Supreme Court Overturns Tender Decision, Emphasizes Fairness in Government Contracting

The Supreme Court found the rejection of the appellant's tender and acceptance of respondent No. 4's tender to be arbitrary and discriminatory. The Court held that respondent No. 4's tender did not conform to the specified requirements, and the 10% price preference given to Government undertakings was unjustified. Consequently, the Court allowed the appeal, overturned the High Court's decision, and instructed the respondents to accept the appellant's tender, emphasizing the importance of fairness and adherence to legal principles in government contracting.

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Issues Involved:
1. Whether the rejection of the appellant's tender and acceptance of respondent No. 4's tender was arbitrary, discriminatory, and contrary to the principles of law.
2. Whether the tender submitted by respondent No. 4 was in consonance with the requirements of the tender form.
3. Whether the 10% price preference given to Government undertakings was justified and in conformity with the tender notice.

Summary:

Issue 1: Arbitrary and Discriminatory Rejection of Tender
The appellant, a long-standing supplier of fresh buffalo and cow milk, submitted a tender for the supply of fresh milk as per the tender notice issued by respondent No. 2. Despite being the lowest bidder, the appellant's tender was rejected in favor of respondent No. 4, who offered pasteurized milk, not contemplated by the tender notice. The Supreme Court found that the rejection of the appellant's tender was arbitrary and discriminatory. The Court emphasized that "the Government cannot act arbitrarily at its sweet will" and must conform to "rational, relevant and non-discriminatory standard or norm."

Issue 2: Non-Conformance of Respondent No. 4's Tender
The tender notice specifically demanded the supply of fresh buffalo or cow milk. Respondent No. 4 submitted a tender for pasteurized milk, which did not meet the specified requirements. The Supreme Court held that the acceptance of respondent No. 4's tender was unjustified as it was not in conformity with the tender notice. The Court stated, "If the tender forms submitted by any party is not in conformity with the conditions of the tender notice the same should not have been accepted."

Issue 3: 10% Price Preference to Government Undertakings
The tender notice did not indicate any preference for Government undertakings except for an exemption from depositing earnest money and tender form fee. Despite this, a 10% price preference was given to respondent No. 4, which the Supreme Court found to be arbitrary and in violation of the tender notice terms. The Court observed, "If the terms and conditions of the tender have been incorporated in the tender notice itself and that did not indicate any preference to the Government undertakings of giving 10 per cent price preference to Government undertaking, the authority concerned acted arbitrarily in allowing 10% price preference to respondent No. 4."

Conclusion:
The Supreme Court allowed the appeal, set aside the High Court's order, and directed the respondents to accept the appellant's tender. The Court concluded that the rejection of the appellant's tender and the acceptance of respondent No. 4's tender were arbitrary, discriminatory, and contrary to the principles of law. The judgment emphasized the need for the Government to act fairly and justly even in contractual matters.

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