Letters Patent Appeal No. 501 of 2013 · Patna High Court
Case Details
IN THE HIGH COURT OF JUDICATURE AT PATNA Letters Patent Appeal No.501 of 2013 In Civil Writ Jurisdiction Case No. 9155 of 2012 ====================================================== 1. The State of Bihar, Through Principal Secretary, Water Resources Department, Government Of Bihar, Sinchai Bhawan, Patna 2. The Engineer In Chief ( North ), Water Resource Department, Government of Bihar, Sinchai Bhawan, Patna 3. The Chief Engineer Water Resources Department, Siwan 4. The Executive Engineer, Saran Division, Chhapra .... .... Appellant/s Versus 1. M/S Mother India Construction Pvt. Ltd., Ashpura House, Road No. 3, Sanjay Gandhi Nagar, Kankarbagh, P.S. Patrakar Nagar, Town And District - Patna, through its Director Chandra Sen Singh Son of Late Laxmi Singh 2. Birendra Kumar Yadav S/o Kamal Prasad Yadav, Proprietor of M/S Maa Rajeshwari Construction, Phulwaria Via - Sanho Maker, District - Saran ( Chhapra ) … Respondent No.1/Petitioner .... .... Respodnent No.2/Respondent No.5 ====================================================== with Letters Patent Appeal No.477 of 2013 ====================================================== 1. The State of Bihar , through Principal Secretary, Water Resources Department, Government of Bihar, Sinchai Bhawan, Patna 2. The Engineer In Chief (North), Water Resources Department, Government of Bihar, Sinchai Bhawan, Patna 3. The Chief Engineer Water Resources Department, Muzaffarpur 4. The Executive Engineer, Flood and Drainage Division Lalganj, (Vaishali) .... .... Appellants/Respondents Versus M/S Mother India Construction Pvt. Ltd. , Ashpura House, Road No. 3, Sanjay Gandhi Nagar, Kankarbagh, P.S. Patrakar Nagar, Town And District - Patna through its Director Chandra Sen Singh, Son of Late Laxmi Singh .... .... Respondent/Petitioner ====================================================== Appearance : (In LPA No.501 of 2013) For the Appellant/s : Mr. Ravi Bhardwaj For the Respondent/s : Mr. (In LPA No.477 of 2013) For the Appellant/s : Mr. Ravi Bhardwaj For the Respondent/s : Mr. ====================================================== CORAM: HONOURABLE MR. JUSTICE NAVIN SINHA and Patna High Court LPA No.501 of 2013 (3) dt.21-08-2013 2 HONOURABLE MR. JUSTICE VIKASH JAIN ORAL ORDER (Per: HONOURABLE MR. JUSTICE NAVIN SINHA) 3 21-08-2013 I.A. No. 2832 of 2013 has been filed to condone delay of approximately 96 days in filing of the appeal. We have considered the submissions made on behalf of the parties, the explanation for delay and the larger questions of public interest involved. We consider it proper to condone the delay, and take up the appeal for disposal on merits. The present appeals arise out of a common order dated 29.11.2012 allowing CWJC No. 9155 of 2012 and CWJC No. 9273 of 2012. The Court annulled the decision of the appellants dated 13.4.2012 to cancel the tender on grounds that the 120 days’ validity period of the bid under the tender had expired before finalization of the bids. Directions have been given to accept the bid after expiry of the validity period on the rate as quoted in the bid documents. The learned Single Judge held that Clause 15 exclusively related to the obligations of the bidder and did not have anything to do with the appellants. Interpreting Clause 15, it was opined that the appellants were conscious that the tender process may take time leading to price variations. The validity period was fixed to prevent a bidder from resciling. The period of 120 days did not relate to the validity of the tender process. There was merely four days delay when the
Legal Reasoning
Patna High Court LPA No.501 of 2013 (3) dt.21-08-2013 3 tender committee recommended acceptance of both tenders as lowest bidders on 11.4.2012. It was held that the Appellants ought to have first asked the respondent if he was willing to extend the bid period on the same terms in the larger public interest and to save public money. Relevant for the discussion is Clause- 15 of the Standard Bidding Document (hereinafter called S.B.D.) which reads as follows:- “15.1- Bid shall remain valid for a period not less than 120 days after the deadline date for bid submission specified in Clause 20. A bid valid for a shorter period shall be rejected by the Employer as non- responsive. In case of discrepancy in bid validity period between that given in the undertaking pursuant to Clause 12.1 (v) and the Form of Bid submitted by the bidder, the latter shall be deemed to stand corrected in accordance with the former and the bidder has to provide for any additional security that is required. 15.2- In exceptional circumstances, prior to expiry of the original time limit, the Employer may request that the bidders may extend the period of validity for a specified additional period. The request and the bidders responses shall be made in writing or by cable. A bidder may refuse the request without forfeiting his bid security. A bidder agreeing to the request will not be required or permitted to modify his bid.”
Legal Reasoning
Learned counsel for the appellants submitted that the bid submitted by the respondents was valid only for a period of 120 days unless the offer was extended for a further period before expiry of 120 days. The departmental tender committee erred in considering the bid offer on 11.4.2012 after Patna High Court LPA No.501 of 2013 (3) dt.21-08-2013 4 expiry of 120 days, which was not brought to its attention. After expiry of the validity period there was no offer surviving for consideration and neither was the validity of the bid extended before its expiry. The Learned Single Judge erred in giving directions contrary to the terms of the SBD. Learned senior counsel for the respondents submitted that under the SBD it was the obligation of the appellants to request for extension of the bid beyond 120 days. If no such request was made by the appellants and the respondents were ready and willing to extend the validity period of bids beyond 120 days on the same terms and conditions, there was no infirmity in the reasoning given by the Learned Single Judge. The delay in finalization was attributable to the appellants themselves as opined in the order under appeal. It has correctly been held that the Clause did not relate to the validity of the tender process. We have considered the submissions made on behalf of the parties. In matters of contract/tender the jurisdiction under Article 226 has to be restricted to errors in the decision making process and not the merits of the final decision. If there be arbitrariness in action, discrimination, or the decision is actuated by malafides, intended to indirectly help another, the Court may intervene to ensure upholding Article 14 of the Constitution. Normally it is not the jurisdiction of the writ Court to interfere in commercial decisions even if Patna High Court LPA No.501 of 2013 (3) dt.21-08-2013 5 one of the parties be the government as the government also has the right to protect its commercial interests. The terms of the tender bind both parties. Rights and Obligations cannot be unilateral. What was intended by the terms of the tender is best left to the authors of the tender. The Court cannot substitute its own understanding of the tender or interpret it as per its own understanding. Only in the event that there may be any ambiguity in the language of the tender, the Court may unravel the same. But if the terms and language of the tender be unambiguous the Court cannot read it in any other manner merely because two interpretations may be possible. The law with regard to jurisdiction under Article 226 in contract / tender matters was settled long ago in (1994) 6 SCC 651 (Tata Cellular Vrs. Union of India) observing at paragraph-94 as follows: “94. The principles deducible from the above are: (1) The modern trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open judicial scrutiny to because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract reached by process of negotiations through several tiers. More often than not, such decisions are made is Patna High Court LPA No.501 of 2013 (3) dt.21-08-2013 6 qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an quasi- administrative sphere administrative the decision must not only be tested by the application of Wednesbury Principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides…..” sphere. However, or In (2004) 4 SCC 19 (Directorate of Education v. Educomp Datamatics Ltd) it was held follows :- “12. It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. That the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The courts would the administrative policy interfere with decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. The courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide. 13…… Moreover, it was for the authority to set the terms of the tender. The courts would not interfere with the terms of the tender notice unless it was shown to be either arbitrary or discriminatory or actuated by malice. While exercising the power of judicial review of the terms of the tender notice the court cannot say that the terms of the earlier tender notice would serve the purpose sought to be achieved better than the terms Patna High Court LPA No.501 of 2013 (3) dt.21-08-2013 7 of tender notice under consideration and order change in them, unless it is of the opinion that the terms were either arbitrary or discriminatory or actuated by malice…..” Similar view has been taken in (2009) 6 SCC 171 (Meerut Development Authority v. Assn. of Management Studies) as follows :- “26. A tender is an offer. It is something which invites and is communicated to notify it must be acceptance. Broadly stated unconditional; must be in the proper form, the person by whom tender is made must be able to and willing to perform his obligations. The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. However, a limited judicial review may be available in cases where it is established that the terms of the invitation to tender were so tailor-made to suit the convenience of any particular person with a view from others eliminate participating in the bidding process.” all to Clause-15 amply reflects that a bid had to be made valid for a period not less than 120 days and bid for a shorter period was bound to be rejected as a non-responsive bid. In case of any discrepancy in the bid validity period between that given in the undertaking pursuant to Clause 12.1 (v) and the form of bid submitted by the bidder, the latter shall be deemed to stand corrected in accordance with the former. Therefore the clause in no uncertain terms provides for the period of validity of the bid and in case of any discrepancy between the bid offers in two different clauses which one of Patna High Court LPA No.501 of 2013 (3) dt.21-08-2013 8 them shall prevail. The validity of the bid would only be extended if prior to the expiry of the original time limit the bidder extended the period of validity for an additional period. The fact that it could be only on a request by the employer is qualified by the fact that the bidder could also refuse to do so. After the expiry of 120 days, for whatever the reasons may be, and in the absence of any extension of the bid period before expiry of the 120 days, the bid offer lost its relevance under the terms and conditions of the S.B.D. Thereafter the appellants necessarily had to go in for inviting fresh bids. The Court does not find any ambiguity in the terms of the tender notice. In any event a bidder has no vested right to the acceptance of his bid merely because he may be the lowest bidder and unless the final acceptance of the bid is communicated to him. The internal recommendation of the Departmental Tender Committee to accept the appellants bid does not create any legal right in it. It is not open for the Writ Court under Article 226 to read and interpret the bid documents to arrive at a judicial re-determination of the terms of tender with regard to what it means and does not mean, the respective obligation of the parties etc. In our opinion, the moment the validity of the period of bid expired after 120 days without any extension before expiry matters came to an end. In (2009) 11 SCC 9 (Sorath Builders v. Patna High Court LPA No.501 of 2013 (3) dt.21-08-2013 9 Shreejikrupa Buildcon Ltd) it was observed :- “21. In Puravankara Projects Ltd. v. Hotel Venus International, in which one of us, namely, Dr. Arijit Pasayat, J. was a party, it was held as follows: “Tender terms are contractual and it is the privilege of the Government which invites its tenders and courts do not have jurisdiction to judge as to how the tender terms should be framed. By observing that there was an implied term which was not there in the tender, and postponing the time by which the bank guarantee had to be furnished, in essence the High Court directed modification of a vital term of the contract.” It further held that: “The statutory parameters have to be kept in view and the High Court can never alter or amend a contract entered into between the parties.” The dangers of judicial re-interpretation of the terms of a tender was noticed in (2009) 6 SCC 171 ( Meerut Development Authority v. Assn. of Management Studies) observing as follows :- of review proceedings judges wrongly “68. The impugned judgment illustrates “the danger though unconsciously substituting their own views for the views of the decision-maker who alone is charged and authorised by law to exercise discretion”. With respect, we find that the High Court virtually converted the judicial an inquisitorial one. The way proceedings went on before the High Court suggest as if the High Court was virtually making an inquiry into the conduct and affairs of MDA in a case where the Court was merely concerned with the decision-making process of MDA in not accepting the offer/tender of AMS in respect of the disputed plot on the ground that the offer so made was less than that of the reserved price fixed by MDA.” into Patna High Court LPA No.501 of 2013 (3) dt.21-08-2013 10 The Learned Single Judge in our opinion exceeded the jurisdiction under Article 226 by rewriting the terms of the tender introducing meaning beyond what the Appellants intended, virtually rewriting the terms of the same by a judicial interdict. We therefore find it difficult to uphold the orders under appeal. The orders are accordingly set aside.
Decision
The appeal is allowed. P.K./- (Navin Sinha, J) (Vikash Jain, J)