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2019 DIGILAW 661 (BOM)

ADITYA CONSTRUCTION COMPANY v. STATE OF MAHARASHTRA

2019-03-06

S.M.MODAK, SUNIL B SHUKRE

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JUDGMENT : SUNIL B. SHUKRE, J. 1. Rule. Rule is made returnable forthwith and heard finally with the consent of Shri S.G. Jagtap, learned counsel for the petitioner, Shri S.Y. Deopujari, learned Government Pleader for respondent Nos. 1 to 4 and Shri A.S. Jaiswal, learned Senior Advocate i/b Shri G.E. Moharir, learned counsel for respondent No. 5. 2. Considering the facts admitted, as regards the issue involved in this petition, we do not find it necessary to reproduce entire facts of the case. Suffice it to state a few of them which would have bearing on the issue raised herein. A tender notice was issued for awarding the contract of work of Cement Concrete road between Zingabai Takli Godhani (Railway) Bokara and Koradi Road on a patch of National Highway No. 69, Tahsil & District - Nagpur. In response to this notice, bids were received by respondent Nos. 2 to 4. It was one of the essential conditions of the bidding document (see condition No. 7.2) that offer in envelope No. 2 must be accompanied by a Demand Draft (DD) or a Bank guarantee of appropriate amount of performance security. As per the condition contained in 2.8.4 of this document, it was clear that if the offer contained in envelope No. 2 was not accompanied by the performance security of the appropriate amount, the offer would be treated as invalid. 3. In the present case, although the petitioner was the lowest bidder, envelop No. 2 submitted by him was not in conformity with clause 2.8.4 and also clause 7.2 of the bid document. The DD that was contained in envelope No. 2 fell short of the requisite amount by Rs.30,708/-. These facts are not in dispute. But, according to the learned counsel for the petitioner, considering the fact that the petitioner was the lowest bidder, the deficiency so found in envelope No. 2, ought to have been viewed by respondent Nos. 1 to 4 as immaterial or as an insignificant deviation and, therefore, falling within the category of a substantially responsive financial bid under clause 26.2. 4. This has been seriously disputed by Shri Deopujari, learned GP for respondent Nos. 1 to 4 and also by Shri Jaiswal, learned Senior Advocate for respondent No. 5. Nobody appears for the newly added respondent Nos. 6 to 8. 5. 4. This has been seriously disputed by Shri Deopujari, learned GP for respondent Nos. 1 to 4 and also by Shri Jaiswal, learned Senior Advocate for respondent No. 5. Nobody appears for the newly added respondent Nos. 6 to 8. 5. On going through the bid document, we find that furnishing of a Bank guarantee or DD of the appropriate amount as performance security at the time of offer contained in envelope No. 2 is an essential condition. This could be seen from the disqualification clause No. 2.8. It would be convenient to reproduce the relevant portion of clause No. 2.8. "Disqualification Even through the tenderer meet the qualification criteria, they are subject to be disqualified if they have, 2.8.1 .............. 2.8.2 ............. 2.8.3 .............. 2.8.4 The offer in envelope 2 without demand Draft/ Bank Guarantee of appropriate amount of performance security shall be treated as invalid offer. 6. The appropriate amount of the performance security to be furnished by the bidder is determined by the formula contained in clause 7.2 of the bid document. In the present case, the petitioner, on calculations made as per the formula, was required to furnish performance security of the amount of Rs.1,76,81,908/-, whereas, the petitioner furnished a demand draft towards performance security of Rs.1,76,51,200/-. Thus, this demand draft was in deficit of the performance security amount to the extent of Rs.30,708/-. We must state it here that there is no dispute about the short fall so determined as per clause 7.2 of the bidding document. 7. Now, the question would be as to whether this shortfall could be considered as an insignificant deviation within the contemplation of 26.2 of the bidding document or otherwise. In order to find out the answer to this question, we will have to consider the contents of clause 26.2. It reads thus : "26.2 - A substantially responsive "Financial Bid" is one which conforms to all the terms, conditions, and specifications of the bidding documents, without material deviation or reservation. A material deviation or reservation is one (a) which 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." 8. A bare perusal of clause 26.2 would reveal that before a deviation in question is considered as being material deviation or otherwise, certain conditions must be fulfilled. These conditions relate to the need for complying with all the terms and conditions and further requirement of meeting the specifications of bidding documents. This would be clear from the structure of clause 26.2. This clause begins with the expression "A financially responsive "Financial Bid" is one which conforms to all the terms, conditions and specifications of the bidding documents" and then it goes on further to say that such conformity is "without material deviation or reservation". So, the question of the bid submitted as being "without material deviation or reservation" would arise only when the first condition of the submitted bid conforming substantially to all the terms, conditions and specifications is fulfilled. Furnishing of performance security of an amount lesser than the prescribed amount cannot be viewed as substantial compliance or immaterial deviation in view of the disqualification clause 2.8.4 discussed earlier and also the further elucidation of expression "material deviation or reservation" given in clause 26.2. 9. The clarification given in clause 26.2 says that material deviation or reservation is the one which affects in any substantial way the scope, quality or performance of the works. Sub-clause (b) further explains that a deviation or reservation is also material if it limits in any substantial way, the Employer's rights or the Bidder's obligations under the Contract; or is inconsistent with the bidding document. Sub-clause (c) further elaborates that a deviation is material which when rectified would affect unfairly the competitive position of other bidders presenting substantially responsive bids. 10. Such detailed explanation of the words "material deviation" would only show that whatsoever contemplated under this clause is deviation or departure from something which if pardoned would affect the scope, quality or performance of the Works or which would restrict substantially the Employer's rights or the Bidder's obligations under the Contract, or which would affect unfairly the competitive bidding made by other persons. 11. Apart from what is said above, at the cost of repetition, we would state that the disqualification clause 2.8.4 puts a clear embargo on furnishing of performance security of inappropriate amount by creating a risk of disqualification of a bidder venturing to submit the security of inappropriate amount. 11. Apart from what is said above, at the cost of repetition, we would state that the disqualification clause 2.8.4 puts a clear embargo on furnishing of performance security of inappropriate amount by creating a risk of disqualification of a bidder venturing to submit the security of inappropriate amount. When this clause says that the amount must be appropriate, it can certainly not be understood as an amount which may also be somewhat near the appropriate or somewhat lesser than the appropriate so as to call it a substantial compliance. If such an interpretation is to be accepted, a question would arise in a case where the amount is less and the question would be as to how much and up to what margin the amount could be less ? The question cannot be answered as there is no provision made anywhere in the bidding document for permitting furnishing of security of amount which is lesser than the appropriate amount up to a certain percentage of the appropriate amount. That would only mean that the bidding document does not leave any scope for furnishing of security of amount which is lesser than the appropriate even by a slight difference. Besides, a lesser security if permitted, would pose another difficulty, the difficulty of letting the bidders go down to any level below and by any percentage lesser than the appropriate amount and in that case, it would be a situation of free for all and do as you like. Such a situation would be hit by sub-clauses (b) and (c) of clause 26.2 in the sense that it would substantially restrict the right of the Employer or obligation of the bidder under the contract and also unfairly affect the competitive position of other bidders. 12. In the circumstances, we find that the amount of performance guarantee furnished admittedly being lesser by Rs.30,708/- than the required amount was inappropriate in terms of clause 2.8.4 read with clause 26.2 and, therefore, the petitioner was rightly disqualified by respondent Nos. 2 to 4. This decision taken by these respondents cannot be found to be falling foul of any material procedural irregularity, or requirement of rule of reasonableness and absence of arbitrariness. It can also not be seen as something replete with perversity or manifest favouritism. 2 to 4. This decision taken by these respondents cannot be found to be falling foul of any material procedural irregularity, or requirement of rule of reasonableness and absence of arbitrariness. It can also not be seen as something replete with perversity or manifest favouritism. After all, as held by the Hon'ble Apex Court in the case of Tata Cellular vs. Union of India, (1994) 6 SCC 651 , while taking review of administrative decisions regarding government contracts, the Court can only examine correctness or otherwise of the decision making process and the Court cannot look into the merits of the decision itself as if it is sitting as an appellate Court unless the decision is seen on the touchstone of 'Wednesbury Principle of unreasonableness' as patently illegal, perverse or unfair or so highly illogical or irrational as no reasonable person on proper application of mind would take it. Such is not the case here. 13. The learned counsel for the petitioner has invited our attention to the interpretation given to the expression 'substantial responsive financial bid' by the co-ordinate Division Bench of this Court in its judgment dated 06.09.2018 rendered in Writ Petition No. 5244 of 2018. We must say that what has been said in this judgment is not in the nature of an exercise made to interpret the meaning of expression in question but an effort made to reach a conclusion in the context of facts of that case. The facts of that case were that the tender document was to be submitted on-line and also in physical form by supplying a copy thereof to the authority or employer and instead of the tender document having been submitted on-line, it was submitted only physically by furnishing its copy to the authority. So, the question involved was, whether the procedure adopted for submission of tender document in that case, unfairly affected the competitive position of other bidders or not or whether that procedure affected in any substantial manner the scope, quality or performance of the work or created any limits upon the employer's right or bidders liability, and this question was answered in the negative by taking a view that submission of the tender document did not ultimately affect the performance of the work or rights or liabilities of the parties or the competitive position of other bidders. Such are not the facts of the instant case discussed earlier. The facts of this case would show that one of the essential terms of the tender document has not been complied with by the petitioner and there is also a clause, clause No. 2.8.4 which categorically disqualifies such a bidder for his or its failure to furnish the performance security of the appropriate amount. Therefore, we do not find that the said judgment rendered by the Division Bench of this Court would assist the case of the petitioner in any manner. 14. In the result, we find that there is no merit in the writ petition and it deserves to be dismissed. Writ Petition is accordingly dismissed. Rule discharged. However, there shall be no order as to costs.