tenderer in respect of Tender No. 74.

According to the Respondents, pursuant to the work order which was issued to Sahu Construction on April 3, 1998, Sahu Construction had commenced work. The work is a time bound programme to be completed by 9 months from the date of issuance of the work order.

Having considered the records, in my opinion, the first submission of the writ Petitioner cannot succeed. Whether the covering letter was submitted along with the tender of Sahu Construction on February 17, 1998 is not a dispute which could be resolved in this proceeding. But it can at least be said that the records do not in any manner suggest that the covering letter was obtained subsequently as claimed by the writ Petitioner.

The Petitioner has relied on a passage in the case of Delhi Science Forum v. Union of lndia (1996) S.C.C. 405 which reads as follows:

Many administrative decisions including decisions relating to awarding of contracts are vested in a statutory authority or a body constituted under an administrative order. Any decision taken by such authority or a body can be questioned primarily on the grounds: (i) decision has been taken in bad faith; (ii) decision is based on irrational or irrelevant considerations; (iii) decision has been taken without following the prescribed procedure which is imperative in nature. While exercising the power of judicial review even in respect of contracts entered on behalf of the Government or authority, which can be held to be State within the meaning of Article 12 of the Constitution, Courts have to address while examining the grievance of any Petitioner as to whether the decision has been vitiated on one ground or the other. It is well settled that the onus to demonstrate that such decision has been vitiated because of adopting a procedure not sanctioned by law, or because of bad faith or taking into consideration factors which are irrelevant, is on the person who questions the validity thereof. This onus is not discharged only by raising a doubt in the mind of the Court, but by satisfying the Court that the authority or the body which had been vested with the power to take decision has adopted a procedure which does not satisfy the test of Article 14 of the Constitution or which is against the provisions of the statute in question or has acted with oblique motive or has failed in its function to examine each claim on its own merit on relevant consideration.

There is no evidence that the decision to accept the tender of the Respondent No. 5 was taken in bad faith or on any irrelevant consideration. The decision to accept the tender of the Respondent No. 5 was taken after scrutiny at all levels by officers against whom there is no allegation of bias or malafides. On the records, at the time of opening or the tender the Respondent No. 5''s offer was the lowest and there can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. See Tata Cellular Vs. Union of India,

The Tender Opening Register which contains, inter alia, the records relating to the opening of tender notice No. 74 shows that there were 22 tenderers for this particular tender. The Respondent No. 6''s name is listed at No. 5. Next to in the column special conditions it is recorded ''unconditional rebate 5.5.%''. This has been signed by two officers of RITES including the Assistant Manager who is alleged by the writ Petitioner to have made an announcement that the writ Petitioner''s tender was the lowest. The writ Petitioner''s name is listed immediately after the Respondent No. 5. The writ Petitioner''s representative has signed against the entry. It would appear therefore not only that there was no subsequent negotiation as alleged by the Petitioner but that the Petitioner knew that its tender was not the lowest on February 17, 1998 when it signed the tender register and note sheet when the respective rates of the tenders were noted. At the very least the Petitioner knew that its tender had not been accepted on March 30, 1998 when its earnest money was refunded. The work order had been issued to the Respondent No. 5 on April 3, 1998. The writ Petitioners letter dated April 13, 1998 returning the cheque was faxed to the Respondent on April 17, 1998 i.e. 2 weeks later. By this letter the Petitioner expressly referred to the acceptance of the Respondent No. 5''s tender. It then filed this writ application on April 24, 1998. The delay by the writ Petitioner, particularly where the work is to be completed in 9 months, is fatal to its cause.

The second submission of the Petitioner is that the change in rate could not be effected by a covering letter. The Petitioner has cited Tata Cellular v. Union of India (Supra) the Supreme Court to contend that the tender of the Respondent No. 5 was not in proper form.

In Tata Cellular the Supreme Court laid down the characteristics of a valid tender:

A tender is an offer. It is something which invites and is communicated to notify acceptance, Broadly stated, the following are requisites of a valid tender:

It must be unconditions.

Must be made at the proper place.

Must conform to the terms of obligation.

Must be made at the proper time.

Must be made in the proper form.

The persons by whom the tender is made must be able and willing to perform his obligation

There must be reasonable opportunity for inspection.

Tender must be made to the proper person.

It must be of full amount.

The Respondents reputed the submission that the Respondent No. 5''s tender was not in proper form stating that a reduction in the offer could be made by offering a rebate in the covering letter. It is contended that this is envisaged in Clause 1.4 of the instructions to Tenderers and is in any event a practice which had been followed in respect of other tenders as well. The Respondents have relied on the Tender Opening Register and have procedured covering letters written by tenderers offering rebates on the quoted rates in connection with other tenders.

Clause 1.6 of the instructions of Tenderers requires rates to be quoted only on the appropriate forms of the tender and that rates written at places other than those prescribed shall not be considered as part of the offer itself. The moot question therefore is whether a covering letter is a prescribed place for specifying the rates.

Clause 1.4 of the instructions to Tenderers although somewhat ambiguously framed appears to allow for a change in the tender documents including the rate by a covering letter.

1.4 No scribbling is permissible in the tender documents and no special conditions are to be stipulated by the tenderer in the same. If the tenderer wants to intimate anything of importance, he may do so in a separate covering letter. Such stipulations and conditions shall be deemed to be a part of the contract to such extent only as may be explicitly accepted by RITES and communicated to the successful tenderer RITES however, reserves the right not to accept any such special stipulation and conditions made by the tenderers and may as the tenderer to withdraw any or all such stipulations before awarding the contract. In the event of refusal of the tenderer to do so the tender is liable to be rejected.

Thus for example, a tenderer having quoted a particular rate in his tender document, might subsequently have second thoughts having perhaps assessed the possibility of his rates not being lowest at the time of submission of his tender. He cannot make an interpolation in his tender form. Clause 1.4 forbids this. The only method would be to indicate the revised quotation prior to submission of the tender document by including it in the covering letter. Such a construction of Clause 1.4 is not an unreasonable one. The Respondent authorities clearly are of the view that such a procedure was permissible under Clause 1.4 and have in the past allowed such rebates to be offered by the tenderers by means of a covering letter. This is borne out from the records. It is not as if the Respondent authorities have adopted a new procedure in this case.

It cannot in the circumstances be said that there was a procedural impropriety established in this case or at least irregularily, which calls for interference by the Court. Neither the nature nor degree of the irregularity alleged requires the Court''s intervention.

The writ application is accordingly dismissed with no order as to costs.