2019 (9) TMI 271 - HC - Indian Laws

Court sets aside contract award due to irregularities in tender process, orders fresh procurement.

The Court found irregularities in the tender process, including non-responsiveness of the winning bid and incorrect addition of charges. Consequently, the ... Floatation of an e-tender no. 30/EQ/2018 dated 22.3.2018 for supply, installation and maintenance of 74 videoscopes at various field formations of CBEC - It is the case of the petitioner that the price sheet of the bidders disappeared form the portal of the Authority from 8.8.2018 till 6.12.2018 - It is also the contention of the petitioner that the bid of respondent No. 2 was non-responsive on account of column No. 3 relating to custom duty in the Price Schedule Bid having been left blank, and thus the same ought to have been rejected - HELD THAT:- There is no dispute on the basic facts viz. the nature of tender being was an Etender for supply, installation and maintenance on 74 Nos. videoscope; opening and closing date of the tender; the place of the opening of tender and the tender conditions. At this stage reference is required to be made to the relevant clauses in Section II of the General Instructions to the Tenderers (GIT) which was a part of the e-tender Inquiry Document. ‘Contract Price’ has been defined in clause 2.2.1 to mean the price provided in clause 2.12.1 of Section II of the tender document. ‘L-1’ means the tenderer whose tender is the lowest as per clause 2.2.1(xi). Having traversed through the different clauses relating to the terms and conditions governing the present tender, we find that the conditions mandate that the tenderers must read the Instructions given in Form 1 carefully before the tender forms are filled and the bids are submitted. The bidding process was a two-stage process, the first stage being the Technical Bid and the second being a Price Bid. Technically valid and responsive tenders could only be opened for Price Bids. After opening of the Price Bid, the tender was to be awarded to the lowest bidder (L-1). Section VIII provides two proformas in Part I and Part II. Part I relates to the price schedule while part II relates to CCAMC. A perusal of the price bids submitted by the petitioner and respondent No. 2 respectively shows that while the petitioner has claimed the custom duty, respondent No. 2 has not added the duty to the price bid. Column No. 3 of the proforma in Part-I of Section VIII therefore only has a blank in case of the bid of respondent No.2. We may at this stage refer to paras 3 and 5 of the Instruction to tenderers mentioned in Form -1 of Section X, as quoted by us above. It is clear from a reading of the Instructions that the tenderer was required to fill in all columns of the tender form, and if the tender form was incomplete, the same ought to have been rejected. In our view, when respondent No. 2 left the column of custom duty blank, this was an incomplete form and ought to have been rejected as non-responsive in terms of the above mentioned instructions to tenderers. It is evident that it is the absence of the two factors that the contract price of respondent No. 2 has become lower than the petitioner, as rightly contended by learned senior counsel for the petitioner. Thus, the CAMC charge, is not the only factor which has resulted in the price difference between the two parties. In fact, as noted above the CAMC charges of the petitioner are on the lower side. Thus, the contention of respondent No. 1 that the price difference is on account of the CAMC charges which has determined the Net Cash Outflow and has resulted in respondent No. 2 being lower deserves to be rejected. There is complete arbitrariness in the decision making process by which the tender has been awarded to respondent No. 2. This apart, respondent No. 1 has also violated various conditions of the tender as well as the circular issued by the concerned Department - Having come to this conclusion, we quash and set aside the Letter of Award dated 12.11.2018 issued in favor of respondent No. 2. No other relief has been claimed by the petitioner in the present writ petition. Petition allowed. Issues Involved:1. Validity of the award of the contract to respondent No. 2.2. Compliance with tender conditions and procedures.3. Calculation of the lowest bidder (L-1).4. Non-responsiveness of the bid due to incomplete submission.5. Addition of notional landing charges.Detailed Analysis:1. Validity of the Award of the Contract to Respondent No. 2:The petitioner challenged the award of the contract to respondent No. 2, arguing that the price quoted by the petitioner was lower than that of respondent No. 2, resulting in a loss of Rs. 61.30 lakhs to the Government Exchequer. The petitioner sought the setting aside of the impugned order awarding the contract to respondent No. 2 and requested the original records pertaining to the contract to be placed before the Court.2. Compliance with Tender Conditions and Procedures:The petitioner contended that respondent No. 2's bid was non-responsive due to the omission of the custom duty amount in the price schedule, which should have led to its rejection. The tender conditions required all columns of the tender form to be filled, and incomplete forms were liable to be rejected. The Court agreed with this contention, stating that leaving the column of custom duty blank rendered the bid incomplete and non-responsive.3. Calculation of the Lowest Bidder (L-1):The methodology for determining the lowest bidder (L-1) was based on the net cash outflow from the purchaser in the first seven years after commissioning, as per Clause 2.29.2 of the tender conditions. The net cash outflow was calculated by adding the contract price of the system and the sum of discounted annual maintenance charges (CCAMC) for five years. The Court found that respondent No. 1 had incorrectly added 1% notional landing charges to the petitioner's bid, contrary to the Supreme Court's decision in M/s Wipro Ltd. and the Department of Revenue's circular. This incorrect addition affected the determination of the L-1 bidder.4. Non-responsiveness of the Bid Due to Incomplete Submission:The Court held that respondent No. 2's bid was non-responsive due to the blank column for custom duty, which violated the tender conditions requiring all columns to be filled. The Court emphasized that allowing such ambiguities in bids would undermine the fairness and transparency of the tender process.5. Addition of Notional Landing Charges:The Court found that respondent No. 1 had wrongly added 1% notional landing charges to the petitioner's bid, contrary to the Supreme Court's decision and the Department of Revenue's circular. This addition was illegal and affected the determination of the L-1 bidder. The Court noted that if notional landing charges were to be added, they should have been added to respondent No. 2's bid as well, given that respondent No. 2 had subsequently imported the videoscopes.Conclusion:The Court concluded that there was complete arbitrariness in the decision-making process by which the tender was awarded to respondent No. 2. The Court quashed and set aside the Letter of Award dated 12.11.2018 issued in favor of respondent No. 2. The official respondent was given the liberty to advertise a fresh tender for the procurement of the videoscopes, with both parties being free to participate in the new tender if advertised.Orders:The writ petition was allowed, and the applications for stay were disposed of accordingly.