REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6978 of 2016
(ARISING OUT OF SLP (CIVIL) NO.5695 OF 2016)
BAKSHI SECURITY AND PERSONNEL
SERVICES PVT. LTD. …APPELLANT
VERSUS
DEVKISHAN COMPUTED PVT. LTD.
AND ORS. …RESPONDENTS
J U D G M E N T
R.F. Nariman, J.
1. Leave granted.
2. On 20.11.2014, the Commissioner of Transport, Government of Gujarat,
floated a tender seeking bids for services inter alia of supervisors,
computer programmers, data entry operators, and electrician staff at 11 RTO
check-posts. A few material clauses of the tender are set out hereinbelow:-
“2.5.5 Commercials
The Commercial Bids should strictly conform to the formats provided
in Annexure 2 of this tender document.
2.5.6 Fixed Price
Prices quoted by the Bidder shall be fixed and no variation will be
allowed under any circumstances during the entire period of the project.
No open-ended Bid shall be entertained and the same is liable to be
rejected straightaway.
2.8.3 Rejection of Bid
The hard-bound copy of Technical Bid Document shall be submitted in
the form of printed document. Bids submitted by Telex, fax or email shall
not be entertained. Any bid not secured in accordance with Clause 2.8
mentioned above, shall be rejected by COT without any further
correspondence, as non-responsive. A bid that does not meet all pre-
qualification criteria or is not responsive or not fulfilling technical
evaluation shall be rejected by COT, and may not subsequently be made
responsive by correction or withdrawal of the non-conforming deviation or
reservation by the Bidder.
3.4.5
It shall be the responsibility of the Bidder to abide by the
provisions of the labour welfare legislations, like The Payment of Wages
Act, 1936, The Payment of Bonus Act, 1965, The Minimum Wages Act, 1948, The
Equal Remuneration Act, 1976, The Payment of Gratuity Act, 1972, The
Employees’ State Insurance Act, 1948, Contract Labor Act, 1970, The
Workmen’s Compensation Act, 1923 and other similar legislations, rules, and
orders as issued from time to time.
Annexure – 2 (Financial Bid)
Format for Financial Bid
Price Bid: (Financial/Commercial Bid submitted in physical form shall be
liable for rejection. It should be submitted online only at
https://www.nprocure.com)
Please provide price bid for supply of Man Power to be deployed at
different Check-posts/CMC.
|Sr. No. |Particulars |Qty |Cost per |Total cost for |
| | | |person per |24 months |
| | | |month without|without tax |
| | | |tax | |
|1 |Data Entry |120 | | |
| |operator | | | |
|2 |Computer Engineer|02 | | |
|3 |Electrician |12 | | |
|4 |Supervisor |12 | | |
| |Total | | | |
|Additional Service Tax |% | | |
|Grand Total | |
Salary paid to the deployed manpower should not be less than the minimum
wages published as per the notification issued by state govt. labour
department or other statutory benefits applicable. In case of revision of
minimum wages/DA by the labour department, agency would be entitled to get
the revised rates from Commissioner of transport.
2. Break-up of salary for each category of employee should be provided
indicating clearly the wages, DA, other mandatory statutory benefits & the
service charges.
If the component of salary quoted is less than the minimum wages prescribed
or the components of mandatory statutory benefits are not included in the
break-up, the bid is liable to be rejected.
The quantity of manpower required may vary and the supplier may be asked to
supply upto 25% extra manpower at the rate quoted above.
L1 will be decided on grand total.
Signature: Date:
Designation: Seal:”
3. The financial bids were opened on 10.12.2014. 9 bidders gave
financial bids of which only three were qualified. The Appellant bid for a
total amount of Rs.2,92,93,944/-; Respondent No.1 bid for Rs.2,77,68,000/-,
and one Airan Consultants Pvt. Ltd. made a bid for Rs.3,03,83,184/-.
4. On 26.2.2015, the Technical Evaluation Committee, after taking into
account the opinion of the Labour Department, arrived at a minimum wage
figure of Rs.3,00,92,346/-. Inasmuch as both the Appellant as well as
Respondent No.1 gave bids which were below this figure, (which would,
therefore, be less than the amount required as minimum wages, in
accordance with the tender conditions read with the Annexure 2 thereof),
both the Appellant as well as Respondent No.1 were held to be ineligible.
A decision was, therefore, taken to award the tender to the third bidder,
namely, M/s Airan Consultants Pvt. Ltd. Respondent No.1 approached the
Gujarat High Court in a writ petition challenging the aforesaid decision.
By its judgment dated 11.8.2015, the High Court ultimately came to the
conclusion that the tender in favour of M/s Airan Consultants Pvt. Ltd.
ought to be quashed and set aside with the further direction that the
Government of Gujarat shall give an opportunity to all three tenderers to
resubmit their bids after being appraised of the minimum wage figure given
by the Labour Department. This was done as the High Court was of the
opinion that all the bidders ought to have been given an opportunity to
revise their bills subsequent to the minimum wage calculated by the Labour
Department.
5. In pursuance of the aforesaid judgment, the Transport Department of
the Government of Gujarat furnished to all the competing bidders the Labour
Department’s calculation that minimum wages plus bonus payable for the
contract was Rs.3,00,92,346/-.
6. In response to the above, the Appellant wrote a letter dated
2.11.2015 sticking to the original bid figure of Rs.2,92,93,944/-. On
3.9.2015, Respondent No.1, in response to the minimum wage figure
disclosed, wrote to the Government of Gujarat, as follows:-
“(6.3) Thus, it can be seen that according to the calculation, Minimum
Wages and other statutory benefits payable to the employees for 730 days [2
years of contract] comes to Rs.3,00,92,346 [without service tax]. The
price at which I am ready to work is Rs.2,77,68,000 [without service tax].
Thus, against payment of wages and all statutory benefits of
Rs.3,00,92,346/- and service tax thereon, am ready and willing to accept
Rs.2,77,68,000 [plus service tax] from the Government. This would enable
the Government to save Rs.23,24,346.00 and service tax thereon, and the
ultimate beneficiary would be public exchequer.
(6.4) I have undertaken in past in writing that I am ready to incur loss as
well. The price I have offered shall have no impediment on wages and
statutory benefits to be paid to the employees as calculated by the
Technical Evaluation Committee based on the report/ opinion of the Labour
Commissioner. The tender document itself binds the contractor to abide by
all labour welfare legislation, and therefore, there is no question of
resiling from performing that part of contract from my end.
(6.5) Even in my previous letters also, I have undertaken that I shall
conform to all labour welfare legislations even after accepting
Rs.2,77,68,000 + Service Tax from the Government. I have also undertaken
that I shall bear the burden of loss incurred on account of the margin
between my bid and the amount of minimum wages and statutory benefits
payable to my employees. The margin between the two shall not be hindrance
in quality of services I would offer through my employees on these check-
posts.
(6.6) Without prejudice to above, I am to state that I am ready to accept
even Rs.3,00,92,346.00 + Service Tax, being the bare minimum wages payable
to the employees during the life of the contract from the Government as
calculated by the Technical Evaluation Committee based on the report of the
Labour Commissioner, such offer will result into ‘No Profit No Loss’
business for me, but at the same time, it would create a burden of
Rs.23,24,346.00 on the State Funds.”
7. On 12.10.2015, the Labour Department gave a second opinion that
though Data Entry Operators are ordinarily to be treated as “skilled
workers”, for the purpose of the present tender they should be treated as
“semi skilled workers”. In view of this decision, the Government, on
30.10.2015, arrived at a decision that the actual minimum wage plus bonus
worked out to Rs.2,91,00,000/-, and thus revised their earlier figure of
Rs.3,00,92,346/-. In the judgment under appeal, the High Court has stated,
and it is not controverted before us, that this figure was not disclosed to
either party.
8. On 2.11.2015, Respondent No.1 again knocked at the doors of the High
Court in a second writ petition filed by it. By the impugned judgment
dated 22.2.2016, the High Court allowed Respondent no.1’s petition in the
following terms:-
“8. Under the circumstances, the decision of the authorities to shortlist
respondent No.3 for awarding the contract is set aside. The offer of the
petitioner shall be treated as matching with the revised minimum wage
calculation. The petitioner shall give such offer in clear writing and
undertaking to the authorities latest by 25.2.2016. The respondent
authorities, unless there is any other disqualification of the petitioner
to carry out the contract, being the lower, shall accept the same.
9. Petition is disposed of.”
9. Being aggrieved by the aforesaid judgment, the Appellant is before
us.
10. Shri Harin Raval, learned senior advocate appearing on behalf of the
Appellant, has pointedly referred to the tender conditions and has argued
before us that Respondent No.1’s writ petition was not at all maintainable
in view of the fact that Respondent No.1 stuck to its earlier offer of
Rs.2,77,68,000/- which was lower than the figure of Rs.3,00,92,346/- as
well as the figure of Rs.2,91,00,000/- fixed by the Government upon advice
given by the Labour Department, of minimum wage plus bonus. According to
him, the without prejudice offer of Rs.3,00,92,346/- flew in the face of
the tender conditions and, therefore, the writ petition being not
maintainable, ought to have been dismissed both on the ground that the
figure quoted by Respondent No.1 was below the minimum wage fixed as also
on the ground that no open ended bid is liable to be entertained. He
further argued that the Court cannot make a contract between the parties by
treating the offer of the Respondent No.1 as matched with the revised
minimum wage calculation. He further argued that a Mandamus cannot be
issued to straightaway award the tender to a person who does not conform to
the essential conditions of the tender.
11. Countering these submissions, Shri Shyam Divan, learned senior
counsel appearing on behalf of Respondent No.1, has argued that it is an
admitted fact that the revised figure of minimum wage was never disclosed
to either of the parties and this being so, the judgment under appeal is
correct. He also stated that though the High Court did not find malafides,
yet it went out of its way to comment on the secret manner in which the
Labour Department re-fixed the minimum wage at Rs.2,91,00,000/-, which is
only one lakh above the Appellant’s figure of Rs.2,92,00,000/- and that,
therefore, the said non-transparent process rendered the decision of the
Government to award the tender to the Appellant as bad in law. He further
argued that if the offer of the Respondent No.1 was treated as matching
with the revised minimum wage calculation, the State will benefit by an
amount of Rs.1 lakh and that this was well within the discretion of the
High Court while exercising jurisdiction under Article 226 of the
Constitution.
12. Having heard learned counsel for the parties, we agree with Shri
Raval’s contention that Respondent No.1’s bid was contrary to the terms of
the tender.
13. First and foremost, under tender condition 2.5.5, commercial bids
have to strictly conform to the format provided in Annexure 2 of the tender
document. Annexure 2 which contains the format for the price bid makes it
clear that the salary paid to deployed manpower should not be less than the
minimum wage. It further goes on to state in paragraph 3 thereof that if
the component of salary quoted is less than the minimum wage prescribed,
the bid is liable to be rejected. On this ground alone, Respondent No.1‘s
bid is liable to be rejected inasmuch as, vide its letter dated 3.9.2015,
Respondent No.1 stuck to its original figure of Rs.2,77,68,000/- which is
way below the minimum wage fixed by the Government. Secondly, Shri Raval is
also right in stating that the without prejudice offer of Rs.3,00,92,346/-
is an offer which is not fixed, but open ended. This is clear from the
fact that it was up to the Government then to pick up either figure by way
of acceptance. This is clearly interdicted by clause 2.5.6 of the tender
which states that prices quoted by the bidder have to be fixed, and no open
ended bid can be entertained, the same being liable to be rejected
straightaway. Such condition is obviously an essential condition of the
tender which goes to the eligibility of persons who make offers under the
tender.
14. Unfortunately, even though the High Court noticed the open ended
nature of Respondent No.1’s bid, it went on to add that the offer of
Respondent No.1 shall be treated as matching with the revised minimum wage
calculation and that it is nowhere envisaged by the tender conditions that
rejection of an offer which may have the potential of causing loss to the
tenderer is present. It is not for the High Court to revisit a condition
contained in Annexure 2 read with 2.5.5 of the tender in the manner
aforesaid. Once the tender condition states that the tender must strictly
conform to the format provided in Annexure 2, and Annexure 2 in turn
clearly states that if the component of salary quoted is less than the
minimum wage prescribed, the bid is liable to be rejected, and the High
Court cannot hold otherwise. The High Court’s further finding that
Respondent No.1’s offer was “clear” is wholly incorrect. It was a without
prejudice offer which muddied the waters and rendered the price quoted by
the bidder as variable and not fixed.
15. The law is settled that an essential condition of a tender has to be
strictly complied with. In Poddar Steel Corpn. v. Ganesh Engineering Works,
(1991) 3 SCC 273, this Court held as under:-
“… The requirements in a tender notice can be classified into two
categories — those which lay down the essential conditions of eligibility
and the others which are merely ancillary or subsidiary with the main
object to be achieved by the condition. In the first case the authority
issuing the tender may be required to enforce them rigidly. In the other
cases it must be open to the authority to deviate from and not to insist
upon the strict literal compliance of the condition in appropriate cases….”
[para 6]
16. Similarly in B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd.,
(2006) 11 SCC 548, this Court held as under:-
“…(i) if there are essential conditions, the same must be adhered to;
(ii) if there is no power of general relaxation, ordinarily the same shall
not be exercised and the principle of strict compliance would be applied
where it is possible for all the parties to comply with all such conditions
fully;
(iii) if, however, a deviation is made in relation to all the parties in
regard to any of such conditions, ordinarily again a power of relaxation
may be held to be existing;
(iv) the parties who have taken the benefit of such relaxation should not
ordinarily be allowed to take a different stand in relation to compliance
with another part of tender contract, particularly when the was also not in
a position to comply with all the conditions of tender fully, unless the
court otherwise finds relaxation of a condition which being essential in
nature could not be relaxed and thus the same was wholly illegal and
without jurisdiction;
(v) when a decision is taken by the appropriate authority upon due
consideration of the tender document submitted by all the tenderers on
their own merits and if it is ultimately found that successful bidders had
in fact substantially complied with the purport and object for which
essential conditions were laid down, the same may not ordinarily be
interfered with; …” [para 66]
17. We also agree with the contention of Shri Raval that the writ
jurisdiction cannot be utilized to make a fresh bargain between parties.
18. In General Assurance Society Ltd. V. Chandmull Jain, (1996) 3 SCR 500,
this Court, in a slightly different context, stated:
“In other respects there is no difference between a contract of insurance
and any other contract except that in a contract of insurance there is a
requirement of uberrima fides i.e. good faith on the part of the assured
and the contract is likely to be construed contra proferentem that is
against the company in case of ambiguity or doubt. A contract is formed
when there is an unqualified acceptance of the proposal. Acceptance may be
expressed in writing or it may even be implied if the insurer accepts the
premium and retains it. In the case of the assured, a positive act on his
part by which he recognises or seeks to enforce the policy amounts to an
affirmation of it. This position was clearly recognised by the assured
himself, because he wrote, close upon the expiry of the time of the cover
notes that either a policy should be issued to him before that period had
expired or the cover note extended in time. In interpreting documents
relating to a contract of insurance, the duty of the court is to interpret
the words in which the contract is expressed by the parties, because it is
not for the court to make a new contract, however reasonable, if the
parties have not made it themselves. Looking at the proposal, the letter of
acceptance and the cover notes, it is clear that a contract of insurance
under the standard policy for fire and extended to cover flood, cyclone
etc. had come into being.”
19. In the light of the aforesaid judgment, the High Court was not
correct in treating Respondent No.1’s offer as matching with the revised
minimum wage calculation, as that would make a new contract between the
parties that the parties have not made themselves.
20. It is also well to remember the admonition given by this Court in
Michigan Rubber (India) Limited v. State of Karnataka and Others, (2012) 8
SCC 216 in cases like the present, as under:-
“In Jagdish Mandal v. State of Orissa, [(2007) 14 SCC 517], the following
conclusion is relevant:
“22. Judicial review of administrative action is intended to prevent
arbitrariness, irrationality, unreasonableness, bias and mala fides. Its
purpose is to check whether choice or decision is made ‘lawfully’ and not
to check whether choice or decision is ‘sound’. When the power of judicial
review is invoked in matters relating to tenders or award of contracts,
certain special features should be borne in mind. A contract is a
commercial transaction. Evaluating tenders and awarding contracts are
essentially commercial functions. Principles of equity and natural justice
stay at a distance. If the decision relating to award of contract is bona
fide and is in public interest, courts will not, in exercise of power of
judicial review, interfere even if a procedural aberration or error in
assessment or prejudice to a tenderer, is made out. The power of judicial
review will not be permitted to be invoked to protect private interest at
the cost of public interest, or to decide contractual disputes. The
tenderer or contractor with a grievance can always seek damages in a civil
court. Attempts by unsuccessful tenderers with imaginary grievances,
wounded pride and business rivalry, to make mountains out of molehills of
some technical/procedural violation or some prejudice to self, and persuade
courts to interfere by exercising power of judicial review, should be
resisted. Such interferences, either interim or final, may hold up public
works for years, or delay relief and succour to thousands and millions and
may increase the project cost manifold. Therefore, a court before
interfering in tender or contractual matters in exercise of power of
judicial review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority is mala
fide or intended to favour someone;
OR
Whether the process adopted or decision made is so arbitrary and irrational
that the court can say: ‘the decision is such that no responsible authority
acting reasonably and in accordance with relevant law could have reached’;
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no interference under
Article 226. Cases involving blacklisting or imposition of penal
consequences on a tenderer/ contractor or distribution of State largesse
(allotment of sites/shops, grant of licences, dealerships and franchises)
stand on a different footing as they may require a higher degree of
fairness in action.”[Para 21]
21. We have seen that the present tender has not gotten off the ground
since May 2015, and one year’s precious time has been wasted due to
litigation between the parties. We must hasten to add that the Government
of Gujarat is partly to blame for this inasmuch as it arrived at a minimum
wage figure and did not disclose the same to the tendering parties twice.
Even in the second round of litigation, the Government did not disclose the
newly arrived at minimum wage figure of Rs.2,91,00,000/- to the two persons
in the fray before us. Ordinarily, therefore, we would have asked the
Government to disclose the second figure of minimum wage and restart the
tendering process. However, we do not think that the justice of the case
requires us to do so, for two reasons. First and foremost, Respondent No.1
before us has clearly violated the strict terms of the tender condition on
every occasion and hence cannot be given relief. And, secondly, we already
find that due to litigation the present tender has not taken off for over
one year. In the absence of malafides, and indeed the High Court judgment
has found that malafides did not vitiate the calculation of minimum wage by
the Labour Department, we cannot accept Shri Divan’s submission that the
figure of Rs.2,91,00,000/- was tailor made to suit the bid offered by the
Appellant herein. We, therefore, set aside the decision of the Gujarat
High Court and allow the Government to proceed further in finalizing the
tender in favour of the Appellant herein. The appeal is, accordingly,
allowed with no order as to costs.
……………………J.
(Dipak Misra)
……………………J.
New Delhi; (R.F. Nariman)
July 26, 2016
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6978 of 2016
(ARISING OUT OF SLP (CIVIL) NO.5695 OF 2016)
BAKSHI SECURITY AND PERSONNEL
SERVICES PVT. LTD. …APPELLANT
VERSUS
DEVKISHAN COMPUTED PVT. LTD.
AND ORS. …RESPONDENTS
J U D G M E N T
R.F. Nariman, J.
1. Leave granted.
2. On 20.11.2014, the Commissioner of Transport, Government of Gujarat,
floated a tender seeking bids for services inter alia of supervisors,
computer programmers, data entry operators, and electrician staff at 11 RTO
check-posts. A few material clauses of the tender are set out hereinbelow:-
“2.5.5 Commercials
The Commercial Bids should strictly conform to the formats provided
in Annexure 2 of this tender document.
2.5.6 Fixed Price
Prices quoted by the Bidder shall be fixed and no variation will be
allowed under any circumstances during the entire period of the project.
No open-ended Bid shall be entertained and the same is liable to be
rejected straightaway.
2.8.3 Rejection of Bid
The hard-bound copy of Technical Bid Document shall be submitted in
the form of printed document. Bids submitted by Telex, fax or email shall
not be entertained. Any bid not secured in accordance with Clause 2.8
mentioned above, shall be rejected by COT without any further
correspondence, as non-responsive. A bid that does not meet all pre-
qualification criteria or is not responsive or not fulfilling technical
evaluation shall be rejected by COT, and may not subsequently be made
responsive by correction or withdrawal of the non-conforming deviation or
reservation by the Bidder.
3.4.5
It shall be the responsibility of the Bidder to abide by the
provisions of the labour welfare legislations, like The Payment of Wages
Act, 1936, The Payment of Bonus Act, 1965, The Minimum Wages Act, 1948, The
Equal Remuneration Act, 1976, The Payment of Gratuity Act, 1972, The
Employees’ State Insurance Act, 1948, Contract Labor Act, 1970, The
Workmen’s Compensation Act, 1923 and other similar legislations, rules, and
orders as issued from time to time.
Annexure – 2 (Financial Bid)
Format for Financial Bid
Price Bid: (Financial/Commercial Bid submitted in physical form shall be
liable for rejection. It should be submitted online only at
https://www.nprocure.com)
Please provide price bid for supply of Man Power to be deployed at
different Check-posts/CMC.
|Sr. No. |Particulars |Qty |Cost per |Total cost for |
| | | |person per |24 months |
| | | |month without|without tax |
| | | |tax | |
|1 |Data Entry |120 | | |
| |operator | | | |
|2 |Computer Engineer|02 | | |
|3 |Electrician |12 | | |
|4 |Supervisor |12 | | |
| |Total | | | |
|Additional Service Tax |% | | |
|Grand Total | |
Salary paid to the deployed manpower should not be less than the minimum
wages published as per the notification issued by state govt. labour
department or other statutory benefits applicable. In case of revision of
minimum wages/DA by the labour department, agency would be entitled to get
the revised rates from Commissioner of transport.
2. Break-up of salary for each category of employee should be provided
indicating clearly the wages, DA, other mandatory statutory benefits & the
service charges.
If the component of salary quoted is less than the minimum wages prescribed
or the components of mandatory statutory benefits are not included in the
break-up, the bid is liable to be rejected.
The quantity of manpower required may vary and the supplier may be asked to
supply upto 25% extra manpower at the rate quoted above.
L1 will be decided on grand total.
Signature: Date:
Designation: Seal:”
3. The financial bids were opened on 10.12.2014. 9 bidders gave
financial bids of which only three were qualified. The Appellant bid for a
total amount of Rs.2,92,93,944/-; Respondent No.1 bid for Rs.2,77,68,000/-,
and one Airan Consultants Pvt. Ltd. made a bid for Rs.3,03,83,184/-.
4. On 26.2.2015, the Technical Evaluation Committee, after taking into
account the opinion of the Labour Department, arrived at a minimum wage
figure of Rs.3,00,92,346/-. Inasmuch as both the Appellant as well as
Respondent No.1 gave bids which were below this figure, (which would,
therefore, be less than the amount required as minimum wages, in
accordance with the tender conditions read with the Annexure 2 thereof),
both the Appellant as well as Respondent No.1 were held to be ineligible.
A decision was, therefore, taken to award the tender to the third bidder,
namely, M/s Airan Consultants Pvt. Ltd. Respondent No.1 approached the
Gujarat High Court in a writ petition challenging the aforesaid decision.
By its judgment dated 11.8.2015, the High Court ultimately came to the
conclusion that the tender in favour of M/s Airan Consultants Pvt. Ltd.
ought to be quashed and set aside with the further direction that the
Government of Gujarat shall give an opportunity to all three tenderers to
resubmit their bids after being appraised of the minimum wage figure given
by the Labour Department. This was done as the High Court was of the
opinion that all the bidders ought to have been given an opportunity to
revise their bills subsequent to the minimum wage calculated by the Labour
Department.
5. In pursuance of the aforesaid judgment, the Transport Department of
the Government of Gujarat furnished to all the competing bidders the Labour
Department’s calculation that minimum wages plus bonus payable for the
contract was Rs.3,00,92,346/-.
6. In response to the above, the Appellant wrote a letter dated
2.11.2015 sticking to the original bid figure of Rs.2,92,93,944/-. On
3.9.2015, Respondent No.1, in response to the minimum wage figure
disclosed, wrote to the Government of Gujarat, as follows:-
“(6.3) Thus, it can be seen that according to the calculation, Minimum
Wages and other statutory benefits payable to the employees for 730 days [2
years of contract] comes to Rs.3,00,92,346 [without service tax]. The
price at which I am ready to work is Rs.2,77,68,000 [without service tax].
Thus, against payment of wages and all statutory benefits of
Rs.3,00,92,346/- and service tax thereon, am ready and willing to accept
Rs.2,77,68,000 [plus service tax] from the Government. This would enable
the Government to save Rs.23,24,346.00 and service tax thereon, and the
ultimate beneficiary would be public exchequer.
(6.4) I have undertaken in past in writing that I am ready to incur loss as
well. The price I have offered shall have no impediment on wages and
statutory benefits to be paid to the employees as calculated by the
Technical Evaluation Committee based on the report/ opinion of the Labour
Commissioner. The tender document itself binds the contractor to abide by
all labour welfare legislation, and therefore, there is no question of
resiling from performing that part of contract from my end.
(6.5) Even in my previous letters also, I have undertaken that I shall
conform to all labour welfare legislations even after accepting
Rs.2,77,68,000 + Service Tax from the Government. I have also undertaken
that I shall bear the burden of loss incurred on account of the margin
between my bid and the amount of minimum wages and statutory benefits
payable to my employees. The margin between the two shall not be hindrance
in quality of services I would offer through my employees on these check-
posts.
(6.6) Without prejudice to above, I am to state that I am ready to accept
even Rs.3,00,92,346.00 + Service Tax, being the bare minimum wages payable
to the employees during the life of the contract from the Government as
calculated by the Technical Evaluation Committee based on the report of the
Labour Commissioner, such offer will result into ‘No Profit No Loss’
business for me, but at the same time, it would create a burden of
Rs.23,24,346.00 on the State Funds.”
7. On 12.10.2015, the Labour Department gave a second opinion that
though Data Entry Operators are ordinarily to be treated as “skilled
workers”, for the purpose of the present tender they should be treated as
“semi skilled workers”. In view of this decision, the Government, on
30.10.2015, arrived at a decision that the actual minimum wage plus bonus
worked out to Rs.2,91,00,000/-, and thus revised their earlier figure of
Rs.3,00,92,346/-. In the judgment under appeal, the High Court has stated,
and it is not controverted before us, that this figure was not disclosed to
either party.
8. On 2.11.2015, Respondent No.1 again knocked at the doors of the High
Court in a second writ petition filed by it. By the impugned judgment
dated 22.2.2016, the High Court allowed Respondent no.1’s petition in the
following terms:-
“8. Under the circumstances, the decision of the authorities to shortlist
respondent No.3 for awarding the contract is set aside. The offer of the
petitioner shall be treated as matching with the revised minimum wage
calculation. The petitioner shall give such offer in clear writing and
undertaking to the authorities latest by 25.2.2016. The respondent
authorities, unless there is any other disqualification of the petitioner
to carry out the contract, being the lower, shall accept the same.
9. Petition is disposed of.”
9. Being aggrieved by the aforesaid judgment, the Appellant is before
us.
10. Shri Harin Raval, learned senior advocate appearing on behalf of the
Appellant, has pointedly referred to the tender conditions and has argued
before us that Respondent No.1’s writ petition was not at all maintainable
in view of the fact that Respondent No.1 stuck to its earlier offer of
Rs.2,77,68,000/- which was lower than the figure of Rs.3,00,92,346/- as
well as the figure of Rs.2,91,00,000/- fixed by the Government upon advice
given by the Labour Department, of minimum wage plus bonus. According to
him, the without prejudice offer of Rs.3,00,92,346/- flew in the face of
the tender conditions and, therefore, the writ petition being not
maintainable, ought to have been dismissed both on the ground that the
figure quoted by Respondent No.1 was below the minimum wage fixed as also
on the ground that no open ended bid is liable to be entertained. He
further argued that the Court cannot make a contract between the parties by
treating the offer of the Respondent No.1 as matched with the revised
minimum wage calculation. He further argued that a Mandamus cannot be
issued to straightaway award the tender to a person who does not conform to
the essential conditions of the tender.
11. Countering these submissions, Shri Shyam Divan, learned senior
counsel appearing on behalf of Respondent No.1, has argued that it is an
admitted fact that the revised figure of minimum wage was never disclosed
to either of the parties and this being so, the judgment under appeal is
correct. He also stated that though the High Court did not find malafides,
yet it went out of its way to comment on the secret manner in which the
Labour Department re-fixed the minimum wage at Rs.2,91,00,000/-, which is
only one lakh above the Appellant’s figure of Rs.2,92,00,000/- and that,
therefore, the said non-transparent process rendered the decision of the
Government to award the tender to the Appellant as bad in law. He further
argued that if the offer of the Respondent No.1 was treated as matching
with the revised minimum wage calculation, the State will benefit by an
amount of Rs.1 lakh and that this was well within the discretion of the
High Court while exercising jurisdiction under Article 226 of the
Constitution.
12. Having heard learned counsel for the parties, we agree with Shri
Raval’s contention that Respondent No.1’s bid was contrary to the terms of
the tender.
13. First and foremost, under tender condition 2.5.5, commercial bids
have to strictly conform to the format provided in Annexure 2 of the tender
document. Annexure 2 which contains the format for the price bid makes it
clear that the salary paid to deployed manpower should not be less than the
minimum wage. It further goes on to state in paragraph 3 thereof that if
the component of salary quoted is less than the minimum wage prescribed,
the bid is liable to be rejected. On this ground alone, Respondent No.1‘s
bid is liable to be rejected inasmuch as, vide its letter dated 3.9.2015,
Respondent No.1 stuck to its original figure of Rs.2,77,68,000/- which is
way below the minimum wage fixed by the Government. Secondly, Shri Raval is
also right in stating that the without prejudice offer of Rs.3,00,92,346/-
is an offer which is not fixed, but open ended. This is clear from the
fact that it was up to the Government then to pick up either figure by way
of acceptance. This is clearly interdicted by clause 2.5.6 of the tender
which states that prices quoted by the bidder have to be fixed, and no open
ended bid can be entertained, the same being liable to be rejected
straightaway. Such condition is obviously an essential condition of the
tender which goes to the eligibility of persons who make offers under the
tender.
14. Unfortunately, even though the High Court noticed the open ended
nature of Respondent No.1’s bid, it went on to add that the offer of
Respondent No.1 shall be treated as matching with the revised minimum wage
calculation and that it is nowhere envisaged by the tender conditions that
rejection of an offer which may have the potential of causing loss to the
tenderer is present. It is not for the High Court to revisit a condition
contained in Annexure 2 read with 2.5.5 of the tender in the manner
aforesaid. Once the tender condition states that the tender must strictly
conform to the format provided in Annexure 2, and Annexure 2 in turn
clearly states that if the component of salary quoted is less than the
minimum wage prescribed, the bid is liable to be rejected, and the High
Court cannot hold otherwise. The High Court’s further finding that
Respondent No.1’s offer was “clear” is wholly incorrect. It was a without
prejudice offer which muddied the waters and rendered the price quoted by
the bidder as variable and not fixed.
15. The law is settled that an essential condition of a tender has to be
strictly complied with. In Poddar Steel Corpn. v. Ganesh Engineering Works,
(1991) 3 SCC 273, this Court held as under:-
“… The requirements in a tender notice can be classified into two
categories — those which lay down the essential conditions of eligibility
and the others which are merely ancillary or subsidiary with the main
object to be achieved by the condition. In the first case the authority
issuing the tender may be required to enforce them rigidly. In the other
cases it must be open to the authority to deviate from and not to insist
upon the strict literal compliance of the condition in appropriate cases….”
[para 6]
16. Similarly in B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd.,
(2006) 11 SCC 548, this Court held as under:-
“…(i) if there are essential conditions, the same must be adhered to;
(ii) if there is no power of general relaxation, ordinarily the same shall
not be exercised and the principle of strict compliance would be applied
where it is possible for all the parties to comply with all such conditions
fully;
(iii) if, however, a deviation is made in relation to all the parties in
regard to any of such conditions, ordinarily again a power of relaxation
may be held to be existing;
(iv) the parties who have taken the benefit of such relaxation should not
ordinarily be allowed to take a different stand in relation to compliance
with another part of tender contract, particularly when the was also not in
a position to comply with all the conditions of tender fully, unless the
court otherwise finds relaxation of a condition which being essential in
nature could not be relaxed and thus the same was wholly illegal and
without jurisdiction;
(v) when a decision is taken by the appropriate authority upon due
consideration of the tender document submitted by all the tenderers on
their own merits and if it is ultimately found that successful bidders had
in fact substantially complied with the purport and object for which
essential conditions were laid down, the same may not ordinarily be
interfered with; …” [para 66]
17. We also agree with the contention of Shri Raval that the writ
jurisdiction cannot be utilized to make a fresh bargain between parties.
18. In General Assurance Society Ltd. V. Chandmull Jain, (1996) 3 SCR 500,
this Court, in a slightly different context, stated:
“In other respects there is no difference between a contract of insurance
and any other contract except that in a contract of insurance there is a
requirement of uberrima fides i.e. good faith on the part of the assured
and the contract is likely to be construed contra proferentem that is
against the company in case of ambiguity or doubt. A contract is formed
when there is an unqualified acceptance of the proposal. Acceptance may be
expressed in writing or it may even be implied if the insurer accepts the
premium and retains it. In the case of the assured, a positive act on his
part by which he recognises or seeks to enforce the policy amounts to an
affirmation of it. This position was clearly recognised by the assured
himself, because he wrote, close upon the expiry of the time of the cover
notes that either a policy should be issued to him before that period had
expired or the cover note extended in time. In interpreting documents
relating to a contract of insurance, the duty of the court is to interpret
the words in which the contract is expressed by the parties, because it is
not for the court to make a new contract, however reasonable, if the
parties have not made it themselves. Looking at the proposal, the letter of
acceptance and the cover notes, it is clear that a contract of insurance
under the standard policy for fire and extended to cover flood, cyclone
etc. had come into being.”
19. In the light of the aforesaid judgment, the High Court was not
correct in treating Respondent No.1’s offer as matching with the revised
minimum wage calculation, as that would make a new contract between the
parties that the parties have not made themselves.
20. It is also well to remember the admonition given by this Court in
Michigan Rubber (India) Limited v. State of Karnataka and Others, (2012) 8
SCC 216 in cases like the present, as under:-
“In Jagdish Mandal v. State of Orissa, [(2007) 14 SCC 517], the following
conclusion is relevant:
“22. Judicial review of administrative action is intended to prevent
arbitrariness, irrationality, unreasonableness, bias and mala fides. Its
purpose is to check whether choice or decision is made ‘lawfully’ and not
to check whether choice or decision is ‘sound’. When the power of judicial
review is invoked in matters relating to tenders or award of contracts,
certain special features should be borne in mind. A contract is a
commercial transaction. Evaluating tenders and awarding contracts are
essentially commercial functions. Principles of equity and natural justice
stay at a distance. If the decision relating to award of contract is bona
fide and is in public interest, courts will not, in exercise of power of
judicial review, interfere even if a procedural aberration or error in
assessment or prejudice to a tenderer, is made out. The power of judicial
review will not be permitted to be invoked to protect private interest at
the cost of public interest, or to decide contractual disputes. The
tenderer or contractor with a grievance can always seek damages in a civil
court. Attempts by unsuccessful tenderers with imaginary grievances,
wounded pride and business rivalry, to make mountains out of molehills of
some technical/procedural violation or some prejudice to self, and persuade
courts to interfere by exercising power of judicial review, should be
resisted. Such interferences, either interim or final, may hold up public
works for years, or delay relief and succour to thousands and millions and
may increase the project cost manifold. Therefore, a court before
interfering in tender or contractual matters in exercise of power of
judicial review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority is mala
fide or intended to favour someone;
OR
Whether the process adopted or decision made is so arbitrary and irrational
that the court can say: ‘the decision is such that no responsible authority
acting reasonably and in accordance with relevant law could have reached’;
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no interference under
Article 226. Cases involving blacklisting or imposition of penal
consequences on a tenderer/ contractor or distribution of State largesse
(allotment of sites/shops, grant of licences, dealerships and franchises)
stand on a different footing as they may require a higher degree of
fairness in action.”[Para 21]
21. We have seen that the present tender has not gotten off the ground
since May 2015, and one year’s precious time has been wasted due to
litigation between the parties. We must hasten to add that the Government
of Gujarat is partly to blame for this inasmuch as it arrived at a minimum
wage figure and did not disclose the same to the tendering parties twice.
Even in the second round of litigation, the Government did not disclose the
newly arrived at minimum wage figure of Rs.2,91,00,000/- to the two persons
in the fray before us. Ordinarily, therefore, we would have asked the
Government to disclose the second figure of minimum wage and restart the
tendering process. However, we do not think that the justice of the case
requires us to do so, for two reasons. First and foremost, Respondent No.1
before us has clearly violated the strict terms of the tender condition on
every occasion and hence cannot be given relief. And, secondly, we already
find that due to litigation the present tender has not taken off for over
one year. In the absence of malafides, and indeed the High Court judgment
has found that malafides did not vitiate the calculation of minimum wage by
the Labour Department, we cannot accept Shri Divan’s submission that the
figure of Rs.2,91,00,000/- was tailor made to suit the bid offered by the
Appellant herein. We, therefore, set aside the decision of the Gujarat
High Court and allow the Government to proceed further in finalizing the
tender in favour of the Appellant herein. The appeal is, accordingly,
allowed with no order as to costs.
……………………J.
(Dipak Misra)
……………………J.
New Delhi; (R.F. Nariman)
July 26, 2016
