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2011 DIGILAW 1022 (BOM)

Shalby Limited v. State of Goa

2011-08-12

F.M.REIS, S.A.BOBDE

body2011
JUDGMENT S. A. BOBDE, J:- Rule. Rule returnable forthwith. Heard finally by consent of the parties. 2. In Mapusa, the Government of Goa has constructed a 290 bedded modern District Hospital (Hereinafter referred to as the "said Hospital") through the Goa State Infrastructure Development Corporation. 3. On 04.05.2011, the respondent no.2-Secretary, Health Department, published a notice inviting tender or a request for proposal for development, operation and management of the said Hospital on Public Private Partnership (PPP) basis. Eight prospective bidders participated in the pre-bid meeting. Eventually, only three of the eight bidders submitted their offers. They were Apollo Hospitals, Chennai, Shalby Limited, Ahmedabad (the petitioner) and Radiant Life Care Ltd., New Delhi (the respondent no.3). These three got qualified at "Response to Pre3 Qualification" (part-I). On 27.05.2011, the aforesaid bidders qualified at the Technical Offers (Part-II). The scores obtained by the three bidders were as follows; Apollo Hospital, Chennai : 76.05, Radiant Life Care Pvt. Ltd. : 89.20, and Shalby Limited, Ahmedabad: 77.95. 4. On 02.06.2011, the financial offers were opened in presence of the Joint Secretary of the Department of Health, Director of Health Services, Government of Goa and the representatives of the three bidders and ICRA Management Consulting Services Ltd. i.e. the Consultant appointed by respondent no.2. The respondents-State had asked, inter alia, the bidders to quote annuity grant i.e. the amount that would be payable by the Government or receivable by the Government. If the Government was to pay a certain amount, it was to be considered as a positive annuity grant and if the bidder was to pay a certain amount, it was to be considered as a negative annuity grant. The Financial Proposals were to be evaluated on the basis of the Annuity Grants, positive or negative and bidders were to be selected on that basis vide clauses 5.5.2, 5.5.5 and 5.5.6 of the RFP, which read as follows: "5.5 Evaluation-Part III-Financial Offer: 5.5.1 ..... 5.5.2 Part III- Financial Proposal of all the Bidders would be evaluated on the basis of the Positive or Negative annuity Grant (quoted in INR per year) for the project and the accompanying supporting information regarding assumptions underlying the Financial Quite. 5.5.3 ..... 5.5.4. ..... 5.5.5 The Financial Proposals would then ranked in ascending order of the validated Annuity Grant. 5.5.6. 5.5.3 ..... 5.5.4. ..... 5.5.5 The Financial Proposals would then ranked in ascending order of the validated Annuity Grant. 5.5.6. The Bidder ranked first in accordance with the above procedure would be declared as the Preferred Bidder as evidenced by the issue of Letter of Intent described in section 5.6" After the preferred bidder had complied with certain conditions like the formation of an SPV and submission of a Performance Guarantee, the Authority was to issue a Letter of Award and the preferred bidder was to execute a Concession Agreement with the Authority vide Clause 5.8.4 of the RFP. 5. The Apollo Hospital, Chennai quoted a positive annuity grant of Rs. 500,00,00,000/- for concession period of 20 years. Radiant Life Care, New Delhi-respondent no.3 quoted a positive annuity grant of Rs. 39,40,00,000/- for the concession period of 20 years. The petitioner's bid did not contain a figure of either a positive or a negative annuity grant and according to the petitioner, was a "Nil Bid". The final quotation of the petitioner reads as follows : Project Name Amount (INR) In Figures In Words Equip, Operate, Maintain and Manage the 290 Bed Mapusa ** ** Hospital, Goa for 20 years timeframe. ** The company is required to invest in capital expenditure of about Rs. 40 Crores (Forty Crores including working capital, equipment and infrastructure requirements as per IPHS norms which is mandatory as per list given and other equipments & infrastructure upgrade requirement not available in your list provided and which is required as per NABH norms) and we have to further invest in day to day operations of the hospital. We do not demand any subsidy from the Govt. of Goa. In the Same manner, we request the Govt. of Goa not to ask for any compensation from the company." The representatives of the other bidders objected to the offer of the petitioner, apparently on the ground that the offer contained asterisks (**) followed by the amplification against the column "Amount (INR)" instead of stating "Nil" or "Zero". The representative of the petitioner is said to have explained that the petitioner wanted to state its offer more explicitly and since there was no adequate space in the table, the petitioner resorted to the asterisks and made a statement below. The petitioner explained that this was a neutral bid. The representative of the petitioner is said to have explained that the petitioner wanted to state its offer more explicitly and since there was no adequate space in the table, the petitioner resorted to the asterisks and made a statement below. The petitioner explained that this was a neutral bid. The objections of the other bidders were noted by the officials, who stated that they would consult their Consultant and would then decide upon the objections. The Consultant reported that the petitioner had put two asterisks without indicating any amount therein and had amplified the offer as a separate paragraph. Relying on two legal opinions annexed to the report, they observed that the documents submitted by the petitioner are not in conformity with the format provided. They further reported that they found that based on the legal opinions, the petitioners' bid is non responsive and hence invalid. In the report, there is also an observation that the documents submitted by the petitioner are not in conformity with the format and the value of some other costs is high. The Consultant opined that amongst the valid bids. Radiant Life Care Private Ltd. was the L1 bidder and Apollo Hospitals Enterprise Limited was the L-2 bidder. Accordingly, their Draft Evaluation Report was to be placed before the Project Appraisal Committee (PAC) for their endorsement to invite the preferred bidder for discussion. 6. On 07.06.2011, the PAC met and held the petitioners' proposal as non responsive and disqualified the petitioner on the basis of the Consultant's reports. Further, the Committee recommended the bid of respondent no.3 fur awarding the work. The PAC also acted on the opinion of the Law Secretary that the petitioner's bid was ambiguous and vague since it was not according to the format. This ground for rejection has referred to the following format: APPENDIX- 8 (A) (Assumptions Project Cost) Capital Cost for Equipping the Hospital: S.No. Description Suggested Quantity Unit Price Total Price Capacity (INR Lakh) (INR Lakh) 1. Equipment Name (add rows if required) 2. Any Other capital Cost TOTAL COST (Assumptions Operating and Maintenance Cost) O & M Cost S.No. Description Annual Cost (Rs. Lakh) 1. Annual Manpower Cost (provide details on no. and designations. etc) 2. Annual Operating and Maintenance cost of Equipment 3. Annual expenditure on building maintenance including power, water, SWM etc. 4. Administrative cost 5. Any Other capital Cost TOTAL COST (Assumptions Operating and Maintenance Cost) O & M Cost S.No. Description Annual Cost (Rs. Lakh) 1. Annual Manpower Cost (provide details on no. and designations. etc) 2. Annual Operating and Maintenance cost of Equipment 3. Annual expenditure on building maintenance including power, water, SWM etc. 4. Administrative cost 5. Cost Total O & M COST Thereafter, on the same day, a Letter of Intent (LOI) was issued to respondent no.3. Hence, this petition. 7. According to the respondents, the petitioners' bid was non-responsive also because it was not in accordance with the prescribed form, which was as follows: APPENDIX- 8 (A) (Assumptions Project Cost) Capital Cost for Equipping the Hospital: S.No. Description Suggested Quantity Unit Price Total Price Capacity (INR Lakh) (INR Lakh) 1. Equipment Name (add rows if required) 2. Any Other capital Cost (Assumptions Operating and Maintenance Cost) O & M Cost S.No. Description Annual Cost (Rs. Lakh) 1. Annual Manpower Cost (provide details on no. and designations, etc) 2. Annual Operating and Maintenance cost of Equipment 3. Annual expenditure on building maintenance including power, water, SWM etc. 4. Administrative cost 5. Cost Total O & M COST Instead the figures were substituted as follows: Assumptions Operating & Maintenance Cost Rs in Lacs S.No. Description Amount (Rs) 1. Annual Manpower Cost Refer Annexure 2 1,455 2. Annual Operating & Maintenance Cost of Equipments 80 3. Annual Expenditure on building mainte- nance including power, water, SWM, ete. 425 4. Administrative Cost 815 5. Other Costs (Other Operative Costs) 8,015 TOTAL COST 10,790 It is submitted that in the last column, the petitioner had omitted the word "Annual Cost" and simply wrote as; "Amount (Rs)". 8. Mr. Nadkarni, the learned counsel for the petitioner, submitted that the petitioners' offer ought not to have been treated as non responsive since there was neither ambiguity nor vagueness in it. The offer in respect of annuity grant i.e. whether positive or negative, was not vague merely because the petitioner had employed asterisks for the purposes of amplifying the text. The quotation could have been treated only as "Nil" in view of the specific statement of the petitioner that, "We do not demand any subsidy from the Govt. of Goa. In the Same manner, we request the Govt. The quotation could have been treated only as "Nil" in view of the specific statement of the petitioner that, "We do not demand any subsidy from the Govt. of Goa. In the Same manner, we request the Govt. of Goa not to ask for any compensation from the company." The learned counsel for the petitioner further submitted that the Advocates, who were consulted for the legal opinion have considered that sentence, "We do not demand any subsidy from the Govt. of Goa. In the Same manner, we request the Govt. of Goa not to ask for any compensation from the company" and then opined that reasonable inference that can be drawn is that the Annuity Grant quoted by the petitioner is 0.00 and that merely because the amount "00" is net mentioned in the figures and words, it should be treated as a technical irregularity. 9. On the other aspect, the learned counsel for the petitioners submitted that there was no deviation from the format in which the petitioners have stated assumption regarding operating and maintenance costs only because of omission of word "Annual" in the last column. According to the petitioner, their quotation was made in a format downloaded from the Internet, where it was uploaded by the respondents and while reproducing the same, the word "Annual" was accidentally omitted. In any event, the omission of word "Annual" did not change the fact that the figures quoted were indeed annual since the word "Annual" was written in the first column against items 1 and 2. Though, the word "annual" was not written against the figures of Annual Manpower Costs and other costs under items 3, 4 and 5 the figures were, in fact, annual. 10. The main contention on behalf of the petitioner is that, in the circumstances, no reasonable doubt could have been entertained by the respondents regarding the petitioners' offer which was clear. Assuming that the respondents entertained any bonafide doubt and they wish to consider the petitioners' offer with an open mind, they could have simply resolved the doubt by asking the petitioners if the quotation was nil and whether the figures quoted under the Assumptions Operating and Maintenance Cost were annual. The petitioners' further contention is that the Letter of Intent (LOI) issued to respondent no. The petitioners' further contention is that the Letter of Intent (LOI) issued to respondent no. 3 is illegal being contrary to the Rules of Business of the Government of Goa, 1991 (the "Business Rules") in that no concurrence of the Finance Department was obtained though the Letter of Intent had a financial bearing, within the meaning of the Business Rules. 11. The contention of Mr. Kantak, the learned Advocate General, appearing for respondent nos. 1 and 2-State of Goa and Mr. S.G. Aney, learned counsel for respondent no.3, is that the petitioner had no reason to make a long winded statement following the asterisks when the petitioners could have simply written the numerical "0.00" or "nil". The petitioners having stated that it is required to invest a sum of Rs. 40,00,00,000/- in capital expenditure and in day-to-day operation of the said Hospital, their offer is conditional, which is impermissible since clause 1.4.3 of the RFP clearly stipulates that any conditional offer, proposal shall be regarded as non responsive and would be liable for rejection. As regards the alleged deviation in the format wherein, the petitioner has omitted the word "Annual" the contention of the respondents is that clause 3.6.9 of the RFP clearly requires a bidder to strictly adhere to the format prescribed in the RFP document and that authority reserves the rights to reject a proposal, which does not meet this requirement. 12. According to the learned Advocate General, the State was not bound to seek any clarification from the petitioners but was entitled to consider the petitioner as disqualified and reject their bid because the tender was vague and was not in accordance the form prescribed by the State. Further, according to the learned Advocate General, the statement made by the petitioner in amplification that, "**The company is required to invest in capital expenditure of about Rs. 40 Crores (Forty Crores-including working capital, equipment and infrastructure requirements as per IPHS norms which is mandatory as per list given and other equipments & infrastructure upgrade required not available in your list provided and which is required as per NASH norms) and we have to further invest day to day operations of the hospital" makes the offer conditional, which is not permissible, therefore, renders the offer liable to be rejected. Further, the contention is that the offer is trade conditional upon investment of Rs. 40 crores and if Rs. Further, the contention is that the offer is trade conditional upon investment of Rs. 40 crores and if Rs. 40 Crores are not invested, it is not possible to know what the offer is. As regards the alleged deviation in the format, where the word "Annual" has been omitted, the contention of the learned Advocate General is that by omitting the word "Annual", the petitioners have reserved their right to turn around and say that the figures are not annual and thereby make an undue claim at a later stage. 13. The consideration of the issue requires the Court to determine, whether the requirement to write "Nil" in figures and in words is an essential requirement, which vitiates the whole quotation and renders the tender itself non responsive and liable to be rejected and, whether difference in language employed by the petitioners is a deviation in substance or whether differs only in the form. The petitioners-bidders were required to indicate the documents in the following format: "I/we are pleased to inform that I/We would charge/Pay the following Annuity Grant (positive/negative) for carrying out the Project envisaged under the Scope of work indicated in this RFP document. Project Name Amount (INR) In Figures In Words Equip, Operate, Maintain and Manage the 290 Bed Mapusa Hospital, Goa for 20 years time frame. We confirm that the amount quoted above includes all taxes except for service tax as applicable or any other equipment tax as applicable in future. We confirm that in case of discrepancy in Figures and Words for the amount Quoted the Lowest will be considered. We confirm that the Financial Proposal conforms to all the terms and conditions stipulated in the Request for Proposal Document. We confirm that our Financial Proposal is FINAL in all respects and contain No conditions." Instead, as reproduced earlier, the petitioners have quoted as follows: Project Name Amount (INR) In Figures In Words Equip, Operate, Maintain and Manage the 290 Bed Mapusa ** ** Hospital, Goa for 20 years timeframe. ** The company is required to invest in capital expenditure of about Rs. ** The company is required to invest in capital expenditure of about Rs. 40 Crores (Forty Crores including working capital, equipment and infrastructure requirements as per IPHS norms which is mandatory as per list given and other equipments & infrastructure upgrade requirement not available in your list provided and which is required as per NABH norms) and we have to further invest in day to day operations of the hospital. We do not demand any subsidy from the Govt. of Goa. In the Same manner, we request the Govt. of Goa not to ask for any compensation from the company." There is no dispute about the other statements. 14. We have no doubt that the petitioners have unnecessarily burdened, what would have been a simple quotation, with several unnecessary words and statements. There is no doubt that the only thing that the petitioners were called upon to write in figures were the numbers "0.00" and the words "nil". They have obviously strayed far from the simple requirement. But the question is, have they not submitted a quotation which is "nil"? The answer seems to be in the affirmative in view of their statement that, "We do not demand any subsidy from the Govt. of Goa. In the Same manner, we request the Govt. of Goa not to ask for any compensation from the company." They have chosen to use a word "subsidy" instead of "annuity" so also stated that they would not pay any "compensation" instead of payment of "annuity". Reading of these words, it seems plain that the petitioners-bidders do not want any payment from the Government nor do they intend to make any payment. It is understandable that a question could have arisen in the mind of the respondents-authority as to the exact meaning of the quotation but then the simple answer to that was to ask the petitioner what they meant. There is also no merit in the contention that the quotation has become conditional only because the petitioners have stated that they are required to invest Rs. 40 Crores in capital expenditure. There is no foundation for the expression on behalf of the respondents that they do not know what the offer would become if the investment is less than Rs. 40 Crores. Nowhere have the petitioners stated that the figures they are quoting would be "nil" if the investment is Rs. 40 Crores in capital expenditure. There is no foundation for the expression on behalf of the respondents that they do not know what the offer would become if the investment is less than Rs. 40 Crores. Nowhere have the petitioners stated that the figures they are quoting would be "nil" if the investment is Rs. 40 Crores and it would be some other figure if the investment is more or less than Rs. 40 Crores. There is no foundation for the respondents' apprehension that the petitioners' quotation is conditional. It is not possible to countenance the contention on behalf of the State that they were entitled to simply ignore the entire quotation without seeking any clarification, particularly since the petitioners' quotation appears to be financially the best in that the Government would not have to pay anything to the petitioners for running the hospital for 20 years in comparison to the quotation of respondent no.3, which requires the Government to pay a sum of Rs. 1,97,20,000/- annually. There is no doubt that since the matter involves public revenue, the Government was duty-bound in law to accept the lowest or the most beneficial tender and was, therefore, bound to ascertain, if necessary, by asking a few questions to the petitioners about what the offer was assuming it to be ambiguous. Similarly, even in regard to the omission of the word "Annual" in the column under heading "Assumptions Operating & Maintenance Cost." It appears that there was no real reason to assume that the figures quoted were not annual since in the first column there is sufficient indication, particularly in the first three items that the figures are annual. If there was any doubt regarding, whether the figures were annual or not in the other items, seeking a simple clarification would have enabled the Government to consider and possibly accept the tender, which appears to be the lowest and the most beneficial to it. 15. From the above, we are of the view that this is not a case where the bidder has embarked on a deviation from an essential term of tender, which mandatorily attracted a rejection. In fact, it appears that there is no deviation made by the petitioners in any term and there is at the most a defect of technical nature in the manner in which the quotation is expressed. 16. In M/s. Poddar Steel Corporation Vs. In fact, it appears that there is no deviation made by the petitioners in any term and there is at the most a defect of technical nature in the manner in which the quotation is expressed. 16. In M/s. Poddar Steel Corporation Vs. M/s. Ganesh Engineering Works and others; AIR 1991 Supreme Court 1579 the Supreme Court observed in para 6 as follows: "6. It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the Stale Bank clause 6 of the tender notice was not obeyed literally, but the question is as to whether the said noncompliance 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 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 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 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." Change in the manner of the expression of the quote and the omission of the word "annual" in the format was a technical irregularity, which did not involve the continuation of any deviation. It was certainly open to the respondent not to insist upon strictly literary compliance of the format or the manner of expressing the quote. The strong resistance exhibited by the respondent to even seeking simple clarification and proceeding to reject the tender as non responsive raise a serious question about the manner of exercise of the power. Indeed, the State Government, while entering into commercial transactions is called upon to act like a prudent businessman and in the present case, like any prudent businessman ought to have sought the necessary clarification if it entertained any doubts particularly since the tender which it has left out of consideration appears to be financially the best offer. 17. In Raunaq International Ltd. Vs. I.V.R. Construction Ltd. and ors.; (1999) 1 Supreme Court Cases 492; the Supreme Court observed as follows: 9. The award of a 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 22 decision, considerations which are of paramount importance are commercial considerations. These would be: (1) the price at which the other side is willing to do the work; (2) whether the goods or services offered are of the requisite specifications; (3) whether the person tendering has the ability to deliver the goods or services as per specifications. These would be: (1) the price at which the other side is willing to do the work; (2) whether the goods or services offered are of the requisite specifications; (3) whether the person tendering has the ability to deliver the goods or services as per specifications. When large works contracts involving engagement of substantial manpower or requiting specific skills are to be offered, the financial ability of the tenderer to fulfil the requirements of the job is also important; (4) the ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality: (5) past experience of the tenderer and whether he has successfully completed similar work earlier; (6) time which will be taken to deliver the goods or services; and often (7) the ability of the tenderer to take follow up action, rectify defects or to give post-contract services. Even when the State or a public body enters into a commercial transaction, considerations which would prevail in its decision to award the contract to a given party would be the same. However, because the State or a public body or an agency of the State enters into such a contract, there could be, in a given case, an element of public law or public interest involved even in such a commercial transaction. 18. In Tata Cellular Vs. Union of India; AIR 1996 Supreme Court 11, the Supreme Court vide para 105 observed as follows:- 105. Sir John Donaldson, M.R. in R. v. Monopolies and Mergers Commission, ex p Argyll Group plc- observed thus: "We are sitting as a public law court concerned to review an administrative decision, albeit one which has to be reached by the application of judicial or quasi-judicial principles. We have to approach our duties with a proper awareness of the needs of public administration. I cannot catalogue them all but, in the present context, would draw attention to a few which are relevant. Good public administration is concerned with substance rather than form. ... Good public administration is concerned with the speed of decision, particularly in the financial field. ... Good public administration requires a proper consideration of the public interest. In this context, the Secretary of State is the guardian of the public interest. ... Good public administration is concerned with substance rather than form. ... Good public administration is concerned with the speed of decision, particularly in the financial field. ... Good public administration requires a proper consideration of the public interest. In this context, the Secretary of State is the guardian of the public interest. ... Good public administration requires a proper consideration of the legitimate interests of individual citizens, however rich and powerful they may be and whether they are natural or juridical persons. But in judging the relevance of an interest, however legitimate, regard has to be had to the purpose of the administrative process concerned. ... Lastly, good public administration requires decisiveness and finality, unless there are compelling reasons to the contrary." It is not possible to define what is "substantial" and what is "formal" for all situations. It must be left to each case. In the present case, it appears that the arguments on behalf of the respondents are mainly that the petitioners have deviated from the format in which the respondents asked for the quotation by not simply writing amount in figure and words and by omitting the word "Annual" in the form. In our view, that was not sufficient to ignore the entire tender itself as non responsive. The respondents would have done well to see if in substance the petitioners have quoted any "nil" figure and if in substance the figures quoted by them were "annual". It would be well to recall the following words of the Supreme Court in Ram and Shyam Co. Vs. State of Haryana, 1985 (3) Supreme Court Cases 267, .....It is also well settled that the authorities like the Doordarshan should act fairly and their action should be legitimate and fair and transaction should be without any aversion, malice or affection. Nothing should be done which given the impression of favouritism or nepotism." Merely because the respondent had reserved their right to reject any tender they did not possess any unfettered discretion of ignoring the tender, which might be more beneficial to the Government for the reasons those employed in the present case. In F.C.I. Vs. Kamdhenu Cattle Feed Industries, (1993) 1 SCC 71 , in para 7, the Supreme Court has observed as follows: "... There is no unfettered discretion in public law: A public authority possesses powers only to use them for public good. In F.C.I. Vs. Kamdhenu Cattle Feed Industries, (1993) 1 SCC 71 , in para 7, the Supreme Court has observed as follows: "... There is no unfettered discretion in public law: A public authority possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a procedure which is 'fair-play in action' ." Equally, there is no doubt that the Courts would not be concerned with the merits of a decision but the situation must be treated as very different where tender itself is left out of consideration and a tender, which requires the Government to pay about Rs. 29 Crores is accepted. 19. The learned counsel for the petitioners relied on several decisions where the Courts have insisted on the parties acting on the basis of substance and not on form, if necessary by asking for a clarification from a party in respect of any doubt. In the circumstances, we arc of the view that ignoring the petitioners' offer as non responsive, instead of seeking clarification, is something done without lawful execution and suffers from malafides in law. In State of A.P. Vs. Goverdhanlal Pitti; (2003) 4 SCC 739 ; the Supreme Court observed as follows: "12. The legal meaning of malice is 'ill-will or spite towards a party and any indirect or improper motive in taking an action'. This is sometimes described as 'malice in fact'. 'Legal malice' or 'malice in law' means 'something done without lawful excuse'. In other words, 'it is an act done wrongfully and wilfully without reasonable or probable cause, and not necessarily an act done from ill feeling and spite. It is a deliberate act in disregard of the rights of others'. (See Words and Phrases Legally Defined, 3rd Edn., London Butterworths, 1989) 13. Where malice is attributed to the State, it can never be a case of personal ill-will or spite on the part of the State. If at all it is malice in legal sense, it can be described as an act which is taken with an oblique or indirect object. Prof. Wade in his authoritative work on Administrative Law (8th Edn. Where malice is attributed to the State, it can never be a case of personal ill-will or spite on the part of the State. If at all it is malice in legal sense, it can be described as an act which is taken with an oblique or indirect object. Prof. Wade in his authoritative work on Administrative Law (8th Edn. At p. 414) based on English decisions and in the context of alleged illegal acquisition proceedings, explains that an action by the State can be described mala fide if it seeks to 'acquire land 'for a purpose not authorised by the Act" 20. In Madhucan Projects Ltd. Vs. National Highways Authority of India and Ors.; W.P. (C) No. 8418 of 2010, decided on 10.03.2011, the Delhi High Court held that the petitioner's bid ought not to have been treated as non responsive but the petitioner could have been called to issue a clarification as to the doubt about the authenticity of the Power of Attorney in that case. 21. In State of Kerala Vs. Zoom Developers Private Ltd. And others; (2009) 4 Supreme Court Cases 563, the bid of a party was treated as non responsive because there was a change in the consortium membership and failure to incorporate joint and several liability clause for the consortium clause in the consortium agreement. According to the respondents the party had used words "Joint and several responsibility" instead of the words "joint and several liability". The Supreme Court observed that though the word "responsibility" is different from the word "liability" and the term "joint and several liability" was required to be incorporated in the consortium agreement, there was no merit in the contention that only the word "liability" ought to have been used since it constituted an objective criterion. The Court observed that the earlier view taken by the party that it was a curable defect was correct. 22. The petitioner also relied on the judgment of this Court in A 2 Z Maintenance & Engineering Services Ltd. Vs. Maharashtra State Electricity Distribution Co. Ltd. & Anr. 2010 (5) ALL MR 4 where this Court took a view that a tender ought not to have been considered as non responsive because the Power of Attorney submitted was not in conformity with a clause in the tender document. Maharashtra State Electricity Distribution Co. Ltd. & Anr. 2010 (5) ALL MR 4 where this Court took a view that a tender ought not to have been considered as non responsive because the Power of Attorney submitted was not in conformity with a clause in the tender document. The Court observed that "the Bidder ought to have been given an opportunity to cure the defect as was done in the case of any other bidder" Further, we are of the view that in a case where two views are possible, the view holding that a party should not be disqualified should be accepted since disqualification prevents the applicant from participating in the budding process and affects fundamental lights under Article 19 (1) (g) of the Constitution of India, which also affects finances of the State. 23. The learned Advocate General for the State of Goa further submitted that in any event, the petitioners' bid is liable to be rejected since its quotation is non viable. According to the respondents, the petitioners' bid is liable to be rejected because its expenditure is three times its net worth. There is no merit in this contention, particularly since there is no clause in the RFP which requires a particular amount of net worth to be maintained by its bidder in proportion to its annual expenditure. Thus, it is not permissible to adopt any hidden criteria. Clause 4.4.5 of the RFP requires a bidder to have net worth of Rs. 20 Crores. Net worth of the petitioners is 31,53 Lacs. The proposition of the net worth to annual expenditure is nowhere prescribed as a criterion. Moreover, the petitioners' bid has been rejected as non responsive which means that it has not been rejected on the basis of any evaluation. It would, therefore, not be appropriate to consider these objections raised by the respondents at this stage. The judgments relied upon by the learned Advocate General in Siemens Public Communication Networks Pvt. Ltd. & Anr. Vs. Union of India and ors. (2008) 16 Supreme Court Cases 215 and other judgment in Larsen and Tubro Ltd. and anr. Vs. Union of India and ors; (2011) 5 S.C.C. 430 are not applicable to the facts and circumstances of the case. As already held herein, the action on the pat of the respondents to hold that the bid of the petitioners was non responsive. (2008) 16 Supreme Court Cases 215 and other judgment in Larsen and Tubro Ltd. and anr. Vs. Union of India and ors; (2011) 5 S.C.C. 430 are not applicable to the facts and circumstances of the case. As already held herein, the action on the pat of the respondents to hold that the bid of the petitioners was non responsive. can not be accepted for the reasons stated hereinabove. 24. It is admitted by respondent no.3 that respondent no.2 has issued a Letter of Intent and respondent no.3 has accepted the Letter of Intent and that they have duly conveyed the acceptance vide para 4 of the affidavit-in-reply. The Letter of Intent dated 07.06.2011 reads as follows: "This is to notify that your Financial offer dated 26th May, 2011 submitted for development. Operations and Management uf "District Hospital at Mapusa, Goa as prescribed in the PFP document at an annuity of (excluding Service Tax) INR Rs. 1,97,20,000/- (Indian Rupees One Crore Ninety Seven Lakhs Twenty thousand Only) is hereby accepted by Public Health Department, Government of Goa. The period of services will be as mentioned in Clause 2.4.1 of the Draft Concession Agreement as per Volume III of RFP. You are hereby requested to sign the Concession Agreement on a mutually agreed date at the earliest. You are also requested to furnish Performance Security in form of Bank Guarantee as per Clause No. 3.5.4 of the RFP. The Performance Security shall be arranged within 15 days from the issue of Letter of Acceptance and shall remain valid for the entire period of Concession." Thus, respondent no.3 has accepted the Letter of Intent and the acceptance has been duly communicated to the Government. 25. It was lastly contended on behalf of the petitioner that the Letter of Intent dated 07.06.2011 issued by respondent no.2 to respondent no.3 constitutes a concluded contract and is an order, which has a financial beating within the meaning of Section 7 (1) (d) of the Business Rules and, in any case, the proposal requires previous concurrence of the Finance Department. The said previous concurrence, not having been obtained, the issue of Letter of Intent is contrary to the Business Rules and, therefore, illegal. It is the contention of learned Advocate General and Mr. The said previous concurrence, not having been obtained, the issue of Letter of Intent is contrary to the Business Rules and, therefore, illegal. It is the contention of learned Advocate General and Mr. S. G. Aney, the learned counsel for respondent no.3 that the issue of LOI and its acceptance by respondent no.3 does not constitute a concluded contract which may be said to come into existence only after the issue of the Letter of Award and the signing of the Concession Agreement and, therefore, the concurrence of the Finance Department required by Rule 7 of the Business Rules would be necessary only before the signing of the Concession Agreement. It is, therefore, necessary to examine the Business Rules. Rule 7 of the Business Rules reads as follows: "7. (1) Unless the case is fully covered by the power to sanction expenditure or to appropriate or re-appropriate funds conferred by any general or special orders made by the Finance Department, no Department shall, without the previous concurrence of the finance Department, issue any order, which may- (a) involve any abandonment of revenue or involve any expenditure for which no provision has been made in the appropriation Act; (b) …… (c) …… (d) otherwise have a financial bearing whether involving expenditure or not. (2) No proposal which requires previous concurrence of the finance Department under this rule, but in which the Finance Department has not concurred, may be proceeded with unless a decision to that effect has been 33 taken by the Council. (3) ..... (4) ..... (5) ....." 26. According to the respondents, after evaluation the financial proposals of the various bidders have to be ranked in ascending order of the evaluated annuity grant and declare the bidder of rank first as a preferential bidder for the purposes of issuing of Letter of Intent and that the preferred bidder would be then notified in writing by authority by issuing a Letter of Intent. It is the contention on behalf of the respondents that after the Letter of Intent issued, the bidder has to comply as to form a SPY with the share holding conditions of the RFP and submit a performance guarantee. It is only after this is done by the preferred bidder, the Letter of Award is issued and the concession agreement is signed. It is only after this is done by the preferred bidder, the Letter of Award is issued and the concession agreement is signed. In the circumstances the respondents contended that a concluded contract cannot be said to have come into existence because the concession agreement has not been signed and it was, therefore, not necessary for respondent no.2 to have obtained the concurrence of the Finance Department under Rule 7 of the Business Rules. 27. After considering that the respondents have accepted the terms of the Letter Of Intent reproduced above, there is a little doubt that a concluded contract can be said to have come into existence even though the formal execution of the Concession Agreement remained. It was fairly accepted by the learned Advocate General that respondent no.2 could not have backed out after issuing the Letter of Intent to respondent no.3 so that the contract may be given to any other bidder without incurring any liability. In any case, there is no doubt whatsoever that whether the Letter of Intent is treated as concluded contract or not, it is certainly a proposal within the meaning of Rule 7 (2) of the Business Rules. As far as the Business Rules are concerned, vide Rule 7, no Department is entitled to issue any order, which may have financial bearing, whether involving expenditure or not without previous concurrence of the Finance Department. Thus, the decision of the PAC dated 07.06.2011 to award the work to respondent no.3, is clearly an order which has a financial bearing within the meaning of Section 7 (1) (d) of the Business Rules above. Therefore, it was necessary for the respondents to have obtained the previous concurrence of the Finance Department before the issue of order and the Letter of Intent in pursuance of the order. In any event, assuming that the issuance of the Letter of Intent and its acceptance is not a concluded contract, it is undoubtedly a proposal, which has a financial bearing. 28. It is well settled in a recent judgment of the Supreme Court in M/s. M. R. F. Ltd. & Anr. Vs. Manohar Parrikar & Ors.; 2010 AIR SCW 5742 that Rule 7 (2) of the Business Rules, requires the concurrence of the Finance Department as a condition precedent. The Supreme Court has observed as follows: 53. 28. It is well settled in a recent judgment of the Supreme Court in M/s. M. R. F. Ltd. & Anr. Vs. Manohar Parrikar & Ors.; 2010 AIR SCW 5742 that Rule 7 (2) of the Business Rules, requires the concurrence of the Finance Department as a condition precedent. The Supreme Court has observed as follows: 53. ...From a combined reading of the provisions of Rules 7, 3 and 6 of the Business Rules of the Government of Goa the conclusion would be irresistible that any proposal which is likely to be converted into a decision of the State Government involving expenditure or abandonment of revenue for which there is no provision made in the Appropriation Act or an issue which involves concession or otherwise has a financial implication on the State is required to be processed only after the concurrence of the Finance Department and cannot be finalized merely at the level of the Minister in charge....." We are, thus, of the view that the decision to issue Letter of Intent and its issuance has been done in violation of rule 7 of the Business Rules. 29. It was then contended by Mr. Aney, learned counsel for respondent no.3 that in contractual matters, there was no scope for granting relief to a party on the ground of equity and that the decision in favour of respondent no.4 can be interfered with only on the ground of reasonableness and public interest. As indicated earlier, we are of the view that the petitioners' tender has been unreasonably excluded from consideration and that has resulted in the Government not considering the offer, which appears to be the most favourable to it contrary to the public interest. In the result, we are of the view that the petition must be allowed. Accordingly, we quash and set aside the decision taken by respondent nos. 1 and 2 to reject financial offer of the petitioners and further quash and set aside the Letter of Intent dated 07.06.2011 issued to respondent no.3. We further direct that all the existing offers received by respondent no.2 be considered afresh and, if necessary, by seeking such clarifications as may be needed. Rule made absolute in the above terms. No order as to costs. At this stage, learned counsel for respondent no.3 prays for stay of the order. We further direct that all the existing offers received by respondent no.2 be considered afresh and, if necessary, by seeking such clarifications as may be needed. Rule made absolute in the above terms. No order as to costs. At this stage, learned counsel for respondent no.3 prays for stay of the order. However, in view of the fact that the Hospital Project is unduly delayed and there are directions in other Public Interest Litigation for commissioning the District Hospital at Mapusa, we do not consider it appropriate to grant stay. The prayer is, therefore, rejected. Petition allowed.