VIDARBHA IRRIGATION DEVELOPMENT CORPORATION versus M/S ANOJ KUMAR AGARWALA & ORS.

Citation: [2019] 2 S.C.R. 493 · Decided: 23-01-2019 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Disposed off

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Judgment (excerpt)

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VIDARBHA IRRIGATION DEVELOPMENT CORPORATION
v.
M/S ANOJ KUMAR AGARWALA & ORS.
(Civil Appeal No.1049 of 2019)
JANUARY 23, 2019
[R. F. NARIMAN AND NAVIN SINHA, JJ.]
Tenders – Essential tender condition – Non-compliance of –
Tender called by the appellant on 06.01.2018 for balance earthwork
to be done in a canal – Tender was ultimately replied to by three
persons – Clause 2.22 of the tender conditions inter alia stated that
bank guarantee that was to be furnished had to be valid up to one
month after the defect liability period, which was for a period of 40
months – Bank guarantee furnished by Respondent No.2 was initially
furnished only for a period of six months – Bids were opened on
06.04.2018 – One day later,  Respondent No. 2 sought to make up
this deficiency by adding a period of 34 months to the bank
guarantee – Bid of Respondent No. 2 being the lowest bid was
accepted – Appellant condoned the initial bank guarantee given
by Respondent No. 2 for an admittedly incorrect period of 6 months
– Propriety of – Held: Clause 2.35 made it clear that a substantially
responsive bid was one which conforms to all terms, conditions and
specifications without any material deviation – Inter alia, a material
deviation is one which limits, in any substantial way, or is
inconsistent with the bidding documents or the employer’s rights or
bidder’s obligations under the Contract – A bank guarantee, for a
period of six months and not for a period of 40 months, would not
only be directly inconsistent with the bidding documents but would
also be contrary to the employers’ right to a bank guarantee for a
longer period – Since a material deviation from the terms and
conditions of the tender document was made by Respondent No. 2,
such bid would have to be considered as not substantially responsive
and ought to have been rejected by the employer – When an essential
tender condition which had to be strictly complied with was not so
complied with, the appellant would have no power to condone lack
of such strict compliance – Any such condonation, as has been
done, would amount to perversity in the understanding or
 [2019] 2 S.C.R. 493
  493
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SUPREME COURT REPORTS
[2019] 2 S.C.R.
appreciation of the terms of the tender conditions, which must be
interfered with by constitutional court – Judgment of the High Court,
insofar as para 8 is concerned, set aside  –  Work now be performed
by the Respondent No. 1 (one of the bidder)  at the bid of Rs. 39.15
Crores that was the bid of Respondent No.2.
Disposing of the appeals, the Court
HELD:  1.1 Clause 2.15 of the tender conditions made it
clear that it is only at a pre-tender stage that a clarification may
be obtained regarding tender conditions. Sub-clause 4 of Clause
2.15 is important because all tenderers were cautioned by this
Clause that tenders containing any deviation from the contractual
terms and conditions, specifications or other requirements, will
be rejected as non-responsive. [Para 6] [501-B-C]
1.2 In the pre-tender meetings that took place between
the Chief Engineer and prospective parties on 30.01.2018
questions were raised as to the period of bank guarantee, and
the Department specifically relied upon a GR dated 12.02.2016,
together with the corrigenda thereto, and stated that as a policy
decision, modification in this Clause cannot be made.  It is clear,
therefore, that a modification to this very tender condition was
suggested at the pre-tender stage, and was rejected to the
knowledge of all prospective tenderers. Sub-clause 4 of Clause
2.15, therefore, becomes important in this context as the
Respondent No. 2 was put on notice from the beginning itself
that if there is any deviation in terms of the period of bank
guarantee, its bid would be treated as non-responsive. Clause
2.22,  also makes reference to the self-same PWD Circular dated
12.02.2016 with the corrigenda.  A reading of this Clause would
also show that a bank guarantee that is to be furnished has to be
valid up to one month after the defect liability period which,
admittedly, is for a period of 40 months. [Paras 7, 8] [501-C-D,
F-H; 502-A-B]
1.3 Clause 2.35 makes it clear that a substantially
responsive bid is one which conforms to all terms, conditions
and specifications without any material deviation. Inter alia, a
material deviation is one which limits, in any substantial way, or
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is inconsistent with the bidding documents or the employer’s
rights or bidder’s ob

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