2024 (5) TMI 1624 - HC - Indian Laws

Minor bid defects curable under Rule 61(2); material deficiencies like wrong performance security and omitted RTPP clause are not

HC held that minor bid defects may be cured under Rule 61(2), but material deficiencies cannot. documents with wrong UDIN or wrong financial year were ... Deficiencies in the bid document of the respondent no.1 - material deviation or not - curable under Rule 61 of the Rajasthan Transparency in Public Procurement Rules, 2013 or not - opportunity to a bidder to remove the non-material non-conformities in the bid document - HELD THAT:- From the scheme of Rule 61(2) of the Rules of 2013, it is apparent that while, minor deficiencies in the bid document may either be ignored or, clarification be sought or the bidder may be required to make up the same; the material deficiencies are not permitted to be cured. Now, if the deficiency in the bid document of the petitioner is considered, as is reflected from the material on record, it has submitted certain documents along with bid document either with the wrong UDIN No. or, of the financial year 2021-22 instead of the financial year 2022-23. Rule 61(2) permits the bid evaluation committee to request the bidder to supply the documents like audited statement of account, PAN etc. Use of the words “like” and “etc.” has to be given due importance and purposive interpretation as envisaged by the legislature while enacting the Rules, i.e., not to oust an otherwise eligible bidder from the zone of consideration only on account of non-submission of the documents not amounting to material deviation/omission under Rule 59(3) of the Rules. This Court is of the considered opinion that the documents required by the Bid Evaluation Committee from the petitioner are covered under Rule 61(2) as has rightly been observed even by the second appellate authority in its order impugned dated 11.3.2024 wherein, it has observed “while it can be considered within interpretation power and discretion of the procuring entity to allow to make up for shortfall of the documents.” This Court is satisfied that the promise to furnish the performance security amount of 2.5% instead of 5% and omission of the word “as per RTPP Rules amended time to time” in the financial undertaking submitted by the respondent no.1 amounts to material reservation which could not be permitted to be cured. Submission of the learned counsel for the respondent no.1 that it was on account of a typographical error, is far from convincing. Even otherwise also, no explanation has been offered as to why the material condition of furnishing the prescribed performance security amount “as per RTPP Rules amended time to time” was omitted by it in the financial undertaking. It is neither case of the respondent no.1 that this requirement was totally insignificant nor, it can be assumed to be so in view of the importance attached to it. In view thereof, this Court is satisfied that the bid document submitted by the respondent no.1 suffered from material deficiency which was not curable. Therefore, the second appellate authority erred in putting both the petitioner and the respondent no.1 at equal pedestal and striking down the decision of the Procuring Entity in holding the petitioner responsive and the respondent no.1 nonresponsive as unfair and discriminatory. This Court is also not in agreement with the finding of the second appellate authority that under Rule 60, it was obligatory upon the Procuring Entity to have afforded the respondent no.1 an opportunity to clarify its position qua financial undertaking. The Rule 60 of the Rules of 2013 does not give unqualified or unbridled power to the bid evaluation committee to seek clarification qua each and every deficiency in the bid document. This discretion is qualified by the provisions of sub-Rule (3) and sub-Rule (4) of Rule 60 - the bid document submitted by the respondent no.1 suffered from the material reservation and in view thereof, it could not have been made responsive resorting to provisions of either Rule 59 or of Rule 60 of the Rules. Petition allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the shortfall in documents submitted by a bidder (wrong UDIN or documents of an earlier financial year) constitute a material deviation, reservation or omission under Rule 59 of the Rajasthan Transparency in Public Procurement Rules, 2013 or are non-material and curable under Rule 61(2). 2. Whether submission of a financial undertaking stating an incorrect rate of performance security (2.5% instead of 5%) and omission of the phrase 'or as per RTPP Rules amended time to time' constitutes a material reservation rendering the bid non-responsive under Rule 59. 3. Whether Rule 60 (clarification of bids) obliged the procuring entity or bid evaluation committee to permit curing of the alleged material reservation/typographical error in the financial undertaking so as to make an otherwise unresponsive bid responsive. 4. Whether the second appellate authority erred in treating both bidders equally (finding unfair discrimination) and in cancelling the earlier responsiveness determination and directing re-tender, where one bidder's deficiency was held non-material and the other's was material. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Curability of documentary shortfalls (wrong UDIN / earlier financial year documents) Legal framework: Rules 59, 60 and 61 of the Rajasthan Transparency in Public Procurement Rules, 2013 govern determination of responsiveness, clarification of bids, and treatment of non-material non-conformities. Rule 61(2) permits the committee to request bidders to submit necessary information or documents (like audited statements, PAN, etc.) within a reasonable time; Rule 59(3) defines material deviations/reservations/omissions. Precedent Treatment: The judgment does not rely on or overrule any prior authority; the analysis is statutory and purposive. Interpretation and reasoning: The use of 'like' and 'etc.' in Rule 61(2) must be given purposive interpretation to prevent ousting otherwise eligible bidders for non-material omissions. The alleged defects (wrong UDIN or submission of previous year documents) fall within the class of documents (audited accounts, PAN, etc.) that Rule 61(2) contemplates may be furnished post-bid. Such deficiencies do not affect the scope, quality or performance of the procurement nor limit the procuring entity's rights, and thus do not amount to material deviation under Rule 59(3). Ratio vs. Obiter: Ratio - The shortfall in the form of incorrect UDIN or submission of prior-year audited documents is a non-material non-conformity curable under Rule 61(2). Conclusion: The bid evaluation committee correctly could permit the bidder to cure these documentary shortfalls; they did not constitute material deficiencies. Issue 2 - Materiality of incorrect financial undertaking (performance security 2.5% v. 5% and omission of RTPP clause) Legal framework: Rule 59(2)-(5) read with Rule 61 and Rule 60 control what deviations are material and what may be cured; a 'material reservation' is one that affects bidder obligations or the procuring entity's rights under the proposed contract. Precedent Treatment: No precedential authorities were applied; the Court applied statutory tests in Rule 59. Interpretation and reasoning: A financial undertaking promising to furnish a specified performance security is an important term that affects the bidder's obligations and the security available to the procuring entity. Substituting 2.5% for the prescribed 5%, and omitting the express caveat 'as per RTPP Rules amended time to time,' constitutes a material reservation within the meaning of Rule 59 because it alters a significant contractual commitment and could, if accepted, affect the procuring entity's rights and competitive equality. A bare assertion of typographical error, absent satisfactory explanation, does not convert a material reservation into a curable non-material omission. Ratio vs. Obiter: Ratio - Submission of an undertaking proposing a lower performance security amount and omitting a material contractual qualifier is a material reservation and renders the bid non-responsive; it is not curable under Rule 61. Conclusion: The respondent's financial undertaking amounted to a material reservation; the bid was rightly held non-responsive on that ground and could not be made responsive by clarification or cure. Issue 3 - Scope and limits of Rule 60 (clarification of bids) in relation to material deficiencies Legal framework: Rule 60 allows the bid evaluation committee to seek written clarifications to assist examination, evaluation and comparison, but sub-rules (3) and (4) forbid seeking or permitting changes in prices or the substance of bids or changes that would make an unqualified/unresponsive submission responsive. Precedent Treatment: No external authorities invoked; statutory construction applied. Interpretation and reasoning: Rule 60 is a qualified power and cannot be used to permit substantive changes that cure material deviations/reservations. Where a bid suffers from a material reservation (as with the incorrect financial undertaking), Rule 60 cannot be invoked to effectuate a substantive change that would alter the bidder's obligations and make a non-responsive bid responsive. Therefore, there was no obligation on the procuring entity to permit curing of a material reservation under Rule 60. Ratio vs. Obiter: Ratio - Rule 60 does not authorize curing of material deviations or reservations; its clarificatory power is limited and cannot be used to make an otherwise unresponsive bid responsive. Conclusion: The bid evaluation committee was not obliged under Rule 60 to allow rectification of the material deficiency in the financial undertaking. Issue 4 - Validity of appellate authority's equal-treatment finding, cancellation of work order and direction to re-tender Legal framework: The Act of 2012 (Rajasthan Transparency in Public Procurement Act) and the Rules empower remedial measures where procurement process is anti-competitive or defective; appellate authority's powers include remedying unfair processes but must do so within legal boundaries and based on correct characterization of responsiveness. Precedent Treatment: No precedent applied; analysis based on statutory scheme and facts. Interpretation and reasoning: The second appellate authority treated the two bidders as similarly positioned and set aside the procuring entity's responsiveness determination as unfair, effectively curing the respondent's material reservation. Given the Court's finding that one bidder's deficiencies were non-material/curable while the other's deficiency was material/uncurable, placing both bidders on an equal footing was legally impermissible. The appellate authority also directed cancellation/re-tender though no specific prayer was made for such relief; however, where an order in appeal was passed during pendency of appeal and work order was issued, the appellate authority may consider remedies under the Act for anti-competitive or defective procurement. Still, the core error was treating a material reservation as curable and faulting differential treatment when differential treatment was legally justified. Ratio vs. Obiter: Ratio - An appellate authority errs in equating bidders and ordering remedial measures if that treatment rests on incorrectly classifying a material reservation as curable; differential treatment is permissible where one bid is legally responsive and the other is not. Conclusion: The appellate authority's order allowing the appeal on the ground of unequal treatment and overturning the procuring entity's responsiveness determination was unsustainable; the impugned order was quashed and set aside. Final Disposition (Court's conclusion) The writ petition is allowed: the shortfall in documentary submissions by the successful bidder was non-material and curable under Rule 61(2); the unsuccessful bidder's financial undertaking contained a material reservation (incorrect performance security and omission of the RTPP clause) and was non-curable; Rule 60 could not be used to cure that material reservation; the second appellate authority erred in equating the bidders and in its resultant order; the appellate order dated 11.3.2024 is quashed and set aside.