Supreme Court Upholds Government Tender Decision, Emphasizes Fairness

The Supreme Court set aside the Gujarat High Court's decision and allowed the Government to finalize the tender in favor of the Appellant. The Court emphasized the importance of adhering to tender conditions, the role of judicial review in ensuring fairness without altering contractual terms, and the necessity of transparency in the tender process. The appeal was allowed with no order as to costs.

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Issues Involved:
1. Compliance with Tender Conditions
2. Minimum Wage Calculation and Disclosure
3. Judicial Review and Contractual Terms
4. Transparency and Fairness in Tender Process

Issue-wise Detailed Analysis:

1. Compliance with Tender Conditions:
The core issue in this case revolved around whether the bids submitted by the parties complied with the tender conditions. The tender document specified that commercial bids must strictly conform to the format provided in Annexure 2, which included a stipulation that the salary paid to deployed manpower should not be less than the minimum wage. The court noted, "if the component of salary quoted is less than the minimum wage prescribed, the bid is liable to be rejected." Respondent No.1's bid of Rs. 2,77,68,000/- was below the minimum wage figure of Rs. 3,00,92,346/-, thus making it non-compliant with the tender conditions. Additionally, Respondent No.1's "without prejudice offer" of Rs. 3,00,92,346/- was considered open-ended and not fixed, which violated clause 2.5.6 of the tender that required prices quoted by the bidder to be fixed.

2. Minimum Wage Calculation and Disclosure:
The minimum wage figure was a significant point of contention. Initially, the Labour Department calculated the minimum wage as Rs. 3,00,92,346/-. However, this figure was later revised to Rs. 2,91,00,000/- after considering Data Entry Operators as "semi-skilled workers." The court observed that this revised figure was not disclosed to the parties, which led to further litigation. The High Court's judgment was criticized for treating Respondent No.1’s bid as matching the revised minimum wage calculation, which was seen as creating a new contract between the parties, contrary to established legal principles.

3. Judicial Review and Contractual Terms:
The Supreme Court emphasized that judicial review should not be used to alter the terms of a contract. The court cited precedents such as Poddar Steel Corpn. v. Ganesh Engineering Works and B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd., which underscore the necessity of strict compliance with essential tender conditions. The court stated, "an essential condition of a tender has to be strictly complied with," and it is not within the court's purview to modify these conditions.

4. Transparency and Fairness in Tender Process:
The court noted the lack of transparency in the tender process, particularly the non-disclosure of the revised minimum wage figure. Despite this, the court found no malafides in the Labour Department's calculation. The court referred to Michigan Rubber (India) Limited v. State of Karnataka and Others, emphasizing that judicial review should prevent arbitrariness and irrationality but should not interfere with bona fide decisions made in public interest. The court concluded that the Government of Gujarat's decision to award the tender to the Appellant was lawful and in compliance with the tender conditions.

Conclusion:
The Supreme Court set aside the Gujarat High Court's decision, allowing the Government to finalize the tender in favor of the Appellant. The court highlighted the importance of adhering to tender conditions, the role of judicial review in ensuring fairness without altering contractual terms, and the necessity of transparency in the tender process. The appeal was allowed with no order as to costs.

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