2015 (10) TMI 2727 - SC - Indian Laws

Cancellation of Tender Notice - quashing of e-tender process - non-submission of draft by some of the bidders (containing the tender cost and earnest money) required to be filed along with the tender - Held that - A careful reading of the impugned judgment and order would show that none of the aforesaid aspects have been borne in mind by the High Court and it has failed to appreciate the same in a proper perspective while exercising its judicial review power. The High Court has erred in quashing the decision of the Appellant-Corporation regarding the cancellation of its earlier tender notice and also the subsequent tender notice issued afresh by it on 13.12.2012 for the same works. The High Court has failed to see that the Appellant-Corporation adopted a fair and transparent method by inviting the bids for the re-tender notice issued by it. The High Court has not found any malafide intention on the part of Appellant-Corporation in inviting the fresh bids after taking the decision to cancel its earlier tender notice. The Appellant-Corporation, being the custodian of public finance, took its decision objectively with a bonafide intention to serve the best interest of the public in general - the Appellant-Corporation has not committed any wrong in cancelling its earlier tender notice and issuing subsequent tender notice afresh inviting bids from the eligible contractors. The decision of the High Court in quashing the Appellant-Corporation s decision of cancelling the earlier tender vide corrigendum dated 30.11.2012 and also the subsequent e-tender process is vitiated in law and therefore, the same is liable to be set aside - appeal allowed.

Summary

Issues Involved:
1. Cancellation of earlier tender notice by the Appellant-Corporation.
2. Issuance of a subsequent tender notice.
3. High Court's decision to quash the cancellation and subsequent tender notice.
4. Reasonableness of rates quoted by the Respondents.
5. Application of CVC Guidelines.
6. Allegations of arbitrariness and violation of Article 14 of the Constitution of India.

Detailed Analysis:

1. Cancellation of Earlier Tender Notice by the Appellant-Corporation:
The Appellant-Corporation, South Delhi Municipal Corporation, cancelled the earlier tender notice (NIT No. 21 dated 15.11.2012) due to "Administrative Reasons" as stated in the corrigendum dated 30.11.2012. The Respondents, who were declared successful bidders, were orally informed about the cancellation due to non-submission of draft by some bidders. Dissatisfied with the oral information, the Respondents insisted on written intimation, leading to the issuance of the aforementioned corrigendum.

2. Issuance of a Subsequent Tender Notice:
On 13.12.2012, the Appellant-Corporation issued a fresh NIT No. 24 inviting new bids. This action was taken without responding to the legal notice sent by the Respondents on the same day.

3. High Court's Decision to Quash the Cancellation and Subsequent Tender Notice:
The High Court quashed the Appellant-Corporation's decision to cancel the earlier tender and directed the Corporation to process the bids submitted by the Respondents in accordance with the original NIT No. 21. The High Court also quashed the subsequent tender process initiated by NIT No. 24. The High Court held that the process adopted by the Corporation in concluding that the rates offered were high was faulty.

4. Reasonableness of Rates Quoted by the Respondents:
The Appellant-Corporation contended that the rates quoted by the Respondents were much higher than those for similar works awarded in the same financial year. The Corporation argued that the internal system for financial checks justifies the reasonableness of the rates by comparing them with recent similar works. The Respondents countered that the rates were based on the Delhi Schedule of Rates and were below the rates mentioned in the Corporation's circulars, thus challenging the Corporation's claim of high rates.

5. Application of CVC Guidelines:
The Appellant-Corporation emphasized that the CVC Guidelines ensure transparency and the best price for executing works. The Corporation argued that the cancellation and re-tendering were in line with these guidelines to protect public money and ensure reasonable rates.

6. Allegations of Arbitrariness and Violation of Article 14 of the Constitution of India:
The Appellant-Corporation asserted that its decision was neither arbitrary nor unreasonable and was taken in the best interest of public finance. The High Court did not find any malafide intention on the part of the Corporation to favor any bidder. The Corporation's decision was deemed to be objective and in the public interest.

Conclusion:
The Supreme Court found that the High Court failed to appreciate several key aspects, including the bonafide intention of the Appellant-Corporation to serve the best interest of the public, the reasonableness of rates, and adherence to CVC Guidelines. The High Court's decision to quash the cancellation and subsequent tender notice was erroneous. The Supreme Court allowed the appeal, setting aside the High Court's judgment, and restored the re-tender notice. The Respondents were given the opportunity to submit their tenders, and the Corporation was directed to proceed with the evaluation of bids without delay. No order as to costs was made.