2001 (1) TMI 921 - SC - Companies Law

Whether the correction made by the appellant in the bid documents of respondent Nos.1 to 4 and consequential evaluation of their bid communicated with letter dated December 18 1999 are valid in law? Whether respondents 1 to 4 are entitled to seek correction in their bid documents either under ITB or in equity and the direction given by the High Court to the appellant to permit the correction of errors is sustainable? Held that - The contract is awarded normally to the lowest tenderer which is in public interest. The principle of awarding contract to the lowest tenderer applies when all things are equal. Merely because a bid is the lowest the requirements of compliance of rules and conditions cannot be ignored. It is obvious that the bid of respondent Nos.1 to 4 is the lowest of bids offered. As the bid documents of respondent Nos.1 to 4 stands without correction there will be inherent inconsistency between the particulars given in the annexure and the total bid amount it cannot be directed to be considered along with other bid on the sole ground of being the lowest. We find no force in the submission that as under Clause 14.2 items against which no rate or price is entered by the bidder will not be paid by the employer when executed and shall be deemed covered by the other rates and prices in the bill of quantities the unit price in items containing errors be ignored and the bid be considered on the basis of total price bid which is the lowest. In our view there is a basic distinction between a case where against some items no rates or prices are quoted and a case where some rate is quoted. Whereas in the former case the bidder will not be entitled to claim any specific amount for the work done by him in the absence of any rate for that work because in the aforementioned clause it is clarified that the bidders will not be paid by the employer and that the execution of the work shall be deemed covered by other rates and prices in the bill of quantities but in the latter case the bidder will be entitled to claim for the work executed on the basis of quoted price/rate. We may however clarify that the appellant is not obliged to award contract to any of the bidders at their quoted price bid. It is always open to the appellant to negotiate with the next lowest bidder for awarding the contract on economically viable price bid. For the reasons abovementioned though the impugned order of the High Court insofar as it relates to quashing of letter of the appellant dated December 18 1999 falls within the purview of judicial review yet the direction to the appellant to permit correction of errors by respondents 1 to 4 in their bid documents and consider their bid along with other bid goes far beyond the scope of judicial review. In the result we uphold the impugned order of the Division Bench insofar as it relates to quashing of communication and letter dated December 18 1999 and set aside that part of the impugned order giving direction to the appellant to permit respondent Nos.1 to 4 to correct bid documents and to consider their bid after correction along with other bids. The appeal is thus allowed in part. On the facts and in the circumstances of this case we leave the parties to bear their own costs.

Summary

Issues Involved:
1. Validity of the corrections made by the appellant in the bid documents of respondent Nos.1 to 4.
2. Entitlement of respondent Nos.1 to 4 to seek correction in their bid documents under ITB or in equity.
3. Scope of judicial review in administrative actions related to tender processes.
4. Public interest considerations in awarding contracts.

Detailed Analysis:

1. Validity of the Corrections Made by the Appellant:
The appellant corrected the bid documents of respondent Nos.1 to 4, identifying arithmetic errors as per Clause 29 of the Instructions To Bidders (ITB). The corrections and subsequent evaluation were communicated on December 18, 1999. The High Court found these corrections unsustainable, noting that the errors were beyond the scope of Clause 29.1, which only allows correction of arithmetic errors, not changes to the unit rate.

2. Entitlement to Seek Correction:
Respondent Nos.1 to 4 argued that the errors were due to a systematic computer failure and were clerical, not arithmetic. They sought correction under the ITB and in equity, emphasizing that their bid was the lowest. However, the court held that the mistakes, even if unintentional, were not beyond the control of the respondents and could have been avoided with due diligence. The court further noted that permitting such corrections would violate Clauses 24.1, 24.3, and 29.1 of the ITB, which do not allow for post-submission modifications.

3. Scope of Judicial Review:
The court referenced the principles from Tata Cellular Vs. Union of India, emphasizing judicial restraint in administrative actions and the importance of not substituting administrative decisions with judicial ones. The court found that the High Court's direction to allow corrections in the bid documents exceeded the permissible scope of judicial review.

4. Public Interest Considerations:
While the bid of respondent Nos.1 to 4 was the lowest, the court stressed the importance of adhering to the ITB rules to maintain the integrity and fairness of the tender process. It was noted that relaxing the rules for one bidder could lead to discrimination and arbitrariness, undermining public confidence in the process. The court clarified that the appellant could negotiate with the next lowest bidder for an economically viable bid.

Conclusion:
The court upheld the High Court's decision to quash the appellant's communication dated December 18, 1999, but set aside the direction to permit corrections in the bid documents of respondent Nos.1 to 4. The appeal was allowed in part, with each party bearing its own costs.