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Judgment
M.Jaichandren, J.—It has been stated that the Petitioner is a company,registered under the Companies Act, 1956. It is engaged in the
business of execution of infrastructural projects, byway of turn key contracts, for water supply schemes andother works. The Petitioner company
has been executingcontracts for the water supply boards in the various Statesof India and it has considerable experience and expertisein such
works. While so, the first Respondent had floated atender calling for offers, with regard to certain watersupply works, to be carried out under the
VellakoilMunicipality, the Kangeyam Town Panchayat and in 174 otherrural habitations in Erode and Tiruppur Districts.
It has also been stated that the Petitioner companyhad submitted the tender for the said works. The bidcomprised of a 2-tier system, with
technical bid and pricebid. The bidder was required to furnish a bid security of 3 Rs. 20,00,000/-in any of the specified forms. Certainconditions
had been specified, with regard to the bidsecurity to be furnished by the bidder.
It had also been stated that the total amountarrived at, based on the excess/less quoted in the''Abstract of Bill of Quantities'', is to be taken as
thefinal value for comparison and finalization of the tender. The Petitioner company had submitted a detailed descriptionof the works and the
amount in respect of each of theworks, for a total sum of Rs. 37,51,55,177/-. The Petitionerhad agreed to execute all the components of the
works at 9%excess over the value mentioned in the ''Abstract of Bill ofQuantities''. The Petitioner had, originally, offered 15%excess and had
worked out a final amount payable atRs.43,12,28,453/-. However, before submitting the tender,the figures had been modified by quoting the
amount at 9%excess. Accordingly, the final figure was quoted asRs.40,89,19,143/-. However, while making the saidcalculation, in terms of
figures, the Petitioner did notstrike off the term ''less'', due to over sight. However, theactual amount of bid, shown as Rs. 40,89,19,143/-, was
9%excess of the amount of Rs. 37,51,55,177/-quoted in the
It had been further stated that the technical bidof the tender had been opened, on 24.3.2010. The validityof the tender, after the opening of the
technical bid, wasfor a period of 120 days. The price bid had been opened, on21.5.2010. There were five participants in the tenderprocess. The
Petitioner company was the L1 being the lowesttenderer, on consideration of the 9% excess quoted by the Petitioner, amounting to a sum of Rs.
40,89,19,143/-. Subsequently, the Petitioner company had been invited for adiscussion, by the first Respondent, for negotiations onthe tendered
rate.
It had been further stated that, pursuant to the negotiations, the Petitioner company had agreed to give arebate of 0.5% on the quoted
percentage of 9% excess. Whileso, on 12.7.2010, the first Respondent had addressed a letter requesting the Petitioner to extend the validity of the
tender for the works upto 21.9.2010, as the originalvalidity was only upto 21.7.2010. Accordingly, the Petitioner had agreed to the extension of
the validity of the tender, till 21.9.2010. However, by the communication,dated 14.7.2010, the first Respondent had stated that the bid offered by
the Petitioner would only be taken as 9%less than the quoted amount in the ''Abstract of Bill ofQuantities'', as per Clause 5 of the Note in the
tender conditions. Since, the Petitioner was claiming for amodification and as the Petitioner company was not willingto undertake the works at 9%
less than the quoted rate, thebid, submitted by it, was treated as ''non-responsive'', asper clauses 23.3, 23.4 and 27.2 of the tender conditions.
Therefore, the bid security of Rs. 20,00,000/-remitted by the Petitioner company in the form of deposit receipt,bearing No. 421280, dated
22.3.2010, issued by Andhra Bank,Hyderabad, was forfeited. Further, by a letter, dated14.7.2010, the first Respondent had issued a fresh
tenderinvitation as the second call for tender, for the saidworks, on 27.9.2010. In such circumstances, the Petitionerhad preferred the present writ
petition before this Court,under Article 226 of the Constitution of India.
The main contention of the learned senior counselappearing for the Petitioner is that the impugned letterissued by the first Respondent, on
14.7.2010, rejecting thePetitioner''s tender as ''non-responsive'' and stating thatthe bid security of Rs. 20,00,000/-, furnished by the Petitioner, is
forfeited, is arbitrary, illegal and void. He had also stated that the amount of Rs. 40,89,19,143/-,quoted by the Petitioner, is 9% excess over the
sum ofRs.37,51,55,177/-quoted in the ''Abstract of Bill ofQuantities''. Further, the Petitioner had agreed to a rebateof 0.5% at the time of
negotiations with the Respondents. The Petitioner Company had a legitimate expectation thatthe contract would be awarded to it, as it had been
placedas L1. While so, the stand taken by the first Respondent,in his proceedings, dated 14.7.2010, that the amountoffered by the Petitioner
company is 9% less, is clearlyillegal. Even if there were some discrepancies in thecalculation of the amount quoted by the Petitioner, itcannot be
held that the bid submitted by the Petitioner is''non-responsive''. As such, the statement made by the firstRespondent, in his impugned letter, dated
14.7.2010, thatthe bid security of Rs. 20,00,000/-, remitted by the Petitioner, is forfeited, is unsustainable in the eye oflaw. Therefore, the action of
the Respondents calling for afresh tender, for the works in question, is arbitrary and illegal.
In the counter affidavit filed on behalf of the first Respondent, it has been stated that the price bid of the tender in question had been opened, on
21.5.2010. The 7 percentage quoted by the bidders were read out at the timeof the opening of the tender. The value quoted by the Petitioner was
9%. It had not been mentioned as to whetherit was excess or less than the rate quoted in the ''Abstractof Bill of Quantities''. As per the tender
conditions, wherethere was no mention as to whether the quoted rate by thebidder is excess or less than the rate quoted in the''Abstract of Bill of
Quantities'', it would be taken asless. When the rate quoted by the Petitioner company was taken as 9% less than the rate quoted in the ''Abstract
of Bill of Quantities'', there was no objection raised on behalf of the Petitioner company.
It had also been stated that the entire process relating to the opening of the price bid had been video graphed. On 31.5.2010, the Petitioner
company had sent its representative to negotiate the rate quoted in the tender. For the first time, on 2.6.2010, the Petitioner had sent a letter stating
that the rate quoted by it, was 9% excess. It had also been stated, on behalf of the Petitioner company, that it was willing to give a rebate of 0.5%
in the rate already quoted in the price bid. Since, there was no response from the Petitioner company after the finalization of the tender process, the
earlier tender 8 awarded to the Petitioner had been treated as ''non responsive''. Therefore, a fresh tender had been called for.
It had also been submitted that, as per clauses 23.3, 23.4 and 27.2 of the tender conditions, the bid awarded in favour of the Petitioner had
been treateas'' on on-responsive'' and the bid security submitted by the Petitioner company had been treated as forfeited. Hence, the writ petition
filed by the Petitioner is without merits and therefore, it is liable to be dismissed.
The learned Counsel for the Respondents had submitted that the rate of Rs. 40,49,94,950/-quoted by the Petitioner is not 9% excess of the
rate of Rs.37,51,55,177/-quoted as the rate in the ''Abstract of Bill of Quantities''. It only works out to 8.18% excess. Further, as per the relevant
tender conditions, if the tenderer does not state clearly as to whether the rate quoted is less or excess, it would only be taken to beless. As such, it
cannot be said that the rate quoted by the Petitioner company is excess. Further, the Petitioner company had not raised any serious objections
during the negotiations held between the representatives of the Petitioner company and the Respondents, with regard to the rate quoted by it.
Further, after the tender had been awarded in favour of the Petitioner company, there was no proper response from it. Therefore, the impugned
letter had been issued by the first Respondent stating that the tender awarded in favour of the Petitioner was treated as non-responsive and that the
amount of Rs. 20,00,000/-, remitted by the Petitioner, as security, was treated as forfeited.
The learned Counsel had also submitted that this Court, under normal circumstances, would not interfere in the tender conditions or in the
tender process. The learned Counsel had relied on the decision of the Supreme Court in W.B.State Electricity Board v. Patel Engineering CO
(2001)2 SCC 451), in support of his contentions.
In view of the averments made in the affidavit fileded in support of the writ petition and in the counter affidavit filed by the first Respondent and
in view of the submissions made by the learned Counsels appearing for the parties concerned, and in view of the records available, this Court is of
the considered view that the Petitioner has not shown sufficient cause or reason to grant there liefs, sought for by the Petitioner, in the present writ
petition.
Nothing has been shown on behalf of the Petitioner to substantiate his claims that the impugned letter of the first Respondent, dated 14.7.2010, is
arbitrary and illegal. It is clear that the first Respondent had issued the impugned letter, dated 14.7.2010, taking into consideration the relevant
tender conditions.
As per clauses 23.3, 23.4 and 27.2 of the tender conditions, it is clear that no bid shall be modified, substituted, or withdrawn after the
deadline of the submission of the bids. According to Clause 6 schedule - A of the Bill of quantities, the total amount arrived, based on the
excess/loss quoted in the ''Abstract of the Bill of quantities'' would only be taken as final value for comparison and for finalisation of the tender. It
has been stated that, as per Clause 5 of the note, if the tenderer failed to score out the word, either excess or less, the word less alone would be
taken into consideration. Since, the Petitioner had failed to score out the words excess and less, the Respondents had taken the rate quoted by the
Petitioner as less. Accordingly, the tender had been awarded in favour of the Petitioner company. Even after certain negotiations had been held,
the Petitioner company had failed to respond. Therefore, the first Respondent had issued the impugned letter, dated 14.7.2010, treating the tender
awarded in favour of the Petitioner company as ''non-responsive'' and stating that the bid security furnished by the Petitioner company had been
forfeited. Thereafter, the Respondents had called for a fresh tender, in respect of the works concerned. In such circumstances, Further, it is a
settled position that the Courts of law would be reluctant in interfering with the tender processes, except in rare cases, involving matters of public
policy or in circumstances when the provisions of law have been infringed with impunity or if it had been conducted in a blatantly mala fide manner.
14.1. In Association of Registration Plates Vs. Union of India (UOI) and Others, , it has been held as follows:
Article 14 of the Constitution prohibits the government from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly
and in public interest in awarding contract. At the same time, no person can claim a fundamental right to carry on business with the government. All
that he can claim is that in competing for the contract, he should not be unfairly treated and discriminated against, to the detriment of public interest.
Undisputedly, the legal position which has been firmly established from various decisions of the Supreme Court is that government contracts are
highly valuable assets and the court should be prepared to enforce standards of fairness on government in its dealings with tenderers and
contractors
In the matter of formulating conditions of a tender document and awarding a contract of the nature of ensuring supply of high security registration
plates, greater latitude is required to be conceded to the State authorities. Certain preconditions or qualifications for tenders have to be laid down
to ensure that the contractor has the capacity and the resources to successfully execute the work. Unless the action of tendering Authority is found
to be malicious and misuse of its statutory powers, tender conditions are unassailable.
14.2. In Jagdish Mandal V. State of Orissa (2007(14) SCC 517), it has been held as follows:
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, interfere even if a procedural aberration or error in assessment or prejudice to a tendered, is made out. The 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
tendered 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 succour 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 reasonably 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 tendered/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 inaction.
14.3. In Shimnit Utsch India Pvt. Ltd. and Another Vs. West Bengal Transport Infrastructure Development Corporation Ltd. and Others, , it has
been held as follows:""Government policy can be changed with changing circumstances and only on ground of change, a policy is not vitiated.
Government has discretion to adopt a different policy, alter or change its policy to serve public interest and make it more effective. But change in
policy must be inconformity with Wednes bury reasonableness and free from arbitrariness, irrationality, bias and malice. State or its tendering
authority is bound to give effect to essential conditions of eligibility stated in a tender document and not entitled to waive such conditions. However,
this does not take away its administrative discretion to cancel entire tender process in public interest provided such action is not actuated with
ulterior motive, arbitrariness, irrationality or is in violation of some statutory provisions.
14.4. In Sri Amman Associates Vs. State of Tamil Nadu, , it has been held as follows:
It is not for the Courts to interfere with the terms of tender notice unless it was shown that it was either arbitrary or discriminatory or actuated by
malice.
As such, the writ petition filed by the Petitioneris devoid of merits. Hence, it is dismissed. No costs. Connected M.P. Nos. 1, 2 and 3 of 2010
are closed.