2016 (7) TMI 1384 - SC - Indian Laws

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 ... Bidding process - finalization of tender - non disclosure of minimum wage figure - Held that:- 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. 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. As 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 ₹ 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 ₹ 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. Issues Involved:1. Compliance with Tender Conditions2. Minimum Wage Calculation and Disclosure3. Judicial Review and Contractual Terms4. Transparency and Fairness in Tender ProcessIssue-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.