AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (11) TMI 809
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.... for an appropriate writ, direction and order to quash and set aside the impugned decision of the respondent Corporation to disqualify the petitioner no.1 treating its bid as nonresponsive and ineligible on the sole ground that while submitting the bid the petitioner no.1 has not paid Goods and Services Tax (hereinafter referred to as the "GST") to the respondent with the Bid/ Document Fee. 3.0. The facts leading to the present Special Civil Application in nutshell are as under: 3.1. That the respondent Corporation has issued a Request for Proposal (hereinafter referred to as "RFP") for "Development of Integrated Group Housing Facility at Dumbhal Tenements of FP No. 18/A TPS No. 33 (Dumbhal) on PPP basis under Redevelopment of Public Housing Scheme2016". As per the RFP, initially the online bid was to be submitted by 29.03.2017 and the physical bid was to be submitted by 07.04.2017. However, the aforesaid deadlines came to be extended upto 22.06.2017 for the online submission and 01.07.2017 for the physical submission. One of the conditions of the FIR RFP required the bidder to make payment of Rs. 18,000/towards "Bid/ Document Fee". Pursuant to the first RFP the petitioner no....
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....ST @18% on reverse charge basis as per the provisions of Central Goods and Service Tax, 2017, petitioner did not deposit 18% GST. 3.2. It is the case on behalf of the petitioners that thereafter, during the internal audit of the petitioner no.1, the auditor enquired from the concerned office of the petitioner no.1 about the SAC for the service in respect of which the respondent had demanded GST @ 18% since the respondent, in case of other tenders invited by it, had demanded GST at different rates. It is the case on behalf of the petitioners that pursuant thereto, upon inquiry from the respondent Corporation, it came to be informed to the petitioner no.1 that the amount of GST @ 18% was paid along with bid / document fee. It is the case on behalf of the petitioners that in view thereof, despite having made a provision for the payment of GST on reverse charge basis as per law, the petitioner no.1 out of abundant caution, addressed a letter dated 19.09.2017 and submitted a Demand Draft No.052513 dated 19.09.2017 towards the said amount of GST as per the information provided by the respondent. At this stage, it is required to be noted that at the time of submitting bid the petitioners ....
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....pal Corporation - bid submitted by the petitioner disqualified at technical base solely on the ground that the petitioners had not deposited the bid/ document fee with 18@ GST and thereby to that extent the petitioners were not responsive of the eligibility criteria / terms and conditions of the tender document / notice that bidder was required to deposit the bid / document fee Rs. 18000/with GST @18%, the petitioners have preferred present Special Civil Application under Article 226 of the Constitution of India. 4.0. Shri Mihir Joshi, learned Senior Advocate has appeared on behalf of the petitioners, Shri Prashant G Desai, learned Senior Advocate has appeared with Shri Dhawal Nanavati, learned advocate for the respondent Corporation and Shri Mihir Thakore, learned Senior Advocate has appeared on behalf of the respondent no.2. 5.0. Shri Mihir Joshi, learned counsel for the petitioner has vehemently submitted that in the facts and circumstances of the case action of the respondent Corporation in considering the petitioner disqualified at technical stage on the sole ground of non deposit / payment of bid / document fee of Rs. 21,240/with GST @18% is absolutely illegal and most ....
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....fillment of essential conditions of the eligibility. It is submitted that requirement in the tender notice can be classified into two categories those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary to the main object to be achieved by the condition. It is submitted that in the first case the authority issuing the tender may be required to enforce them rigidly, however in the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases. 5.4. It is further submitted by Shri Mihir Joshi, learned counsel for the petitioners that even otherwise the conditions of payment of Bid/ document / tender fees can neither be said to be a condition of eligibility nor the condition for evaluation. It is submitted that the charges for production of bid document per se is unrelated to bid evaluation. It is submitted that therefore, non payment of aforesaid amount in full (with GST @18% ) cannot be said to be non fulfillment / non compliance of the essential condition relating to eligibility and / or evaluation of the bid on merits. 5.5. It is....
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....d and therefore, there shall not be any competition and therefore, the public interest will suffer. (1). G.J.Fernandez vs. State of Karnataka and Ors reported in (1990) 2 SCC 488. (para 11,14 and 15) (2). Poddar Steel Corporation vs. Ganesh Engineering Works and Ors reported (1991) 3 SCC 273. (para 6) (3). Rashmi Metaliks Limited and Another vs. Kolkata Metropolitan Development Authority and Ors reported in (2013) 10 SCC 95. (para 17 & 18) (4). Om Prakash Sharma vs. Ramesh Chand Prashar and Ors reported in (2016) 12 SCC 632. (Para 10 to 12) (5). Jal Mahal Resorts Private Limited vs. K.P. Sharma and Ors reported in (2014) 8 SCC 804. (para 108 to 116 and 138). (6). Bakshi Security And Personnel Services Private Limited vs. Devkishan Computed Private Limited and Ors reported in (2016) 8 SCC 446. (7). MHS Infra Tech Pvt Ltd vs. State of Gujarat reported in AIR 2016 (Guj) 16 (para 11). (8). PES Installations Pvt. Ltd and Anr vs. Union of India and Anr reported in AIR 2015 (Del) 108. (para 1, 17 and 24) (9). R.G. Holding Pvt Ltd vs. M.T.N.L & Anr reported in 2004(78) DRJ 274 (Delhi). 10. R.G. Holdin....
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....or the purpose of opening bid, i.e. offer / tender of those tenderers whose EMD and Tender fee is received electronically shall be opened. However, for the purpose realization of EMD and Tender Fee, bidder was required to send EMD as well as Tender Fee in the required format in original through RPAD or Speed Post so as to reach the Accounts Department within 7 days from the last date of submission of price bid. It is submitted that everybody was informed about the amount to be paid towards bid Document Fee / Bid Processing Fee i.e. Rs. 21240/. It is submitted that as the entire process of invited tender through E Tender anybody could download E Tender Bid document, however for the purpose of considering such party as bidder, such party is required to deposit bid / document fee (entire) and also bid security. It is submitted that only when the entire amount of bid document fee / bid processing fee and the EMD is deposited within the stipulated time as provided under the tender document, the receipt is generated in the record of the Corporation and on generation of the receipt, such party who had complied with all the terms and conditions at the initial stage namely deposit of entire....
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....arned counsel for the respondent Corporation that in the present case the petitioners submitted bid online on 7.9.2017 and physical bid was received on 14.09.2017. It is submitted that as the petitioners did not pay the full bid document fee, which was mandatory, the petitioners were never considered to be tenderer itself. It is submitted that the petitioners sent the draft of differential amount of Bid document fee after the technical bid was opened on 18.09.2017. It is submitted that therefore, when the petitioners at initial stage only not fulfilled the mandatory condition of paying the required amount of Bid Document Fee and therefore, the respondent Corporation has never considered the petitioner as tenderer itself. It is submitted that any amount / differential amount deposited subsequently and after the relevant date as prescribed in the tender document, such payment cannot be considered to be a valid payment and / or such payment is not required to be considered at all, more particularly, in the present case the differential amount was deposited after technical bid was opened on 18.09.2017. 6.6. It is vehemently submitted by Shri Desai, learned counsel for the respondent....
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.... vs. State of Gujarat and Ors rendered in Special Civil Application No.4731 of 2017. 6.9. It is further submitted by Shri Desai, learned counsel for the respondent Corporation that the decision taken by the respondent Corporation is absolutely just, legal and absolutely in consonance with the terms and conditions of the tender document, which is neither perverse nor arbitrary and therefore, it is requested not to interfere with the same in exercise of powers under Article 226 of the Constitution of India. 6.10. On scope of judicial review in the contractual matter, Shri Desai, learned counsel for the respondent Corporation has relied upon the decision of the Hon'ble Supreme Court in the case of Michigan Rubber (India) Limited vs. State of Karnataka and ors reported in (2012) 8 SCC 216; in the case of Tata Cellular vs. Union of India reported in (1994) 6 SCC 651; in the case of Jagdish Mandal vs. State of Orissa and Ors reported in (2007) 14 SCC 517; in the case of Afcons Infrastructure Limited vs. Nagpur Metro Rail Corporation Limited and Another reported in (2016) 16 SCC 818 and in the case of Tamil Nadu Generation And Distribution Corporation Limited (Tangedco) Represen....
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....id document fee/ bid processing fee of Rs. 21240/which includes GST at 18%. It is an admitted position that when the petitioners submitted its bid online and thereafter in physical format the petitioners did not pay the entire amount of bid document fee/ bid processing fee of Rs. 21240/and deposited only part of the bid document fee / bid processing fee i.e. Rs. 18000/only. At this stage, it is required to be noted that other two tenderers who submitted their bid, paid / deposited the entire document fee / bid processing fee i.e. Rs. 21,240/. Thus, in the tender consolidation details and "nProcure" tender consolidated details deposit of entire amount of document fee and EMD details was mandatory to be paid. Even as mentioned in Annexure A24 (Instruction to Bidder regarding Tender Fee and EMD) submission of EMD and tender fee is for the purpose of opening bid. Therefore, only those parties who paid the EMD and tender fee electronically and thereafter in the physical format within the stipulated time is required to be considered the tenderers / bidders, whose bid is required to be opened and considered on merits subject to fulfillment of other terms and conditions, if any. Thus, as p....
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....ender document, more particularly, the terms and conditions mentioned in the "nprocure" tender consolidated details. In light of the above facts and circumstance of the case, few decisions of the Hon'ble Supreme Court on the nature and scope of judicial review of the Constitutional Court / High Court in exercise of powers under Article 226 of the Constitution are required to be referred to. 9.1. In the case of Michigan Rubber (India) Limited (supra) after considering the various other decisions of the Hon'ble Supreme Court on the point, more particularly, after considering the decisions of the Hon'ble Supreme Court in the case of Jagdish Mandal (supra) and Tejas Constructions and Infrastructure (P) Ltd (supra), in para 23 and 24, the Hon'ble Supreme Court has observed and held as under: "23. From the above decisions, the following principles emerge: (a) the basic requirement of Article 14 is fairness in action by the State, and nonarbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically fo....
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....preme Court in the case of Dwarkadas Marfatia and Sons vs. Port of Bombay reported in (1989) 3 SCC 293; Tata Cellular (supra) and Jagdish Mandal (supra) that the Constitutional Courts are concerned with the decision making process and the decision if challenged the decision having been arrived at through a valid process, the Constitutional Courts can interfere only if the decision is perverse. It is also further observed that however, the Constitutional Courts are expected to exercise restraint in interfering with the administrative decision and ought not to substitute its view for that of the administrative authority. It is further observed that mere disagreement with the decision making process or the decision of the administrative authority is no reason for a Constitutional Court to interfere. It is further observed that the threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the Constitutional Court interferes with the decision making process or the decision. 10. Now, so far as submission on behalf of the petitioners that non deposit of entire amount of bid document fee/ bid processing fee cannot be said to be....
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....e document and make it altogether inapplicable. It is further observed that whether a term of NIT is essential or not is a decision taken by the employer, which should be respected and soundness of that decision cannot be questioned by Court. In the case before the Hon'ble Supreme Court the bid was rejected for non furnishing of bank guarantee in prescribed format. While submitting EMD by furnishing bank guarantee in format prescribed by GTC of another tender and the bidder took the plea that bank guarantee format of present tender was ambiguous. Rejecting the claim of the bidder and upholding the decision of the employer of rejection of bid for noncompliance of submitting the bank guarantee in prescribed format, the Hon'ble Supreme Court in para 31 to 38, 42 to 44, 47 to 49, 52, 55 and 56 has observed and held as under: [31] We were informed by the learned Attorney General that 9 of the 11 bidders furnished a bank guarantee in the prescribed and correct format. Under these circumstances, even after stretching our credulity, it is extremely difficult to understand why JVC was unable to access the prescribed format for the bank guarantee or furnish a bank guarantee in the....
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.... of the eligibility condition of being a registered II Class hotelier would not be a bar for consideration, they too would have submitted a tender, but were prevented from doing so due to the eligibility condition, which was relaxed in the case of respondents 4. This resulted in unequal treatment in favour of respondents 4 treatment that was constitutionally impermissible. Expounding on this, it was held: "It is indeed unthinkable that in a democracy governed by the rule of law the executive Government or any of its officers should possess arbitrary power over the interests of the individual. Every action of the executive Government must be informed with reason and should be free from arbitrariness. That is the very essence of the rule of law and its bare minimal requirement. And to the application of this principle it makes no difference whether the exercise of the power involves affectation of some right or denial of some privilege." 36. Applying this principle to the present appeals, other bidders and those who had not bid could very well contend that if they had known that the prescribed format of the bank guarantee was not mandatory or that some other term(s) of the NIT or ....
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....nce to the lawfulness of a decision and not its soundness. If an administrative decision, such as a deviation in the terms of the NIT is not arbitrary, irrational, unreasonable, mala fide or biased, the Courts will not judicially review the decision taken. Similarly, the Courts will not countenance interference with the decision at the behest of an unsuccessful bidder in respect of a technical or procedural violation. This was quite clearly stated by this Court (following Tata Cellular) in Jagdish Mandal v. State of Orissa, 2007 14 SCC 517 in the following words: "Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to awa....
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.... significance. As pointed out in Tata Cellular there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned but the decision making process can certainly be subject to judicial review. The soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision "that no responsible authority acting reasonably and in accordance with relevant law could have reached" as held in Jagdish Mandal followed in Michigan Rubber. [48] Therefore, whether a term of the NIT is essential or not is a decision taken by the employer which should be respected. Even if the term is essential, the employer has the inherent authority to deviate from it provided the deviation is made applicable to all bidders and potential bidders as held in Ramana Dayaram Shetty. However, if the term is held by the employer to be ancillary or subsidiary, even that decision should be respected. The lawfulness of that decision can be questioned on very limited grounds, as mentioned in the various decisions discussed above, but the soundness of the decision cannot be que....
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.... guarantee. Consequently, the failure of JVC to furnish the bank guarantee in the prescribed format was sufficient reason for CCL to reject its bid. [56] There is nothing to indicate that the process by which the decision was taken by CCL that the bank guarantee furnished by JVC ought to be rejected was flawed in any manner whatsoever. Similarly, there is nothing to indicate that the decision taken by CCL to reject the bank guarantee furnished by JVC and to adhere to the requirements of the NIT and the GTC was arbitrary or unreasonable or perverse in any manner whatsoever. " 10.2. In the case of Afcons Infrastructure Limited (supra) in para 50 and after considering earlier decision in the case of Central Coalfields Limited and Another (supra), Dwarkadas Marfatia and Sons (supra), Raman Dayaram Shetty vs. International Airport Authority reported in (1979) 3 SCC 489, it is observed and held that the holder / employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. It is further observed that Constitutional Courts must defer to this understanding and appreciation of the tender docum....
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....n absence of GSTIN number and as there is ambiguity, it is not possible for the petitioners to deposit the amount of GST. The petitioners neither sought any clarification nor did it make any representation to the respondent Corporation. Therefore, even the case on behalf of the petitioners so pleaded in the petition that the petitioners did not deposit the amount of GST in absence of GST registration / GSTIN is nothing but an afterthought. At this stage, it is required to be noted that as such the petitioners was not required to deposit the amount of GST. The petitioners and others were required to deposit as such Rs. 21,240/towards bid document fee/ bid processing fee which includes GST amount at 18%. Therefore, there was no question of furnishing any details of GST registration / GSTIN, as now stated by the petitioners. At this stage, it is required to be noted even at the cost of repetition that other two bidders did deposit the entire amount of Rs. 21,240/and thereby complied with the relevant terms and conditions / essential conditions. 11. Now, so far as the submission on behalf of the petitioners that subsequently the petitioners in fact sent the demand draft of differenc....
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....tire tender process was through E Tender process and downloading of tender document was free. Unless and until all the terms and conditions of the tender document, more particularly, "nProcure"and the essential conditions are complied with the petitioners / bidders would not get right automatically to consider him eligible. Downloading of tender document is different thing then thereafter getting the entry after complying with the terms and conditions of the tender document "nProcure" requirement. Therefore, merely because the petitioner and others were permitted to download the tender document free of cost, unless and until all the terms and conditions are satisfied, it does not get any right to consider its bid. Mere downloading of tender document cannot be said to be entry at the initial stage to consider such person who has downloaded as bidder / tenderer. 12.2. Now, so far as the submission on behalf of the petitioners that earlier the tender process was canceled as only one bidder was there and therefore, it was the case of single bid and in the present case also two bidders other than petitioners submitted their bids one bidder was found to be ineligible and therefore, on....