M/S. SUBHASH PROJECTS & MARKETING LTD. versus WEST BENGAL POWER DEVELOPMENT CORPORATION LTD. AND ORS.

Citation: [2005] SUPP. 4 S.C.R. 375 · Decided: 21-10-2005 · Supreme Court of India · Bench: R.C. LAHOTI · Disposal: Dismissed

Judgment (excerpt)

MIS. SUBHASH PROJECTS & MARKETING LTD. 
Contract: 
v. 
WEST BENGAL POWER DEVELOPMENT 
CORPORATION LTD. AND ORS. 
OCTOBER 21, 2005 
[R.C. LAHOTI, CJ., G.P. MATHUR AND 
P.K. BALASUBRAMANYAN, JJ.) 
A 
B 
c 
Invitation of tenders-Before opening the price bids, due to vagueness 
found in the tender notice, certain deviations suggested-Jn the light of 
deviations, tenderers making fresh offers-In original offer, first party was 
lowest bidder-Jn Fresh offer, second party by reducing the original tender 
amount became lowest bidder-Offer of second party accepted-On influence D 
of Minister, the contract awarded to first party-High Court held influence of 
Ministry incorrect but declined to interfere as substantial work done by the 
first party, however directed first party to pay Rs. 1 crore to second party-
On appeal, Held: As the bidders on understanding the real scope and magnitude 
of the work offered to reduce the amount that had originally been offered on 
the basis of misconceptions created by the vagueness in the tender notice, it E 
could not be said that such offers were liable to be rejected-Substantial 
portion of contract having been executed, first party rightly held liable to pay 
Rs. 1 crore to second party to get equitable relief-Equity. 
Pursuant to the decision of the Power Corporation to take up the 
construction of Bakereshwar Thermal Power Project with the aid of F 
OECF, tenders were invited for the work of water intake and plant water 
system package. Five bidders including appellant and L & T submitted 
the tenders. The tenderers were found technically qualified. However, it 
was found that some vagueness had crept into the notice inviting tenders 
and that the scope of certain works remained vague or unclear. The G 
technically qualified tenderers were called for discussion. Ultimately, at a 
Technical Evaluation Committee meeting for techno-commercial 
evaluation, it was decided to suggest seven modifications/deviations. 
Pursuant to the communication issued by Power Corporation 
375 
H 
376 
SUPREME COURT REPORTS (2005] SUPP. 4 S.C.R. 
A regarding seven modifications, the appellant made a firm bid but increased 
its tender amount. L & T indicated an increase of Rs. 35 lakhs in view of 
the seven deviations but indicated reduction of the original tender amount 
by Rs. 64 crores in view of the clarifications and proper understanding of 
the real scope of the work. Thereafter, the price bids were opened. As per 
B the original price offered, L & T was placed as the fifth lowest and 
appellant though it had resorted to price variation in the original tender, 
was found the lowest bidder. But on taking note of the reduction proposed 
by L & T, while responding to the subsequent communication, its bid was 
found to be the lowest. In view of this, the Tender Evaluation Committee, 
the Power Corporation and OECF decided to award the contract to L & 
C T. At this stage, appellant wrote a letter to the Minister of State for Power 
in the Union Government, complaining that the placing of L & T as the 
lowest tenderer, was not justified in view of the fact that the acceptance 
of the reduction of Rs. 64 crores from its original bid was against the 
tender conditions and that no such deviation could have been permitted 
D after the earnest deposit cover and the techno-commercial evaluation offers 
had been opened, even though the price bids themselves had not been 
opened. Based on this letter, the Power Corporation was asked to look 
into the complaint of appellant. When the Power Corporation stuck to its 
position and the Government of West Bengal also agreed that the contract 
be awarded to L & T, the Minister of State for Power and his ministry 
E persisted in its direction seeking a fresh evaluation to be made on the basis 
I 
of the original bids. Ultimately, a fresh evaluation was made ignoring the 
reduction of Rs.64 crores offered by L & T and to award the contract to 
appellant. Aggrieved L & T approached the High Court with the Writ 
Petition. No stay of the working of the contract was granted, but the High 
Court permitted appellant to continue the work, making it clear that it 
F would not be entitled to claim any equity, in case the Writ Petition was 
allowed. Thus, pending the Writ Petition appellant did a part of the work. 
The Single Judge held that although the Power Corporation, ought 
not to have succumbed to the pressure of the Minister of State for Power, 
G and awarded the contract to a

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