Mega Electricals Dihang Edutech Infrastructure Private Limited v. State of Assam
2012-05-17
A.K.GOSWAMI
body2012
DigiLaw.ai
JUDGMENT A.K. Goswami, J. 1.
JUDGMENT A.K. Goswami, J. 1. This writ application under Article 226 of the Constitution of India has been filed with the following prayers: In the premises aforesaid, it is therefore prayed that your Lordships would be graciously pleased to admit this petition, call for the records of the case, issue a Rule directing the respondents to show cause as to why a writ in the nature of Certiorari and/or any other appropriate writ, order or directions of like nature shall not be issued, directing the respondent authorities to set aside and quashed the decision of the Tender Purchase Committee Meeting held on 29.11.2011 in respect of Bid submitted by the petitioners for execution of the work namely, Design, Supply, Construction & Commissioning of 33 KV double circuit line (length 13.00 Km Approx.) from Mintriang SHEP to 220/33 KV Sub-Station under Karbi Langpi HEP at Karbi Anglong District of Assam, against the specifications No. ASEB/CGM(RE)/APDCL/Tech-001/Mintriang-SHEP/2011-12/08 of Assam Power Distribution Company Limited (RE) and/or a writ in the nature of Certiorari and/or any other appropriate writ, order or directions of like nature shall not be issued, directing the respondent authorities to set aside and quash the letter dated 16.12.2011 issued by Chief General Manager (RE), APDCL in respect of decision of Tender Purchase Committee for bid security of the petitioners and/or a writ in the nature of Certiorari and/or any other appropriate writ, order or directions of like nature shall not be issued, directing the respondent authorities to set aside and quash any decision of the respondent authorities to issue work order in favour of respondent No. 6 and any other consequential order thereto and/or as to why a writ in the nature of Mandamus and/or any other appropriate writ, order or directions of like nature shall not be issued, directing the respondent authorities not to award the work of Design, Supply, Construction and Commissioning of 33 KV double circuit line (length 13.00 Km Approx.) from Mintriang SHEP to 220/33 KV Sub-Station under Karbi Langpi HEP at Karbi Anglong District of Assam, against the specifications No. ASEB/CGM(RE)/APDCL/Tech-001/Mintriang-HEP/2011-12/08 of Assam Power Distribution Company Limited (RE) to the respondent No. 6 and/or issue a writ in the nature of Mandamus and/or any other appropriate writ, order or directions of like nature shall not be issued, directing the respondent authorities to accept the bid document, bid security along with Earnest Money Deposit of the petitioners which has been deposited of the petitioners which has been deposited in favour of Chief General Manager (RE), APDCL for execution of the Design, Supply, Construction & Commissioning of 33 KV double circuit line (length 13.00 Km Approx.) from Mintriang SHEP to 220/33 KV Sub-Station under Karbi Langpi HEP at Karbi Anglong District of Assam, against the specifications No. ASEB/CGM(RE)/APDCL/Tech-001/Mintriang-SHEP/2011-12/08 of Assam Power Distribution Company Limited (RE) and/or to issue work order in favour of the petitioners Joint Venture Consortium to award the work of Design, Supply Construction & Commissioning of 33 KV double circuit line (length 13.00 Km Approx.) from Mintriang SHEP to 220/33 KV Sub-Station under Karbi Langpi HEP at Karbi Anglong District of Assam, against the specifications No. ASEB/CGM(RE)/APDCL/Tech-001/Mintriang-SHEP/2011-12/08 of Assam Power Distribution Company Limited (RE), after perusal of materials on record and after hearing the parties your Lordships may be pleased to make the Rule absolute and/or may be pleased to pass any other order or orders so as to give full and complete relief to the petitioners and/or may be pleased to pass such further or other order(s) as your Lordships may deem fit and proper.
The petitioner No. 1 is a Joint Venture Consortium (JV), constituted by the petitioner Nos. 2 & 3 for the purpose of Design, Supply, Construction and Commissioning of 33 KV double circuit line (length 13.00 Km Approx.) from Mintriang SHEP of 220/33 KV Sub-Station under Karbi Langpi HEP at Karbi Anglong District of Assam, against the specifications No. ASEB/CGM(RE)/APDCL /Tech-001/Mintriang-SHEP/2011-12/08 of Assam Power Distribution Company Limited (RE). The petitioner No. 2 is executing various contractual work under North Eastern Electric Power Corporation Limited and also under Assam Power Distribution Company Ltd. as well as other Government and semi-Government Departments. The petitioner No. 3 has executed various civil and electrical works successfully. 2. On 2.9.2011, the Chief Engineer (RE), Assam Power Distribution Company Limited, for short, APDCL, issued an advertisement under NIT ASEB/CGM(RE)/APDCL/Tech-001/Mintriang-SHEP/2011-12/8 dated: 02.09.2011 for execution of Design, Supply, Construction and Commissioning of 33 KV double circuit line (length 13.00 Km Approx.) from Mintriang SHEP to 220/33 KV Sub-Station under Karbi Langpi HEP at Karbi Anglong District of Assam, hereinafter referred to as, the work. By the said NIT, sealed tenders were invited from experienced and financially sound Electrical Contractor(s) (individual or joint venture)/Firm(s) having valid electrical contractor license up in 33 KV issued by the competent authority of the Government of Assam and having Electrical Supervisor's Certificate of Competency and Workman Permit. The last date of receipt of tender was fixed on 30.9.2011. The period of completion of the work was fixed at 140 days. It was stipulated that the tenderers were required to submit the bid in 2 (two) parts -(i) Techno-Commercial Bid and (ii) Price Bid and both the Bids were required to be submitted in two separate sealed envelopes. 3. The petitioner No. 1 submitted tender within the stipulated time by submitting all required documents and had deposited earnest money by way of a bank draft along with a forwarding letter dated 30.9.2011 issued by the constituted Attorney of the petitioner No. 1. The Techno-commercial Bid of the tenderers were not opened on 30.9.2011 and without fixing any date for opening of Techno-commercial Bid, the bidders were told that they would be informed about the outcome of Techno-commercial verification later on.
The Techno-commercial Bid of the tenderers were not opened on 30.9.2011 and without fixing any date for opening of Techno-commercial Bid, the bidders were told that they would be informed about the outcome of Techno-commercial verification later on. In spite of request, the respondent authorities, with mala fide intention, did not inform the petitioners the result of the verification and therefore, a letter dated 09.12.2011 was issued to the respondent No. 4, requesting him to intimate the petitioners the status of the aforesaid tender at the earliest and also indicating that, if there was any discrepancy in submission of any document/paper, they would rectify the same. 4. On 16.12.2011, a letter was issued by the respondent No. 4, informing the petitioner No. 2 that the Tender Purchase Committee (TPC), in its meeting held on 29.11.2011, found the bid of the petitioner No. 1 substantially non-responsive as per clause No. 19 (vii) of Section 2 of Bidding Document in respect of submission of Bid Security. On 3.1.2012, the constituted Attorney of the petitioner No. 1 wrote a letter to the respondent No. 4 in response to the letter dated 16.12.2011, which was received on 28.12.2011, stating that the petitioner No. 1 had deposited earnest money in terms of clause 10.2 of Section -2 of the Bidding Document on behalf of the Joint Venture Consortium though remitted from the account of petitioner No. 2. It was also stated that in the NIT, nowhere it was stated that the tenderer shall deposit bid security before the execution of work and therefore, earnest money and bid security being not same, the decision of the meeting of TPC held on 29.11.2011, treating the bid of the petitioner No. 1 as non-responsive, is not correct. It was also stated that even otherwise, assuming that there was some deficiency with regard to bid security/earnest money deposit, the bid of the petitioner ought not to have been rejected on such a flimsy ground and therefore, requested him to convene a meeting of Tender Committee to take a fresh decision with regard to the Joint Venture Consortium Bid of the petitioner No. 1, and/or cancel the work order issued in favour any party, if any, and/or to open the bid value of the Joint Venture Consortium and take a fresh decision in respect of award of the work. 5.
5. It has further been pleaded in the writ petition that the respondents had almost decided to allot the work in favour of the respondent No. 6, but the final work order had not been issued and that no agreement was also executed with the respondent No. 6. 6. On 06.02.2012, the petitioners filed an additional affidavit stating that after passing of the interim order dated 20.01.2012, surreptitiously, by a back dated order, the respondent authorities had issued the work order and as no copy of the same was made available to the petitioners, prayed for a direction to the authorities to produce the work order and the relevant records. 7. An affidavit on behalf of M/s Neccon Power & Infra Ltd. was filed, contending that the said entity be impleaded as respondent No. 6 in place of the respondent No. 6 as finding place in the writ petition as name of the respondent No. 6 in the writ petition was changed long back to Neccon Power & Infra Ltd. In the said affidavit, the allegation of passing a back dated order by the authorities and the respondent No. 6 not doing any work pursuant to the work order dated 16.12.2011, was denied. It is stated therein that 15% advance payment was prepared on 29.12.2011 and it had received a payment of Rs.78,00,228.00 on 13.01.2012. The Company had also procured huge quantity of materials and had applied for dispatch clearance which was issued on 19.1.2012 and the materials were duly delivered at site. The affidavit asserted that the petitioners failed to comply with clause 19 (vii) of Section 2 of the Bidding Document in respect of submission of bid security as it was in the name of petitioner No. 2 and the forwarding letter was also issued in the name of petitioner No. 2 and as such the petition lacks merit and deserves to be dismissed. 8. Two affidavit(s)-in-opposition had been filed by the respondent Nos. 2, 3, 4 & 5 -one on 02.03.2012 and the other on 12.03.2012. In the affidavit filed on 2.3.2012, it is stated that the Bid Document was issued by the respondent No. 4 to the writ petitioner No. 2 and the tender was submitted by the petitioner No. 1.
8. Two affidavit(s)-in-opposition had been filed by the respondent Nos. 2, 3, 4 & 5 -one on 02.03.2012 and the other on 12.03.2012. In the affidavit filed on 2.3.2012, it is stated that the Bid Document was issued by the respondent No. 4 to the writ petitioner No. 2 and the tender was submitted by the petitioner No. 1. The earnest money of Rs.6 lakh was deposited along with tender document in the form of banker cheque dated 27.09.2011, remitted by the petitioner No. 2 and not in the name of both the parties (JV), the earnest money deposit was in violation of clause 19(vii) of Section 2 of the Bidding Document. The allegation of the respondents informing the bidders on 30.09.2011 that they would inform the outcome of Techno-commercial Bid later on was denied. By notification dated 05.09.2011, a Tender Opening and Evaluation of Techno-commercial Bid Committee was constituted and the said Committee, in its meeting held on 21.10.2011, completed Techno-commercial Evaluation of the bids. It was found that out of six contractors, who had taken the tender documents only three contractors participated in the process. As the tender was not finalized, the respondent authority could not provide status of the tenders as sought for by the petitioners vide letter dated 09.12.2011 and after finalization of the tender process, letter dated 16.12.2011 was issued informing the petitioners that the Techno-commercial bid was substantially non-responsive as per clause 19(vii) of Section- 2 of the Tender Document in respect of submission of Bid Security. It is also stated that Bid Security and Earnest Money is one and the same. It is also stated that the price offered by respondent No. 6 after negotiation was found to be reasonable and therefore, TPC had recommended award of contract to Neccon Power & Infra Ltd. at Rs.5,94,33,966.00. As the value of the work was beyond Rs.5.00 crores, the matter was placed before the Board and the Board, in its meeting held on 09.12.2011, approved to allot the work as recommended by the TPC. A statement was also made that clause 19(vii) in Section - 2 of the Bid Document was incorporated to protect the company from loss etc.
A statement was also made that clause 19(vii) in Section - 2 of the Bid Document was incorporated to protect the company from loss etc. in the event of withdrawing from participation by any partner of the Joint Venture Consortium during the execution of the work, as in absence of the same, it would not be possible on the part of the respondent company to bind the Joint Venture Consortium for any loss or damage. It is also indicated that contract agreement was executed on 19.12.2011 and work was commenced thereafter and a Survey Report (Drawing) and Route Map were also submitted on 18.01.2012. 9. By the affidavit filed on 12.03.2012, it is clarified that the word "execution" used while explaining the purpose of incorporation of clause 19(vii) in Section -2 of the Bid Document was wrongly typed and the same should be read as "finalization". It has also been stated that the General Conditions of Supply and Erection, 2009 is also a part of the tender document as per clause 21 of the Bid Document. 10. I have heard Mr. N. Dutta, learned Senior counsel for the petitioners, Mr. B.D. Das, learned Senior counsel for the respondent Nos. 1 to 5 and Mr. G.N. Sahewalla, learned Senior counsel for the respondent No. 6. 11. The writ petitioners had filed an application to bring on record Neccon Power & Infra Ltd. by amending the name of the respondent No. 6 as appeared in the writ petition. All the Senior counsel appearing for the parties submit that respondent No. 6 be read as Neccon Power & Infra Ltd. and cause title be corrected accordingly. 12. Before proceeding further to note and consider the submissions of the learned Senior counsel for the parties, it will be appropriate to notice certain clauses of the NTT as well as terms and conditions appearing in Section 2(Tender inviting proposal) and therefore, the same are re-produced herein below :- ASSAM POWER DISTRIBUTION COMPANY LTD. Office of the Chief General Manager (RE) NOTICE INVITING TENDER ................................................................. .................................................................... Note: 2. In case of a joint venture firm, the relevant deed in support of joint venture, an agreement duly registered or certified by Notary must be submitted along with the bid. In absence of such documents, the tender from a joint venture firm shall be rejected, (for joint venture requirement refer S1.19 of Sec-2). 3.
.................................................................... Note: 2. In case of a joint venture firm, the relevant deed in support of joint venture, an agreement duly registered or certified by Notary must be submitted along with the bid. In absence of such documents, the tender from a joint venture firm shall be rejected, (for joint venture requirement refer S1.19 of Sec-2). 3. The Techno-Commercial & Price bids must be submitted as per instructions laid down in S1.4 of Sec-2. 4. Earnest money as stipulated should be submitted with the Techno Commercial bid in the form of Bank Draft/Banker's Cheque pledged in favour of "CHIEF GENERAL MANAGER (RE), ASEB, Guwahati-1". Any tender without earnest money will be rejected outright. ............................................. ............................................. TENDER INVITING PROPOSALS WITH TERMS & CONDITIONS FOR THE WORK ON TURNKEY BASIS 4. Submission of bid The bidder shall submit the bid be in a sealed envelope as follows: 1. Techno-commercial bid Techno-commercial bid should be submitted in a sealed envelope, Superscribing "Techno-commercial bid with EMD (in separate envelop) with name of bidder, full address and NIT reference and under this will be included and defined vendors scope of work, responsibilities, guarantees, specification of equipment, commercial terms and conditions, vendor's company credentials, experience of similar assignments, registration details, etc. as per requirement. Tender proforma for techno-commercial Bid is enclosed as Annexure-1. II Price Bid Price bid should be submitted in a sealed envelope superscribing "Price Bid" with name of bidder, NIT reference No. Under this will include rates of supply and erection of different items for electrification. The tender proforma for price Bid is enclosed as Annexure-II. Both the envelope should be placed in a bigger envelope duly sealed superscribing name of bidder, NIT reference and addressed to CGM(RE), APDCL, Bijulee Bhawan, Annex Building, Paltanbazar, Guwahati. NB: (a) If there is discrepancy between the unit price and the total price that is obtained by multiplying the unit price and quantity, the unit price shall prevail and total price should be corrected. If there is discrepancy between the words and figures, the amount in word should prevail. If the bidder does not accept the correction of the errors as above, his bid will be rejected and the amount of bid guarantee/security will be forfeited.
If there is discrepancy between the words and figures, the amount in word should prevail. If the bidder does not accept the correction of the errors as above, his bid will be rejected and the amount of bid guarantee/security will be forfeited. 10.2 Earnest Money Deposit (EMD): The Tender must be accompanied with earnest money as mentioned in the NIT against the work to be deposited in the form of Bank Draft/Banker's Cheque pledged in favour of "Chief General Manager (RE)" with validity of 60 (sixty) days from the last date of submission of Bid. The EMD should be submitted along with Techno-Commercial bid. The earnest money to the unsuccessful bidders will be released on finalization of the tenders. The EMD to the successful bidder will be released on submission of Contract Performance Guarantee at the time of execution of the agreement as per clause 10.3. 10.3 CONTRACT PERFORMANCE GUARANTEE The successful bidder shall be required to furnish to the Chief General Manager (RE) a Contract Performance Guarantee (CPG) for the value of Five percent (5%) of Total Contract Price with an undertaking to extend from time to time till 90 (ninety) days beyond the actual date of successful completion of warranty period, as may be required under the Contract. The bid guarantee shall be kept valid by the successful bidder till the Contract Performance Guarantee is accepted by the APDCL. The Contract Performance Guarantee will have to be submitted at the time of signing the agreement by the successful bidder. ...................................................... ...................................................... 19. Joint Venture Requirement (i) The Bid and, in case of successful Bid, the form of agreement shall be signed so as to legally bind both the partners. (ii) One of the partners shall be authorized to be as the lead partner and this authorization shall be evidenced by submitting a Power of Attorney signed by legally authorized signatories of the partners. (iii) The lead partner shall be authorized to incur liabilities, receive payments and receive instructions for and on behalf of any or all partners of the joint venture and the entire execution of the contract.
(iii) The lead partner shall be authorized to incur liabilities, receive payments and receive instructions for and on behalf of any or all partners of the joint venture and the entire execution of the contract. (iv) All the partners of the joint venture shall be jointly and severally liable for the execution of the contract in accordance with the contract terms and a relevant statement to this effect shall be included in the authorization mentioned under (ii) above as well as in the bid form and the form of agreement (in case of successful bidder). (v) A copy of the agreement entered into by the joint venture partners shall be submitted with the bid. (vi) The figure of average annual turnover for the joint venture partners shall be added together to determine the bidder's compliance with the minimum average turnover requirement. However, the lead partner must meet at least 40% and other partner must meet the balance 60% of the minimum average annual turnover criteria given in the Tender. (vii) In case the bid is submitted by a joint venture, the Bid Security shall be in the name of the Joint Venture covering all the partners of the Joint Venture and not in the name of the Lead Partner or any partner (s) of the Joint Venture alone. .................................................... ..................................................... 21. Terms and conditions, which are not specified, herein above will be governed by Company's General Conditions of Supply and Erection in force. 13. Mr. N. Dutta, learned Senior counsel for the petitioners submits that the decision of the Tender Purchase Committee meeting held on 29.11.2011 holding the bid substantially non-responsive as per clause 19(vii) of Section-2 of Bidding Document in respect of bid security is not sustainable in law. He submits that the letter dated 30.9.2011 by which earnest money was submitted in the shape of a demand draft leaves no room for doubt that clause 19(vii) was fully complied with. Assuming but not admitting that there was some irregularity, then also the irregularity is not such that it should necessarily entail rejection of the tender.
He submits that the letter dated 30.9.2011 by which earnest money was submitted in the shape of a demand draft leaves no room for doubt that clause 19(vii) was fully complied with. Assuming but not admitting that there was some irregularity, then also the irregularity is not such that it should necessarily entail rejection of the tender. Though at the beginning, the learned Senior counsel had also tried to project that there was no stipulation in NIT for submission of any bid security, the same was not pursued further in view of the stand in the affidavit of the Board that apart from earnest money there was no requirement of deposit of any bid security. The learned Senior counsel also submits that the requirement of furnishing of earnest money is a mode to signify assent to a contract by depositing a sum to demonstrate that the parties are earnest to perform the contract. He submits that earnest money deposit, in terms of clause 10.2, is to be released to the successful bidder on submission of contract performance guarantee at the time of execution of agreement as per the terms of clause 10.3 14. The learned Senior counsel submits that the Tender Purchase Committee fell into serious error in construing that the earnest money was not deposited by the Joint Venture Company only because of the fact that in the demand draft it was indicated that the same was remitted by M/s Mega Electricals. He further submits that the same was not a banker's cheque as indicated in the technical evaluation sheet as well as in the affidavit filed by the respondent Nos. 2, 3, 4 & 5 but was a demand draft, which is distinct and different from a banker's cheque. He submits that demand draft will have three components, namely, (i) drawer, (ii) drawee and (iii) payee, who is the person named in the instrument to whom or to whose order the money is directed to be paid. He contends that a Joint Venture Company will have to make out a demand draft/banker's cheque in the name of the payee, which, as per Note 4, is Chief General Manager, ASEB.
He contends that a Joint Venture Company will have to make out a demand draft/banker's cheque in the name of the payee, which, as per Note 4, is Chief General Manager, ASEB. According to him, all that is required under clause 19(vii) of Section-2 of Bidding Document is that there must be sufficient indication in the tender that the earnest money has been deposited to cover the bid of the Joint Venture. The expression "remitted by" indicates that money was drawn from the account of Mega Electricals. There was no condition in the tender document that remittance for the earnest money has to be from the bank account of the Joint Venture. It is his assertion that the view taken by the authorities of the ASEB that the bid security of the petitioner did not conform to clause 19(vii) of Section- 2 of the Bidding Document as it states that the bid security shall be in the name all the partners of the joint venture and not in the name of lead partner or any of the partners of the Joint Venture alone, is contrary to the provisions of the Negotiable Instruments Act, 1881. The learned Senior counsel also submits that even though the petitioner by his letter dated 9.12.2011 had wanted to know the status of the tender at the earliest, no information was given to the petitioner immediately informing that the Tender Purchase Committee had found the bid of the Joint Venture substantially non-responsive as per clause 19(vii) of Section-2 of the Bidding Document in its meeting held on 29.11.2011. Only on 16.12.2011, a letter was issued informing the aforesaid and that was also posted on 23.12.2011. In the said letter dated 16.12.2011, there was no indication that the Board had taken a decision in its meeting held on 9.12.2011 to allot the work to the respondent No. 6. He submits that out of 3 (three) tenderers in the fray, two tenderers had been disqualified including the petitioner. Ultimately, tender of only one party was opened and the entire process of rejection and allotment of the work was done keeping everyone in dark. Though the terms of the tender enjoin return of the earnest money to the unsuccessful bidder on finalization of the tender, the same was also not released.
Ultimately, tender of only one party was opened and the entire process of rejection and allotment of the work was done keeping everyone in dark. Though the terms of the tender enjoin return of the earnest money to the unsuccessful bidder on finalization of the tender, the same was also not released. In this connection, he submits that the General Conditions of Supply and Erection in force would be applicable only in case terms and conditions are not specified and such General Conditions of Supply and Erection in force cannot override a special condition finding place in the NIT. It is also his submission that though clause 10.3 of Section-2 of the Tender Document requires that Contract Performance Guarantee will have to be submitted at the time of signing the agreement by the successful bidder, the Board executed an agreement with respondent No. 6 on 19.12.2011 and the Contract Performance Guarantee was submitted only on the next day, which goes to show that the respondent authorities had relaxed the terms of the tender in respect of the respondent No. 6. The learned Senior counsel also submits that a banker's cheque can be stopped but payment of bank draft cannot be stopped after the same reaches the payee except on account of dispute relating to title and therefore, the apprehension expressed by the Board in the affidavit that in the event of withdrawal of participation by any of the partners of the Joint Venture Consortium, during finalization of the work, unless the bid security is in the name of Joint Venture, it would not be possible on the part of the respondent Company to bind the Joint Venture Consortium for any loss or damage which may occur due to default or negligence on the part of the Joint Venture Consortium, is without any basis. 15. The learned Senior counsel places reliance on the Judgments : (1) (1990) 2 SCC 488 : G.J. Fernandez Vs. State of Karnataka & Ors. (2) (1996) 2 GLR 330 : Azharul Islam Vs. State of Assam & 6 Ors. (3) AIR 1957 Assm. 133: Mohanlal Jogani Rice and Atta Mills & Ors. Vs. Ramlal Onkarmal Firm & Ors. (4) AIR 1976 Bom. 185 : Tukaram Bepuji Nikam Vs. The Belguam Bank Ltd. (5) AIR 1960 All. 238 : Pt. Sidh Nath Shukla Vs.
(2) (1996) 2 GLR 330 : Azharul Islam Vs. State of Assam & 6 Ors. (3) AIR 1957 Assm. 133: Mohanlal Jogani Rice and Atta Mills & Ors. Vs. Ramlal Onkarmal Firm & Ors. (4) AIR 1976 Bom. 185 : Tukaram Bepuji Nikam Vs. The Belguam Bank Ltd. (5) AIR 1960 All. 238 : Pt. Sidh Nath Shukla Vs. Punjab National Bank of India Ltd. (6) 1991 SC 1579: M/s Poddar Steel Corporation Vs. M/s Ganesh Engineering Works & Ors. (7) (2002) 6 SCC 315 : Kanhaiya Lal Agrawal Vs. Union of India & Ors. (8) (2012) 1 GLT 271: Dhirendra Chandra Bhattacharjee Vs. State of Tripura & Ors. (9) (2000) 3 GLT 173 : Bibhu Bhushan Choudhury Vs. Union of India & Ors. 16. Mr. B.D. Das, learned Senior counsel appearing for the respondent Nos. 1 to 5 submits that General Conditions of Supply and Erection, 2009, at clause 3.2.2 provides that the same will be treated as a part of the NIT and the contractor shall be deemed to have carefully examined the aforesaid General Conditions of Supply and Erection besides all specifications. He also relies upon clause 3.2.3 of the General Conditions of Supply and Erection, 2009 to emphasise that tender should be complete in all aspects and the tender which is not complete in all aspects will be liable for rejection. His submission is that terms and conditions of both the notice inviting tender as well as the General Conditions of Supply and Erection, 2009 are to be strictly complied with by a tenderer and if the terms are not followed, the tender is liable to be rejected. The earnest money deposited by the tenderer being not in the name of Joint Venture, clause 19(vii) of Section-2 of the Bidding Document was not fulfilled and forwarding letter dated 30.9.2011 issued in the letter head of Mega Electricals, though submitted on behalf of the Joint Venture Company, does not meet the requirement of clause 19(vii), which specifies that the bid security to be deposited in the form of bank draft/banker's cheque shall be in the name of the Joint Venture covering all the partners of the Joint Venture and not in the name of the lead partner or any partner of the Joint Venture alone.
In the instant case, according to him, the demand draft contained the name of one partner only and if such a demand draft is accepted, the same will be violative of the provisions of the notice inviting tender and the General Terms and Conditions of Supply and Erection. He contends that the deposit of earnest money by the Joint Venture is an eligibility criteria which cannot be relaxed. The learned Senior counsel submits that cases cited by the learned Senior counsel for the petitioners are clearly distinguishable as this case relates to submission of the bid by a Joint Venture. He has also submitted that reliance placed by Mr. Dutta on Negotiable Instrument Act, 1881, is wholly misplaced and one has to go by a simple and plain meaning of the terms and conditions as appearing in NIT. He has submitted that work order not being challenged, the instant writ petition is not maintainable. 17. The learned Senior counsel places reliance on the following Judgments: (1) (1979) 3 SCC 489 : Ramana Dayaram Shetty Vs. International Airport Authority of India & Ors. (2) (1999) I SCC 492: Raunaq International Ltd. Vs. I.V.R. Construction Ltd. & Ors. (3) AIR 2012 Guj. 42 : Akhtar Hussain Ali Hassan Khan Vs. Surat Municipal Corporation & Anr. (4) (2005) 4 SCC 435 : Global Energy Ltd. & Anr. Vs. Adani Exports Ltd. & Ors. 18. Mr. G N. Sahewalla, learned Senior counsel for the respondent No. 6 submits that the petitioner No. 1 is the tenderer and therefore, the earnest money/bid security is to be deposited by the tenderer and the earnest money is to be deposited in the form of a bank draft and/or banker's cheque in the name of Joint Venture. The demand draft discloses that the earnest money was given by Mega Electricals and not by the Joint Venture and therefore, the earnest money in the name of Mega Electricals cannot be construed to be an earnest money on behalf of the Joint Venture. Deposit of earnest money is a mandatory condition and Joint Venture being a distinct legal entity, deposit of earnest money by Mega Electricals does not at all conform to the requirement of clause 19(vii) of Section-2 of the Bidding Document and the forwarding letter of the Joint Venture dated 30.9.2011 does not, in any manner, cure the incurable defect.
Deposit of earnest money is a mandatory condition and Joint Venture being a distinct legal entity, deposit of earnest money by Mega Electricals does not at all conform to the requirement of clause 19(vii) of Section-2 of the Bidding Document and the forwarding letter of the Joint Venture dated 30.9.2011 does not, in any manner, cure the incurable defect. The learned Senior counsel, in support of his submissions, places reliance on the following Judgments: (1) (1995) 1 SCC 478 : New Horizon Ltd. & Anr. Vs. Union of India & Ors. (2) (2011) 12 SCC 499 : Gammon India Ltd. Vs. Commissioner of Customs, Mumbai (3) (2006) 11 SCC 548 : B.S.N. Joshi & Sons Ltd. Vs. Nair Coal Services Ltd. & Ors. (4) (2004) 2 SCC 617: Air India Ltd. Vs. Cochin International Airport Ltd. & Ors. (5) (2009) 11 SCC 9 : Sorath Builders Vs. Shreejikrupa Builders Ltd. & Anr. 19. Before the weighty submission of the learned counsel of the parties are given the consideration that they deserve, at the outset, it will be necessary to understand what "earnest money" really means, Earnest money represents a guarantee that the contract will be fulfilled and it evinces the earnestness to bind the tenderer in the bargaining as the process of contract goes through. The notice inviting tender dated 2.9.2011 requires that the bank draft/banker's cheque deposited towards earnest money should have validity of 60 days from the last date of submission of the bid. It also provides that any tender without earnest money will be rejected out-right. The earnest money to the unsuccessful bidder is also required to be released on finalisation of tenders. Even the earnest money deposited will be released to the successful bidder on submission of contract performance guarantee at the time of execution of agreement as per Clause 10.3. The General Conditions of Supply and Erection, 2009, however, provides that the earnest money would be released on request from the tenderer on a date subsequent to execution of contract agreement with the successful tenderer.
The General Conditions of Supply and Erection, 2009, however, provides that the earnest money would be released on request from the tenderer on a date subsequent to execution of contract agreement with the successful tenderer. When there is a specific clause in the notice inviting tender with regard to release of the earnest money to the unsuccessful bidders, the clause in the General Conditions of Supply and Erection, 2009 that earnest money would be released on a request from tenderer on a date subsequent to execution of contract agreement with the successful tenderer cannot come into play as a general condition of contract cannot override special conditions of contract as stipulated in a particular notice inviting tender and, at the most, such general conditions would be operative to supplement the notice inviting tender in areas where there is no specific terms and conditions. The notice inviting tender does not indicate anything towards forfeiture of earnest money but Clause 3.1 of the General Conditions of Supply and Erection, 2009, at clause 3.4.1 (e) provides that the purchaser/employer reserves the right to forfeit the earnest money or part thereof in circumstances, which according to it, indicates that the tenderer is not earnest in accepting/executing any order placed under specification. Therefore, the earnest money, binds the tenderer in accepting and executing any order placed in his favour failing which the amount of earnest money deposited by the tenderer shall be forfeited. Obviously, if no earnest money is deposited, it will signify that there is no earnestness on the part of tenderer and therefore, a tender is liable to be rejected, as per the notice inviting tender. 20. At this stage, it will be necessary to dwell upon the concept of joint venture consortium. In New Horizons (supra), the Apex Court stated thus: "It connotes a legal entity in the nature of partnership engaged in the joint undertaking of particular transaction for mutual profit or an association of persons or companies jointly undertaking some commercial enterprises wherein all contribute assets and share risks. It requires a community of interest in the performance of the subject-matter, a right to direct and govern policy in connection therewith, and duty, which may be altered by agreement, to share both in profit or losses. (Blacks Law Dictionary (6th Edn. Pg. 839).
It requires a community of interest in the performance of the subject-matter, a right to direct and govern policy in connection therewith, and duty, which may be altered by agreement, to share both in profit or losses. (Blacks Law Dictionary (6th Edn. Pg. 839). According to Words and Phrases, Permanent Edition, a joint venture is an association of two or more persons to carry out a single business of enterprise for profit. (P. 117, vol.- 23).....A joint venture corporation as a corporation has been defined which has joined with other individuals or corporations within the corporate frame work in some specific undertaking commonly found in oil, chemicals, electronic, atomic fields. (Black's Law Dictionary, 6th Edn., P 342". 21. With the opening of Indian Economy, there has been growth of joint venture in India where foreign companies have joined hands with Indian counterparts and contribute towards capital and technical know-how. Now, we have joint venture among different entities of our own country participating in tender processes. In New Horizons Ltd. (Supra), it was held that "joint venture," which is more frequently used and found in the United States, can take the form of a corporation wherein two or more persons or companies join together. 22. Applying the principle of "lifting the corporate veil", it was held in New Horizons case that the joint venture companies' technical experience could only be the experience of the partnering companies and the technical experience of all constituents of the joint venture was liable to be cumulatively reckoned in the tender proceedings and any one of the constituents was competent to act on behalf of the joint venture company. 23. In Gammon India (Supra), the Apex Court explained New Horizon (Supra) by observing that New Horizons recognises a joint venture to be a legal entity in the nature of a partnership of the constituted companies. 24. In view of the stand taken in the affidavit filed by the respondent Nos. 2,3,4 and 5 in the writ petition that Clause 19(vii) of Section-2 of the Bidding Document was incorporated to protect the respondent Company from loss etc.
24. In view of the stand taken in the affidavit filed by the respondent Nos. 2,3,4 and 5 in the writ petition that Clause 19(vii) of Section-2 of the Bidding Document was incorporated to protect the respondent Company from loss etc. in the event of withdrawing from participation by any of the partners during the finalisation of the work, it will not be possible on the part of the respondent company to bind the joint venture consortium, it will be necessary to deal with the concept of demand draft/banker's cheque, in which form the earnest money was required to be deposited. 25. Section 5 of Negotiable instruments Act, 1881, for short, the Act, defines a bill of exchange as follows: "Bill of exchange".- A " bill of exchange" is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to or to the order of, a certain person or to the bearer of the instrument. From the aforesaid it is clear that a bill of exchange is a instrument in writing containing an unconditional order signed by the makers directing a certain person to pay a certain specified sum of money only to, or to the order of, a certain person or to the bearer of the instrument 26. Cheque has been defined in Section 6 of the Act to be a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of truncated cheque and a cheque in electronic form, which expressions have been explained in Explanation-1 to the definition. 27. The maker of a bill of exchange or a cheque is called the drawer; the person thereby directed to pay is called the drawee. Payee is defined in Section 7 of the Act as the person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid. 28. Issuance of demand draft is one of the most convenient methods of transmission of amounts and is found entrenched as an established practice of banking.
Payee is defined in Section 7 of the Act as the person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid. 28. Issuance of demand draft is one of the most convenient methods of transmission of amounts and is found entrenched as an established practice of banking. The person who takes the draft is called the purchaser of draft and he either pays the amount to the bank in cash or gets the amount debited to his own account and for purchase of the draft he has to pay some requisite charges. The Bank then issues an order on itself or its one of the branches for the payment of the amount to the person named as a payee or to his order and the draft is handed over by the bank to the purchaser. It is then presented to bank to which it is addressed by the payee or any endorsee on his behalf. If the bank is satisfied about the identity of the person presenting the same and about the endorsement in his favour, if he is an endorsee, the amount is paid and if it is a crossed draft, the amount is collected through a bank and credited to the account of the person entitled to the money. 29. Section 13 of the Act defines Negoti-able Instrument as follows: 13 "Negotiable instrument" [(1) A "negotiable instrument" means a promissory note, bill of exchange or cheque payable either to order or to bearer. Explanation (i). - A promissory note, bill of exchange or cheque is payable to order which is expressed to be so payable or which is expressed to be payable to a particular person, and does not contain words prohibiting transfer or indicating an intention that it shall not be transferable. Explanation (ii). -A promissory note, bill of exchange or cheque is payable to bearer which is expressed to be so payable or on which the only or last indorsement is an indorsement in blank. Explanation (iii).
Explanation (ii). -A promissory note, bill of exchange or cheque is payable to bearer which is expressed to be so payable or on which the only or last indorsement is an indorsement in blank. Explanation (iii). - Where a promissory note, bill of exchange or cheque either originally or by indorsement, is expressed to be payable to the order of a specified person, and not to him or his order, it is nevertheless payable to him or his order at his option.] [(2) A negotiable instrument may be made payable to two or more payees jointly, or it may be made payable in the alternative to one of two, or one or some of several payees.] 30. Under the English Bill of Exchange Act, a bill of exchange was required to be addressed by one person to another and therefore, under the English Law, a draft could not be construed to be a bill of exchange as it was not addressed by one person to another but was addressed by a bank either to itself or to one of its branches. This generated certain amount of doubt in India as to whether a draft was a negotiable instrument, though under the definition of bill of exchange under the Act, there is no requirement that there should be a direction from one person to a different person and the only requirement is that the direction should be to a certain person, in contradiction to the definition of bill of exchange under the English law. Judicial opinion in the country also appeared to be almost unanimous that a demand draft is a bill of exchange and as such a negotiable instrument. But because of lack of acceptance of general public due to lingering doubt, in order to remove any doubt on the subject, the legislature added Section 85A to the Act which makes a specific reference to draft and brought them at par with bill of exchange. In Mohanlal Jogani Rice (supra), a Division Bench of this Court had also held that a banker's draft is a bill of exchange and as such a negotiable instrument. 31. In Pandit Sidh Nath Shukla (supra), the High Court of Allahabad had spelt out the difference between the demand draft and a cheque as follows: 12.
In Mohanlal Jogani Rice (supra), a Division Bench of this Court had also held that a banker's draft is a bill of exchange and as such a negotiable instrument. 31. In Pandit Sidh Nath Shukla (supra), the High Court of Allahabad had spelt out the difference between the demand draft and a cheque as follows: 12. Though a demand draft is a bill of exchange and shares in certain respects the characteristics of a cheque there are other respects in which it is essentially different from a cheque. The main point of difference between a cheque and a draft lies in the fact that while cheque is an order by the drawer on his own agent the bank for the payment of a certain sum of money to the bearer or the order of the person in whose favour the cheque is drawn a draft is not an order by a private person to his own agent. On the contrary, it is an order by a bank to itself or to one of its branches for the payment of a certain amount. A draft must therefore necessarily be drawn by a bank on another bank or on one of its own branches and cannot be drawn by a private individual like a cheque. If a person orders his agent to pay a certain amount to another person it is clearly open to him to stop the payment and to direct his agent not to make the payment provided of course the payment has not already been made. The payment of a cheque can therefore be very easily stopped. Only a direction has to be issued to a bank and it is received before the payment is actually made the direction is bound to be carried out. If in the meantime the cheque has been endorsed in favour of a holder in due course and a dispute arises between such a holder and the maker, the bank, is outside that dispute because in stopping payment it had only carried out the orders of its principal. A draft cannot, however, be countermanded so easily because having issued the draft the bank does not necessarily remain the agent of the purchaser.
A draft cannot, however, be countermanded so easily because having issued the draft the bank does not necessarily remain the agent of the purchaser. By issuing it the bank undertakes a liability which it is bound to discharge at the instance of the person in whose favour it has issued the draft or a person claiming through him. If therefore the payee of the draft or his endorsee satisfies the bank to which the draft is addressed about his own identity and about the correctness of the endorsement on which he relies and presents the draft so as to be able to give an effective discharge the bank is bound to pay the money even if it has received instructions from the purchaser requesting it to stop the payment. 32. Whether the purchaser of a draft from a bank, which has been made out in favour of a third party, has any right to stop the payment of the draft and if so, till what stage can he do so, was considered first in the case of Malik Barkat Ali Vs. Imperial Bank of India, reported in 1945 Lah 213 and the Lahore High Court had laid down as follows: "Ordinarily, a bank cannot stop payment of a draft unless there is some doubt as to the identity of the person presenting it as being or properly representing the person in whose favour it is drawn. This appears from Sheldon's Practice and Law of Banking, 1931, P. 155. The position of a bank in regard to its own drafts is not quite the same as its position in regard to cheques drawn on it, since it has taken on commitments of its own in favour of a third person at the instance of the purchaser. This seems to be in accordance with the provisions of the Negotiable Instruments Act." Section 85A and Section 10 of the Negotiable Instruments Act were then referred to, and it was observed as follows: This Section (Section 10) would seem to indicate that the question with regard to which a bank has to satisfy itself is that of the title of the person presenting the draft. If a draft is lost, for example, a risk may arise that it will be presented by some one who is not entitled to be the holder and there may be a forged endorsement.
If a draft is lost, for example, a risk may arise that it will be presented by some one who is not entitled to be the holder and there may be a forged endorsement. In such cases, the purchaser may reasonably ask the bank to be on its guard against presentation by the wrong person; and, if the bank for negligence. It is with cases of this kind that the reported decisions are mostly concerned. On the other hand, it does not appear that the purchaser is entitled to ask the issuing bank to stop payment on other grounds, such as matters relating to the consideration in respect of which the draft has been issued at his instance, for this would often put the bank in an impossible position, as when the purchaser of the draft is dissatisfied with some bargain which he has made with the person in whose favour the draft has been issued. 33. In Tukaram Bapuji (supra), taking into consideration the decisions rendered by the High Court of Allahabad and the High Court of Lahore, the High Court of Bombay had laid down the following propositions: 8.
33. In Tukaram Bapuji (supra), taking into consideration the decisions rendered by the High Court of Allahabad and the High Court of Lahore, the High Court of Bombay had laid down the following propositions: 8. From a consideration of these authorities, in my opinion, the following propositions emerge:- (1) The relationship of the purchaser of a draft and the bank from which that draft has been purchased is merely that of debtor and creditor; (2) The purchaser of the draft can, therefore, call upon the bank from which he has purchased it to cancel the draft and pay back the money to him at any time before the draft has been delivered to the payee; (3) If, however, the sole object of the issue of the draft was to transmit the money to another person, a fiduciary relationship is created between the purchase of the draft and the bank which issued it, and the purchaser of the draft can countermand payment only if the bank has not actually parted with the money held by it as agent, thus terminating the relationship of principal and agent; (4) Ordinarily, a bank issuing a draft cannot refuse to pay the amount thereof, unless there was some doubt as to the identity of the person presenting it as being or properly representing the person in whose favour it was drawn, or, in other words, unless there is reasonable ground for disputing the title of the person presenting the draft; and (5) Once the draft has been delivered to the payee or his agent, the purchaser is not entitled to ask the issuing bank to stop payment of the draft to the payee on other grounds such as matters relating to consideration, and the issuing bank can stop payment of the draft to the payee on other grounds such as matters relating to consideration, and the issuing bank can thereafter pay back the amount of the draft to the purchaser of the draft only with consent of the payee. 34. There is no gainsaying fact that delivery is one of the essential ingredients of the making, acceptance or endorsement of a negotiable instrument and the contract on a negotiable instrument without delivery is incomplete and revocable.
34. There is no gainsaying fact that delivery is one of the essential ingredients of the making, acceptance or endorsement of a negotiable instrument and the contract on a negotiable instrument without delivery is incomplete and revocable. The payee has a right to offer a draft only after the draft is delivered to him and can claim any right in respect of it and become entitled to as a holder to receive or recover its amount. Till such time the draft is delivered to payee, it is always open to the purchaser to get the draft cancelled and to instruct the bank not to pay the amount to anyone else but return it to him. 35. A perusal of the technical evaluation sheet shows that the amount of Rs.6,00,000/- deposited by the petitioners was considered to be a banker's cheque and the Tender Purchase Committee in its meeting held on 3.11.11 also considered the deposit of the petitioner to be in the form of banker's cheque. Though Mr. Dutta has submitted that banker's cheque and demand draft are two different kinds of negotiable instruments and that unlike a demand draft, bank can be directed to stop making payment of a banker's cheque even after it reaches the payee, the same does not appear to be the correct position. A banker's cheque also has to be purchased, for which purpose, a purchaser has to deposit the amount in cash or get the amount debited from his own account. Banker's Cheque is a kind of instrument whose payment is made at the same branch and unlike Demand Draft there is no paying branch, banker's cheque is not like any other cheque issued by any private individual which can be stopped by the drawer and a banker's cheque stands on the same footing as a demand draft. Therefore, it is not really material whether the earnest money was deposited by the petitioner in the form of demand draft or in the form of a banker's cheque. 36. In Poddar Steel (supra), clause 6 of the notice inviting tender required the tender to be accompanied by earnest money calculated at 5% of the offer under the tender subject to a maximum of Rs.50,000/- and in terms permitted the deposit of cash or by demand draft drawn on State Bank of India.
36. In Poddar Steel (supra), clause 6 of the notice inviting tender required the tender to be accompanied by earnest money calculated at 5% of the offer under the tender subject to a maximum of Rs.50,000/- and in terms permitted the deposit of cash or by demand draft drawn on State Bank of India. Tender Committee had accepted the tender of a tenderer who had offered earnest money by banker's cheque by a banker other than State Bank of India after obtaining a verification from the bank in question about its authenticity and after the bank had assured to honour the cheque. 37. A challenge was made before the Allahabad High Court and the Allahabad High court had taken a view that deposit of earnest money by a tenderer by a banker's cheque of a bank other than the State Bank of India mentioned in clause 6 of the Notice Inviting Tender (NIT) did not satisfy clause 6 of the NIT. The Apex Court laid down that as a matter of general proposition, it cannot be held that the 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 Apex Court held that the requirements in tender notice can be particularly classified in two categories - those who lays 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 matter failing within the first category, the authority issuing the tender may be required to enforce them rigidly and in other cases, it must be open to the authority to deviate from and not to insist upon strict literal compliance of the condition in appropriate cases. 38. In Azharul Islam (supra), this Court had held that rejection of a tender for non-furnishing of income tax clearance certificate was not a valid one as the same was in the realm of an ancillary requirement. 39. In G.Z. Fernandez (supra), the authority of Karnataka Power Corporation (KPC) permitted one MCC to furnish a certificate relating to execution of brick work which should have been supplied along with the request for application of tender forms, much later.
39. In G.Z. Fernandez (supra), the authority of Karnataka Power Corporation (KPC) permitted one MCC to furnish a certificate relating to execution of brick work which should have been supplied along with the request for application of tender forms, much later. One of the questions that fell for consideration was as to whether MCC ought to have been denied altogether the right to tender for the contract consequent on the delay in submitting the document. The Apex Court pointed out that it is not that KPC could not deviate from these guidelines at all in any situation, but any deviation, if made, should not result in arbitrariness or discrimination. The Supreme Court stated thus: ......Assuming for purposes of argument that there has been a slight deviation from the terms of the NIT, it has not deprived the appellant of its right to be considered for the contract; on the other hand, its tender has received due and full consideration. If, save for the delay in filling one of the relevant documents, MCC is also found to be qualified to tender for the contract, no injustice can be said to have been done to the appellant by the consideration of its tender side by side with that of the MCC and in the KPC going in for a choice of the letter on the merits...... 40. In Kanhaiyalal (supra), the Supreme Court laid down that where an essential condition of tender is not complied with, it is open to the person inviting tender to reject the same. Whether a condition is essential or corollary could be ascertained by reference to the consequence of non-compliance thereto. If non-fulfillment of the requirements results in rejection of the tender, then it would be an essential term of the tender. Otherwise it is only a corollary term. 41. In Bibhu Bhusan Choudhury (Supra), the contention of the petitioner was that his tender was going to be rejected by the authorities of the N.F. Railway on the ground that his earnest money deposit in the form of Fixed Deposit Receipts (FDR) was wrongly shown in favour of Dt.
Otherwise it is only a corollary term. 41. In Bibhu Bhusan Choudhury (Supra), the contention of the petitioner was that his tender was going to be rejected by the authorities of the N.F. Railway on the ground that his earnest money deposit in the form of Fixed Deposit Receipts (FDR) was wrongly shown in favour of Dt. FA & CAO/Construction, N.F. Railway, Maligaon instead of FA & CAO Construction, N.F. Railway, Maligaon inspite of his letter dated 27.9.1999 sent to the bank authority and the letter dated 1.10.1999 issued by the bank authority requesting the Railway authorities to treat the aforesaid FDR as issued in the name of FA & CAO Construction, NF Railway. The stand of the authority was that the tender of the petitioner was summarily rejected as per the stipulation in the NIT. This Court held that, in the facts and circumstances, the Railway authority could have exercised its discretion in favour of the petitioner by making a little digression from the NIT and such exercise of discretion would not have amounted to unlawful or arbitrary exercise of discretion and on the contrary, the Railway authority gave emphasis to the cold letter of NIT. Accordingly, the order rejecting tender of the writ petitioner and the acceptance of the tender in whose favour contract was awarded was interfered with. Thus, it is seen that mandamus was issued by this Court to the authorities for not relaxing suitably conditions of the notice inviting tender on the ground that such non-relaxation has resulted in arbitrariness. 42. In Ramana (supra), notice inviting tender invited sealed tenders in the prescribed form from registered 2nd Class hoteliers having at least 5 years experience for putting up and running a 2nd class restaurant and 2 Snack Bars at the International Airport at Bombay for a period of 3 years. The aforesaid clause was held to be a condition of eligibility which was required to be satisfied by every person submitting a tender and if he did not satisfy the said condition of eligibility, his tender would not be eligible for consideration on the settled rule of administrative law, that an executive authority must be rigorously held to the standard by which it professes its action to be judged and that it must scrupulously observe those standards on pain of invalidation of an act in violation of them.
The aforesaid case lays down the principle that an authority inviting tender cannot act arbitrarily at its sweet will but its action must be in conformity with the standard or norms which is not arbitrary, irrational or irrelevant and the authority cannot depart from conditions of eligibility prescribed in the notice inviting tender. 43. In Raunaq International (supra), the contention advanced was that the terms and conditions of the tender having been specified, the requisite qualifying criteria could not have been relaxed. The challenge was made by a tenderer which also did not fulfill the requisite criteria. The Supreme Court held that the power of relaxation was available under the terms of the tender and the relaxation was granted on valid principles looking at the expertise of the tenderer and his past experience although it did not exactly tally with the prescribed criteria. 44. In Air India (supra), the Supreme Court taking note of various decisions of the Apex Court, laid down the law relating to award of contract by the State, its corporations and bodies acting as its instrumentalities and agencies of the Government thus: 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 decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned.
Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process the court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should intervene. 45. In B.S.N. Joshi & Sons Ltd. (supra), noting the expansive role of the superior Courts in judicial review, the Apex Court summarised the principles as under: 66.
Only when it comes to a conclusion that overwhelming public interest requires interference, the court should intervene. 45. In B.S.N. Joshi & Sons Ltd. (supra), noting the expansive role of the superior Courts in judicial review, the Apex Court summarised the principles as under: 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 summarised 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 with 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. 46.
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. 46. In Sorath Builders (supra), the tendering authority, namely, Navsari Agriculture University did not open the pre-qualification documents submitted by a tenderer on 1.12.2008, after three days of the date fixed for receipt of pre-qualification document, and the Apex Court held the action of the University authority to be justified as there was a time schedule attached to the notice inviting tender and as the terms and conditions of tender are required to be adhered to strictly. 47. In Akhtar Hussain (supra), the Gujarat High Court had held that submission of the tender on or before the last date was a mandatory and essential condition and its noncompliance was fatal and that there was no question of relaxing the last date. The case had arisen because of delayed delivery of the tender papers, which were required to be sent by registered post with A/D, by the postal authorities beyond the last date fixed. 48. In Global Energy (supra), the Supreme Court had pointed out that deposit of some amount of earnest money is a normal condition of tender with the object that only such parties who were financially sound and are serious in getting the work or contract should make a bid as otherwise, any number of persons who have no capacity, financial or otherwise, would like to take a chance by making a bid. The NIT considered in the said case, had granted exemption to Government organizations and public sector undertakings from submission of earnest money of Rs.30,00,000.00 required to be deposited by other tenderer in the form of demand draft or pay order drawn on any scheduled bank of India in favour of the West Bengal State Electricity Board. The tender was to be opened on 16.03.2005. In a writ petition filed, a plea was taken that said exemption was discriminatory and the learned Single Judge passed an interim order granting liberty to participate in the NIT with the condition that the writ petitioners would deposit the earnest money by furnishing a bank guarantee or bankers' cheque within 18.03.2005.
The tender was to be opened on 16.03.2005. In a writ petition filed, a plea was taken that said exemption was discriminatory and the learned Single Judge passed an interim order granting liberty to participate in the NIT with the condition that the writ petitioners would deposit the earnest money by furnishing a bank guarantee or bankers' cheque within 18.03.2005. The appeal preferred against the said order was allowed and against such order the writ petitioner had approached the Supreme Court. The Supreme Court held that the order of the Single Judge, which was wholly illegal, altered the terms of the NIT and allowed the writ petitioner to participate in the tender process without depositing earnest money as the petitioner was permitted to deposit the earnest money till three days after the actual date of the opening of the tender. It is in this context that the Supreme Court had laid down that the terms of the invitation to tender are not open to judicial scrutiny and the Courts cannot whittle down the terms of the tender as they are in the realm of contract unless they are wholly arbitrary, discriminatory or actuated by malice. 49. In Dhirendra Chandra (supra), the clause relating to earnest money read as follows: Bidder must deposit required Earnest Money as stated in 1st page of DNIT in the 'shape' of deposit at call/bank draft/fixed deposit in favour of the undersigned on any 'nationalised bank' of India. Without EMD in appropriate 'shape' the tender will summarily be rejected. This Court held that tenders which did not accompany earnest money deposit in proper 'shape' was only liable to be rejected. As earnest money deposit in proper 'shape' was only mandatory, it was held, in the light of language employed that if the deposit at call/bank draft/fixed deposit, offered by tenderer, was not from a 'nationalised bank', no fatal consequences would ensue. 50. In the instant case, tender was submitted with earnest money deposit of Rs.6,00,000,00 duly pledged in favour of Chief General Manager (RE), ASEB, Guwahati-1. Significantly, clause 19 (vii) of Section-2 of the Bidding Document did not use the word 'earnest money' but has used the expression 'bid security'. The earnest money deposited by the petitioners in the form of demand draft was also submitted along with a covering letter of the joint venture.
Significantly, clause 19 (vii) of Section-2 of the Bidding Document did not use the word 'earnest money' but has used the expression 'bid security'. The earnest money deposited by the petitioners in the form of demand draft was also submitted along with a covering letter of the joint venture. It is difficult to accept the submission of the learned senior counsel for the respondents that as the banker's cheque/demand draft did not contain the names of all the partners of the joint venture under the heading 'remitted by', the same did not meet the criteria of clause 19 (vii) of Section 2 of the Bidding Document. There was no condition in the tender document that the bank draft/banker's cheque has to be purchased from the bank account of the Joint Venture. No where it has been laid down that the bank draft/banker's cheque must bear the name of the Joint Venture covering all the partners of the Joint Venture. This Court also finds it difficult to accept' shall be in the name of is one of the same thing "as remitted by" as contended by the learned senior counsel for the respondents. If a tender is liable to be rejected for non-fulfillment of a term of the NIT, such term must be clear and unambiguous and not open to various possible interpretations. The demand draft was valid in all respects and after the same had been received by the payee along with the tender, in view of legal position as has been discussed hereinbefore, the payment of the draft could not have been stopped by anyone except on account of dispute relating to title and therefore, the apprehension expressed by the respondent Board in the affidavit that the respondent would not be able to bind the Joint Venture Consortium for any loss or damage on the strength of the said draft is wholly misconceived. It is also to be borne in mind that the earnest money deposit is also to be returned to the successful bidder on submission of Contract Performance Guarantee.
It is also to be borne in mind that the earnest money deposit is also to be returned to the successful bidder on submission of Contract Performance Guarantee. Considering the matter in its entirety, this Court is of the opinion that in any view of the matter, there is substantial compliance if not complete compliance of clause 19 (vii) of Section -2 of Bidding Document, and tender could not have been rejected on the ground of non-compliance of the aforesaid clause and therefore, the rejection of the tender of the Joint Venture is arbitrary and illegal. 51. It has been faintly urged by Mr. Das, the learned senior counsel appearing for the respondent Board that work order has not been challenged in this case and therefore, the writ petitioners are not entitled to any relief. A perusal of the prayer in the writ petition goes to show that the writ petitioners had prayed for setting aside and quashing any decision of the respondent authorities to issue work order in favour of the respondent No. 6 and any other consequential order thereto. The writ petition was filed 18.01.2012 and averments were made that the respondent authorities had almost decided to allot the work order in favour of the respondent No. 6 and was contemplating to issue the same. On 20.01.2012, this Court, in presence of the learned Standing counsel, ASEB, had passed an interim order that the work in question covered by the NIT dated 2.09.2011 shall not be finalized till the next date fixed and the said interim order was continued subsequently in presence of all the parties. By filing an additional affidavit, the writ petitioners had brought to the notice of the Court that the work order had been issued to the respondent No. 6. It was also stated that as the copy of the work order was not made available, they were unable to produce the same and as such prayed for a direction to the respondents to produce the same. In view of the prayer made in the writ petition wherein the decision making process to allot the work order to the respondent No. 6 and any other consequential order, after arbitrarily rejecting the tender of the petitioner No. 1, has been impugned, this Court is unable to accept the contention of Mr.
In view of the prayer made in the writ petition wherein the decision making process to allot the work order to the respondent No. 6 and any other consequential order, after arbitrarily rejecting the tender of the petitioner No. 1, has been impugned, this Court is unable to accept the contention of Mr. Das that no interference is called for with the impugned order dated 16.12.2011 issued in favour of the respondent No. 6. 52. In the result, order date 16.12.2011 allotting the work pursuant to the NIT dated 2.9.2011 is set aside and quashed and the respondent authorities are directed to reconsider the technical bid of the writ petitioner No. 1 treating the earnest money deposit to be a valid deposit and thereafter, shall proceed to finalize the tender in accordance with law. 53. The writ petition is allowed. No costs. Petition allowed.