M/S. TRANS ADS v. The Secretary to Government Transport Department Government of Tamil Nadu Fort St. George Chennai & Ors.

Writ Petition filed under Article 226 of the Constitution ofIndia praying for the issuance of a Writ of Mandamus forbearing therespondents 2 and 3 from considering the fourth respondent for theaward of contract for "Licensing for Display of Advertisement on therear side panel board, rear side of driver cabin, passenger viewglasses (one side view) and in the vacant space below rooftop andabove the windows on both sides along with intensive cleaning of 1400buses' pursuant to the Tender No. 19507/A1/Advt.Rev./MTC/ 2011floated by the second respondent and to consequentially award thesaid tender to the petitioner being the highest qualified bidder. For Petitioner : Mr.R.Gandhi Senior Counsel for Mr.K.S.NatarajanFor Respondents 1 to 3 : Mr.A.Navaneethakrishnan Advocate GeneralAssisted byMr.V.R.Kamalanathan, AGPFor Respondent No.4 : Ms.S. HemalathaO R D E RThe prayer in the writ petition is to issue a Writ of Mandamusforbearing the respondents 2 and 3 from considering the fourthrespondent for the award of contract for "Licensing for Display ofAdvertisement on the rear side panel board, rear side of drivercabin, passenger view glasses (one side view) and in the vacantspace below rooftop and above the windows on both sides along withintensive cleaning of 1400 buses' pursuant to the Tender Notificationissued by the second respondent and consequently award the saidtender to the petitioner being the highest qualified bidder. 2. Brief facts necessary for disposal of this writ petition areas follows:Petitioner-advertising agency is engaged in the business ofadvertising and has generated a lot of goodwill in the AdvertisingSector. It is carrying out advertisements by way of publications inall modes, namely, Railway Advertisements, erection of sign-boardsand advertisement panel with proper license and approval from theauthorities concerned. The Metropolitan Transport Corporation(Chennai) Limited (hereinafter called as "MTC) invited tenders fromthe eligible persons for "licensing of display of advertisement onthe rear side panel board, rear side of driver cabin, passenger viewglasses (one-side view) and in the vacant space below roof top andabove the windows on both sides along with intensive cleaning of 1400 https://hcservices.ecourts.gov.in/hcservices/ buses" through a tender notification published in "The Hindu"newspaper dated 13.7.2011. The tender was scheduled to be opened on30.7.2011 at 15.30 hours and last date for submission of tenders wasfixed as 30.7.2011 at 15.00 hours. 3. According to the petitioner, in January, 2011 and June,2011, similar tenders were called for and the petitioner participatedin the tender by paying EMD of Rs.5 lakhs on each occasion. However,the said tenders were not acted upon and the EMD, paid were also notrefunded. The petitioner participated in the present tender pursuantto the Notification dated 13.7.2011 by submitting three bids (a)technical bid (b) commercial bid for advertising and (c) commercialbid for carrying out intensive cleaning, in three separate sealedcovers, duly superscribed in the covers and dropped the same in thetender box at the office of MTC. The petitioner's bid was submittedin three separate covers and all the three are put in one sealedcover and dropped in the box.4. On 30.7.2011, the Tender Opening Committee of MTC opened allthe tenders at 15.30 hours and it was informed that there were fourparticipants, namely, the petitioner, fourth respondent and twoothers. The Tender Opening Committee opened the tenders one by oneand read out the names of the participants and number of coverssubmitted by each of the participants. After opening the covers, itwas noticed that the fourth respondent had submitted only two sealedcovers as against the required three sealed covers specified in thenotification. The fourth respondent had only submitted the technicalbid and one commercial bid instead of two commercial bids asstipulated in the tender conditions. According to the petitioner, allthe participants expected that the tender of the fourth respondentwill be summarily rejected as per the notification, which clearlystates that if tender applications are not submitted in threeseparate sealed covers, the same will be rejected summarily. 5. According to the petitioner, the above procedure was alsopointed out before the Tender Opening Committee at the time ofopening of the tenders and it was assured that the same will be notedand a decision will be taken in accordance with the Rules,Regulations and Notification. The authorities, in violation of thetender conditions, chose to open the commercial bid of the fourthrespondent on 10.8.2011 and found that the fourth respondent hasquoted Rs.2,200/- per bus per month for display of advertisement in1400 buses and the petitioner had quoted Rs.2,103/= per bus permonth. According to the petitioner, the fourth respondent is a newentrant in the field of advertising business and it is alleged thatthe fourth respondent is a benami of some political bigwig. The saidaction of the official respondents in treating the fourth respondentas a highest bidder, in spite of his tender liable to be rejected asper the notification at the first instance, being violative of thetender conditions, the petitioner has come up with the present writ https://hcservices.ecourts.gov.in/hcservices/ petition with the above said prayer contending that the fourthrespondent is disqualified from participating in the commercial bidas he failed to comply with the mandatory requirement of submittingthe bids in three separate sealed covers and the same should havebeen rejected summarily as it is against the terms and conditions ofthe tender, which is a mandatory requirement. 6. This writ petition was filed on 22.8.2011 and as status-quowas ordered to be maintained as on 24.8.2011, which was subsequentlyextended and as on today, the said tender is not confirmed in favourof the fourth respondent.7. Respondents 2 and 3 have filed a counter affidavit, whereinit is admitted that the fourth respondent had filed two covers and inouter cover submitted for commercial bid, he filed two separate formsas prescribed by the tender schedule one for the amount he is willingto pay for the advertisement and another one for the amount he iswilling to receive for cleaning the buses. It is also stated thatsince it is a new venture for the fourth respondent and the ratesquoted for displaying being the highest and for cleaning being thelowest, respondents 2 and 3 had decided to accept the tender ofcommercial bid opted by the fourth respondent and there is noillegality in the said order and due to the interim order of status-quo granted, respondents 2 and 3 are unable to proceed further in thematter and the tenders were not confirmed in favour of the fourthrespondent.8. The fourth respondent has also filed a counter affidavitcontending that the tender documents in prescribed covers, one fortechnical bid and another for commercial bid for display ofadvertisement and another for intensive cleaning of the buses,quoting the rates in separate forms furnished by the MTC, weresubmitted and there was no deviation. The tender was opened on30.7.2011 at 15.30 hours. The fourth respondent submitted two coversi.e., for technical bid and commercial bid for display ofadvertisement and intensive cleaning of buses. The fourth respondentfurnished three bids namely, (a) technical bid (b) commercial bidfor display of advertisement and (c) commercial bid for carryingout intensive cleaning. The technical bid was furnished in one overand the commercial bid for display of advertisement and for carryingout intensive cleaning in separate forms were furnished in separatesealed cover. Thus, the fourth respondent also admitted about thefact of not submitting three covers. It is also submitted that thefourth respondent having quoted Rs.2,200/- per bus per month fordisplay of advertisement and the petitioner having quoted Rs.2,103/-per bus per month, the second respondent decided to award license, inpublic interest and the petitioner is not prejudiced because of themistake on the part of the fourth respondent in having submitted twocommercial bid in one single cover and prayed for dismissing the writpetition. https://hcservices.ecourts.gov.in/hcservices/

9. The learned Senior Counsel for the petitioner submitted thatthe petitioner is having rich experience in the advertising sectorand it is the most suitable advertising agency from among theparticipants and the amount quoted by the petitioner being the secondlowest, as admitted by the second respondent, it is entitled to getthe auction confirmed in its favour, as the fourth respondent is anew comer in the field of advertising, who also failed to comply withthe mandatory requirements, while submitting the tender in threeseparate sealed covers. The learned Senior Counsel also submittedthat not submitting the bids in three separate sealed covers by thefourth respondent being the admitted position as per the counteraffidavits filed by the second respondent as well as the fourthrespondent, the bids submitted by the fourth respondent is liable tobe rejected in terms of the general terms and conditions imposed bythe second respondent, which is found at page No.1 of the typed setof papers. The learned Senior Counsel further submitted that theaction of respondents 2 and 3 in opening the commercial bid of thefourth respondent is erroneous and unsustainable, as the bidssubmitted are not in the manner prescribed by the fourth respondentand the same are bound to be summarily rejected as per the terms andconditions. The learned Senior Counsel also cited few judgments insupport of his contentions. 10. The learned Advocate General, appearing for respondents 1 to3 submitted that though the fourth respondent submitted only twocovers instead of submitting the same in three separate covers, hehaving quoted highest amount for display of advertising and quotedlowest rate for intensive cleaning, the second respondent has decidedto accept the commercial bid submitted by the fourth respondent andnon-submission of bids in three separate covers is only a proceduralviolation and the same will not stand in the way of respondents 2 and3 in accepting the tender of the fourth respondent. The learnedAdvocate General cited few decisions in support of his contentions.11. The learned counsel for the fourth respondent also supportedthe arguments of the learned Advocate General and contended that theamount quoted by the fourth respondent being highest for display andlowest for cleaning charges, there is no illegality in the tentativedecision taken by the second respondent in accepting the fourthrespondent's bids and the petitioner has no locus standi to challengethe action of the second respondent as it is the prerogative of thesecond respondent to accept or reject the tender or to proceed withthe tender. The learned counsel also cited certain decisions insupport of her contentions. 12. I have considered the rival submissions made by the learnedSenior Counsel for the petitioner, the learned Advocate General forrespondents 1 to 3 and the learned counsel for the fourth respondent,and also perused the pleadings, documents and the decisions cited. https://hcservices.ecourts.gov.in/hcservices/

13. The point arises for consideration in this writ petition is,whether the respondents 2 and 3 are bound to follow their own termsand conditions while proceeding with the tender and awardingcontract. The general terms and conditions read as follows:-" GENERAL CONDITIONSThe tender consists of Technical Bid and two CommercialBids in the prescribed form.The tenderer shall furnish three bids (a) Technical Bid(b) Commercial Bid for display of advertisement (c)Commercial Bid for carrying out intensive cleaning in threeseparate sealed covers duly superscribed in the respectivecover properly and lodge them in one outer cover.The bids shall not be clubbed in one cover.Tenderers are requested to go through the terms andconditions thoroughly before filling the Technical Bid andCommercial Bids. The language of the tender shall be inEnglish or Tamil.The prescribed format for Technical Bid is given inSchedule-I, the Commercial Bid for display of advertisementis given in Schedule-II and the Commercial Bid for carryingout intensive cleaning is given in Schedule-III of thetender schedule.Failure to submit the bids in three separate sealedcovers shall result in rejection of the tender summarily.The tender for Technical Bid will be open by the TenderOpening Committee in the presence of tender participants.Only one participant representing each tender will beallowed to participate in the opening of tender. Evidencefor representing the concerned firm to be produced i.e.authorization letter of the concerned firm to be produced atthe time of entrance of Tender Opening Hall.The Technical Bid shall be short listed to ascertainthe eligible tenderers and then offer containing theCommercial Bids in respect of successful Technical Biddersshall be opened for further processing on the specific day,which will be informed by MTC.Demand Draft for EMD and all other relevant documentsshall be enclosed along with Technical Bid only."(Emphasis Supplied) https://hcservices.ecourts.gov.in/hcservices/

14. The petitioner has admittedly submitted bids in threeseparate sealed cover i.e. for (1) technical bid, (2) commercial bidfor display of advertisement, and (3) commercial bid for carrying outintensive cleaning. The fourth respondent has submitted the bids onlyin two sealed covers. In the counter affidavit filed by the secondrespondent, in paragraph-5, it is stated as follows:-"5. As far as paras 6 to 10 of the Affidavit areconcerned, I submit that the contention of thepetitioner is denied since the tender was opened on30.7.2011 at 15.30 hours in the presence of otherrepresentative and the following firms wereparticipated in this tender namely 1) M/s.Tool Tech(fourth respondent) 2)M/s.View Max, 3) M/s.Matrix and4) M/s.Trans Ads (petitioner). On opening theTechnical Bid, the fourth respondent M/s.Tool Tech hassubmitted only two covers i.e. one Technical Bid andone Commercial Bid for display of Advertisement andintensive cleaning of buses instead of one TechnicalBid and two Commercial Bid i.e. a) Commercial Bid fordisplay of advertisement b) Commercial Bid forintensive cleaning as mentioned in the tenderschedule.Further, the commercial bid covers for all theparticipated firms were opened on 10.8.2011 in thepresence of other representatives for display ofadvertisement and intensive cleaning for obtainingcompetitive offers, I came to understand that the veryobject of filing 3 covers is, it should not overlapeach other in terms of amount quoted by the bidders,but in this case the 4th respondent had filed 2 coversin one outer cover submitted for commercial bid, hefiled the two separate forms as prescribed by thetender schedule one for the amount he is willing topay for the advertisement and another is what is theamount he is willing to receive for cleaning thebuses. Since it is a new venture to the M/s.Tool Tech,the fourth respondent even though submitted thecommercial bid cover both in one cover for display ofadvertisement and intensive cleaning of buses, but therates were quoted separately in separate forms. Hence,the question of deviation made by the 4th respondentdoes not arise.The rates quoted for display of advertisement andintensive cleaning of buses by the firms are asfollows: https://hcservices.ecourts.gov.in/hcservices/ S.No.Name of the FirmsFor display of adv.(Rate per bus permonth in Rs.)For intensivecleaning (Rateper bus permonth in Rs.)1M/s.Tool Tech2200402M/s.Trans Ads21033933M/s.View Max16006904M/s. Matrix1523900"15. The counter affidavit filed by the fourth respondent alsoclearly states that the technical bid was furnished in one cover andcommercial bid for display of advertisement and for carrying outintensive cleaning in separate forms were furnished in separate threesealed covers. Therefore, the bids submitted by the fourth respondentis only in two covers and not in three covers, as mandated in theconditions stipulated as extracted above. In the terms andconditions, it is clearly spelt out that "failure to submit the bidsin three separate sealed covers shall result in rejection of thetender summarily". 16. In the light of the said statement contained in the termsand conditions, particularly stating that failure to submit the bidsin three separate sealed covers shall result in rejection of thetender summarily, establishes an inevitable inference that the saidcondition is mandatory and persons, who are submitting the bids arebound to follow the same and failure to follow, will have seriousconsequence of rejection of tender. The said terms and conditions arebound to be followed not only by the petitioner and the fourthrespondent, but also by respondents 2 and 3. Any deviation from theprescribed procedure, which is mandatory in character, will lead toarbitrariness. The second respondent having prescribed the saidcondition, the second respondent is duty bound to follow the samewithout giving room for raising any other allegation of bias,favouratism etc., against respondents 2 and 3 in favour of the fourthrespondent. The rules of selections are bound to be followed by allconcerned, not only in the case of admission of students,appointments and awarding contracts, if it is mandatory and the issueis no longer res integra. 17. The decision cited by the learned Advocate General viz.,AIR 1991 SC 1579 (Poddar Steel Corporation v. Ganesh EngineeringWorks) was rendered on the basis of the terms and conditionsmentioned for conducting auction in the said matter. The HonourableSupreme Court having found that depositing earnest money bycertified cheque of Union Bank instead of depositing money by cash orby Demand Draft drawn on State Bank is only ancillary or subsidiarywith the main object to be achieved and decided that the same being a https://hcservices.ecourts.gov.in/hcservices/ directory condition need not be treated as a materialirregularity/mandatory violation. The Supreme Court also held thatthe conditions, which lay down the essential conditions ofeligibility are mandatory and other conditions are merely ancillaryor subsidiary with the main object to be achieved and further heldthat mandatory conditions are to be viewed strictly and the ancillaryconditions are to be viewed liberally. The same is the view taken bythe Honourable Supreme Court in the decision reported in 2010 (13)SCC 364 (Indian Railway Catering and Tourism Corporation Limited andAnother vs. Doshion Veolia Water Solutions Private Limited andOthers). In paragraph 41 and 42, the Honourable Supreme Courtnoticing the fact and the condition, which was not essential and onlycollateral, which has no serious/adverse consequence of not followingthe general conditions, held that the said infraction of thecondition will not vitiate about acceptance. Paragraphs 40 to 42 ofthe said judgment read thus:-" 40. Clauses (i) and (ii) of the Note appended tothe prescribed price schedule, which relate to duties andtaxes, are quoted hereinbelow:“Note.—(i) The prices quoted are lump sum inclusive of allduties and taxes, etc.(ii) Vendor should indicate total excise dutyamount included in above prices (for plants andequipments).”41. The language of Clauses (i) and (ii) of the Notequoted above is clear that the prices quoted are to belump sum inclusive of all duties and taxes, etc. and thevendor should indicate total excise duty amount includedin the prices for plants and equipments. The Note does notindicate the consequences that will follow if the vendordoes not indicate the total excise duty amount included inthe prices for plants and equipments. The Note does notsay that if the vendor does not indicate the total exciseduty amount included in the prices for plants andequipments, the offer of the vendor “shall” be rejected.In the absence of any mention of the consequence ofrejection of the offer for not indicating the total exciseduty amount in rupees included in the price of plants andequipments in the tender documents, the High Court couldnot have held that Ion Exchange had committed breach of anessential term or condition of the tender notification orthe tender format.42. For this conclusion, we are again supported bythe decision in Kanhaiya Lal Agrawal v. Union of India inwhich this Court relying on G.J. Fernandez v. State of https://hcservices.ecourts.gov.in/hcservices/ Karnataka held: (Kanhaiya Lal case, SCC p. 317, para 6)“6. … Whether a condition is essential orcollateral could be ascertained by reference to theconsequence of non-compliance thereto. If non-fulfilment of the requirement results in rejection ofthe tender, then it would be an essential part of thetender otherwise it is only a collateral term.”Hence, if on the recommendation of the Tender Committee,the accepting authority did not find the deviation fromClause (ii) of the Note by Ion Exchange very material andhas accepted the offer of Ion Exchange, the Division Benchof the High Court could not have held that Ion Exchangecommitted a breach of an essential term by not mentioningthe excise duty amount in rupees in its offer."(Emphasis supplied)Thus, the decision cited by the learned counsel for the respondentsare clearly distinguishable as there was no adverse effect/rejectionof tender for not complying with the conditions summarily. 18. In this case a clear condition is mentioned in the terms andconditions that not following the prescribed procedure will have theconsequence of rejection of the tenders summarily. The saiddistinction is considered by the Honourable Supreme Court in thedecision reported in 2001 (2) SCC 451 (W.B.State Electricity Boardvs. Patel Engineering Co. Ltd., and Others). In the said case, thedirection given by the High Court to permit correction of errors byrespondents 1 to 4 was not accepted by the Honourable Supreme Courton the ground that it will be in violation of the terms andconditions. In paragraph-23 it is held that had the appellant andrespondents 1 to 4 were vigilant in checking the bid documents beforetheir submission, the mistakes would have been avoided and correctionof such mistakes after one and a half months of opening of the bidswill also be violative of Clauses 24.1, 24.3 and 29.1 of the ITB(Instructions to Bidders). Further it is held that it is essentialto maintain the sanctity and integrity of process of tender/bid andalso award of a contract. It was also pointed out that the appellantas well as the respondents are all bound by the ITB (Instructions toBidders) that the same should be complied with scrupulously. Inparagraph-24 of the said judgment, it is held as follows:" 24. The controversy in this case has arisen atthe threshold. It cannot be disputed that this is aninternational competitive bidding which postulateskeen competition and high efficiency. The biddershave or should have assistance of technical experts.The degree of care required in such a bidding isgreater than in ordinary local bids for small works. https://hcservices.ecourts.gov.in/hcservices/ It is essential to maintain the sanctity andintegrity of process of tender/bid and also award ofa contract. The appellant, Respondents 1 to 4 andRespondents 10 and 11 are all bound by the ITB whichshould be complied with scrupulously. In a work ofthis nature and magnitude where bidders who fulfilpre-qualification alone are invited to bid, adherenceto the instructions cannot be given a go-by bybranding it as a pedantic approach, otherwise it willencourage and provide scope for discrimination,arbitrariness and favouritism which are totallyopposed to the rule of law and our constitutionalvalues. The very purpose of issuingrules/instructions is to ensure their enforcementlest the rule of law should be a casualty. Relaxationor waiver of a rule or condition, unless so providedunder the ITB, by the State or its agencies (theappellant) in favour of one bidder would createjustifiable doubts in the minds of other bidders,would impair the rule of transparency and fairnessand provide room for manipulation to suit the whimsof the State agencies in picking and choosing abidder for awarding contracts as in the case ofdistributing bounty or charity. In our view suchapproach should always be avoided. Where power torelax or waive a rule or a condition exists under therules, it has to be done strictly in compliance withthe rules. We have, therefore, no hesitation inconcluding that adherence to the ITB or rules is thebest principle to be followed, which is also in thebest public interest."(Emphasis Supplied)19. The scope of interference in tender matters is clearlymentioned by the Honourable Supreme Court in the decision reportedin AIR 1996 SC 11 = (1994) 6 SCC 651 (Tata Cellular vs. Union ofIndia).20.In the decision reported in AIR 1996 SC 11 = (1994) 6 SCC651 (Tata Cellular vs. Union of India), in paragraph-69, it is heldthus:" 69. A tender is an offer. It is something whichinvites and is communicated to notify acceptance.Broadly stated, the following are the requisites ofa valid tender:1.It must be unconditional.2.Must be made at the proper place.3.Must conform to the terms of obligation.4.Must be made at the proper time.5.Must be made in the proper form. https://hcservices.ecourts.gov.in/hcservices/

6.The person by whom the tender is made must be ableand willing to perform his obligations.7. There must be reasonable opportunity forinspection.8. Tender must be made to the proper person.9. It must be of full amount."21. Here in this case, no discretion is vested with respondents2 and 3 to accept the technical bid submitted by the fourthrespondent as the technical bid was defective and the terms andconditions imposes a duty on the part of respondents 2 and 3 tosummarily reject the tender of the fourth respondent at the firstinstance. 22. In Clause-5 of the terms and conditions, it is specificallystated that the technical bid shall be shortlisted to ascertain theeligible tenderers and then offer containing the commercial bids inrespect of successful technical bidders shall be opened for furtherprocessing on the specific day. Thus, it is incumbent on therespondents 2 and 3 to shortlist the eligible tenderers at thetechnical bid stage and only successful technical bidders can beallowed to participate in the further proceeding of commercial bid onthe specific day. The said procedure has not been followed byrespondents 2 and 3 while opening the commercial bid of the fourthrespondent. No right is also accrued to the 4th respondent as noconfirmation order is issued to the 4th respondent as on date. TheHonourable Supreme Court in the decision reported in (2008) 9 SCC 299(Valji Khimji & Co v. Official Liquidator of Hindustan Nitro Product(Gujarat) Ltd.) emphasised the said proposition and in paragraph 30held thus,"30.......... where the auction is subject tosubsequent confirmation by some authority (under astatute or terms of the auction) the auction is notcomplete and no right accrue until the sale isconfirmed by the said authority. Once, however, thesale is confirmed by that authority, certain rightsaccrue in favour of the auction-purchaser, and theserights cannot be extinguished except in exceptionalcases such as fraud."23. In the light of above judgments and having regard to theinstructions issued for submission, processing and accepting thetender, which is binding on all the parties, the action of therespondents 2 and 3 in accepting the commercial bid of the fourthrespondent cannot be sustained. The petitioner also cannot claimconfirmation of its bids as a matter of right. It is the discretionof the respondents 1 and 2 either to accept the best offer/lowestoffer or reject all offers and proceed for fresh auction. Therefore,it is upto the respondents 2 and 3 to decide as to whether thepetitioner's offer, being the second highest offer, should be https://hcservices.ecourts.gov.in/hcservices/ accepted and confirmed or to proceed with further auction by invitingfresh tenders. Respondents 2 and 3 are directed to take a decisionin that aspect and pass appropriate orders, within a period of twoweeks from the date of receipt of a copy of this order. The amountdeposited by the 4th respondent is directed to be returned.The writ petition is disposed of accordingly. No costs.Consequently, connected miscellaneous petition is closed.Sd/-Asst. Registrar//true copy//Sub Asst.RegistrarkbTo1 THE SECRETARY TO GOVERNMENT TRANSPORT DEPARTMENTGOVERNMENT OF TAMILNADU FORT ST. GEORGE CHENNAI – 600 009.2 THE MANAGING DIRECTOR METROPOLITAN TRANSPORT CORPORATION (CHENNAI) LIMITED PALLAVAN HOUSE ANNA SALAI CHENNAI – 600 002.3 THE GENERAL MANAGER (CORPORATE) METROPOLITAN TRANSPORT CORPORATION (CHENNAI) LIMITED PALLAVAN HOUSE ANNA SALAI CHENNAI – 600 002.1 cc to Mr.K.S.Natarajan, Advocate, Sr.No.693631 cc to Mr.V.R.Kamalanathan, Advocate, Sr.No.697121 cc to M/s.S.Hemalatha, Advocate, Sr.No.69303 Order made in W.P.No.19608 of 2011GR {CO}TP/15.11.2011.