M/S.CHERIAN VARKEY CONSTRUCTION CO.(P)LTD. v. UNION OF INDIA

“C.R. “V.CHITAMBARESH, J.-------------------------------W.P.(C) No.2234 of 2012-------------------------------Dated this the 1st day of March, 2012J U D G M E N TThe Southern Railway ('the Railway' for short) invitedbids for the award of contract in connection with the doubling oftrack between Haripad and Ambalapuzha. Only four biddersqualified in the credential bid and the fourth respondent wasdeclared successful in the financial bid. The petitioner whoqualified in the credential bid challenges the acceptance of the bidtendered by the fourth respondent. The core of the contentions ofthe petitioner is that the Railway should punctiliously and rigidlyenforce the conditions in the bid document. The petitioner assertsthat the bid tendered by the fourth respondent was incomplete anddefective. The writ petition is filed for such a declaration and for awrit in the nature of mandamus directing the Railway to award thecontract in favour of the petitioner who is the next lowest bidder. 2. The bid document essentially contains four parts,viz., preamble, price bid submission sheet, offer sheet (summary W.P.(C) No.2234 of 20122sheet) and annexures (A, B, C, D & E). It is a conceded fact thatthe fourth respondent omitted to fill up the particulars elicited inthe offer sheet. This according to the petitioner is fatal andshould have entailed in the rejection of the bid tendered by thefourth respondent. The petitioner relies on the following clausesin Ext.P2 bid document to buttress its contention:“2.1Tenderer shall note that they arerequired to quote a single %ageabove/PAR/below for each individual annexureseparately in the respective column/spaceprovided in the Offer sheet. Tenderers shall notquote their rates at any other place other thanthe offer sheet.7.18The Tenderer shall submit theTechno-Commercial Bid and Price Bid along withthe relevant submission sheets in accordancewith Annexure - I & Annexure - XIII respectively.These forms/sheets must be completed withoutany alterations to their format and no substitutesshall be accepted. All blank spaces shall be filledin with the information requested.” (emphasissupplied) W.P.(C) No.2234 of 20123The petitioner also relies on note (ii) in the offer sheet which isas follows:“ii) Tenderers shall note that thepercentage rate for the various Annexures ofTender schedule is to be quoted in offer sheetonly. No cognizance will be taken for ratesquoted at any other place.” (emphasis supplied)3. The Railway as well as the fourth respondent onthe other hand maintain that the omission to fill up theparticulars in the offer sheet is inconsequential. This isparticularly so since the amount quoted by the fourth respondentis discernible from the various annexures. The offer sheet onlyindexes the total amount quoted in the various annexures to thebid document. The filling up of the particulars in the offer sheetis not an essential condition in order to result in the rejection ofthe bid for failure. The Railway relies on the following clauses inExt.P2 bid document to justify their action in accepting the bid: “2.0The tender schedule is split intovarious annexures covering all the items W.P.(C) No.2234 of 20124pertaining to particular activity. In the variousannexures of Tender Schedule quantity and unitrates and thereby the amount against each itemhave been indicated. From this, cost price ofeach Annexure of Tender schedule has beenworked out and indicated in the summary sheet.The Tenderer shall quote rates as percentageabove/below/at par for each schedule in thesummary sheet in both figures and words. If nopercentage as above, below or par is indicatedfor any particular schedule, the same will beconsidered as percentage at par. 7.19 In the Tender Schedule (Packet -'2'Price Bid), quantity and unit rates and therebythe amount against each item have beenindicated. From this, cost price of each Annexureof Tender Schedule has been worked out andindicated in the offer sheet. The Tenderer shallquote rates as percentage above/below/on parfor each schedule in the offer sheet. If nopercentage as above, below or par is indicatedfor any particular schedule, the same will beconsidered as quoted at par. (emphasis supplied)4. I have heard Mr.K.L.Varghese, Senior Advocate W.P.(C) No.2234 of 20125instructed by M/s.Rahul Varghese and Ranjith Varghese,Advocates on behalf of the petitioner. I have also heardMr.C.S.Dias, Advocate on behalf of the Railway and Mr.RamMohan.G., Advocate on behalf of the fourth respondent. 5. The Supreme Court has laid down the test inKanhaiya Lal Agrawal v. Union of India and Others (2002(6) SCC 315) wherein it is succinctly held as follows:- “It is settled law that when an essentialcondition of tender is not complied with, it isopen to the person inviting tender to rejectthe same. Whether a condition is essential orcollateral could be ascertained by referenceto the consequence of non-compliancethereto. If non fulfillment of the requirementresults in rejection of the tender, then itwould be an essential part of the tenderotherwise it is only a collateral term. Thislegal position has been well explained inG.J.Fernandez v. State of Karnataka.”(emphasis supplied) W.P.(C) No.2234 of 20126The above decision which relies on G.J.Fernandez v. State ofKarnataka (1990 (2) SCC 488) has been quoted with approvalin Indian Railway Catering and Tourism Corporation Ltd.and another v. Doshion Veolia Water Solutions Pvt. Ltd.and others (2010 (13) SCC 364). 6. The Supreme Court has also in B.S.N.Joshi &Sons Ltd. v. Nair Coal Services Ltd. and others (2006 (11)SCC 548) held that strict compliance of essential conditionsshould be adhered to. The award amount in the instant caseexceeds `.20 crores and hence the decision in W.B.StateElectricity Board v. Patel Engineering Company Ltd. andothers (2001 (2) SCC 451) may be relevant wherein it isobserved as follows: “In a work of this nature and magnitudewhere bidders who fulfill pre-qualificationalone are invited to bid, adherence to theinstructions cannot be given a go-by bybranding it as a pedantic approach, otherwise W.P.(C) No.2234 of 20127it will encourage and provide scope fordiscrimination, arbitrariness and favouritismwhich are totally opposed to the rule of lawand our constitutional values. The verypurpose of issuing rules/instructions is toensure their enforcement lest the rule of lawshould be a causality.”7. Necessarily my endeavour should be to find out asto whether the filling up of the particulars in the offer sheet is anessential condition of the bid or not. This in turn would dependon the question as to what would be the consequence of notfilling up the particulars in the offer sheet. The filling up of theparticulars in the offer sheet would be an essential condition onlyif it entails in rejection for non-compliance. Otherwise it is acollateral term of the bid and its insistence may not be verymaterial to decide substantial compliance. The offer sheet andsummary sheet are one and the same going by the description inPart E of Ext.P2 bid document. Clause 2.0 implies that the bidwill be considered as percentage at par if no percentage as W.P.(C) No.2234 of 20128above, below or par is indicated in the offer sheet. SimilarlyClause 7.19 indicates that the rates quoted will be considered atpar if no percentage as above, below or par is indicated for anyparticular schedule in the offer sheet.8. What is the consequence in the fourth respondentnot indicating percentage as above, below or par for anyparticular schedule in the offer sheet ? The consequence is onlythat the price quoted by the fourth respondent would be treatedat par with the railway cash value indicated in the offer sheet.This assumes importance since the fourth respondent has quoted6.45% below the railway cash value as is discernible from theannexures to Ext.P2 bid document. Note (ii) in the offer sheetmeans that no cognizance will be taken for the rates quotedelsewhere and not that no cognizance will be taken of the bidtendered. A reasonable interpretation would mean that nocognizance will be taken for the rates if the bidder had quotedabove the railway cash value. The offer sheet only reflects the W.P.(C) No.2234 of 20129rates as percentage above/below/on par for each schedule andindexes the total amount given in the annexures. I havetherefore no hesitation to hold that filling up of the particulars inthe offer sheet is not an essential condition which should entail inthe rejection of the bid. 9. I should also bear in mind that the Court shouldbe slow to interfere with the award of contract when no elementof public interest is involved. The Supreme Court in RaunaqInternational Ltd. v. IVR Construction Ltd. & others (AIR1999 SC 393) has held as follows: When a writ petition is filed in the High Courtchallenging the award of a contract by a publicauthority or the State, the Court must be satisfied thatthere is some element of public interest involved inentertaining such a petition. If, for example, thedispute is purely between two tenderers, the Courtmust be very careful to see if there is any element ofpublic interest involved in the litigation. Again the Supreme Court in Air India Ltd. v. Cochin W.P.(C) No.2234 of 201210International Airport Ltd. and others (AIR 2000 SC 801) hasheld as follows:“Even when some defect is found in the decisionmaking process, the Court must exercise itsdiscretionary power under Article 226 with greatcaution and should exercise it only in furtheranceof public interest and not merely on the makingout of a legal point. The Court should alwayskeep the larger public interest in mind in order todecide whether its intervention is called for ornot. Only when it comes to a conclusion thatoverwhelming public interest requiresinterference, the Court should intervene.”The afore quoted decisions and the decision in Tata Cellular v.Union of India (AIR 1996 SC 11) were referred to in JagdishMandal v. State of Orissa and others (2007 (14) SCC 517)when the Supreme Court observed as follows: “When the power of judicial review is invokedin matters relating to tenders or award ofcontracts, certain special features should beborne in mind. A contract is a commercial W.P.(C) No.2234 of 201211transaction. Evaluating tenders and awardingcontracts are essentially commercial functions.Principles of equity and natural justice stay ata distance. If the decision relating to award ofcontract is bona fide and is in public interest,Courts will not, in exercise of power of judicialreview interfere even if a proceduralaberration or error in assessment or prejudiceto a tenderer is made out. The power ofjudicial review will not be permitted to beinvoked to protect private interests at the costof public interest, or to decide contractualdisputes.“ (emphasis supplied)10. I must immediately note that the petitioner hadquoted ` 24,77,28,328/- whereas the fourth respondent hadquoted ` 22,11,39,058/- for the contract. Thus the petitionerhad quoted above and the fourth respondent had quoted belowthe railway cash value of ` 22,35,80,946/- as is reflected in theoffer sheet. There is a difference of ` 2,65,89,270/- between therates quoted and the Railway would stand to gain if the bidtendered by the fourth respondent is accepted. The action of the W.P.(C) No.2234 of 201212Railway in treating the one tendered by the fourth respondent asa substantially responsive financial bid will only advance publicinterest. No malafides has been alleged on the part of theRailway and the writ petition only reveals a tiff between twobidders on technical grounds. 11. I decline jurisdiction under Article 226 of theConstitution of India and dismiss the writ petition however withno order as to costs. V.CHITAMBARESHJUDGE nj. V.CHITAMBARESH, J. --------------------------------------W.P.(C) No. 2234 of 2012JUDGMENTDated:- 1st March, 2012--------------------------------------