2019 (1) TMI 2013 - SC - Indian Laws

Furnishing of Bank Guarantee - whether it is possible for the appellant to condone the initial bank guarantee being given for an admittedly incorrect period of 6 months? - HELD THAT - Given the fact that in the present case, 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 in the present case, would amount to perversity in the understanding or appreciation of the terms of the tender conditions, which must be interfered with by a constitutional court. It did not advert to the main point in question, but instead focused on supposed contradictions made in an affidavit filed by the appellant in the High Court. Having gone through the affidavit, there are no such contradiction. It is also necessary to advert to the final relief given by the High Court. If, for the reason given by the High Court, the bid of the Respondent No. 2 had to be rejected, it cannot be understood as to how Respondent No. 2 can be brought back in the event that Respondent No. 1 does not agree to carry out the work for the lower bid amount of Respondent No. 2. Appeal disposed off.

Summary

Issues Involved:
1. Validity of the bank guarantee period.
2. Compliance with tender conditions.
3. Material deviation from tender requirements.
4. Judicial review of the tender process.

Detailed Analysis:

1. Validity of the bank guarantee period:
The primary issue revolves around whether the initial bank guarantee period of six months furnished by Respondent No. 2, instead of the required 40 months, could be rectified post submission. The tender conditions explicitly required the bank guarantee to be valid up to one month after the defect liability period, totaling 40 months. Despite Respondent No. 2 extending the guarantee period to 40 months after the deficiency was pointed out, the court held that the initial non-compliance constituted a substantial deviation from the tender requirements.

2. Compliance with tender conditions:
Clause 2.15 of the tender conditions emphasized that any deviation from the contractual terms, specifications, or other requirements would render the bid non-responsive. The court noted that the tenderers were cautioned that deviations would lead to outright rejection. The tender evaluation committee initially accepted the bid of Respondent No. 2, despite the deviation, which the court found to be contrary to the tender conditions.

3. Material deviation from tender requirements:
Clause 2.35 defined a substantially responsive bid as one that conforms to all terms, conditions, and specifications without material deviation. A material deviation is one that affects the scope, quality, or performance of the works, or limits the employer’s rights or the bidder’s obligations. The court concluded that the six-month bank guarantee was a material deviation, making the bid non-responsive. The court emphasized that such a bid should have been rejected outright and could not be made responsive by subsequent correction.

4. Judicial review of the tender process:
The court referenced established legal principles, noting that essential conditions of a tender must be strictly complied with. It cited precedents, including *Bakshi Security and Personnel Services Pvt. Ltd. v. Devkishan Computed Pvt. Ltd. and Ors.*, which held that essential tender conditions must be rigidly enforced. The court also referred to *Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd.*, reiterating that tender documents must be interpreted as per their terms and any deviation from essential conditions cannot be condoned.

Conclusion:
The court dismissed the appeal, holding that the deviation in the bank guarantee period was a material non-compliance that could not be rectified post submission. The court ordered that the work be performed by Respondent No. 1 at the bid amount of Rs. 39.15 crores, as Respondent No. 1 agreed to match the bid of Respondent No. 2. The judgment of the High Court was modified to this extent, ensuring adherence to the strict compliance of tender conditions.