TaxTMI 
TaxTMI 
2001 (1) TMI 921
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....oject (for short, the Project), at an estimated cost of about Rs.3,188.9 crores with an installed capacity of 900 M.W. For funding that project the Central Government entered into a loan agreement with the Overseas Economic Cooperative Fund now Japan Bank of International Cooperation (for short, the J.B.I.C.). The Project is proposed to be completed in six Lots of which Lot No.4 relates to main civil works. For carrying out the work of Lot No.4, the appellant, after complying with the formalities and after satisfying itself of the pre- qualification of the bidders, invited revised tenders (hereinafter referred to as, the tenders). The bids were to be submitted on or before April 27, 1998. Three bidders are now in fray. The first is a consortium of four companies (respondent Nos.1 to 4), the second is M/s. Taisei Corporation (respondent No.10) and the third is M/s. Skanska International (respondent No.11). They submitted their bids along with the summary sheets thereof. On September 8, 1999 the bids were opened in the presence of the representatives of the bidders and they were read out; the bid of respondent Nos.1 to 4 was Rs.647.90 crores, of respondent No.11 was Rs.691.22 crores ....
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.... date of the order. Against the said order of the learned Single Judge, the aforementioned appeals and cross-objections were filed both by the appellant as well as by respondent Nos.1 to 4. A Division Bench of the High Court at Calcutta, by the impugned common judgment, dismissed the appeals and the cross-objections upholding the order of the learned Single Judge, directed the appellant to permit respondent Nos.1 to 4 to correct the errors in the bid documents and then consider their bid along with the other bids and take a decision objectively and rationally. Mr. Altaf Ahmed, the learned Additional Solicitor General, appearing for the appellant, has submitted that the appellant is bound by the ITB and it acted accordingly. The letter dated October 25, 1999 of respondent Nos.1 to 4 did not indicate the errors in the bid documents and the correction sought by them. Even their letter of December 17, 1999 did not specify in any detail the desired corrections, therefore, the appellant proceeded to evaluate the bid in terms of ITB. The actual scope of correction sought by respondent Nos.1 to 4 came to light in their representation dated December 23, 1999, filed after approaching the Hig....
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.... spectator and the High Court, being both a court of law and equity, had rightly directed the appellant to permit correction of the mistakes by respondent Nos.1 to 4. It was submitted that having regard to the nature of the mistakes, the appellant itself ought to have sought clarification from the said respondents under Clause 27 of ITB instead of evaluating the bid on the basis of an unintended unit rate to reach an astonishing figure which was wholly disproportionate to the cost of the Project. His contention is that once the total bid price is maintained, the unit rate is a matter of arithmetic exercise which should have been corrected by the appellant; further the mode of payment by the appellant for the work done is not on the basis of each unit but on the basis of bid price. Accepting that the bid price is unalterable, the unit rate should be regarded as adjustable. It was also argued by Mr. Chidambaram that there was no mistake in giving the unit rate as such; the mistake was in giving the conversion equivalent in US Dollars and, therefore, the correction not being the one falling under Clause 29 of the ITB was rightly permitted to be corrected by the High Court. Finally, he....
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....tative may, at his discretion, ask any or all bidders for clarification of his/their Bids, including breakdowns of unit rates, technical information, documents and materials after opening of the Bid. The request for clarification and the response shall be in writing or by cable, but no change in the price or substance of the Bid after opening the Price Bid shall be sought, offered or permitted except as required to confirm the correction of arithmetic errors discovered by the Employers authorised representative in the evaluation of the bids in accordance with Clause 29 of ITB. 29. Correction of Errors 29.1 Bids determined to be substantially responsive will be checked by the Employers authorised representative for any arithmetic errors. Errors will be corrected by the Employers authorised representative as follows: (a) where there is a discrepancy between the amounts in figures and in words, the amount in words will govern; and (b) where there is a discrepancy between the unit rate and the line item total resulting from multiplying the unit rate by the quantity, the unit rate as quoted will govern. (c) Where there is a discrepancy between figures and in words of an unit....
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....in the Form of Bid. The authorised representative has to communicate the correction of errors to the bidder in writing for his written acceptance within seven days from the date of issue of such communication. It also provides that such corrections shall be binding upon the bidder and in the event of the bidder not accepting the corrected amount of bid, his bid will be rejected and the bid security is liable to be forfeited in accordance with sub- clause 17.6 (b) of the ITB. Now adverting to the Annexures, the statement of B.Upper Dam price bid submitted by respondents 1 to 4 discloses that with reference to each work item the quantity thereof is mentioned. The bidder is expected to give the unit price in Indian Rupee as well as in U.S. Dollar both in figures as well as in words and enter the line item total resulting from multiplying the unit rate by the quantity. A plain reading of sub-clause (b) of Clause 29.1, referred to above, leaves no room for doubt that once the unit rate and line item total are filled in by the bidder, both the quoted unit rate and item total are treated as unalterable at the instance of the bidder though arithmetic errors in arriving at line item total b....
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....hing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. In the light of these principles, we shall determine the aforementioned points. Taking up the first question first, it will be necessary to understand the nature of errors, correction made by the appellant and the relief sought by respondent Nos.1 to 4 in respect of 37 items in the bid documents. We shall extract here, as a sample of errors in 37 items, the price bid submitted by respondent Nos.1 to 4 relating to B. Upper Dam found on page No.70 of Vol.IV of the documents (marked A). It reads thus: Annexure B. Upper Dam A Price Bid as Submitted Item Work Item Esc. Coeff. Remarks Unit Quantity Unit Price Amount Clause In Specifica- tions INR US$ Figure Words 1.Care of river 02 Rock Excavation 3,384.64 Cum 1000 148.08 148.08 148,077.97 7.4 One hundred forty-eight point nil eight One hundred forty-eight point nil eight 03 Impervious Core Embankment 7,506.71 &n....
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.... December 17, 1999. Respondent Nos.1 to 4 seek correction of the entries in the third line also which is the first line against work item Impervious Core Embankment. It is plain that against this Work Item the entries in the first line are quite different. The quantity column is blank, though 3900 should have been noted therein. In that line also the entries in the first line are repeated. There the correction sought is that the figure column should read as 84.21 both in figure and words. It is stated that in the second line the unit rate 1.92 both in figures and words, represents U.S. Dollar equivalent of 84.21 Indian Rupee which is now sought to be inserted. The errors in other 36 items are said to be similar. Had the errors been confined to these aspects, it would not have resulted in material change in the unit rate because the unit rate in one of the permissible currencies is correctly given and there will be no discrepancy as envisaged in sub-clause (b) of Clause 29.1. It would not really be a case of incorporating a new unit rate but a case of either recording U.S. Dollar equivalent of the unit rate already noted in Indian Rupee or vice versa as given in statement B ab....
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....n line 1 Serial Item 2 to the next two succeeding lines i.e. the computer has overwritten the unit rates in US$ terms for the serial item no.2 and the INR unit rates for the immediately succeeding serial item. However, the figures appearing the amount column of the BOQ for the said lines/items in which the above mentioned errors have occurred are the correct tendered figures both in US$ terms as well as INR terms. II. Further the BOQ quantities stated in the quantity column of serial item no.3 on each and every page has been erased. Enclosed is an attachment which would show the applicable unit rates (in the lower half) and the unit rates which were overwritten due to computer failure (in the upper half). It is an admitted position that at the time of opening of the tender on 8th September 1999, our bid was the lowest at Rs.647.90 crores. The bid of Skanska was Rs.691.22 crores and that of Taisei was Rs.726.50. We confirm that we have all along maintained and still maintain the said bid price of Rs.647.90 crores. However, we have reasons to believe that you have chosen to ignore our said letter and have proceeded to evaluate our price bid by an illogical and mis-applica....
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....Work Items, the first line denotes 50 per cent of the quoted unit rate in Indian Rupee and the second line represents the other 50 per cent of the unit rate in U.S. Dollar. According to him the actual rate quoted for quantity 1000 is the sum total of two lines i.e. 148.08 in Indian Rupee plus 3.38 in U.S. Dollar. This is not noted either in statement A or in statement B. Be that as it may, quoting the unit rate 50 per cent in Indian Rupee and 50 per cent in U.S. Dollar is not provided in the ITB. Nothing is brought to our notice to justify splitting of unit rate in that ratio. There is no indication of this fact in the price bid documents submitted by the said respondents to explain that the unit rate has been so quoted. This is also not in conformity with Clause 15 of ITB which, as noted above, requires a bidder to quote unit rates and prices in Indian Rupee and either in U.S.Dollar or Japanese Yen. The learned Additional Solicitor General, in our view, is right in his submission that till the representation was made by the said respondents on December 23, 1999, after the interim direction of the High Court, the appellant was unaware of the quoted unit rate being in such proportio....
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....t will encourage and provide scope for discrimination, arbitrariness and favouritism which are totally opposed to the Rule of law and our Constitutional values. The very purpose of issuing Rules/instructions is to ensure their enforcement lest the Rule of law should be a casuality. Relaxation or waiver of a rule or condition, unless so provided under ITB, by the State or its agencies (the appellant) in favour of one bidder would create justifiable doubts in the minds of other bidders, would impair the rule of transparency and fairness and provide room for manipulation to suit the whims of the State agencies in picking and choosing a bidder for awarding contracts as in the case of distributing bounty or charity. In our view such approach should always be avoided. Where power to relax or waive a rule or a condition exists under the Rules, it has to be done strictly in compliance with the Rules. We have, therefore, no hesitation in concluding that adherence to ITB or Rules is the best principle to be followed, which is also in the best public interest. For all these reason, in such a highly competitive bid of global tender, the appellant was justified in not permitting respondent N....
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....fect and granting the injunction prayed for. But on appeal the decree was reversed by the circuit court of appeals. On further appeal to the Supreme Court of U.S.A., it was observed that both the courts below found that there was a mistake and while the trial court opined it was clear, explicit and undisputed, the court of appeal was of the view that it was not a mistake in any legal sense but was a negligent omission arising from an inadequate calculation of the cost of the work and held that the mistake was not sufficient to preclude a claim for relief if the mistake justified it. The Supreme Court relied on the following observation in an earlier judgment of that Court in Hearne Vs. Marine Ins. Co. 22 L ed. 305, A mistake on one side may be a ground for rescinding, but not for reforming, a contract. Where the minds of the parties have not met there is no contract, and hence none to be rectified. And it was concluded that the last two propositions might be claimed to be pertinent to that case even though the transactions between the parties be considered as a completed contract and held that the action of the City of Rochester in awarding one contract to another bidder and forcin....
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....Vs. Borough of Fairview [304 N.J. Super 425] to justify the claim for rectification of mistakes. In that case, the Borough of Fairview invited tenders. Spina and one Tomaro participated in the bid. The bid was on a unit price basis and the proposals were submitted on Forms supplied by the Borough. The bid specifications provided, inter alia : in the event there is a discrepancy between the unit price and the extended total, the unit price shall prevail. The Borough reserved the right to waive any informality if deemed in the best interests of the owner. On the evening when the bids were opened, Spina discovered that its secretary had erroneously indicated the unit price for one of the items as 400 dollars per square yard though it should have been 4 dollars per square yard as reflected in the total bid for that work. Spina faxed the Borough indicating that the intended unit price was 4 dollars per square yard. On the basis of 400 dollars per square yard Spinas bid was calculated which obviously worked out far higher than the intended bid amount. Taking note of that amount the Borough awarded the contract to Tomaro. Spina instituted action claiming that the Borough arbitrarily faile....
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....to the lowest tenderer which is in public interest. The principle of awarding contract to the lowest tenderer applies when all things are equal. It is equally in public interest to adhere to the rules and conditions subject to which bids are invited. Merely because a bid is the lowest the requirements of compliance of rules and conditions cannot be ignored. It is obvious that the bid of respondent Nos.1 to 4 is the lowest of bids offered. As the bid documents of respondent Nos.1 to 4 stands without correction there will be inherent inconsistency between the particulars given in the annexure and the total bid amount, it cannot be directed to be considered along with other bid on the sole ground of being the lowest. We find no force in the submission that as under Clause 14.2 items against which no rate or price is entered by the bidder will not be paid by the employer when executed and shall be deemed covered by the other rates and prices in the bill of quantities, the unit price in items containing errors be ignored and the bid be considered on the basis of total price bid which is the lowest. In our view, there is a basic distinction between a case where against some items no rate....