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
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]
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