2009 (2) TMI 743 - SC - Indian Laws

Whether it by a private party or by a public body or the State is essentially a commercial transaction? Held that - Appeal allowed. The respondent no. 1 was negligent and was not sincere in submitting his pre-qualification documents within the time schedule laid down despite the fact that he had information that there is a time schedule attached to the notice inviting tenders. Despite being aware of the said stipulation he did not submit the required documents within the stipulated date. Pre-qualification documents were received by the respondent no. 2 University only after time schedule was over. The terms and conditions of the tender as held by the Supreme Court are required to be adhered to strictly and therefore the respondent no. 2 University was justified in not opening the tender submitted by respondent no. 1 on 01.12.2008 which was late by three days. According to us no grievance could also be made by the respondent no. 1 as lapse was due to his own fault. The High Court proceeded to interfere with the entire process as if acting as an appellate authority over the decision of the University which was beyond the jurisdiction of the Court. The High Court was not justified in accepting the contentions of respondent no. 1 and thereby upsetting the entire process of inviting tenders by interfering with the terms and conditions of inviting the tenders and by rescheduling and directing the process of re-tendering which would only cause further delay and would increase the burden on the exchequer of the University.

Summary

Issues Involved:
1. Validity of the University's tender process and its stipulations.
2. High Court's interference with the tender terms and conditions.
3. Allegations of arbitrariness and lack of competition in the tender process.
4. Timeliness and procedural adherence in the submission of pre-qualification documents.
5. Financial implications and public interest considerations.
6. Jurisdiction of the High Court in contractual matters.

Detailed Analysis:

1. Validity of the University's Tender Process and Its Stipulations:
The University issued a tender notice on 21.11.2008 for the construction of a Veterinary College building, requiring pre-qualification documents by 27.11.2008 and the price bid by 28.11.2008. The tender notice was widely advertised, ensuring broad awareness. The stipulation was that any violation of the submission deadlines would result in rejection of the tender. The University adhered to these terms, rejecting the bid of respondent no. 1 for late submission.

2. High Court's Interference with the Tender Terms and Conditions:
The High Court deemed the University's requirement for physical submission of pre-qualification documents by 27.11.2008 as arbitrary, ruling that it effectively shortened the submission window. The High Court directed the University to issue a fresh tender with an extended submission period. The Supreme Court, however, held that the High Court overstepped its jurisdiction by altering the tender terms, which are contractual and should not be modified by the court.

3. Allegations of Arbitrariness and Lack of Competition in the Tender Process:
Respondent no. 1 argued that the short submission window was arbitrary and restricted competition, benefiting only two eligible bidders. The Supreme Court found no merit in this argument, noting that the respondent no. 1 failed to raise this issue initially and that no other bidders claimed prejudice due to the time schedule. The Court emphasized that the time provided was sufficient and the process was not arbitrary.

4. Timeliness and Procedural Adherence in the Submission of Pre-Qualification Documents:
Respondent no. 1 submitted pre-qualification documents late, claiming he only learned of the tender on 27.11.2008 due to other commitments. The Supreme Court held that this was a personal difficulty and not a fault of the tender schedule. The University's requirement for timely submission was clear and adhered to, and the rejection of the late bid was justified.

5. Financial Implications and Public Interest Considerations:
The High Court's decision was partly based on the financial argument that respondent no. 1's bid was lower, potentially saving public money. The Supreme Court countered that re-tendering would delay the project, increasing costs and risking the lapse of funds by 31.03.2009. The Court stressed the importance of timely completion of the project for public interest and financial prudence.

6. Jurisdiction of the High Court in Contractual Matters:
The Supreme Court reiterated that tender terms are contractual, and courts should not interfere with how these terms are framed. The High Court's action in modifying the tender terms was beyond its jurisdiction. The Supreme Court cited precedents emphasizing that judicial interference in administrative and contractual matters should be limited and based on clear legal principles.

Conclusion:
The Supreme Court set aside the High Court's judgment, upholding the University's decision to award the contract to the appellant. The Court found no arbitrariness or procedural fault in the University's tender process, emphasizing the necessity of strict adherence to tender terms and the importance of timely project completion for public interest. The appeal was allowed, affirming the validity of the University's actions.