advocatemmmohan

My photo

ADVOCATEMMMOHAN -  Practicing both IN CIVIL, CRIMINAL AND FAMILY LAWS,Etc.,

WELCOME TO LEGAL WORLD

WELCOME TO MY LEGAL WORLD - FOR KNOWLEDGE IN LAW & FOR LEGAL OPINIONS - SHARE THIS

Wednesday, September 11, 2013

'Invitation to Tender' = Appellant-company had failed to comprehensively correspond to the essential terms of the tender and, therefore, its offer contained in the said tender was ineligible for consideration.= “(i) A declaration in the form of Affidavit in a non judicial stamp paper should be submitted stating clearly that the applicant is not barred/delisted/blacklisted by any Government Department/ Government Undertaking/ Statutory Body/ Municipality and of the like Government Bodies in DI Pipe-supply tender during last five years and if any such incident is found at any point of time, the tender will be cancelled summarily without assigning any reason whatsoever. (j) Valid PAN No., VAT No., Copy of acknowledgement of latest Income Tax Return and Professional Tax Return.”= “8. The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Bose J. in Gordhandas Bhanji (AIR 1952 SC 16) (at p.18): “Public orders publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the acting and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself. Orders are not like old wine becoming better as they grow order.” 13. So far as clause (j) of the detailed notice inviting E-tender No.01/KMDA/MAT/CE/2013-2014 dated 10.5.2013 emanating from the office of the Chief Engineer is concerned, it seems to us that contrary to the conclusion in the impugned judgment, the clause is not an essential element or ingredient or concomitant of the subject NIT. In the course of hearing, the Income Tax Return has been filed by the Appellant-company and scrutinized by us. For the Assessment Year 2011-2012, the gross income of the Appellant- company was Rs.15,34,05,627, although, for the succeeding Assessment Year 2012-2013, the income tax was NIL, but substantial tax had been deposited. We think that the Income Tax Return would have assumed the character of an essential term if one of the qualifications was either the gross income or the net income on which tax was attracted. In many cases this is a salutary stipulation, since it is indicative of the commercial standing and reliability of the tendering entity. This feature being absent, we think that the filing of the latest Income Tax Return was a collateral term, and accordingly the Tendering Authority ought to have brought this discrepancy to the notice of the Appellant- company and if even thereafter no rectification had been carried out, the position may have been appreciably different. It has been asserted on behalf of the Appellant-company, and not denied by the learned counsel for the Respondent-Authority, that the financial bid of the Appellant-company is substantially lower than that of the others, and, therefore, pecuniarily preferable. 14. In this analysis, we find that the Appeal is well founded and is allowed. The impugned judgment is accordingly set aside. The disqualification of the Appellant-company on the ground of it having failed to submit its latest Income Tax Return along with its bid is not sufficient reason for disregarding its offer/bid. The Respondents are directed, therefore, to proceed further in the matter on this predication. The parties shall bear their respective costs.

                                                                  REPORTABLE


                        IN THE SUPREME COURT OF INDIA


                        CIVIL APPELLATE JURISDICTION


                        CIVIL APPEAL NO. 6772 OF 2013




      Rashmi Metaliks Ltd. & Anr.                       …..Appellants


            Versus


      Kolkata Metropolitan Development
      Authority & Ors.                                  …..Respondents






                               J U D G M E N T




      VIKRAMAJIT SEN, J.


     1. We are called upon  to  decide  the  correctness  of  the  impugned
        decision of the Division Bench of the High Court of Calcutta  which
        in turn has upheld the appreciation of the law as also the facts of
        the case by a learned Single Judge  of  that  Court.  
Thus,  these
        courts have concurrently concluded that the  Appellant-company  had
        failed to comprehensively correspond to the essential terms of  the
        tender and, therefore, its offer contained in the said  tender  was
        ineligible for consideration.
     2. The two terms of the  subject  'Invitation  to  Tender'  which  are
        germane to the case in hand are clauses (i) and (j) thereof,  which
        read thus –
           “(i) A declaration in the form of Affidavit in  a  non  judicial
           stamp  paper  should  be  submitted  stating  clearly  that  the
           applicant is not barred/delisted/blacklisted by  any  Government
           Department/ Government Undertaking/ Statutory Body/ Municipality
           and of the like  Government  Bodies  in  DI  Pipe-supply  tender
           during last five years and if any such incident is found at  any
           point of time, the tender will be  cancelled  summarily  without
           assigning any reason whatsoever.


           (j) Valid PAN No., VAT No., Copy of  acknowledgement  of  latest
           Income Tax Return and Professional Tax Return.”


     3. It must immediately be clarified that  so  far  as  clause  (i)  is
        concerned, the learned Single Judge had thought it  unnecessary  to
        analyse  its  applicability  and  relevance,  having  come  to  the
        conclusion that a violation of clause (j) had been committed by the
        Appellant-company inasmuch as it had  failed  to  file  its  latest
        Income Tax Return along with its bid.  
This position has  continued
        to obtain even before the Division Bench as will be palpably  clear
        from a perusal of  the  impugned  judgment.   
The  Division  Bench,
        despite noting clause (j), has concerned itself only with the legal
        implications flowing from the alleged non-compliance of clause (i).
       
The Division Bench has  predicated  its  decision  on  W.B.  State
        Electricity Board v. Patel Engineering Co. Ltd. (2001)  2  SCC  451
        and has extracted, as we shall also do,  the  following  paragraphs
        therefrom –
           “23.   The  mistakes/errors  in  question,  it  is  stated,  are
           unintentional and occurred due to the fault of  computer  termed
           as a “repetitive systematic computer typographical  transmission
           failure”.  It is difficult to accept this contention.  A mistake
           may be unilateral or mutual but it is always unintentional.   If
           it is intentional it ceases to be a mistake.  Here the  mistakes
           may be unintentional but  it  was  not  beyond  the  control  of
           Respondents 1 to 4 to correct the same before submission of  the
           bid.  Had they been  vigilant  in  checking  the  bid  documents
           before their submission, the mistakes would have  been  avoided.
           Further, correction of such mistakes after one-and-a-half months
           of opening of the bids will also be violative of  clauses  24.1,
           24.3 and 29.1 of the ITB.


           24.   The controversy in this case has arisen at the  threshold.
           It cannot be disputed that this is an international  competitive
           bidding which postulates keen competition and  high  efficiency.
           The bidders have or should have assistance of technical experts.
            The degree of care required in such a bidding is  greater  than
           in ordinary local bids for small  works.   It  is  essential  to
           maintain the sanctity and integrity of process of tender/bid and
           also award of a contract.  The appellant, Respondents 1 to 4 and
           Respondents 10 and 11 are all bound by the ITB which  should  be
           complied with scrupulously.  
 In  a  work  of  this  nature  and
           magnitude where bidders who fulfil  prequalification  alone  are
           invited to bid, 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
           our  constitutional  values.   The  very  purpose   of   issuing
           rules/instructions is to ensure their enforcement lest the  rule
           of law should be a casualty.  Relaxation or waiver of a rule  or
           condition, unless so provided under the ITB, by the State or its
           agencies (the appellant) 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 as in the  case  of
           distributing bounty or  charity.   
In  our  view  such  approach
           should always be avoided.  Where power to relax or waive a  rule
           or a condition exists  under  the  rules,  it  has  to  be  done
           strictly in compliance with the rules.  We have,  therefore,  no
           hesitation in concluding that adherence to the ITB or  rules  is
           the best principle to be followed, which is  also  in  the  best
           public interest.”


     4. The impugned judgment states that clause (j) cannot be viewed as  a
        non-essential term  and,  therefore,  should  have  been  corrected
        before the submission of the  tender.   This  seems  to  us  to  be
        chronologically or  sequentially  impossible;  what  was  obviously
        meant was that failure to adhere to this term would render the  bid
        non-compliant and, therefore, beyond the pale of  consideration  in
        toto.  The Division Bench also opined  that  the  Appellant-company
        could not be granted the indulgence to correct this error, as ‘such
        facility was not available to other bidders.’  In  saying  so,  the
        Division Bench, it appears to us, has diluted its view that  clause
        (j) is altogether inviolable.
     5. The Respondents have endeavoured to raise the alleged violation  of
        clause (i) before us, but we are in no manner of  doubt  that  this
        effort should be roundly rejected.  This is despite the  fact  that
        an explanation even in this context has been offered  by  Mr.  K.V.
        Vishwanathan, learned senior counsel appearing for the  Appellants.
        We shall desist from making any  observations  in  regard  to  this
        clause (j) since it does not feature in the analysis  of  both  the
        courts below.  Dr. A.M. Singhvi, learned  senior  counsel  for  the
        Respondents has cited the following cases  before  us  :  (i)  W.B.
        State Electricity Board v. Patel Engineering Co. Ltd. (2001) 2  SCC
        451 Para 23; (ii) Kanhaiya Lal Agrawal v. Union of India  (2002)  6
        SCC 315 Paras 5 and 6;  (iii)  Puravankara Projects Ltd.  v.  Hotel
        Venus International  (2007)  10  SCC  33  Paras  28  to  30;   (iv)
        Sorath Builders v. Shreejikrupa Buildcon Ltd. (2009) 11 SCC 9 Paras
        17 and 28; and (v) Glodyne Technoserve  Ltd.  v.  State  of  Madhya
        Pradesh (2011) 5 SCC 103 Para 47.  Mr. Vishwanathan, learned senior
        counsel  for  the  Appellants  sought  to  rely  on  Poddar   Steel
        Corporation v. Ganesh  Engineering  Works  (1991)  3  SCC  273  and
        Kanhaiya Lal.
      6. This Court, and even  more  so  the  High  Court  as  well  as  the
         subordinate courts have to face  lengthy  arguments  in  each  case
         because of the  practice  of  citing  innumerable  decisions  on  a
         particular point of law.  The  correct  approach  is  to  predicate
         arguments on the decision which  holds  the  field,  which  in  the
         present case is Tata Cellular v. Union of India (1994)  6  SCC  651
         rendered by a three-Judge Bench.  The rule of precedence, which  is
         an  integral  part  of  our  jurisprudence,  mandates   that   this
         exposition of law must be followed and applied even by  co-ordinate
         or co-equal Benches  and  certainly  by  all  smaller  Benches  and
         subordinate Courts.  We hasten to clarify  that  if  a  co-ordinate
         Bench considers the ratio decidendi of the previous Bench to be  of
         doubtful efficacy, it must comply with the discipline of requesting
         Hon’ble  the  Chief  Justice  to   constitute   a   larger   Bench.
         Furthermore there are some instances of decisions even of a  Single
         Judge,  which  having  withstood  the  onslaughts  of   time   have
         metamorphosed into high authority demanding reverence and adherence
         because of its vintage and following in  contradistinction  of  the
         strength of the Bench.  This is a significant characteristic of the
         doctrine of stare decisis.  Tata Cellular has been so  ubiquitously
         followed, over decades, in almost every case concerning  Government
         tenders and contracts that it has attained heights  which  dissuade
         digression by even a larger Bench.  The law of  precedence  and  of
         stare  decisis  is  predicated  on  the  wisdom  and  salubrity  of
         providing a firmly  founded  law,  without  which  uncertainty  and
         ambiguity would cause consternation in society.  It  garners  legal
         predictability, which simply stated, is an essential.  Our research
         has revealed the existence of  only  one  other  three-Judge  Bench
         decision which has dealt with  this  aspect  of  the  law,  namely,
         Siemens Public Communication Networks Private Limited v.  Union  of
         India (2008) 16 SCC 215, which is in actuality an anthology of  all
         previous decisions including Tata Cellular.  The sheer plethora  of
         precedents makes it essential that this Court  should  abjure  from
         discussing each and every decision which has dealt with  a  similar
         question of law.  Failure to follow  this  discipline  and  regimen
         inexorably leads to prolixity in judgments which  invariably  is  a
         consequence of lengthy arguments.
      7. It is a capital exhaustion of Court time, lack of which has  become
         critical.    We  shall,  therefore,  confine  ourselves   to   Tata
         Cellular.  We are mindful of the  fact  that  it  is  a  legitimate
         exercise, perfectly permissible for  Benches  to  advance  the  law
         provided this exercise does not  lead  to  a  conclusion  which  is
         irreconcilable with a binding precedent.   We  also  would  clarify
         that the manner in which a Bench  appreciates  the  factual  matrix
         before it can obviously be of  value  only  if  a  subsequent  case
         presents identical facts, which remains a rarity.
     8. Tata Cellular states thus :
            “77. The duty of the court is to confine itself to the question
           of legality.  Its concern should be :


           1. whether a decision-making authority exceeded its powers?
           2. committed an error of law,
           3. committed a breach of the rules of natural justice,
           4.  reached a decision which no reasonable Tribunals would  have
              reached or,
           5. abused its powers.


           Therefore, it is not  for  the  Court  to  determine  whether  a
           particular policy or particular decision taken in the fulfilment
           of that policy is fair.  It is only concerned with the manner in
           which those decisions have been taken.  The extent of  the  duty
           to act fairly will vary from case to  case.   Shortly  put,  the
           grounds upon  which  an  administrative  action  is  subject  to
           control by judicial review can be classified as under :


           i) Illegality: This means  the  decision-maker  must  understand
              correctly the law that regulates  his  decision-making  power
              and must give effect to it.
          ii) Irrationality, namely, Wednesbury unreasonableness.
         iii) Procedural impropriety.


           The above are only the broad grounds but it does  not  rule  out
           addition of further grounds in course of time.  As a  matter  of
           fact, in R. v. Secretary of State for the  Home  Department,  ex
           parte Brind, (1991) 1 AC 696, Lord Diplock  refers  specifically
           to one development  namely,  the  possible  recognition  of  the
           principle of proportionality.  In all these cases the test to be
           adopted is that the Court should,  'consider  whether  something
           has gone wrong of  a,  nature  and  degree  which  requires  its
           intervention.”


     9. Since we have been deluged with decisions,  we  must  now  consider
        whether there have been any material additions to the law which per
        force are compatible with Tata Cellular.   W.B.  State  Electricity
        Board reiterated the exposition of law contained in Tata  Cellular,
        as it had to do.   On facts it opined that ‘once the unit rate  and
        line item total are filled in by the bidder, they  are  unalterable
        though arithmetical errors can be rectified’.  So far as the law is
        concerned the position remains the same significantly, as  it  must
        do; the facts bear no semblance to those in hand.  The  Court  held
        that  the  private  parties  could  not  bind  the  Government   by
        implication.  Although Sorath Builders makes no reference  to  Tata
        Cellular but nevertheless is not incongruous to  it;  otherwise  it
        would have been rendered per incuriam.  It merely  reiterates  that
        while reasonableness in the Wednesbury mould is an integral part of
        administrative law it has no relevance in contractual law; on facts
        this Court held that since documents had  not  been  despatched  in
        accordance with the specified time  schedule,  the  bid  which  had
        already been received on-line could correctly  not  be  considered.
        Glodyne Technoserve also applies Tata Cellular; but on the  factual
        matrix sounds a discordant note so far as the Respondents who  rely
        on it are concerned, inasmuch as it recognises that it fell  within
        the discretionary domain of the concerned Authority whether or  not
        to consider the documents (in that case an ISO Certification) which
        had not been submitted as per tender stipulations.   Kanhaiya  Lal,
        relied upon by Shri Vishwanathan, talks in the same timbre in  that
        it distinguishes between essential and collateral terms of a tender
        and  in  the  latter  case  allows  elbow  room  for  exercise   of
        discretion.  Although it may be  seen  as  a  facet  of  Wednesbury
        reasonableness, this decision can be seen as adding another  factor
        to Tata Cellular viz., the Court is empowered to separate the wheat
        from the chaff.  In this  exercise  the  Court  can  segregate  the
        essential terms forming the bulwark  of  the  compact,  and  whilst
        ensuring their strict adherence, can  allow  leniency  towards  the
        compliance of collateral clauses.  This analysis of the cited case-
        law shows that there is little or no advantage to  be  gained  from
        the manner in which the Court has responded to the  factual  matrix
        as other  Courts  may  legitimately  place  emphasis  on  seemingly
        similar facts to arrive at a different conclusion.  But  the  ratio
        decidendi has to be adhered to.   Counsel  must  therefore  exhibit
        circumspection in the number of cases they cite.   The  three-Judge
        Bench in Tata Cellular is more than sufficient to adumbrate the law
        pertaining to tenders; the later decision of the co-ordinate  Bench
        in Siemens is in the nature of annals of previous decisions on  the
        point.
    10. With this brief analysis of the decisions  cited  at  the  Bar,  we
        shall now return to the essential factors that shall determine  our
        decision.  The two clauses that have been debated  before  us  have
        already been reproduced by us above.  The learned Single Judge  had
        returned the finding that the Appellant-company’s  tender  did  not
        correspond to the essential term of the ‘Invitation to  Tender’  in
        two respects :
           a)  The  alleged  blacklisting  of   the   Appellant-company   as
              postulated in clause (i); and
           b) The Appellant-company’s failure to furnish/forward the  latest
              Income Tax Return, as envisaged in clause (j).


    11. The letter rejecting the Appellant-company’s offer reads thus :
           “Subject: KMDA: Disqualify for Tender No.:01/ KMDA / MAT
                           / CE/2013-2014


           Date : Mon, 22 Jul 2013 18:13:22 +0530 (IST)
           From: tender tender@eternderwizard.com
            To: sales.marketingdomestic@rashmigroup.com


           Dear RASHI METALIKS LIMITED,


           Important Notice:


           This is to inform that your bid has been  disqualified  for  the
           tender invited by KMDA


           Tender No.: 01 / KMDA / MAT / CE / 2013-2014
           Line No.: 01


           Name of Work : SUPPLY and DELIVERY  OF  DIFFERENT  DIAMETERS  OF
           DISS K 7 and K 9 PIPES  AT  DIFFERENT  LOCATION  WITHIN  KOLKATA
           METROPOLITAN AREA


           Reason for Disqualification : company not having  submitted  its
           latest income tax return along with its Bid.


           With regards
           Tendering Authority”

    12. So far as the first point is concerned, it needs to be  dealt  with
        short shrift for the reason that the Courts below have not  thought
        it relevant for discussion, having, in their wisdom, considered  it
        sufficient to non-suit the Appellant-company for its failure on the
        second count.  It has, however, been explained by Mr. Vishwanathan,
        learned Senior  Counsel  for  the  Appellant-company  that  at  the
        material time  there  was  no  blacklisting  or  delisting  of  the
        Appellant-company and  that  in  those  circumstances  it  was  not
        relevant to make any disclosure in this regard.  The very fact that
        the Tendering Authority, in terms of its communication  dated  22nd
        July 2013 had not adverted to this ground at all, lends credence to
        the contention that a valid argument had been  proffered  had  this
        ground been raised.     Regardless  of  the  weight,  pithiness  or
        sufficiency of the explanation given by  the  Appellant-company  in
        this regard, this issue in its entirety has become  irrelevant  for
        our cogitation for the reason that it does not feature as a  reason
        for  the  impugned  rejection.   This  ground  should   have   been
        articulated at the  very  inception  itself,  and  now  it  is  not
        forensically fair or permissible for the Authority or  any  of  the
        Respondents to adopt this ground for the first time in this  second
        salvo of litigation by way of a side wind.  The  impugned  Judgment
        is indubitably a cryptic one and does not contain  the  reasons  on
        which the decision is predicated.  Since reasons are not  contained
        in the impugned Judgment itself, it must be set aside on the  short
        ground that a party cannot be permitted to travel beyond the  stand
        adopted and expressed by it in its earlier decision.  The following
        observations found in the celebrated  decision  in  Mohinder  Singh
        Gill vs. The Chief Election Commissioner, New Delhi,  AIR  1978  SC
        851 are relevant to this question :
           “8. The second equally relevant matter is that when a  statutory
           functionary  makes  an  order  based  on  certain  grounds,  its
           validity must be judged by the reasons so mentioned  and  cannot
           be supplemented by fresh reasons in the shape  of  affidavit  or
           otherwise.  Otherwise, an order bad in the beginning may, by the
           time it comes to court on account of a challenge, get  validated
           by additional grounds later  brought  out.   We  may  here  draw
           attention to the observations of Bose J.  in  Gordhandas  Bhanji
           (AIR 1952 SC 16) (at p.18):
               “Public orders publicly made, in  exercise  of  a  statutory
               authority cannot be construed in the light  of  explanations
               subsequently given by the officer making the order  of  what
               he meant, or of what was in his mind, or what he intended to
               do.  Public orders made by public authorities are  meant  to
               have public effect and are intended to affect the acting and
               conduct of those to whom they  are  addressed  and  must  be
               construed objectively with reference to the language used in
               the order itself.
               Orders are not like old wine becoming better  as  they  grow
               order.”


    13. So far as clause (j)  of  the  detailed  notice  inviting  E-tender
        No.01/KMDA/MAT/CE/2013-2014  dated  10.5.2013  emanating  from  the
        office of the Chief Engineer is concerned,  it  seems  to  us  that
        contrary to the conclusion in the impugned judgment, the clause  is
        not an essential  element  or  ingredient  or  concomitant  of  the
        subject NIT.  
In the course of hearing, the Income Tax  Return  has
        been filed by the Appellant-company and scrutinized by us.  For the
        Assessment Year 2011-2012,  the  gross  income  of  the  Appellant-
        company  was  Rs.15,34,05,627,   although,   for   the   succeeding
        Assessment Year 2012-2013, the income tax was NIL, but  substantial
        tax had been deposited.  We think that the Income Tax Return  would
        have assumed the character of an  essential  term  if  one  of  the
        qualifications was either the gross income or  the  net  income  on
        which tax  was  attracted.   In  many  cases  this  is  a  salutary
        stipulation, since it is indicative of the commercial standing  and
        reliability of the tendering entity.  This feature being absent, we
        think that the filing  of  the  latest  Income  Tax  Return  was  a
        collateral term, and accordingly the Tendering Authority  ought  to
        have brought this discrepancy  to  the  notice  of  the  Appellant-
        company and if even thereafter no rectification  had  been  carried
        out, the position may have been appreciably different.  It has been
        asserted on behalf of the Appellant-company, and not denied by  the
        learned counsel for the Respondent-Authority,  that  the  financial
        bid of the Appellant-company is substantially lower  than  that  of
        the others, and, therefore, pecuniarily preferable.
    14. In this analysis, we find that the Appeal is well  founded  and  is
        allowed.  The impugned judgment  is  accordingly  set  aside.   The
        disqualification of the  Appellant-company  on  the  ground  of  it
        having failed to submit its latest Income Tax Return along with its
        bid is not sufficient reason for disregarding its  offer/bid.   The
        Respondents are directed, therefore,  to  proceed  further  in  the
        matter  on  this  predication.   The  parties  shall   bear   their
        respective costs.



      .............................................J.
                                             [T.S. THAKUR]




      New                                                              Delhi
      .............................................J.
      September 11, 2013.                    [VIKRAMAJIT SEN]
-----------------------
15


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.