TaxTMI 
TaxTMI 
2016 (8) TMI 1299
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....s accepted. 3. Both the Central Coalfields Limited and PLR-RPL-SMASL are aggrieved by judgment and order dated 26th October, 2015 passed by the Division Bench of the Jharkhand High Court whereby the rejection of the bid of SLL-SML by Central Coalfields Limited was set aside. 4. The question for our consideration is generally whether furnishing a bank guarantee in the format prescribed in the bid documents is an essential requirement in the bidding process of the Central Coalfields Limited and specifically whether a bid not accompanied by a bank guarantee in the format prescribed in the bid documents of the Central Coalfields Limited could be treated as non-responsive in view of Clause 15.2 of the General Terms and Conditions governing the bidding process. The answer to the general and the specific question is in the affirmative. The facts 5. On 5th August, 2015 the Central Coalfields Limited (for short CCL) issued a Notification Inviting Tenders (for short NIT). The name of the work was: "Out sourcing for Overburden Removal (1050.00 L. CuM) and Coal Extraction (975.00 L. Te) and transportation by deploying surface miner at Ashok OCP, Piparwar Area for a period of 8 years." 6. ....
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....cted as non-responsive. 13. According to CCL it received 11 bids in response to the e-tender including that of SLL-SML a Joint Venture Consortium (for short JVC). One of the bids was apparently rejected. Nine of the bidders submitted a bank guarantee strictly in accordance with the pro forma provided in the GTC. A bank guarantee was provided by JVC-not in the prescribed pro forma but in another format in respect of some other contract provided in the GTC of which bore the heading "Governing Contractual Transportation & Loading in Areas of Central Coalfields Limited". 14. Under the circumstances, an email was sent on behalf of CCL on 11th September, 2015 to JVC rejecting its bid on the ground that the documents were incomplete. JVC was informed that it would not be allowed to participate in the price bid opening. 15. In response, JVC sent an email on 15th September, 2015 to CCL that all documents as prescribed under the NIT had been submitted. Therefore, JVC was unable to understand the reason for rejection of its bid. The email was replied to on behalf of CCL on the same day in which it was stated that the bid given by JVC was cancelled as the bank guarantee submitted was not in....
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....rred a Letters Patent Appeal before the Division Bench of the High Court being L.P.A. No. 625 of 2015. By the impugned judgment and order dated 26th October, 2015 the Division Bench of the Jharkhand High Court allowed the appeal. Proceedings before the Division Bench 24. It was contended by JVC before the Division Bench that the NIT is ambiguous and that there was no clarity with regard to the format in which the bank guarantee was required to be furnished. Additionally, it was contended that in any event there was substantial compliance with the essential terms of the bank guarantee as required by CCL. In this regard, it was submitted that there were five requirements for the bank guarantee to be acceptable to CCL and JVC met all these requirements. The requirements, as submitted by JVC in the High Court were: (a) The bank guarantee should be irrevocable. (b) The bank guarantee should be from any scheduled bank. (c) The bank guarantee should be payable at the local branch of the issuing bank, that is at Ranchi. (d) The validity of the bank guarantee should be minimum 90 days beyond the validity of the bid. (e) The bank guarantee shall be a....
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.... degree of comfort with e-tenders and the use of computers for bidding in an e-tender. It is this familiarity that enabled JVC to access the "incorrect" format of a bank guarantee. Under these circumstances, it is extremely odd that JVC was not able to access the correct and prescribed format of the bank guarantee. The excuse given by JVC that the NIT was vague and that it was not clear which was the prescribed format of the bank guarantee appears to be nothing but a bogey. A simple reading of the GTC and the terms of the bank guarantee would have been enough to indicate the correct prescribed format and the "incorrect" format. 31. Secondly, the heading mentioned in both the GTCs was different. The correct GTC bore the heading "Governing Hiring of Equipment for removal of Overburden, Extraction of Coal, Transportation and loading in Areas of Central Coalfields Limited" while the not relevant GTC bore the heading "Governing Contractual Transportation & Loading in Areas of Central Coalfields Limited". There is a substantial difference between the two GTCs and anyone bidding for the work "Out sourcing for Overburden Removal (1050.00 L. CuM) and Coal Extraction (975.00 L. Te) and tran....
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....ocuments as to statutes that, save for compelling necessity, the Court should not be prompt to ascribe superfluity to the language of a document "and should be rather at the outset inclined to suppose every word intended to have some effect or be of some use". To reject words as insensible should be the last resort of judicial interpretation, for it is an elementary Rule based on common sense that no author of a formal document intended to be acted upon by the others should be presumed to use words without a meaning. The court must, as far as possible, avoid a construction which would render the words used by the author of the document meaningless and futile or reduce to silence any part of the document and make it altogether inapplicable. In that case, the expression "registered IInd Class hotelier" was recognized as being inapt and perhaps ungrammatical; nevertheless common sense was not offended in describing a person running a registered II grade hotel as a registered II Class hotelier. Despite this construction in its favour, Respondents 4 in that case were held to be factually ineligible to participate in the bidding process. 36. It was further held that if others (such as ....
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....t would decline to do so. It was also reaffirmed that the employer could deviate from the terms and conditions of the tender if the "changes affected all intending applicants alike and were not objectionable." Therefore, deviation from the terms and conditions is permissible so long as the level playing field is maintained and it does not result in any arbitrariness or discrimination in the Ramana Dayaram Shetty sense. 39. Poddar Steel was a rather interesting case and added a new dimension to the discourse. The decision of the Allahabad High Court records that the relevant Clause in the NIT gave the bidder the option of depositing the earnest money in cash or by a "demand draft drawn on DLW Branch of SBI in favour of Assistant Chief Cashier, DLW/- Varanasi."1 As many as 21 parties had responded to the NIT, but 8 of them had not deposited any earnest money at all and the remaining 13 bidders had "deposited the earnest money by one mode or the other but not necessarily in the manner provided in the NIT except perhaps a few." The Tender Committee deviated from the terms of the NIT and considered the bids of these 13 bidders and accepted the bid of Poddar Steel, who had given the ear....
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....nder which could not be deviated from. 41. In appeal, this Court accepted the theory of essential and non-essential or ancillary or subsidiary terms of an NIT. It was held that the cheque of the Union Bank of India issued by Poddar Steel (though a deviation from the terms of the NIT) was sufficient for meeting the conditions of the NIT, the condition being ancillary or subsidiary to the main object to be achieved by the condition and that the employer could waive the "technical literal compliance" of the earnest money Clause of the NIT "specially when it was in its interest not to reject the said bid which was the highest." In other words, this Court concluded that an essential term of the tender document could not be deviated from but an ancillary or subsidiary or non-essential term could be deviated from, and that the deviation could be without any reference to potential bidders. 42. Unfortunately, this Court did not at all advert to the privilege-of-participation principle laid down in Ramana Dayaram Shetty and accepted in G.J. Fernandez. In other words, this Court did not consider whether, as a result of the deviation, others could also have become eligible to participate in ....
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.... to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. This Court then laid down the questions that ought to be asked in such a situation. It was said: Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions: (i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached"; (ii) Whether public interest is affected. If the answers are in the negative, there should be no interference Under Article 226. 44. On asking these questions in the present appeals, it is more than apparent that the decision taken by CCL to adhere to the terms and conditions of....
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....2) 8 SCC 216. Thereafter, this Court rejected the challenge to the employer's decision holding Bakshi Security and Personnel Services ineligible to participate in the tender. 47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As held in Ramana Dayaram Shetty the terms of the NIT cannot be ignored as being redundant or superfluous. They must be given a meaning and the necessary 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 no....
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....ormat not prescribed by it could lead to (avoidable) litigation requiring the employer to justify the rejection or acceptance of each bank guarantee. This is hardly conducive to a smooth and hassle-free bidding process. 52. There is a wholesome principle that the Courts have been following for a very long time and which was articulated in Nazir Ahmad v. King Emperor AIR 1936 PC 253 namely "Where a power is given to do a certain thing in a certain way the thing must be done in that way or not at all. Other methods of performance are necessarily forbidden." There is no valid reason to give up this salutary principle or not to apply it mutatis mutandis to bid documents. This principle deserves to be applied in contractual disputes, particularly in commercial contracts or bids leading up to commercial contracts, where there is stiff competition. It must follow from the application of the principle laid down in Nazir Ahmed that if the employer prescribes a particular format of the bank guarantee to be furnished, then a bidder ought to submit the bank guarantee in that particular format only and not in any other format. However, as mentioned above, there is no inflexibility in this rega....