2015 (3) TMI 1302 - HC - Indian Laws

Bid process - whether the Bid submitted is substantially responsive and whether the rejection of the bid on a hyper technical ground would be in the public interest requiring wider participation of bidders to ensure healthy competition more so in view of the fact that the no unfair advantage had been gained by the petitioner in this process and the petitioners were not stealing a march over any of their competitors by altering their bid amount? - Held that - We are of the view that the Bid of the Petitioner cannot be held to be materially non-responsive. Rejecting the Bid of the Petitioner, in these circumstances, would be hyper technical and would not be in the public interest requiring wider participation of bidders to ensure healthy competition. Further, in our view, no unfair advantage has been gained by the petitioners in this process and the petitioners are not stealing a march over any of their competitors by altering their bid amount. In view, of the above, the respondents are directed to consider the bid of the petitioners and not to reject the same as non-responsive on this ground. The Writ Petition is allowed, with no orders as to costs.

Summary

Issues Involved:
1. Validity and responsiveness of the Bank Guarantee submitted as Earnest Money Deposit (EMD).
2. Whether rejection of the bid on a hyper-technical ground is in public interest.
3. Applicability of tender conditions and amendments.
4. Interpretation of relevant legal precedents regarding minor discrepancies in tender submissions.

Issue-wise Detailed Analysis:

1. Validity and Responsiveness of the Bank Guarantee Submitted as Earnest Money Deposit (EMD):
The petitioners submitted a Bank Guarantee (BG) as EMD that was short by seven days. Upon discovery of this discrepancy during the bid opening, the petitioners extended the BG validity and submitted the amended BG the next day. The central question was whether this minor discrepancy rendered the bid non-responsive. The court examined clauses 19.7, 27.3, and 28 of the tender document, which outline the conditions for EMD submission and the criteria for responsiveness. Clause 19.7 specifies that EMD protects the purchaser against the risk of the bidder's conduct, warranting forfeiture if the bidder withdraws or alters the bid. The court noted that the petitioners had rectified the error promptly, and the discrepancy did not constitute a material deviation affecting the bid's responsiveness.

2. Whether Rejection of the Bid on a Hyper-technical Ground is in Public Interest:
The court considered whether rejecting the bid on the basis of the seven-day discrepancy served the public interest. It referenced the decision in Kapsch Metro JV, where the court held that minor discrepancies should not invalidate a bid if no unfair advantage is gained and wider competition is in public interest. The court found that the petitioners' prompt correction of the BG validity and the lack of any unfair advantage supported the argument that rejecting the bid on this ground would be hyper-technical and contrary to public interest.

3. Applicability of Tender Conditions and Amendments:
The tender document had undergone nine amendments, including changes to the bid opening date and EMD validity period. The petitioners calculated the BG validity based on the original tender date, resulting in the seven-day shortfall. The court acknowledged the petitioners' argument that the amendments contributed to the error and found this plausible. It emphasized that the purpose of the EMD was to protect against bidder misconduct, which was not threatened in this case.

4. Interpretation of Relevant Legal Precedents Regarding Minor Discrepancies in Tender Submissions:
The court relied on precedents such as Kapsch Metro JV and Telecommunications Consultants India Ltd., which supported the waiver of minor technical irregularities in bids. These cases established that minor discrepancies, if promptly rectified and not affecting the fairness of the process, should not lead to bid rejection. The court also distinguished the present case from Titagarh Wagons Ltd and M/S. Balkrishna Ramkaran Goyal, where the discrepancies were more significant and not rectified in a timely manner.

Conclusion:
The court concluded that the petitioners' bid could not be deemed materially non-responsive due to the minor discrepancy in BG validity, which was promptly corrected. It directed the respondents to consider the bid and not reject it on this hyper-technical ground, emphasizing the need for wider participation and healthy competition in public interest. The writ petition was allowed with no orders as to costs.