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2018 DIGILAW 2186 (BOM)

R. K. Sancheti v. State of Maharashtra

2018-09-06

B.P.DHARMADHIKARI, M.G.GIRATKAR

body2018
JUDGMENT : B.P. Dharmadhikari, J. 1. The only question in present matter is whether omission of petitioner to submit Bank Guarantee towards Additional Performance Security online on 22-6-2018 and providing its original (hard copy) on 26-6-2018 can be seen as material deviation from tender conditions. It is not in dispute that Bank Guarantee for required amount was purchased on 18-6-2018. 2. This Court as on 28th August, 2018, after noticing this question, by interim order restrained the employer from issuing work order to anybody. 3. Considering nature of controversy as jointly requested, we have heard matter finally by issuing Rule and making it returnable forthwith. 4. By placing reliance upon the Division Bench judgment of this Court reported in 2016(6) Mh.LJ. 408 , in case of Bharat Conductors Pvt. Ltd., Goa and anr. vs. Executive Engineer, Goa and ors., Shri A. Naik, the learned counsel for the petitioner submits that there identical situation has been looked into and the omission to submit demand draft for earnest money deposit prior to the last date for submission of bid and consequent refusal of employer to open the bid is held arbitrary since the demand draft was prepared much prior to submission. The said demand draft towards the EMD was to be put in envelop No. 1 and still this Court has held that stipulation not mandatory and omission not fatal. According to him here, the Bank Guarantee for Additional Performance Security Deposit is to be put in envelop No. 2 and hence, it does not constitute the fatal defect at all. 5. Ms. N.P. Mehta, the learned Assistant Government Pleader for respondent Nos. 1 to 4, Mrs. Dr. R. Sirpurkar, Advocate for respondent No. 7, Shri S.B. Bawanthade, Advocate for respondent Nos. 6, 8 and 9 are strongly opposing the petition. They are also relying upon the terms and conditions of NIT (Noticing Inviting Tender) or ITB to urge that if such error is allowed to be corrected later on, it would destroy the transparency which is otherwise inherent and essential in the process. To point out the limited jurisdiction available to this Court in such matter, they are relying upon the judgment of Hon'ble Apex Court reported in (2016) 16 SCC 818 in case of Afcons Infrastructure Limited vs. Nagpur Metro Rail Corporation limited and anr., particularly in paragraph Nos. 13 to 16. 6. To point out the limited jurisdiction available to this Court in such matter, they are relying upon the judgment of Hon'ble Apex Court reported in (2016) 16 SCC 818 in case of Afcons Infrastructure Limited vs. Nagpur Metro Rail Corporation limited and anr., particularly in paragraph Nos. 13 to 16. 6. The relevant terms and conditions of NIT need to be perused in the backdrop of communication dated 31-7-2018. By that communication, the employer has informed the petitioner that as the demand draft or FDR or Bank Guarantee for Additional Performance Security was not submitted online as part of Envelop No. 2 and in the said process, the petitioner declared that APSD condition was not applicable, the bid of petitioner was treated as non-responsive. 7. Perusal of NIT reveals that the documents to be put in Envelop Nos. 1 and 2 are stipulated in Clauses 6.1 and 6.2 respectively. The provision of Clauses 11 and 12 in part "C" are on subject preparation of bid. Clause 12 is about Documents Comprising the Bid, Clause 12.1 - Part-I speaks of "Technical Bid" which comprises of total (v) documents and Bid Security to be paid online is first content of Part-I. 8. Part-II named "Finance Bid" comprises of total (iii) requirements and at Sr. No. (iii) is scanned copy of Additional Performance Security Deposit, if the offer is below more than 1%. Clause 12.2 stipulates that bidder has to prepare two copies of bid. One copy is for online submission and other for Physical Submission. Part-D which starts from Clause No. 18 is on the subject of online submission of bids. Clause 19 requires Part-I and Part-II to be submitted as separate files online. Clause 20.1 mandates that complete bids as per Clause 19 must be submitted online not later than the date and time indicated in Appendix to ITB. Clause 20.3 is about physical submission and it requires bidder to submit Hard Copy of Technical and Financial Bid in Sealed Envelope as Envelope No. 1. This is to be done within 72 hours from the time when "control transfer" starts. 9. The subject of Additional Performance Security is dealt with in Clause 7.2. It requires a Demand Draft or Bank Guarantee or FDR for Additional Performance Security Deposit (APSD) for quoting offer more than 1% below the tender cost. This is to be done within 72 hours from the time when "control transfer" starts. 9. The subject of Additional Performance Security is dealt with in Clause 7.2. It requires a Demand Draft or Bank Guarantee or FDR for Additional Performance Security Deposit (APSD) for quoting offer more than 1% below the tender cost. Such Demand Draft or Bank Guarantee or FDR is to be put in Envelope-2. Here, the petitioner has submitted APSD through the Bank Guarantee. Clause-B in this respect states that if amount of Additional Performance Security as required above i.e. under Sub-clause A and B is not submitted by bidder along with Envelope No. 2, then his offer is to be treated as "Non Responsive" and can not be considered. 10. Opening of tender is dealt with by Clause 6. Clause No. 6.1 is about Envelope No. 1 and it specifically stipulates that if various documents contained in the said Envelope do not meet requirements of the Department, a note will be recorded accordingly by the tender opening authority and the Envelope No. 2 submitted by such tenderer will not be considered for further action. Clause 6.2 is on Envelope No. 2 (Financial Bid). It stipulates that this Envelope is to be opened immediately after opening of Envelope No. 1, only if contents of Envelope No. 1 are found to be acceptable by the Department. Clause 6.3 is then about disqualification. 11. Thus, Clause 6.1 in express language indicates that where documents in Envelope No. 1 are not accepted by the Department (Employer), Envelope No. 2 cannot be opened. In the present case, the Envelope No. 2 has been opened and thereafter, the fact that the copy of Bank Guarantee was not submitted online as part of Envelope No. 2 has come to light. Petitioner's Envelope No. 1 was found proper and hence its Envelope No. 2 could be reached. 12. Clause 6.3 prescribes disqualifications. It stipulates that even though the tenderers meet the qualification norms, they are subject to disqualification, if they have made misleading or false representation or then there was rescinding of a contract. Clause 6.3.4 is relevant for present purposes. It states that when the offer in Envelope No. 2 is without Demand Draft or appropriate amount of performance security, it is to be treated as invalid offer. Clause 6.3.4 is relevant for present purposes. It states that when the offer in Envelope No. 2 is without Demand Draft or appropriate amount of performance security, it is to be treated as invalid offer. According to the petitioner, this is not an essential condition while according to the respondents, it is mandatory or essential term in the process. 13. Clause 6.3.3 stipulates that if lowest offer is more than 10% below the cost put to tender, the employer shall obtain detailed justification and planning of executing the work at such lower rate from the concerned contractor and, based on that shall ensure the possibility of completing the work at the offered lowest rate. This Clause therefore, shows that merely because, it is lowest offer or then the Bank Guarantee is furnished as Additional Performance Security work is not awarded to such tenderer. The employer has to apply mind, find out the feasibility and then proceed further. 14. Part-E of NIT/ITB is about Bid Opening and Evaluation, Clause 23.6 therein, is about the Notification after Envelope No. 1 is opened. Clause No. 26 deals with the Examination of Bids and Determination of Responsiveness. Clause No. 26.1 obliges employer to determine whether each Bid (a) meets the eligibility criteria defined in Clauses 3 and 4, (b) has been properly signed, (c) is accompanied by the required securities and (d) is substantially responsive to the requirements of the bidding documents. The word "substantially responsive" employed here assumes importance. The clause thereafter point outs that during the detailed evaluation of "Part-II of Bids", the responsiveness of the bids will be further determined with respect to the remaining bid conditions. Those conditions are also stipulated by putting word "i.e.". Those conditions are priced bill of quantities, technical specification and drawings. 15. Clause 26.2 is pointing out substantially responsive "Financial Bid". It is explained that Bid which conforms to all the terms and condition and specifications of the bidding documents, without material deviation or reservation is to be treated as substantially responsive "Financial Bid". Again, the word employed is "substantially responsive" and while considering the deviation or reservation, the same are qualified by word "material". It is explained that Bid which conforms to all the terms and condition and specifications of the bidding documents, without material deviation or reservation is to be treated as substantially responsive "Financial Bid". Again, the word employed is "substantially responsive" and while considering the deviation or reservation, the same are qualified by word "material". Material deviation or reservation is also explained in this Clause 26.2 to be one which (a) affects in any substantial way the scope, quality or performance of the works, (b) which limits in any substantial way, inconsistent with the bidding documents, the employer's rights or the Bidder's obligations under the Contract or (c) whose rectification would affect unfairly the competitive position of other bidders presenting substantially responsive bids. 16. Thus, this clause permits the employer to accept the financial bids which are substantially responsive i.e. which do not material deviate from tender requirements. It also permits bidder to rectify any defect if rectification does not affect the competitive position of other bidders unfairly. This clause therefore demonstrates the discretion available to employer in the matter, obviously to advance public interest. 17. The Division Bench of this Court in case of Bharat Conductors Pvt. Ltd., Goa and anr. vs. Executive Engineer, Goa and ors., reported in 2016(6) Mh.LJ. 408 has found that action of the employer in refusing to open the bid of the of the Bharat Conductors, because the scanned copy of EMD was not uploaded, is arbitrary and unsustainable. The Division Bench has taken note of the fact that demand draft of EMD was procured by petitioner much prior to submission of his bid. The argument advanced in defence before the Division Bench was that as the EMD was not uploaded nor proof of payment at the time of opening of e-tender, the petitioner stood disqualified from taking part in tender process. Paragraph 7 of this ruling shows that the Technical Bid or Financial Bid was not evaluated because of this omission to upload scanned copy of Demand Draft in proof of payment of EMD. 18. Infacts before us, prequalification for participation is found fulfilled and therefore, only Envelope No. 2 (Part-II) of the present petitioner has been opened when the defect mentioned (supra) came to notice. The requirement of furnishing Additional Performance Security Deposit arises because of lower offer by the petitioner. 18. Infacts before us, prequalification for participation is found fulfilled and therefore, only Envelope No. 2 (Part-II) of the present petitioner has been opened when the defect mentioned (supra) came to notice. The requirement of furnishing Additional Performance Security Deposit arises because of lower offer by the petitioner. The amount of such Additional Performance Security Deposit has got definite relationship with such lesser rate as stipulated in Clause 7.2. The fact that the petitioner has offered lesser rate is not in dispute that the rate is also known and disclosed to everybody. The amount of APSD needed is also therefore, ascertainable. 19. The fact that Hard Copies are to be submitted immediately after online process is discontinued and when "Control Transfer" starts is not in dispute. Accordingly, petitioner has submitted the Hard Copy of Bank Guarantee towards APSD on 26-6-2018. Fact that it could not have been done before the said date, is also not in dispute the fact that this Bank Guarantee was already procured on 18-6-2018, is also not in dispute. The respondents do not even whisper that APSD Bank Guarantee is introduced as hard copy after getting knowledge of rival financial bids. When in this situation, scheme words "substantially and materially" highlighted (supra) or then provisions for rectification in Clause 26.2 are evaluated, the omission here to furnish APSD cannot be seen as the material defect. It does not in any way compromise the transparency at which online process is aimed and it also does not prejudice the competitive position of other bidders presenting the responsive bids. Recently, Hon'ble Apex Court in 2018 MhLJ Online (S.C.) 8 : 2018(5) SCC 462 in case of Municipal Corporation, Ujjain and anr. vs. BVG India Limited and ors., in para 19 pointed out that the modern trend is of judicial restraint in administrative action. The Court does not have expertise to correct administrative decision and does not sit in appeal. A fair play in joints is declared, a necessary concomitant for as administration body functioning in an administrative sphere or quasi judicial sphere. Administrative decision must be tested by applying wednesbury principles of reasonableness and must not be arbitrary or biased as mala fides. Here the respondents have avoided the offer below the "tender cost" without deliberating on it to find out and its viability. Administrative decision must be tested by applying wednesbury principles of reasonableness and must not be arbitrary or biased as mala fides. Here the respondents have avoided the offer below the "tender cost" without deliberating on it to find out and its viability. They have overlooked the burden or confidence shown in them by the language employed in ITB/NIT. They have not assigned any valid reason for not even considering the use of "discretion" conferred upon them by NIT. Their, omission or refusal militates with public interest. 20. The Hon'ble Apex Court has in Afcons Infrastructure Limited vs. Nagpur Metro Rail Corporation Limited and anr., pointed out that the employer of project having authored the tender documents, is the best person to understand and appreciate its requirement and interpret its documents. The Hon'ble Apex Court has observed that the Constitutional Courts must defer to this understanding and appreciation of tender documents, unless there are mala fides or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is also pointed out that the owner or employer of a project may give an interpretation to the tender document not acceptable to the Constitutional Courts but that by itself is not a reason for interfering with the interpretation given. In paragraph 16, the Hon'ble Apex Court has also explained that although there does not appear to be any ambiguity or doubt about the interpretation given by employer, even if there would have been any such doubt, the High Court should not have interfered in the process. 21. Hon'ble Apex Court in para 14 of this judgment reiterates its 40 year old view case of Ramana Dayaram Shety vs. International Airport Authority of India and ors., reported in (1979) 3 SCC 489 that words used by employer in tender documents can not be treated or ignored as redundant or superfluous. The words must be given meaning and their necessary significance. Here, we have mentioned terms and conditions of tender document only and found that the implication thereof has not been considered at all. Mechanically, only because the Bank Guarantee for Additional Performance Security Deposit was not furnished online, the bid has been treated or non responsive. The discretion the discretion are play in joints available to employer through various clauses noted supra has not at all been used and its impact has been lost site of. Mechanically, only because the Bank Guarantee for Additional Performance Security Deposit was not furnished online, the bid has been treated or non responsive. The discretion the discretion are play in joints available to employer through various clauses noted supra has not at all been used and its impact has been lost site of. We are therefore, inclined to follow Division Bench Judgment of this Court mentioned supra. 22. Omission of petitioner to upload soft copy of APSD in these facts, can not be seen as violation of an essential condition. Defect, if any was already cured on 26-6-2018 by petitioner without causing prejudice to any other bidder. Accordingly, we quash and set aside the impugned communication dated 31-7-2018 and direct the respondent Nos. 2, 3 and 4 to treat the Envelope No. 2 submitted by petitioner as a responsive bid and to proceed further as per law. 23. Rule is made absolute in the above terms. No order as to costs.