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TMI Blog2017 (11) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... order to quash and set aside the impugned decision of the respondent Corporation to disqualify the petitioner no.1 treating its bid as nonresponsive and ineligible on the sole ground that while submitting the bid the petitioner no.1 has not paid Goods and Services Tax (hereinafter referred to as the "GST") to the respondent with the Bid/ Document Fee. 3.0. The facts leading to the present Special Civil Application in nutshell are as under: 3.1. That the respondent Corporation has issued a Request for Proposal (hereinafter referred to as "RFP") for "Development of Integrated Group Housing Facility at Dumbhal Tenements of FP No. 18/A TPS No. 33 (Dumbhal) on PPP basis under Redevelopment of Public Housing Scheme2016". As per the RFP, initially the online bid was to be submitted by 29.03.2017 and the physical bid was to be submitted by 07.04.2017. However, the aforesaid deadlines came to be extended upto 22.06.2017 for the online submission and 01.07.2017 for the physical submission. One of the conditions of the FIR RFP required the bidder to make payment of Rs. 18,000/towards "Bid/ Document Fee". Pursuant to the first RFP the petitioner no.1 submitted its online bid on 22.06.2017 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereafter, during the internal audit of the petitioner no.1, the auditor enquired from the concerned office of the petitioner no.1 about the SAC for the service in respect of which the respondent had demanded GST @ 18% since the respondent, in case of other tenders invited by it, had demanded GST at different rates. It is the case on behalf of the petitioners that pursuant thereto, upon inquiry from the respondent Corporation, it came to be informed to the petitioner no.1 that the amount of GST @ 18% was paid along with bid / document fee. It is the case on behalf of the petitioners that in view thereof, despite having made a provision for the payment of GST on reverse charge basis as per law, the petitioner no.1 out of abundant caution, addressed a letter dated 19.09.2017 and submitted a Demand Draft No.052513 dated 19.09.2017 towards the said amount of GST as per the information provided by the respondent. At this stage, it is required to be noted that at the time of submitting bid the petitioners made the payment of Rs. 18000/towards bid / document fees, however without GST @18% as demanded as per the tender document / notice. It is the case on behalf of the petitioners that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that extent the petitioners were not responsive of the eligibility criteria / terms and conditions of the tender document / notice that bidder was required to deposit the bid / document fee Rs. 18000/with GST @18%, the petitioners have preferred present Special Civil Application under Article 226 of the Constitution of India. 4.0. Shri Mihir Joshi, learned Senior Advocate has appeared on behalf of the petitioners, Shri Prashant G Desai, learned Senior Advocate has appeared with Shri Dhawal Nanavati, learned advocate for the respondent Corporation and Shri Mihir Thakore, learned Senior Advocate has appeared on behalf of the respondent no.2. 5.0. Shri Mihir Joshi, learned counsel for the petitioner has vehemently submitted that in the facts and circumstances of the case action of the respondent Corporation in considering the petitioner disqualified at technical stage on the sole ground of non deposit / payment of bid / document fee of Rs. 21,240/with GST @18% is absolutely illegal and most arbitrary. 5.1. It is further submitted by Shri Mihir Joshi, learned counsel for the petitioners that as such the petitioner no.1 in fact, download the tender document / notice successful and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity and the others which are merely ancillary or subsidiary to the main object to be achieved by the condition. It is submitted that in the first case the authority issuing the tender may be required to enforce them rigidly, however 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. 5.4. It is further submitted by Shri Mihir Joshi, learned counsel for the petitioners that even otherwise the conditions of payment of Bid/ document / tender fees can neither be said to be a condition of eligibility nor the condition for evaluation. It is submitted that the charges for production of bid document per se is unrelated to bid evaluation. It is submitted that therefore, non payment of aforesaid amount in full (with GST @18% ) cannot be said to be non fulfillment / non compliance of the essential condition relating to eligibility and / or evaluation of the bid on merits. 5.5. It is further submitted by Shri Mihir Joshi, learned counsel for the petitioners that even as per the clause 1.49 of the Tender document / General Information and Instruction which is relatable to responsive of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Steel Corporation vs. Ganesh Engineering Works and Ors reported (1991) 3 SCC 273. (para 6) (3). Rashmi Metaliks Limited and Another vs. Kolkata Metropolitan Development Authority and Ors reported in (2013) 10 SCC 95. (para 17 & 18) (4). Om Prakash Sharma vs. Ramesh Chand Prashar and Ors reported in (2016) 12 SCC 632. (Para 10 to 12) (5). Jal Mahal Resorts Private Limited vs. K.P. Sharma and Ors reported in (2014) 8 SCC 804. (para 108 to 116 and 138). (6). Bakshi Security And Personnel Services Private Limited vs. Devkishan Computed Private Limited and Ors reported in (2016) 8 SCC 446. (7). MHS Infra Tech Pvt Ltd vs. State of Gujarat reported in AIR 2016 (Guj) 16 (para 11). (8). PES Installations Pvt. Ltd and Anr vs. Union of India and Anr reported in AIR 2015 (Del) 108. (para 1, 17 and 24) (9). R.G. Holding Pvt Ltd vs. M.T.N.L & Anr reported in 2004(78) DRJ 274 (Delhi). 10. R.G. Holding Pvt Ltd vs. M.T.N.L. & Anr reported in AIR 2005 (Delhi) 134. 6.0. Present petition is vehemently opposed by Shri Prashant G Desai, learned counsel for the respondent Corporation. 6.1. It is vehemently submitted by Shri Desai, learned counsel for the respondent Corporation that adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh RPAD or Speed Post so as to reach the Accounts Department within 7 days from the last date of submission of price bid. It is submitted that everybody was informed about the amount to be paid towards bid Document Fee / Bid Processing Fee i.e. Rs. 21240/. It is submitted that as the entire process of invited tender through E Tender anybody could download E Tender Bid document, however for the purpose of considering such party as bidder, such party is required to deposit bid / document fee (entire) and also bid security. It is submitted that only when the entire amount of bid document fee / bid processing fee and the EMD is deposited within the stipulated time as provided under the tender document, the receipt is generated in the record of the Corporation and on generation of the receipt, such party who had complied with all the terms and conditions at the initial stage namely deposit of entire amount of bid document fee and the EMD is considered to be the bidder / tenderer and only thereafter bid of such party / bidder is required to be considered. It is submitted that in the present case as the petitioners did not deposit the entire bid fee/ tender fee, no such receipt was genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered to be tenderer itself. It is submitted that the petitioners sent the draft of differential amount of Bid document fee after the technical bid was opened on 18.09.2017. It is submitted that therefore, when the petitioners at initial stage only not fulfilled the mandatory condition of paying the required amount of Bid Document Fee and therefore, the respondent Corporation has never considered the petitioner as tenderer itself. It is submitted that any amount / differential amount deposited subsequently and after the relevant date as prescribed in the tender document, such payment cannot be considered to be a valid payment and / or such payment is not required to be considered at all, more particularly, in the present case the differential amount was deposited after technical bid was opened on 18.09.2017. 6.6. It is vehemently submitted by Shri Desai, learned counsel for the respondent Corporation that as such on 19.09.2017 itself the draft of differential amount was sent back / returned to the petitioners. It is submitted that the technical bid was opened on 18.09.2017 and the prebid was opened on 03.10.2017 and after the price bid was opened, the petitioners have preferred pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d conditions of the tender document, which is neither perverse nor arbitrary and therefore, it is requested not to interfere with the same in exercise of powers under Article 226 of the Constitution of India. 6.10. On scope of judicial review in the contractual matter, Shri Desai, learned counsel for the respondent Corporation has relied upon the decision of the Hon'ble Supreme Court in the case of Michigan Rubber (India) Limited vs. State of Karnataka and ors reported in (2012) 8 SCC 216; in the case of Tata Cellular vs. Union of India reported in (1994) 6 SCC 651; in the case of Jagdish Mandal vs. State of Orissa and Ors reported in (2007) 14 SCC 517; in the case of Afcons Infrastructure Limited vs. Nagpur Metro Rail Corporation Limited and Another reported in (2016) 16 SCC 818 and in the case of Tamil Nadu Generation And Distribution Corporation Limited (Tangedco) Represented by its Chairman and Managing Director and Another vs. CSEPDITRISHE Consortium Represented by its Managing Director and Another reported in (2017) 4 SCC 318. Making above submissions and relying upon the above decisions, it is requested to dismiss the present petition. 7.0. Shri Mihir Thakore, learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bid document fee / bid processing fee i.e. Rs. 18000/only. At this stage, it is required to be noted that other two tenderers who submitted their bid, paid / deposited the entire document fee / bid processing fee i.e. Rs. 21,240/. Thus, in the tender consolidation details and "nProcure" tender consolidated details deposit of entire amount of document fee and EMD details was mandatory to be paid. Even as mentioned in Annexure A24 (Instruction to Bidder regarding Tender Fee and EMD) submission of EMD and tender fee is for the purpose of opening bid. Therefore, only those parties who paid the EMD and tender fee electronically and thereafter in the physical format within the stipulated time is required to be considered the tenderers / bidders, whose bid is required to be opened and considered on merits subject to fulfillment of other terms and conditions, if any. Thus, as per the "nProcure" tender consolidated detials and as per the instruction to bidders regarding tender, after the tender document is downloaded which was free and while submitting the tender electronically, the concerned tenderer / bidder was required to give details with respect to payment of EMD and tender fee elect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of powers under Article 226 of the Constitution are required to be referred to. 9.1. In the case of Michigan Rubber (India) Limited (supra) after considering the various other decisions of the Hon'ble Supreme Court on the point, more particularly, after considering the decisions of the Hon'ble Supreme Court in the case of Jagdish Mandal (supra) and Tejas Constructions and Infrastructure (P) Ltd (supra), in para 23 and 24, the Hon'ble Supreme Court has observed and held as under: "23. From the above decisions, the following principles emerge: (a) the basic requirement of Article 14 is fairness in action by the State, and nonarbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities; (b) fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is perverse. It is also further observed that however, the Constitutional Courts are expected to exercise restraint in interfering with the administrative decision and ought not to substitute its view for that of the administrative authority. It is further observed that mere disagreement with the decision making process or the decision of the administrative authority is no reason for a Constitutional Court to interfere. It is further observed that the threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the Constitutional Court interferes with the decision making process or the decision. 10. Now, so far as submission on behalf of the petitioners that non deposit of entire amount of bid document fee/ bid processing fee cannot be said to be an essential condition relatable to eligibility on merits and non deposit of entire amount of bid document fee / bid processing fee would not render the petitioners disqualified for considering its bid on merits is concerned, it is required to be noted that as such the respondent Corporation considered it as an essential condition. The respondent Corporation applied has the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing EMD by furnishing bank guarantee in format prescribed by GTC of another tender and the bidder took the plea that bank guarantee format of present tender was ambiguous. Rejecting the claim of the bidder and upholding the decision of the employer of rejection of bid for noncompliance of submitting the bank guarantee in prescribed format, the Hon'ble Supreme Court in para 31 to 38, 42 to 44, 47 to 49, 52, 55 and 56 has observed and held as under: [31] We were informed by the learned Attorney General that 9 of the 11 bidders furnished a bank guarantee in the prescribed and correct format. Under these circumstances, even after stretching our credulity, it is extremely difficult to understand why JVC was unable to access the prescribed format for the bank guarantee or furnish a bank guarantee in the prescribed format when every other bidder could do so or why it could not seek a clarification or why it could not represent against any perceived ambiguity. The objection and the conduct of JVC regarding the prescribed format of the bank guarantee or a supposed ambiguity in the NIT does not appear to be fully above board. [32] The core issue in these appeals is not of judicial revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held: "It is indeed unthinkable that in a democracy governed by the rule of law the executive Government or any of its officers should possess arbitrary power over the interests of the individual. Every action of the executive Government must be informed with reason and should be free from arbitrariness. That is the very essence of the rule of law and its bare minimal requirement. And to the application of this principle it makes no difference whether the exercise of the power involves affectation of some right or denial of some privilege." 36. Applying this principle to the present appeals, other bidders and those who had not bid could very well contend that if they had known that the prescribed format of the bank guarantee was not mandatory or that some other term(s) of the NIT or GTC were not mandatory for compliance, they too would have meaningfully participated in the bidding process. In other words, by rearranging the goalposts, they were denied the "privilege" of participation. [37] For JVC to say that its bank guarantee was in terms stricter than the prescribed format is neither here nor there. It is not for the employer or this Court to scrutinize every bank guarantee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... violation. This was quite clearly stated by this Court (following Tata Cellular) in Jagdish Mandal v. State of Orissa, 2007 14 SCC 517 in the following words: "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 griev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonably and in accordance with relevant law could have reached" as held in Jagdish Mandal followed in Michigan Rubber. [48] Therefore, whether a term of the NIT is essential or not is a decision taken by the employer which should be respected. Even if the term is essential, the employer has the inherent authority to deviate from it provided the deviation is made applicable to all bidders and potential bidders as held in Ramana Dayaram Shetty. However, if the term is held by the employer to be ancillary or subsidiary, even that decision should be respected. The lawfulness of that decision can be questioned on very limited grounds, as mentioned in the various decisions discussed above, but the soundness of the decision cannot be questioned, otherwise this Court would be taking over the function of the tender issuing authority, which it cannot. [49] Again, looked at from the point of view of the employer if the Courts take over the decisionmaking function of the employer and make a distinction between essential and nonessential terms contrary to the intention of the employer and thereby rewrite the arrangement, it could lead to all sorts of problems including the one that we are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the requirements of the NIT and the GTC was arbitrary or unreasonable or perverse in any manner whatsoever. " 10.2. In the case of Afcons Infrastructure Limited (supra) in para 50 and after considering earlier decision in the case of Central Coalfields Limited and Another (supra), Dwarkadas Marfatia and Sons (supra), Raman Dayaram Shetty vs. International Airport Authority reported in (1979) 3 SCC 489, it is observed and held that the holder / employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. It is further observed that Constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of terms of the tender conditions. It is further observed that it is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the Constitutional Courts but that by itself is not a reason for interfering with the interpretation given. 10.3. Applying law laid down by the Hon'ble Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be noted that as such the petitioners was not required to deposit the amount of GST. The petitioners and others were required to deposit as such Rs. 21,240/towards bid document fee/ bid processing fee which includes GST amount at 18%. Therefore, there was no question of furnishing any details of GST registration / GSTIN, as now stated by the petitioners. At this stage, it is required to be noted even at the cost of repetition that other two bidders did deposit the entire amount of Rs. 21,240/and thereby complied with the relevant terms and conditions / essential conditions. 11. Now, so far as the submission on behalf of the petitioners that subsequently the petitioners in fact sent the demand draft of difference of amount of bid document fee by sending demand draft subsequently which was returned and even thereafter deposit the amount of GST on reverse charge basis and therefore, there is not loss to the respondent Corporation is neither here nor there. What is required to be considered as payment of entire amount of bid document fee / bid processing fee and the EMD at the relevant time and before the prescribed period mentioned in the tender document. As observed herein above, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocure" requirement. Therefore, merely because the petitioner and others were permitted to download the tender document free of cost, unless and until all the terms and conditions are satisfied, it does not get any right to consider its bid. Mere downloading of tender document cannot be said to be entry at the initial stage to consider such person who has downloaded as bidder / tenderer. 12.2. Now, so far as the submission on behalf of the petitioners that earlier the tender process was canceled as only one bidder was there and therefore, it was the case of single bid and in the present case also two bidders other than petitioners submitted their bids one bidder was found to be ineligible and therefore, only respondent no.2 would be there and it would again be a case of single tender and therefore, again entire tender process is required to be canceled is concerned, the aforesaid has no substance. At the outset, it is required to be noted that as such no such case has been pleaded. However, in the affidavit in reply, it is specifically submitted on behalf of the respondent Corporation that aforesaid shall not be applicable in case of second time tender process. 13.0. Now, so far ..... 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