ITD Cementation India Limited V. Union of India and Central Public Works Department

CW/4891/2017

AI Insights

The case revolves around the disqualification of M/s. ITD Cementation India Limited from a bidding process conducted by the CPWD for construction works at IIT Jodhpur. The petitioner challenged the disqualification, arguing that it was arbitrary and violated Article 14 of the Constitution. The CPWD had disqualified the petitioner due to an initial error in the bank guarantee, which was later rectified but submitted after the deadline. The court examined the compliance with the tender conditions and the interpretation of essential and non-essential terms in the context of public procurement. The judgment emphasized the importance of adhering to the terms of the NIT and the discretion of the contracting authority in interpreting these terms.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 803021 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 08-08-2017
• Assessment Year: misc
• Other Referred Cases: Poddar Steel Corporation vs. Ganesh Engineering Works & Ors., Rashmi Metaliks Limited & Anr. vs. Kolkata Metropolitan Development Authority & Ors., Agrawal Roadlines Pvt. Ltd. vs. Indian Oil Corporation Ltd. & Ors., Vyankatesh Trading Company vs. Food Corporation of India, Tata Cellular vs. Union of India, Kanhaiya Lal Agarwal vs. Union of India & Ors., Global Energy Ltd. & Anr. vs. Adani Exports Ltd. & Ors., B.S.N.Joshi & Sons Ltd. vs. Nair Coal Services Ltd. & Ors., Jagdish Mandal vs. State of Orissa & Ors., Villayati Ram Mittal (Pvt.) Ltd. vs. Union of India (UOI) and Anr., Central Coalfields Ltd. & Anr. vs. SLL-SML (Joint Venture Consortium & Ors., Afcons Infrastructure Ltd. vs. Nagpur Metro Rail Corporation Ltd. & Anr., Montecarlo Ltd. vs. NTPC Ltd.
• Laws Referred To: Article 226 of the Constitution of India, Companies Act, 1956, Companies Act, 2013
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: RAVI BHANSALI; NAVNEET SINGH
• Assessee Lawyers: RAJESH JOSHI; HARSHIT BHURANI
• Keywords: Bank guarantee; Tender Conditions; Disqualification from bidding; Essential condition; Non-essential condition
• Section: 226

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR S.B. Civil Writ Petition No. 4891 / 2017 M/s. ITD Cementation India Limited Through Its Authorised Representative Mr. Kanchan Madhusudhan Ranadive, Having Its Registered and Corporate Offce At National Plastic Building, A Subhash Road, Paranjape B Scheme, Vile Parle East, Mumbai - 400057 ----Petitioner Versus 1. Union of India Through Principal Secretary, Central Public Works Department, New Delhi. 2. Central Public Works Department Through Executive Engineer, IIT Jodhpur Project Division I, CPWD Having Its Office At Jodhpur Nirman Bhavan, 3 West Patel Nagar, Circuit House Road, Jodhpur - 342011. ----Respondents _____________________________________________________ For Petitioner(s) : Mr Rajesh Joshi, Sr. Advocate assisted by Mr Harshit Bhurani For Respondent(s) : Mr Ravi Bhansali, Sr. Advocate assisted by Mr Navneet Singh _____________________________________________________ HON'BLE MR. JUSTICE VIJAY BISHNOI Judgment / Order 08/08/2017 This writ petition under Article 226 of the Constitution of India is filed by the petitioner-company, which is incorporated under the Companies Act, 1956 and Corresponding Companies Act, 2013, through its power of attorney holder challenging the action of the respondent – Central Public Works Department (for short ‘the CPWD’ hereinafter), whereby it has disqualified the petitioner-company vide letter dated 25.04.2017 (Annexure-1) from the bidding process pursuant to NIT (Annexure-3) issued by (2 of 28) [CW-4891/2017] it. Facts, which are not in dispute, are that the respondent- CPWD has floated an NIT (Annexure-3) for construction of various buildings works at Permanent Campus of IIT, Jodhpur (Phase-2) at Karwar, NH-65, Jodhpur, Rajasthah, description of which is provided in the bid document. Initially the last date for submission of tenders, EMD, e-tender, processing fee and other documents was fixed as 13.02.2017 up to 3:00 P.M. and date of opening technical bid was fixed at 3:30 P.M. on 13.02.2017, however, later on the same was extended up to 02.03.2017, which is evident from the minutes of the Pre-tender Conference shown to the court and not disputed by the petitioner. The petitioner submitted its bid pursuant to the aforesaid tender. Along with the bid, the petitioner had also submitted earnest money, part in the form of fixed deposit receipt and part in bank guarantee issued by the Bank of Maharashtra. The technical bids were opened on 02.03.2017. As per the case of the petitioner it had inadvertently mentioned the name of Executive Engineer of different Division of CPWD, Jodhpur in the bank guarantee and a rectification in the said name was immediately done and amended bank guarantee was submitted to the CPWD on 08.03.2017. On 18.03.2017 vide Annexure-6, the respondent-CPWD wrote a letter to the petitioner, wherein it is mentioned that during scrutiny of initial eligibility criterion, certain discrepancies have been noticed in the document submitted by it and a request was made to provide clarification in detail in respect of the (3 of 28) [CW-4891/2017] discrepancies noticed by 31.03.2017 up to 5:00 P.M. In the said letter, apart from other discrepancy, it has been mentioned that initially the bank guarantee, which was issued in favour of Executive Engineer, ITI Project Division-I CPWD, is submitted, however, subsequently, amended bank guarantee has been submitted, which is issued in favour of Executive Engineer, Jodhpur CPWD and the same has been taken on record, however, the decision on eligibility shall be taken by the competent authority as per prescribed guidelines/procedure. The petitioner has submitted reply to the said notice answering the queries raised by the CPWD on 18.03.2017. A copy of the reply dated 24.03.2017 is placed on record as Annexure-7. Thereafter, the respondent-CPWD issued the impugned letter dated 25.04.2017, whereby the petitioner has been disqualified from bidding process along with three other bidders. The reason for disqualifying the petitioner from bidding process as mentioned in the impugned letter dated 26.04.2017 reads as follows: “The bidder have uploaded part of EMD in the form of B.G. which is not in favour of EE, Jodhpur Central Division, CPWD Jodhpur as per para-9, page-12 of NIT. Hence no qualified as per para-10, page-13 of NIT.” Being aggrieved with this, the petitioner has filed this writ petition. Mr Rajesh Joshi, Senior Counsel has vehemently argued that respondent-CPWD has illegally disqualified the petitioner from the bidding process and the said decision of it is arbitrary and unreasonable and, therefore, violative of Article 14 of the Constitution of India. (4 of 28) [CW-4891/2017] It is further argued that when the petitioner has submitted the amended bank guarantee as per the requirement of the tender conditions on 08.03.2017, there is no reason available with the respondent-CPWD to disqualify the petitioner from the bidding process. It is contended that the condition of submission of bank guarantee in the name of a particular Officer of a Division of CPWD is a non-essential condition and non-fulfillment of said condition will not result in disqualification of a bidder. It is submitted that whatever the minor mistake was there in the bank guarantee submitted by the petitioner, the same was rectified and the respondent-CPWD had accepted the same, then there is no justification in the action of the respondent-CPWD to declare the petitioner disqualified from the bidding process. Heavy reliance is placed on the decisions of the Hon’ble Supreme Court rendered in Poddar Steel Corporation vs. Ganesh Engineering Works & Ors., reported in (1991) 3 SCC 273, Rashmi Metaliks Limited & Anr. vs. Kolkata Metropolitan Development Authority & Ors., reported in (2013) 10 SCC 95 and on the decisions of the Bombay High Court rendered in Agrawal Roadlines Pvt. Ltd. vs. Indian Oil Corporation Ltd. & Ors., reported in 2003(1) Mh.L.J., 610 and in Vyankatesh Trading Company vs. Food Corporation of India, reported in 2016 SCC OnLine Bom 6530. Reliance has also been placed on decision of Hon’ble Supreme Court rendered in Tata Cellular vs. Union of India, reported in (1994) 6 SCC 651. (5 of 28) [CW-4891/2017] Learned counsel for the petitioner has, therefore, prayed that the writ petition of the petitioner may be allowed and the impugned letter disqualifying the petitioner from the bidding process be quashed and set aside qua the petitioner. Per contra, Mr Ravi Bhansali, Senior Counsel appearing for the respondents has argued that there is no illegality in the action of the respondent-CPWD in declaring the petitioner as disqualified from the bidding process as the petitioner has failed to comply with the essential conditions of the tender document. It is submitted that as per para-9 page-12 of the NIT, a bidder has to submit earnest money to the tune of Rs.5,11,24,538/- in the form of Treasury Challan or Demand Draft or Pay order or Banker’s Cheque or Deposit at Call Receipt or Fixed Deposit Receipt. A bidder can also submit part of earnest money in the form of bank guarantee too. It is further submitted that the petitioner has submitted the earnest money in two parts (i) in the form of fixed deposit and (ii) in the form of bank guarantee, however, as per the para-9 page-12 of NIT, the bank guarantee, which is to be submitted, is to be issued in favour of Executive Engineer, Jodhpur, Central Division, CPWD, Jodhpur but the petitioner has submitted the bank guarantee, issued in favour of Executive Engineer, IIT, Jodhpur Project Division-I, CPWD, Jodhpur. It is also submitted that the bank of the petitioner has also informed the respondents through E-mail reply (Annexure-R/4) dated 18.04.2017 that in lieu of bank guarantee dated 08.02.2017 the demand draft will be made in the name of beneficiary only and not in the name of (6 of 28) [CW-4891/2017] others. Learned counsel for the respondents has argued that as the earnest money was not furnished by the petitioner along with its bid as per the tender conditions, the petitioner has rightly been disqualified as per the para-10 of page-13 of the NIT. It is further argued that though the petitioner has furnished the amended bank guarantee issued in the name of the correct authority but that was submitted after the last date of submission of bid and after opening the technical bid, therefore, the respondent-CPWD has not accepted the same and has rightly disqualified the petitioner from the bidding process. Learned counsel for the respondents has submitted that there is no provision under the tender document to relax any essential condition of it. It is further submitted that the respondent – CPWD has adhered to the terms of the NIT issued by it and, therefore, no case for interference is called for. In support of the above contentions, learned counsel for the respondents has placed reliance on decisions of the Hon’ble Supreme Court rendered in Kanhaiya Lal Agarwal vs. Union of India & Ors. reported in (2002) 6 SCC 315, Global Energy Ltd. & Anr. vs. Adani Exports Ltd. & Ors. reported in (2005) 4 SCC 435, B.S.N.Joshi & Sons Ltd. vs. Nair Coal Services Ltd. & Ors., reported in (2006) 11 SCC 548, Jagdish Mandal vs. State of Orissa & Ors., reported in (2007) 14 SCC 517, Villayati Ram Mittal (Pvt.) Ltd. vs. Union of India (UOI) and Anr. reported in AIR 2011 SC 301, Central Coalfields Ltd. & Anr. vs. SLL-SML (Joint Venture Consortium & Ors., reported (7 of 28) [CW-4891/2017] in (2016) 8 SCC 622, Afcons Infrastructure Ltd. vs. Nagpur Metro Rail Corporation Ltd. & Anr., reported in AIR 2016 SC 4305 and Montecarlo Ltd. vs. NTPC Ltd., reported in AIR 2016 SC 4946. An application being APPLW No.3218/2017 is preferred on behalf of Tata Projects Limited with a prayer for impleading it as party respondent in this writ petition. The said prayer is opposed by the petitioner, however, since the applicant has not seriously pressed the application, the same is hereby dismissed. Heard learned counsels for the rival parties and perused the material on record. The conditions of the NIT (Annexure-3) relevant for the purpose of adjudication of the controversy involved in this writ petition read as follows: “9. Earnest Money of Rs. 5,11,28,946/- in the form of treasury Challan or Demand Draft or Pay order or Banker’s Cheque or Deposit at Call Receipt of Fixed Deposit Receipt (drawn in favour of Executive Engineer, Jodhpur Central Division, CPWD, Jodhpur) shall be deposited either in the office of Executive Engineer inviting bids or division office of any Executive Engineer, CPWD within the period of bid submission. A part of earnest money is acceptable in the form of bank guarantee also. In such case, minimum 50% of earnest money or Rs.20 lac, whichever is less, shall have to be deposited in shape prescribed above, and balance may be deposited in shape of Bank Guarantee of any scheduled bank having validity for six months or more from the last date of receipt of tenders in favour of Executive Engineer, Jodhpur Central Division, CPWD, Jodhpur. ....……. 10. The tender/bid submitted shall become invalid a) The tenderer is found ineligible. (8 of 28) [CW-4891/2017] b) The bidder does not deposit original EMD with division office of any Executive Engineer, CPWD (including NIT issuing EE/AE) and uploaded the receipt for the same (The EMD document shall as per NIT document). c) The bidder does not upload all the documents (including Service Tax registration/VAT registration/ Sales Tax registration) as stipulated in the bid document including the copy of receipt for deposition of original EMD. d) If any discrepancy is noticed between the documents as uploaded at the time of submission of tender and hard copies as submitted physically by the tenderers within 03 (three) days of opening of technical tenderers in the office of tender opening authority. e) If a tenderer(s) quotes nil rates against each item in item rate tender or does not quote any percentage above/below on the total amount of the tender or any section/ sub head in percentage rate tender, the tender shall be treated as invalid and will not be considered as lowest tender.” [Emphasis supplied] As per para-9, the earnest money was to be submitted in the form of Treasury Challan or Demand Draft or Pay Order or Banker’s Cheque or Deposit at Call Receipt or Fixed Deposit Receipt and a part of earnest money can also be submitted in the form of bank guarantee issued in favour of Executive Engineer, Jodhpur, Central Division, CPWD, Jodhpur. Clause (b) of Para -10 of NIT specifically says that the tender/bid shall become invalid if the bidder does not deposit original EMD as per NIT document. From the above, it is clear that if the bank guarantee is not submitted as per the NIT document, the bid is invalid. Hon’ble Supreme Court in Kanhaiya Lal Agarwal vs. Union of India & Ors. (supra) has held as under: “6. It is settled law that when an essential condition of tender is not complied with, it is open to the person inviting tender to reject the same. Whether a condition is essential or collateral could be ascertained by reference to the consequence of non-compliance (9 of 28) [CW-4891/2017] thereto. If non-fulfilment of the requirement results in rejection of the tender, then it would be an essential part of the tender otherwise it is only a collateral term. This legal position has been well explained in G.J.Fernandez v. State of Karanatak, (1990) 2 SCC 488.” [Emphasis supplied] In view of said position of law, the requirement of submission of bank guarantee in favour of Executive Engineer, Jodhpur Central Division (CPWD), Jodhpur was an essential condition. In view of the above, the argument of the learned counsel for the petitioner to the effect that the condition of submission of bank guarantee in the name of a particular officer was not an essential condition, is not tenable and is liable to be rejected. Now the question comes whether this Court can interfere in the decision of the respondent-authority, whereby it has disqualified the petitioner from the bidding process when it is clear that the respondents have adhered to the terms of the NIT. The Hon’ble Supreme Court in Poddar Steel Corporation vs. Ganesh Engineering Works & Ors. and Rashmi Metaliks Limited & Anr. vs. Kolkata Metropolitan Development Authority & Ors. (supra) has interfered with the decision of the authorities of rejecting the tenders though the said tenders were not in conformity with the tender conditions. However, in its recent decision rendered in Central Coalfields Ltd. & Anr. vs. SLL- SML (Joint Venture Consortium & Ors., (supra), the Hon’ble Supreme Court while taking into consideration the decisions (10 of 28) [CW-4891/2017] rendered in Poddar Steel Corporation vs. Ganesh Engineering Works & Ors. and Rashmi Metaliks Limited & Anr. vs. Kolkata Metropolitan Development Authority & Ors. (supra) has deprecated the practice of Constitutional Court in interfering with the contractual matters, where the employer seeks to adhere the terms of NIT. It would be proper to quote the relevant portion of the decision of the Hon’ble Supreme Court rendered in Central Coalfields Ltd. & Anr. vs. SLL-SML (Joint Venture Consortium & Ors., (supra), which read as under: “27. What is extraordinary about this case is that the employer, that is CCL, seeks to adhere to the terms of the NIT and the GTC issued by it, but the submission of JVC is that CCL should actually deviate from the terms of these documents so as to benefit JVC. Indeed, in spite of a specific requirement that the bank guarantee should be submitted in the prescribed format, JVC claims an entitlement to a deviation in this regard on the ground that the prescribed format was a non-essential term of the NIT and the GTC. Who is to decide this issue of essentiality? Does CCL with whom the contract has to be entered into by the successful bidder have no say in the matter? Before adverting to this, it is necessary to get clarity on some circumstances. 28. The first and the foremost aspect of the case that must be appreciated is that, as mentioned above, JVC was certainly not computer illiterate. Like every bidder, it was required to have a Digital Signature Certificate which clearly indicates that any bidder (including JVC) had some 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 (11 of 28) [CW-4891/2017] 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. 29. 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 transportation by deploying surface miner at Ashok OCP, Piparwar Area for a period of 8 years\" could immediately see which GTC is relevant and which is not. 30. In this context and thirdly, it is important to note that if JVC had any doubt with regard to the format of the bank guarantee to be furnished, it could have and ought to have sought a clarification from the authority concerned as mentioned in the NIT. Moreover, JVC could have and ought to have at least made a representation to CCL that the prescribed format for the bank guarantee was either not available or that the NIT was ambiguous or that it lacked clarity with regard to the prescribed format of the bank guarantee. JVC neither sought any clarification nor did it make any representation to CCL. It is difficult to understand the conduct of JVC in the situation presented before us, particularly with reference to a contract for about Rs. 2000 crores for eight years. 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 prescribed format when every other bidder could do so or why it could not seek a clarification or why it could not represent against any perceived ambiguity. The objection and the conduct of JVC (12 of 28) [CW-4891/2017] regarding the prescribed format of the bank guarantee or a supposed ambiguity in the NIT does not appear to be fully above board. 32. The core issue in these appeals is not of judicial review of the administrative action of CCL in adhering to the terms of the NIT and the GTC prescribed by it while dealing with bids furnished by participants in the bidding process. The core issue is whether CCL acted perversely enough in rejecting the bank guarantee of JVC on the ground that it was not in the prescribed format, thereby calling for judicial review by a constitutional court and interfering with CCL's decision. 33. In Ramana Dayaram Shetty v. International Airport Authority of India (1979) 3 SCC 489 this Court held that the words used in a document are not superfluous or redundant but must be given some meaning and weightage: “7. …. It is a well-settled Rule of interpretation applicable alike to documents 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.” 34. In Ramana Dayaram Shetty 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 (13 of 28) [CW-4891/2017] case were held to be factually ineligible to participate in the bidding process. 35. It was further held that if others (such as the Appellant in that case) were aware that non-fulfillment 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: “10. … 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. (Emphasis given) 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 GTC were not mandatory for compliance, they too would have meaningfully participated in the bidding process. In other words, by re-arranging the goalposts, they were denied the \"privilege\" of participation. 37. For JVC to say that its bank guarantee was in terms stricter than the prescribed format is neither here nor there. It is not for the employer or this Court to scrutinize every bank guarantee to determine whether it is stricter than the prescribed format or less rigorous. The fact is that a format was prescribed and there was no reason not to adhere to it. The goalposts cannot be re-arranged or asked to be re-arranged during the bidding process to affect the right of some or deny a privilege to some. 38. In G.J. Fernandez v. State of Karnataka (1990) 2 SCC 488 both the principles laid down in Ramana Dayaram Shetty were reaffirmed. It was reaffirmed that the (14 of 28) [CW-4891/2017] party issuing the tender (the employer) \"has the right to punctiliously and rigidly\" enforce the terms of the tender. If a party approaches a Court for an order restraining the employer from strict enforcement of the terms of the tender, the Court 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.\" 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 earnest money not by cash or a demand draft but by \"a loose cheque drawn on its C/D account in the Union Bank of India, Sonarpura, Varanasi.\" On the issue of discriminatory treatment, the contention of the employer was that since all the 13 bidders who had made the earnest money deposit were treated equally, there was no issue of any discriminatory treatment. 40. However, the High Court took the view, following Ramana Dayaram Shetty and the privilege-of-participation principle, that it was possible that if those who did not deposit any earnest money had known that a crossed cheque (drawn on a bank other than SBI) towards earnest money was acceptable to the employer, they too could have been in the fray. Under these circumstances, the High (15 of 28) [CW-4891/2017] Court held that excluding them from competition, through this unannounced deviation affecting bidders and potential bidders alike, rendered the bidding process unfair. The High Court introduced an \"essential term\" concept and held that the Clause in the NIT relating to deposit of earnest money was an essential term thereof and could not be deviated from. The Allahabad High Court held: “24. The mere fact that all the tenderers who had deposited the earnest money, whether in terms of Clause 6 or not had been treated alike cannot make any difference. It is quite possible to visualise that the parties who had failed to deposit the earnest money may also have been in the fray had they known that earnest money through cheque was also acceptable. Thus they have obviously been deprived from competing with others and this makes the action of Respondents 1 to 5 unfair when condition No. 6 of the NIT so specifically points out that deposit of earnest money in any other mode except in cash or by demand draft would not be acceptable. It leads us to think that this was an essential precondition for submitting tenders and the Respondents were not entitled to deviate from this. All tenders which were not accompanied by deposit of earnest money strictly in the manner indicated in the NIT deserved to be rejected. We reject the contention of the Respondents that the earnest money could be accepted even when it was deposited by some mode other than those in NIT. We also hold that Clause 6 of NIT is not merely ancillary or subordinate condition but in view of the language in which is couched the same was a crucial and essential terms of the tender which could not be deviated from.” 41. In appeal, this Court in Poddar Steel 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 in Poddar Steel 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 (16 of 28) [CW-4891/2017] the deviation, others could also have become eligible to participate in the bidding process. This principle was ignored in Poddar Steel. 43. Continuing in the vein of accepting the inherent authority of an employer to deviate from the terms and conditions of an NIT, and re-introducing the privilege-of- participation principle and the level playing field concept, this Court laid emphasis on the decision making process, particularly in respect of a commercial contract. One of the more significant cases on the subject is the three-judge decision in Tata Cellular v. Union of India (1994) 6 SCC 651 which gave importance 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: “22. 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 award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice 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.” (17 of 28) [CW-4891/2017] This Court then laid down the questions that ought to be asked in such a situation. It was said: “22. … 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 the NIT and the GTC was certainly not irrational in any manner whatsoever or intended to favour anyone. The decision was lawful and not unsound. 45. Rashmi Metaliks was a comparatively different case inasmuch as Clause (j) of the NIT was the subject matter of consideration. This Clause required a bidder to submit \"Valid PAN No., VAT No., copy of acknowledgment of latest income tax return and professional tax return.\" The employer interpreted this to be an essential term for qualifying in the bidding process. This view was upheld by a learned Single Judge and the Division Bench of the Calcutta High Court. This Court reversed in the following words: “18. We think that the income tax return would have assumed the character of an essential term if one of the qualifications was either the gross income or the net income on which tax was attracted. In many cases this is a salutary stipulation, since it is indicative of the commercial standing and reliability of the tendering entity. This feature being absent, we think that the filing of the latest income tax return was a collateral term, and accordingly the Tendering Authority ought to have brought this discrepancy to the notice of the Appellant Company and if even thereafter no rectification had been carried out, the position may have been appreciably different.” (18 of 28) [CW-4891/2017] Essentially therefore, this Court substituted its view for that of the employer who interpreted this term of the NIT to be mandatory for compliance. Rashmi Metaliks followed Poddar Steel and apparently overlooked the dictum laid down in Ramana Dayaram Shetty, G.J. Fernandez, Tata Cellular and Jagdish Mandal and must be confined to its own peculiar facts. In any event, this decision does not advance the case of any of the parties before us. 46. It is true that in Poddar Steel and in Rashmi Metaliks a distinction has been drawn by this Court between essential and ancillary and subsidiary conditions in the bid documents. A similar distinction was adverted to more recently in Bakshi Security and Personnel Services Pvt. Ltd. v. Devkishan Computed Pvt. Ltd. 2016 (7) SCALE 425 through a reference made to Poddar Steel. In that case, this Court held a particular term of the NIT as essential (confirming the view of the employer) and also referred to the \"admonition\" given in Jagdish Mandal followed in Michigan Rubber (India) Limited v. State of Karnataka (2012) 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 (19 of 28) [CW-4891/2017] 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 questioned, otherwise this Court would be taking over the function of the tender issuing authority, which it cannot. 49. Again, looked at from the point of view of the employer if the Courts take over the decision-making function of the employer and make a distinction between essential and non-essential terms contrary to the intention of the employer and thereby re-write the arrangement, it could lead to all sorts of problems including the one that we are grappling with. For example, the GTC that we are concerned with specifically states in Clause 15.2 that \"Any Bid not accompanied by an acceptable Bid Security/EMD shall be rejected by the employer as non-responsive.\" Surely, CCL ex facie intended this term to be mandatory, yet the High Court held that the bank guarantee in a format not prescribed by it ought to be accepted since that requirement was a non-essential term of the GTC. From the point of view of CCL the GTC has been impermissibly re-written by the High Court. 50. Yet another problem could be faced by an employer (such as CCL) if the language used in the terms of the NIT or the GTC is not adhered to and its plain meaning discarded. A problem could be faced by an employer if every bidder furnishes a bank guarantee in a different format or one that it is comfortable with. In such a situation, CCL would have to scrutinize each bank guarantee to ascertain whether it meets with its (20 of 28) [CW-4891/2017] requirements and the NIT and the GTC. Apart from the text of the bank guarantee, minor changes could be made by a bidder such as enforceability in a place other than Ranchi (but in Jharkhand) etc. This would place an avoidable and undue burden on the employer particularly if there are a large number of bidders. 51. Not only this, any decision taken by the employer in accepting or rejecting a particular bank guarantee in a format 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 regard and an employer could deviate from the terms of the bid document but only within the parameters mentioned above.” 53. Nazir Ahmed has been followed in dozens of decisions rendered by this Court and by other constitutional Courts in the country. The Central Vigilance Commission has accepted this principle in a modified form as a guiding principle in its circular dated 31st December, 2007 wherein it is mentioned that all organizations ought to evolve a procedure for acceptance of bank guarantees that is compatible with the guidelines of banks and the Reserve Bank of India. One such requirement is that the bank guarantee should be in a proper prescribed format and should be verified verbatim on receipt with the original. (21 of 28) [CW-4891/2017] Adherence to this principle of verbatim verification would not only avoid undue problems for the employer but would also virtually eliminate subjectivity on the part of the employer. 54. In this context, and in the present times, it is important to note that the World Bank has ranked India extremely low in matters relating to enforcement of contracts and ease of doing business. Out of 189 countries worldwide, India is ranked 178 in the matter of enforcement of contracts and 130 in the matter of ease of doing business. One of the possible reasons for this extremely low ranking given to our country is the failure of all parties concerned in strictly adhering to the terms of documents such as the NIT and the GTC. In so far as the present case is concerned, the NIT was floated on 5th August, 2015 and one year later, we are still struggling with the issue of acceptance of a bank guarantee for a contract of about Rs. 2000 crores-certainly not a small sum. Conclusion 55. On the basis of the available case law, we are of the view that since CCL had not relaxed or deviated from the requirement of furnishing a bank guarantee in the prescribed format, in so far as the present appeals are concerned every bidder was obliged to adhere to the prescribed format of the bank 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. (22 of 28) [CW-4891/2017] 57. The impugned judgment and order passed by the Division Bench of the Jharkhand High Court is accordingly set aside and these appeals are allowed.” Thereafter, relying on the decision rendered in Central Coalfields Ltd. & Anr. vs. SLL-SML (Joint Venture Consortium & Ors., (supra), again the Hon’ble Supreme Court in Afcons Infrastructure Ltd. vs. Nagpur Metro Rail Corporation Ltd. & Anr. (supra) has held as under: “11. Recently, in Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium) 2016(8) SCALE 99 it was held by this Court, relying on a host of decisions that the decision making process of the employer or owner of the project in accepting or rejecting the bid of a tenderer should not be interfered with. Interference is permissible only if the decision making process is mala fide or is intended to favour someone. Similarly, the decision should not be interfered with unless the decision is so arbitrary or irrational that the Court could say that the decision is one which no responsible authority acting reasonably and in accordance with law could have reached. In other words, the decision making process or the decision should be perverse and not merely faulty or incorrect or erroneous. No such extreme case was made out by GYT-TPL JV in the High Court or before us. 12. In Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay (1989) 3 SCC 293 it was held that the constitutional Courts are concerned with the decision making process. Tata Cellular v. Union of India (1994) 6 SCC 651 went a step further and held that a decision if challenged (the decision having been arrived at through a valid process), the constitutional Courts can interfere if the decision is perverse. 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. This was confirmed in Jagdish Mandal v. State of Orissa (2007) 14 SCC 517 as mentioned in Central Coalfields. (23 of 28) [CW-4891/2017] 13. In other words, a mere disagreement with the decision making process or the decision of the administrative authority is no reason for a constitutional Court to interfere. 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. 14. We must reiterate the words of caution that this Court has stated right from the time when Ramana Dayaram Shetty v. International Airport Authority of India (1979) 3 SCC 489 was decided almost 40 years ago, namely, that the words used in the tender documents cannot be ignored or treated as redundant or superfluous- they must be given meaning and their necessary significance. In this context, the use of the word 'metro' in Clause 4.2(a) of Section III of the bid documents and its connotation in ordinary parlance cannot be overlooked. 15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional Courts but that by itself is not a reason for interfering with the interpretation given. 16. In the present appeals, although there does not appear to be any ambiguity or doubt about the interpretation given by NMRCL to the tender conditions, we are of the view that even if there was such an ambiguity or doubt, the High Court ought to have refrained from giving its own interpretation unless it has come to a clear conclusion that the interpretation given by NMRCL was perverse or mala fide or intended to favour one of the bidders. This was certainly not the case either before the High Court or before this Court.” (24 of 28) [CW-4891/2017] The Hon’ble Supreme in Montecarlo Ltd. vs. NTPC Ltd. (supra) has reiterated the position of law and has approved the statement of law as defined in the earlier decisions, in the following paragraphs: “19. In Jagdish Mandal v. State of Orissa and Ors the Court has held that 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 award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. 20. In Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd and Anr, it has been ruled that the State can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It has been further held that the State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process, the court must exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. 21. In B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. and Ors. a two-Judge Bench, after referring to series of judgments has culled out certain principles which include the one that where a decision has been taken purely on public interest, the court ordinarily should apply judicial restraint. 22. In Michigan Rubber (India) Ltd. (supra) the Court referred to the earlier judgments and opined that before a court interferes in tender or contractual matters, in exercise of power of judicial review should pose to itself the question whether the process adopted or decision made by the authority is mala fide or intended to favour someone or whether the process adopted or (25 of 28) [CW-4891/2017] decision made is so arbitrary and irrational that the judicial conscience cannot countenance. Emphasis was laid on the test, that is, whether award of contract is against public interest. 23. Recently in Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd. a two-Judge Bench eloquently exposited the test which is to the following effect:- “We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional Courts but that by itself is not a reason for interfering with the interpretation given.” 24. We respectfully concur with the aforesaid statement of law. We have reasons to do so. In the present scenario, tenders are floated and offers are invited for highly complex technical subjects. It requires understanding and appreciation of the nature of work and the purpose it is going to serve. It is common knowledge in the competitive commercial field that technical bids pursuant to the notice inviting tenders are scrutinized by the technical experts and sometimes third party assistance from those unconnected with the owner’s organization is taken. This ensures objectivity. Bidder’s expertise and technical capability and capacity must be assessed by the experts. In the matters of financial assessment, consultants are appointed. It is because to check and ascertain that technical ability and the financial feasibility have sanguinity and are workable and realistic. There is a multi-prong complex approach; highly technical in nature. The tenders where public largesse is put to auction stand on a different compartment. Tender with which we are concerned, is not comparable to any scheme for allotment. This arena which we have referred requires technical expertise. Parameters applied are different. Its aim is to achieve high degree of perfection in execution and adherence to (26 of 28) [CW-4891/2017] the time schedule. But, that does not mean, these tenders will escape scrutiny of judicial review. Exercise of power of judicial review would be called for if the approach is arbitrary or malafide or procedure adopted is meant to favour one. The decision making process should clearly show that the said maladies are kept at bay. But where a decision is taken that is manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the court should follow the principle of restraint. Technical evaluation or comparison by the court would be impermissible. The principle that is applied to scan and understand an ordinary instrument relatable to contract in other spheres has to be treated differently than interpreting and appreciating tender documents relating to technical works and projects requiring special skills. The owner should be allowed to carry out the purpose and there has to be allowance of free play in the joints. 25. In view of the aforesaid analysis, we do not perceive any infirmity in the judgment and order passed by the High Court and, accordingly, the appeal stands dismissed. In the facts and circumstances of the case, there shall be no order as to costs.” In the case in hand, the petitioner has not furnished the earnest money in the form of bank guarantee as per the NIT document up to the last date of submission of tender as well as up to the opening of technical bid. The bank of the petitioner has specifically informed the respondents vide communication Annexure-R/4 that the bank guarantee dated 08.02.2017 cannot be encashed or executed in the name of any other authority except the authority in whose favour it is issued. Though the bank guarantee dated 08.02.2017 was later on amended on 07.03.2017 in favour of correct authority but by that time the last date of submissions of tender bid and opening of technical bid was already over and admittedly there is no provision in the tender document (27 of 28) [CW-4891/2017] by which the condition of submitting the bank guarantee in favour of specific authority can be relaxed. If the amended bank guarantee, submitted by the petitioner had been considered by the respondent-CPWD, the other bidders, who had not bid or had not filed the bank guarantee in proper format, could say that if they had known that earnest money in the form of bank guarantee can be furnished in the name of other authority they too would have done so. Hon’ble Supreme Court has dealt with this issue in para 36 of the decision rendered in Central Coalfields Ltd. & Anr. vs. SLL-SML (Joint Venture Consortium & Ors., (supra) and disapproved the same.. Looking to all these circumstances, no fault can be found with the decision of the respondent-CPWD in declaring the petitioner as disqualified from the bidding process as per the terms of the NIT. The decisions of the Bombay High Court, on which the petitioner has placed reliance, are distinguishable on the facts and are of no help to the petitioner in view of the subsequent decisions of the Hon’ble Supreme Court in Afcons Infrastructure Ltd. vs. Nagpur Metro Rail Corporation Ltd. & Anr. and Montecarlo Ltd. vs. NTPC Ltd. (supra). Learned counsel for the petitioner has also attempted to convince this Court that the judgment of the Hon’ble Supreme Court rendered in Central Coalfields Ltd. & Anr. vs. SLL-SML (Joint Venture Consortium & Ors., (supra) cannot be relied as (28 of 28) [CW-4891/2017] the same ought to be referred to the Larger Bench of Hon’ble Supreme Court as the earlier decision of that Court rendered in Poddar Steel Corporation vs. Ganesh Engineering Works & Ors. (supra) was approved in Tata Cellular vs. Union of India (supra), which is delivered by a Larger Bench. Reliance is placed on the decision of Hon’ble Supreme Court rendered in Central Board of Dawoodi Bohra Community and Anr. vs. State of Maharashtra and Anr. reported in AIR 2005 SC 752. However, this Court cannot express any opinion on this and only that Court, which has passed the above referred judgment can address this issue. In view of the above discussions, no interference is called for in the decision of the respondent-CPWD in disqualifying the petitioner from bidding process. Hence, the instant writ petition fails and is, hereby dismissed. There shall be no order as to costs. (VIJAY BISHNOI)J. m.asif/PS "