M/S Indian Rlys
Cat.& Toursm. Cor. Ld. & ANR Vs. M/S Doshion Veolia Water Solu. P. Ltd.
& Ors [2010] INSC 817 (4 October 2010)
Judgment
CIVIL APPELLATE
JURISDICTION CIVIL APPEAL NOs._8545-8546_______ of 2010 (Arising out of S.L.P.
(C) Nos. 14538-14539 of 2010) M/s. Indian Railway Catering & Tourism
Corporation Limited & Anr. ...... Appellants Versus M/s. Doshion Veolia
Water Solutions (P) Limited & Ors. ...... Respondents WITH CIVIL APPEAL
NOs.8547-8548___ of 2010 (Arising out of S.L.P. (C) Nos. 14996-14997 of 2010)
M/s. Ion Exchange India Limited ...... Appellant Versus M/s. Doshion Veolia
Water Solutions (P) Limited & Ors. ...... Respondents AND CIVIL APPEAL
NO._8549_______of 2010 (Arising out of S.L.P. (C) No. 17471 of 2010) M/s.
Doshion Veolia Water Solutions (P) Limited ...... Appellant Versus M/s. Indian
Railway Catering & Tourism Corporation Limited & Ors. ...... Respondents
2
A. K. PATNAIK, J.
1.
Leave
granted.
2.
These
Appeals are against the judgment and order dated 29.04.2010 passed by the
Division Bench of the Madras High Court in Writ Appeal Nos. 726 and 727 of
2010.
3.
The
relevant facts very briefly are that M/s Indian Railway Catering and Tourism
Corporation Limited (for short `IRCTC') planned to set up a packaged drinking
water bottling plant at Palure, near Chennai, to produce drinking water under
the brand name "Rail Neer" for railway passengers. In November 2008,
the civil work for construction of the plant building was started. In February
2009, IRCTC published a tender notice for turnkey project for design,
engineering, supply, installation, commissioning, operation and maintenance of
the packaged drinking water bottling plant. Pursuant to the tender notice,
three tenderers, namely, M/s Thermax, M/s Ion Exchange (I) Ltd. and M/s.
Doshion Veolia Water Solutions (P) Limited submitted their offers, but as the
3 offers were conditional, it was not possible to evaluate them and to decide
the inter-se position of the three tenderers in an objective manner and
therefore the Tender Committee of the IRCTC recommended for discharge of the
tender and to invite fresh tenders after incorporating all the relevant
revisions in the tender document to avoid anomalies. On 04.08.2009, a fresh
tender notice was advertised by IRCTC and in response to this fresh tender
notice M/s Ion Exchange (I) Limited (for short `Ion Exchange') and M/s. Doshion
Veolia Water Solutions (P) Limited (for short `Doshion') submitted their
technical and financial bids in separate sealed covers. The technical bids were
opened on 24.08.2009 and both Ion Exchange and Doshion were informed on
26.08.2009 that their financial bids would be opened on 27.08.2009. When on 27.08.2009
the financial bids of Ion Exchange and Doshion were opened, it was found that
Doshion had quoted a total price of Rs. 18.65 Crores, whereas Ion Exchange had
quoted a total price of Rs. 18.66 Crores and had also quoted a discount of 1%
on the quoted price. The result was that the net price quoted by Ion Exchange
after deducting the discount of 1% 4 worked out to Rs.18,47,34,000/- as
against the price of Rs.18,66,00,000/- quoted by Doshion.
4.
On
28.08.2009, Doshion submitted a letter to IRCTC saying that the offer of
discount on the quoted price made by Ion Exchange was in violation of Clause
1.10 of the Instructions to Bidders. Again on 03.09.2009, Doshion submitted a
letter reiterating its objection to the offer of discount made by Ion Exchange
and also saying that the excise duty amount had not been indicated in rupees by
Ion Exchange in its financial bid contrary to the terms and conditions of the
tender. On 18.10.2009, the Tender Committee of IRCTC met and made its first
recommendation to the Accepting Authority of IRCTC. In the recommendation, the
two members of the Tender Committee gave their opinion that the discount of 1%
offered by Ion Exchange was not valid and that the non-mentioning of the excise
duty amount in Rupees by Ion Exchange was a major deviation. The third member
gave his dissent in the recommendation saying that the excise duty could be
easily ascertainable by applying the normal methodology of calculation and so
calculated the 5 excise duty amount in the bid of Doshion was Rs.69,26,080/-
and that of Ion Exchange was Rs.55,12,050/-. The third member also gave his
opinion that the bid amount of Ion Exchange was Rs.17 Lacs lesser and if the
set off received in service tax for operation and maintenance part of the
contract is taken into account, then the additional benefit of MODVAT would get
neutralized and therefore even if excise duty amount was not quoted by Ion
Exchange in its financial bid, this was not a material deviation. On
13.10.2009, the Accepting Authority of IRCTC directed the Tender Committee to
look into the financial implications of excise duty on plant and equipment/
MODVAT credit. Regarding the discount of 1%, the Accepting Authority directed
the Tender Committee to look into the prevalent practice being followed by
Government Departments and Public Sector Undertakings regarding discount and
thereafter make their recommendations. On 02.11.2009, the Tender Committee made
its second recommendation. In this recommendation, all the three members of the
Tender Committee were of the unanimous view that excise duty should not be
taken into account for 6 tender evaluation because if the offer of Ion
Exchange in totality was considered, there was no adverse financial implication
to IRCTC. Regarding discount, the Tender Committee could not find any
instruction relating to the prevalent practice followed by Government
Departments and Public Sector Undertakings. On 13.11.2009, the Accepting
Authority considered the second recommendation of the Tender Committee and
asked the Tender Committee for further clarification on excise duty and to make
a review of the cases of Central Vigilance Commission, Chief Technical
Examiner's Organization and Stores Directorate Compendium, Railway Board on the
discount aspect. On 20.11.2009, the Tender Committee made its third
recommendation. In the third recommendation, the members of the Tender
Committee were of the unanimous view that taxes and duties (excise duty in
particular) had no adverse financial implication to IRCTC. Two of the three members
of the Tender Committee after taking into consideration the
guidelines/observations in the Railway Stores Directorate Compendium, Central
Vigilance Commission, Chief Technical Examiner's Organization, the bid 7
documents of other Public Sector Undertakings in respect of discounts and after
verification from Railways and Railway Public Sector Undertakings, took the
view that unconditional discount available alongwith the offer should be
considered. The third member of the Tender Committee, however, did not agree
with this view and maintained his earlier view that unconditional discount
offers should not be considered when price bid does not speak of discount as
part of the bid conditions. The Accepting Authority of the IRCTC accepted the
unanimous recommendation of the Tender Committee that taxes and duties
(including the excise duty) had no financial implication on IRCTC. The
Accepting Authority also accepted the majority recommendation of the Tender
Committee that the 1% discount offered in the bid of Ion Exchange can be
considered. Accordingly, the Accepting Authority decided to accept the offer of
Ion Exchange and on 17.12.2009 letter of acceptance was issued to Ion Exchange.
5.
On
21.12.2009, Doshion filed Writ Petition No. 27074 of 2009 in the Madras High
Court praying for a writ of mandamus restraining IRCTC from taking any step in
8 furtherance of the tender. On 23.12.2009, learned Single Judge of the Madras
High Court issued an interim injunction till 15.01.2010 and posted the matter
for 05.01.2010. On 05.01.2010, IRCTC filed its detailed counter affidavit in
reply to the writ petition. On 17.01.2010, Doshion filed Writ Petition No. 1059
of 2010 praying for quashing the letter of acceptance dated 17.12.2009 issued
in favour of Ion Exchange. IRCTC and Ion Exchange filed their respective
counter affidavits in reply to the Writ Petition and Doshion also filed its
rejoinder affidavit. After hearing, the learned Single Judge of the Madras High
Court dismissed the two Writ Petitions on 16.02.2010. On 08.04.2010, Doshion
filed Writ Appeal Nos. 726-727 of 2010 before the Division Bench of the Madras
High Court and on 12.04.2010 the Division Bench passed the order of status quo
while admitting the appeals. After hearing the appeals, the Division Bench passed
the impugned judgment and order dated 29.04.2010 setting aside the order dated
16.02.2010 of the learned Single Judge in Writ Petition Nos. 27074 of 2009 and
1059 of 2010 and allowed the Writ Petitions of the appellant and quashed the
acceptance of 9 the offer of Ion Exchange. The Division Bench, however,
refused to grant the prayer in the Writ Petition to award the contract to
Doshion and instead observed in the impugned judgment and order that it is for
IRCTC to take a decision in the light of the findings in the impugned judgment.
Aggrieved, the IRCTC and Ion Exchange have filed appeals against quashing of
acceptance of the offer of Ion Exchange by the Division Bench of the High Court
and Doshion has filed the appeal against the refusal of the Division Bench of
the High Court to grant the prayer in the writ petition to award the contract
to Doshion.
6.
Mr.
Goolam E. Vahanvati, learned Attorney General for India appearing for IRCTC,
submitted that the Division Bench of the High Court quashed the acceptance of
the offer of Ion Exchange by IRCTC on the ground that the offer of discount of
1% over the quoted price and the non-mentioning of excise duty amount in rupees
in the offer of Ion Exchange were contrary to the provisions of the tender
notification and the tender format and, therefore, the acceptance of the offer
of Ion 10 Exchange was unfair and arbitrary and violative of Article 14 of the
Constitution.
7.
He
argued that the terms and conditions of the tender documents did not contain
any express provision prohibiting a tenderer from quoting a discount on the
price offered by him and in the absence of an express provision in this regard,
an implied provision cannot be read into the terms and conditions of the tender
documents prohibiting a tenderer from quoting a discount on the quoted price.
He urged that in the facts of the present case, the majority of the members of
the Tender Committee, after taking into consideration the guidelines/
observations in the Railway Stores Directorate Compendium, Central Vigilance
Commission, Chief Technical Examiner's Organization and the bid documents of
other Public Sector Undertakings in respect of discounts and after verification
from Railways and Railway Public Sector Undertakings, had given the opinion in
their third recommendation on 20.11.2009 that unconditional discount along with
the offer should be considered and the Accepting Authority had accordingly
considered the 1% discount offered on the quoted 11 price of Ion Exchange and
accepted the offer of Ion Exchange. He cited the decision of this Court in
Kanhaiya Lal Agrawal v. Union of India and Others [(2002) 6 SCC 315] in which
rebates offered by a tenderer as an additional inducement to accept his offer
was not treated as breach of the terms and conditions of the invitation to
tender.
8.
Regarding
the non-mentioning of excise duty in rupees in the offer of Ion Exchange, Mr.
Vahanvati contended that the members of the Tender Committee in their third
recommendation made on 20.11.2009 were unanimous in their view that taxes and
duties including excise duty had no adverse financial implication on IRCTC and
this recommendation of the Tender Committee was accepted by the Accepting
Authority. He submitted that the Division Bench of the High Court has acted as
an appellate court over the Tender Committee and the Accepting Authority by
holding that the non-mentioning of excise duty in rupees in the offer of Ion
Exchange amounted to breach of the essential terms and conditions of the tender
notification and tender format and has exceeded the power of judicial review in
matters relating to 12 tenders and award of contracts. He cited the decision
of this Court in Tata Cellular v. Union of India [(1994) 6 SCC 651] in which it
has been held that it is not the function of the Judge to act as Super Board
over the decisions of the administrator in matters relating to tenders.
9.
Dr.
Abhishek Manu Singhvi, learned senior counsel appearing for Ion Exchange,
submitted that in the impugned judgment and order, the Division Bench of the
High Court has referred to Clause 1.10 of the Instructions to Bidders which
provides that rates are to be quoted in the prescribed price schedule format
only and has also referred to Clause 1.12 of the Instructions to Bidders which
states that failure to comply with either of the conditions will render the
tender void. He submitted that the Division Bench of the High Court appears to
have taken the view that Clause 1.12 is attracted in case of failure of the
tenderer to comply with Clause 1.10, but a careful reading of Clause 1.12 would
show that it will apply when the tenderer fails to comply with either of the
two conditions in Clause 1.11 of the Instructions to Bidders and will not apply
when the tenderer does not comply with Clause 13 1.10 of the Instructions to
Bidders. He contended that excise duty rate is 8.24% on the value of the plants
and equipments and therefore the excise duty amount in rupees can always be
calculated by IRCTC and it made no difference whether the excise duty was
quoted in rate or in rupees. He submitted that for these reasons, mentioning of
excise duty in rupees for the plants and equipments cannot constitute an
essential term of the tender notification or tender format as held by the
Division Bench of the High Court.
10.
Dr.
Singhvi argued that the fact remains that the price offered by Ion Exchange
with 1% discount is less than that of Doshion and for this reason was accepted
by IRCTC and hence the Division Bench of the High Court should not have quashed
the acceptance of the offer of Ion Exchange. He cited Jagdish Mandal v. State
of Orissa and Others [(2007) 14 SCC 517] in which this Court has held that so
long as a decision relating to award of contract is bona fide and is in the
public interest, courts will not interfere by exercising power of judicial
review even if a procedural aberration or error in assessment or prejudice to a
tenderer is made out.
11.
Mr.
Jaideep Gupta, learned senior counsel appearing for Doshion, on the other hand,
supported the impugned judgment and order of the Division Bench of the High
Court quashing the acceptance of offer of Ion Exchange by IRCTC. He submitted
that when IRCTC published the first notice inviting tenders in February, 2009,
the bid of Doshion was the lowest and yet IRCTC cancelled the tender process on
the ground that the offer made by the three tenderers were conditional and it
was not possible to evaluate them. He submitted that when the fresh tender
notice was advertised on 04.08.2009 for the very same work, IRCTC revised the
tender conditions and the tender format and in Clause 1.10 of the Instructions
to Bidders clearly stipulated that rates are to be quoted in the Prescribed
Price Schedule only. He submitted that the IRCTC further stipulated in Clause
1.12 of the Instructions to Bidders that failure to comply with either of the
conditions in Clauses 1.10 or 1.11 of the Instructions to Bidders will render
the tender void. He contended that on a reading of these two tender conditions,
it will be clear that rates were to be quoted in the Prescribed Price Schedule
only 15 and no tenderer could quote any discount on the quoted price, and
further any offer of discount on the quoted price would be in breach of Clause
1.10 of the Instructions to Bidders and the tender would be rendered void under
Clause 1.12 of the Instructions to Bidders. He submitted that it would be also
clear from Clause 2.1 of the Special Terms and Conditions of the tender
documents that the vendor was required to quote a lump sum price along with
detailed break-up as per price schedule enclosed with the bid documents and
Clause 9.0 of the Special Terms and Conditions stated that the vendor should
clearly spell out in his offer his acceptance of the Special Terms and
Conditions and in case of deviation, his offer may be rejected. He also
referred to the Prescribed Price Schedule to show that there was no scope for a
bidder to quote any discount. Mr. Gupta next submitted that Note (ii) at the
bottom of the price schedule provides that the vendor should indicate total
excise duty amount included in the price for plants and equipments, and yet Ion
Exchange did not mention the total excise duty amount in its offer. He argued
that since Ion Exchange quoted a discount on the price and did not 16 indicate
the excise duty amount in its offer, the Division Bench of the High Court
rightly held that the offer of Ion Exchange did not comply with the essential
terms and conditions of the tender notification and tender format and was ought
to have been rejected by IRCTC.
12.
Mr.
Gupta relied upon the observations of this Court in W.B. State Electricity
Board v. Patel Engineering Co. Ltd. and Others [(2001) 2 SCC 451] that the very
purpose of issuing Rules/Instructions to bidders is to ensure their enforcement
lest the rule of law should be a casualty and relaxation or waiver of a rule or
condition, unless provided in the Instructions to Bidders, by the State or its
agencies in favour of one bidder would create justifiable doubts in the minds
of the other bidders and would impair the rule of transparency and fairness and
provide room for manipulation to suit the whims of the State agencies in
picking and choosing a bidder for awarding contracts. He also relied upon
Kanhaiya Lal Agrawal v. Union of India and Others (supra) for the proposition
that if the consequence of non-compliance of a condition in the notice inviting
tenders is rejection of the 17 tender, then the condition is an essential
condition of the invitation to tender. Mr. Gupta submitted that the Division
Bench of the High Court therefore was right in quashing the offer of Ion
Exchange on the ground that it was in breach of the essential terms and
conditions of the tender notification and the tender format. He submitted that
as the tender of Doshion was the only other valid tender, the High Court should
have directed IRCTC to award the contract to Doshion. He urged that we should
allow the appeal of Doshion on this point and direct IRCTC to award the
contract to Doshion.
13.
The
first question that we have to decide in this case is whether the offer of 1%
discount on the quoted price made by Ion Exchange was in breach of any
essential term of the tender notification or the tender format as held by the
High Court. Mr. Gupta, learned counsel for Doshion, has relied upon Clauses
1.10, 1.11 and 1.12 of the Instructions to Bidders and Clauses 2.1 and 9.0 of
the Special Terms and Conditions of the tender documents to support this
finding of the High Court, which are quoted hereinbelow:
18
"Instructions to Bidders:
1.10 Rates are to be
quoted in the prescribed price schedule format only and it shall be inclusive
of all taxes, levies and duties.
1.11 Every page of
the tender document shall be signed on the left hand side bottom corner and
stamped properly by the authorized person or persons submitting the tender in
token of his/their having acquainted himself/themselves with the general
conditions of contract, technical specifications etc. as laid down. Any tender
is liable to be treated as defective and is liable to be rejected if any of the
documents is not signed. The initials of the tenderer must attest all erasures
and alterations made while filling the tender. Over-writing of figures is not
permitted. 1.12 Failure to comply with either of these conditions will render
the tender void. No advice of any change in rate after opening of the tender
will be entertained.
Special Terms &
Conditions:
2.1 Vendor shall
quote for lump sum price along with detailed break-up as per price schedule
enclosed with this bid document. The cost of plants and equipments as quoted in
the price schedule will constitute contract price/contract value.
9.0 Deviation to
Terms and Conditions:
The vendor should
clearly spell out in his offer his acceptance of the terms & 19 conditions
indicated above. In case of deviation, his offer may be rejected.
Deviations proposed,
if any, should be raised in pre-bid meeting and decision taken there and
conveyed to all parties will be final and binding."
14.
Clause
1.10 of the Instructions to Bidders quoted above states that rates are to be
quoted in the Prescribed Price Schedule format only and it shall be inclusive
of all taxes, levies and duties. This clause does not say that the tenderer
will not quote any discount on the price. Clause 1.11 of the Instructions to
Bidders states that every page of the tender document shall be signed and
properly stamped by the authorized person or persons submitting the tender and
no over-writing will be permitted. Clause 1.12 of the Instructions to Bidders
states that failure to comply with either of these conditions will render the
tender void. Since there is no condition either in Clause 1.10 or Clause 1.11
that the tenderer will not quote discount on the price, in case a tenderer
offers a discount on his quoted price his tender will not be rendered void
under Clause 1.12 of the Instructions to 20 Bidders. Clause 2.1 of the Special
Terms and Conditions quoted above states that the vendor shall quote for lump
sum price along with detailed break-up as per price schedule enclosed with the
bid document and the cost of plants and equipments as quoted in the price
schedule will constitute contract price/contract value. This clause also does
not say that the vendor will not quote a discount on the lump sum price. Clause
9.0 of the Special Terms and Conditions states that the vendor should clearly
spell out in his offer his acceptance of the terms and conditions as indicated
in the Special Terms and Conditions and in case of deviation, his offer may be
rejected. There is nothing in this clause also to show that the vendor cannot
quote a discount on the price. In the Prescribed Price Schedule also there is
no mention anywhere that the tenderer will not offer any discount on his quoted
price. In the absence of any express stipulation in the Instructions to Bidders
or the Special Terms and Conditions or in the Prescribed Price Schedule
prohibiting the tenderer from quoting a discount on the price offered by him,
the High Court could not have come to the conclusion that by offering a 21
discount of 1% on the quoted price Ion Exchange has committed a breach of the
essential terms of the tender notification or the tender format.
15.
For
this conclusion, we are supported by a direct authority of this Court in
Kanhaiya Lal Agrawal v. Union of India and Others (supra) cited by Mr.
Vahanvati. In this case, the conditions in the tender notice required that the
rates at which the supply was to be made had to be stated in words as well as
in figures against each item of work as per Schedule attached thereto and that
the tenders submitted with any omissions or alteration of the tender document
were liable to be rejected, but permissible corrections could be attached with
due signature of the tenderers. Kanhaiya Lal Agrawal submitted along with his
tender a covering letter that if his offer was accepted within the stipulated
time the following rebates would be offered by him: (a) 5% reduction in rates
if the contract is given to him within 45 days, (b) 3% reduction in rates if
the contract is given within 60 days, and 22 (c) 2% reduction in rates if the
contract is given within 75 days."
The Union of India
accepted the tender offered by Kanhaiya Lal Agrawal on the rates subject to the
rebate. Another tenderer, whose rates would have been the lowest if the rebates
offered by Kanhaiya Lal Agrawal would not have been considered, filed a writ
petition in the Madhya Pradesh High Court contending that the offer of Kanhaiya
Lal Agrawal was conditional and not valid and succeeded both before the learned
Single Judge and before the Division Bench of the High Court. Kanhaiya Lal
Agrawal carried an appeal to this Court and this Court held that the offer of
rebates made by Kanhaiya Lal Agrawal "did not militate against the terms
and conditions of inviting tender". From the decision of this Court in
Kanhaiya Lal Agrawal v. Union of India (supra), therefore, it is clear that
unless the offer of rebate or discount is in breach of the clear stipulations
in the notice inviting tenders it cannot be held that such offer is in breach
of the essential terms and conditions of the notice inviting tenders.
16.
The
observations of this Court in W.B. State Electricity Board v. Patel Engineering
Co. Ltd. and Others (supra), on which Mr. Gupta relied upon, is of no
assistance to Doshion. In that case the West Bengal State Electricity Board
invited bids for the Purulia Pumped Storage Project and the bids, which were
submitted, were opened on 08.09.1999 and while the details of the bids were
under scrutiny, respondents 1 to 4 in the appeal before this Court informed the
State Electricity Board that there was a repetitive systematic computer
typographical transmission failure on account of which there were errors in
their bid and requested that the errors be corrected. On 17.12.1999, they sent
another letter stating that they had reason to believe that the State
Electricity Board was evaluating their price bid by an incorrect application of
the Instructions to Bidders and that their bid was the lowest. The State
Electricity Board evaluated their bid and on 18.12.1999 sent a letter to them
saying that during checking of their bid documents a good number of
arithmetical errors were discovered. Respondents 1 to 4 challenged the validity
of the letter dated 18.12.1999 of the State Electricity Board in a 24 writ
petition filed in the High Court at Calcutta. Learned Single Judge of the High
Court directed the State Electricity Board to consider the representation of
Respondents 1 to 4 and to communicate a reasoned order to them. Against the
order of the learned Single Judge, the State Electricity Board filed appeals.
Cross-objections were also filed by Respondents 1 to 4. The Division Bench of
the High Court dismissed the appeals and the cross-objections upholding the
order of the learned Single Judge and directed the State Electricity Board to
permit Respondents 1 to 4 to correct the errors in the bid documents and then
consider their bid along with the other bids and take a decision objectively
and rationally. On these facts, this Court held that Respondents 1 to 4 in that
appeal were bound by the Instructions to Bidders which should be complied with
scrupulously and adherence to the instructions cannot be given a go-by by
branding it as a pedantic approach, otherwise it will encourage and provide
scope for discrimination, arbitrariness and favouritism which are totally
opposed to the rule of law and constitutional values. This Court further
observed that the very purpose of issuing 25 rules/instructions is to ensure
their enforcement lest the rule of law should be a casualty and relaxation or
waiver of a rule or condition, unless so provided under the Instructions to
Bidders, by the State or its agencies in favour of one bidder would create
justifiable doubts in the minds of other bidders, would impair the rule of
transparency and fairness and provide room for manipulation to suit the whims
of the State agencies in picking and choosing a bidder for awarding contracts.
17.
These
observations made by this Court in W.B. State Electricity Board v. Patel
Engineering Co. Ltd. and Others (supra) rather come to the aid of Ion Exchange
in this case. Since IRCTC did not clearly stipulate in the Instructions to
Bidders or in the Special Terms and Conditions or in the Prescribed Price
Schedule or in any other part of the tender documents that a tenderer will not
offer any discount on the prices quoted by him and if any such discount is
offered the tender will be rejected, the offer of discount on the price made by
Ion Exchange cannot be treated to be in breach of the essential term or
condition of the tender documents. To hold 26 that the State or its agencies
can reject a tender for breach of a term or condition in the tender document,
which is not explicit in the tender documents, is to give room to the State or
its agencies to arbitrarily reject tenders even where the clear terms or
conditions of the tender documents are complied with. In Dutta Associates Pvt.
Ltd. v. Indo Merchantiles Pvt. Ltd. [(1997) 1 SCC 53), this Court found that
the offer of the lowest tenderer for wholesale supply of rectified spirit
(Grade 1) to the Excise Department of the Government of Assam was not accepted
on the ground that the price offered did not come within the "viability
range" and this Court held that the tender process was vitiated for the
reason that the tender notice did not specify the "viability range"
nor did it say that only the tenders coming within the "viability
range" will be considered. The Court further observed that whatever
procedure the Government proposes to follow in accepting the tender must be
clearly stated in the tender notice and the consideration of tenders received
and the procedure to be followed in the matter of acceptance of a tender should
be transparent, fair and open.
18.
The
next question, which falls for consideration in this case, is whether the High
Court was right in coming to the conclusion that by not indicating the excise
duty amount in rupees in its offer, Ion Exchange committed breach of an
essential term or condition of the tender notification or the tender format.
Clauses (i) and (ii) of the Note appended to the Prescribed Price Schedule,
which relate to duties and taxes, are quoted here in below:
"Note:
i.
The
prices quoted are lump sum inclusive of all duties and taxes etc.
ii.
Vendor
should indicate total Excise Duty amount included in above prices (for Plants
& Equipments)"
The language of
Clauses (i) and (ii) of the Note quoted above is clear that the prices quoted
are to be lump sum inclusive of all duties and taxes etc. and the vendor should
indicate total excise duty amount included in the prices for plants and
equipments. The Note does not indicate the consequences that will follow if the
vendor does not indicate the total excise 28 duty amount included in the
prices for plants and equipments. The Note does not say that if the vendor does
not indicate the total excise duty amount included in the prices for plants and
equipments, the offer of the vendor "shall" be rejected. In the
absence of any mention of the consequence of rejection of the offer for not
indicating the total excise duty amount in rupees included in the price of
plants and equipments in the tender documents, the High Court could not have
held that Ion Exchange had committed breach of an essential term or condition
of the tender notification or the tender format. For this conclusion, we are
again supported by the decision in Kanhaiya Lal Agrawal v. Union of India and
Others (supra) in which this Court relying on G.J. Fernandez v. State of
Karnataka [(1990) 2 SCC 488] held: "Whether a condition is essential or
collateral could be ascertained by reference to the consequence of
non-compliance thereto. If non- fulfillment of the requirement results in
rejection of the tender, then it would be an essential part of the tender
otherwise it is only a collateral term."
Hence, if on the
recommendation of the Tender Committee, the Accepting Authority did not find
the deviation from Clause (ii) 29 of the Note by Ion Exchange very material
and has accepted the offer of Ion Exchange, the Division Bench of the High
Court could not have held that Ion Exchange committed a breach of an essential
term by not mentioning the excise duty amount in rupees in its offer.
19.
As
the offer of 1% discount on the quoted price and the non-mentioning of excise
duty amount in rupees in the bid of Ion Exchange were not in breach of the
essential terms of the tender documents, it was for IRCTC to evaluate the valid
offers of Ion Exchange and Doshion on the merits of the two offers. We find
that on the basis of recommendations of the Tender Committee, the Accepting
Authority of IRCTC found the offer of Ion Exchange at a net price of
Rs.18,47,34,000/- to be better than the offer of Doshion at the price of
Rs.18,66,00,000/- and that tax and duties including excise duty had no adverse
financial implications to IRCTC and accordingly accepted the offer of Ion
Exchange. By reversing this decision of the Accepting Authority of the IRCTC, the
Division Bench of the High Court, in our considered opinion, acted as an
Appellate Court and exceeded its power of judicial 30 review in a matter
relating to award of contract contrary to the law laid down by this Court in
the leading case of Tata Cellular (supra).
20.
In
the result, we set aside the impugned judgment and order of the Division Bench
of the High Court and allow the appeals of IRCTC and Ion Exchange and dismiss
the appeal of Doshion. There shall be no order as to costs.
..........................J.
(Altamas Kabir)
..........................J.
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