2018 (5) TMI 365 - HC - GST

Court Dismisses Writ Petitions on Tender Process, Finding No Breach of Conditions

M/s. KOTHAMANGALAM AGGREGATES Versus KERALA STATE ELECTRICITY BOARD VYDYUTHI BHAVAN

The court dismissed the writ petitions, finding no arbitrariness, illegality, malafides, or unfairness in the tender process. It concluded that there was ... Supply of 8M and 9M Pre Stressed Concrete Poles (PSC Poles) to the Electrical Circles - submission of tenders - it was the case of petitioner that the 3rd respondent has blatantly violated the conditions stipulated in the tender document - adjustment of the GST incurred by the petitioner at the time of purchase of the raw-materials towards GST payable at the time of sale of Poles - as per the petitioner, the 3rd respondent has violated the conditions, by submitting a certificate along with pre-qualification documents, stating that the effect of GST credit to be availed has been taken into account in the quoted price. Held that: - even if Ext.P7 is issued by the 3rd respondent, that will not have any bearing or implication with respect to the terms and conditions of the contract, and respondents 1 and 2 are entitled to overlook the same and consider the bid submitted by the respective parties. Clause 14 of Section-A stipulated that: “The indication of price anywhere else other than in the price bid (BOQ) will render the bid invalid and will be liable to be rejected”. Therefore, the said stipulations are also specific and clear to the effect that, what is prohibited is indication of price anywhere else other than in the price bid. Therefore, merely Ext.P7 communication is issued by the 3rd respondent, “that the effect of GST credit to be availed has been taken in account in the quoted price” will not in any manner interferes with clauses 14 and 15 of Section-A. Clause 21 stipulates that: “No deviations will be accepted”. There is no case for the petitioners that there is any deviation on the part of the 3rd respondent from the Instructions to Bidders, special conditions of contract or general conditions of contract. So far as Clause B.04 is concerned, it is a flexible condition. Even assuming that petitioner is not having a location within the Electrical Circle, that will not in any manner interferes with the conditions incorporated thereunder. The impracticability of Clause B.20 regarding tax, put forth by the petitioners cannot be legally sustained since a clear method is worked out in the special conditions of contract. The petitioners could not make out any case of arbitrariness, illegality, malafides or unfairness so blatant and patent, so as to interfere with the evaluation made by the 1st and 2nd respondents with respect to the successful bidder, under Article 226 of the Constitution of India - Moreover, it is a commercial contract and the master of the contract is at liberty to enjoy reasonable flexibility in choosing its partner, taking also into account the price bid in the larger public interest, which may not in any manner interferes with the fundamental rights guaranteed under Part III of the Constitution. Petition dismissed - decided against petitioner. Issues Involved:1. Violation of tender conditions by the third respondent.2. Legality and impact of Clause B.20 regarding GST.3. Submission of additional documents by the third respondent.4. Adequacy of facilities and compliance with Clause B.04 by the third respondent.5. Maintainability of the writ petition.Detailed Analysis:1. Violation of Tender Conditions by the Third Respondent:The petitioner argued that the third respondent violated the conditions stipulated in the tender document by submitting documents not called for in the tender notice and indicating the price details in places other than the designated price bid. The petitioner contended that this should have led to the disqualification of the third respondent's bid. However, the court found that the additional documents submitted by the third respondent did not interfere with the tender conditions. The court noted that respondents 1 and 2 could ignore any extraneous documents submitted by the bidders, and the inclusion of such documents did not violate the tender conditions.2. Legality and Impact of Clause B.20 Regarding GST:The petitioner highlighted an anomaly in Clause B.20 of the special conditions of the contract, which deals with taxes and the passing of input tax credit benefits to KSEBL. The petitioner argued that the clause was impractical due to variations in GST rates and input tax credits. However, the court observed that Clause B.20 was formulated to ensure fair and transparent conditions for procuring materials. The court also noted that the special conditions of the contract provided a clear methodology for price variations, which addressed the petitioner's concerns about GST rate changes.3. Submission of Additional Documents by the Third Respondent:The petitioner claimed that the third respondent submitted additional documents, including a certificate stating that the effect of GST credit was considered in the quoted price, which was not permissible under the tender conditions. The court found that the inclusion of such documents did not violate the tender conditions. The court emphasized that any communication from a bidder that was not expressly accepted by the purchaser could be ignored. Therefore, the third respondent's submission of additional documents did not invalidate their bid.4. Adequacy of Facilities and Compliance with Clause B.04 by the Third Respondent:The petitioner argued that the third respondent did not have sufficient facilities, such as water tanks for curing poles and adequate molds for manufacturing poles, as required by Clause B.04 of the special conditions of the contract. The court found that Clause B.04 was flexible and did not mandate the immediate availability of all facilities. The court noted that the third respondent was making arrangements to comply with the yard requirements within the Electrical Circle concerned, and this issue could be addressed after the award of the bid.5. Maintainability of the Writ Petition:Respondents 1 and 2 argued that the writ petition was not maintainable because the petitioner had agreed to approach civil courts in Thiruvananthapuram for disputes arising from the contract. The court did not explicitly address this argument in the judgment but proceeded to evaluate the merits of the petitioner's claims. Ultimately, the court found no arbitrariness, illegality, malafides, or unfairness in the evaluation of the bids by respondents 1 and 2. The court emphasized that the master of the contract has reasonable flexibility in choosing its partner, considering the price bid in the larger public interest.Conclusion:The court dismissed the writ petitions, concluding that the petitioners failed to establish any case of arbitrariness, illegality, malafides, or unfairness in the tender process. The court affirmed that there was no fundamental breach of the tender conditions by the third respondent, and the evaluation by respondents 1 and 2 was in line with the principles of fairness and transparency.