BAKSHI SECURITY AND PERSONNEL SERVICES PVT LTD vs. DEVKISHAN COMPUTED PVT LTD

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 6978 of 2016 (ARISING OUT OF SLP (CIVIL) NO.5695 OF 2016) BAKSHI SECURITY AND PERSONNEL SERVICES PVT. LTD. …APPELLANT VERSUS DEVKISHAN COMPUTED PVT. LTD. AND ORS. …RESPONDENTS J U D G M E N T R.F. Nariman, J. 1. Leave granted. JUDGMENT 2. On 20.11.2014, the Commissioner of Transport, Government of Gujarat, floated a tender seeking bids for services inter alia of supervisors, computer programmers, data entry operators, and electrician staff at 11 RTO check-posts. A few material clauses of the tender are set out hereinbelow:- 1 Page 1 “2.5.5 Commercials

2.5.6 Fixed Price

2.8.3 Rejection of Bid

2 Page 2 Annexure – 2 (Financial Bid) Format for Financial Bid

3. If the component of salary quoted is less than the minimum wages prescribed or the components of mandatory statutory 3 Page 3

JUDGMENT arrived at a minimum wage figure of Rs.3,00,92,346/-. Inasmuch as both the Appellant as well as Respondent No.1 gave bids which were below this figure, (which would, therefore, be less than the amount required as minimum wages, in accordance with the tender conditions read with the Annexure 2 thereof), both the Appellant as well as Respondent No.1 were held to be ineligible. A decision was, therefore, taken to award 4 Page 4 the tender to the third bidder, namely, M/s Airan Consultants Pvt. Ltd. Respondent No.1 approached the Gujarat High Court in a writ petition challenging the aforesaid decision. By its

Department of the Government of Gujarat furnished to all the competing bidders the Labour Department’s calculation that minimum wages plus bonus payable for the contract was Rs.3,00,92,346/-.

dated 2.11.2015 sticking to the original bid figure of 5 Page 5 Rs.2,92,93,944/-. On 3.9.2015, Respondent No.1, in response to the minimum wage figure disclosed, wrote to the Government of Gujarat, as follows:-

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decision that the actual minimum wage plus bonus worked out JUDGMENT to Rs.2,91,00,000/-, and thus revised their earlier figure of Rs.3,00,92,346/-. In the judgment under appeal, the High Court has stated, and it is not controverted before us, that this figure was not disclosed to either party.

doors of the High Court in a second writ petition filed by it. By 7 Page 7 the impugned judgment dated 22.2.2016, the High Court allowed Respondent no.1’s petition in the following terms:-

behalf of the Appellant, has pointedly referred to the tender JUDGMENT conditions and has argued before us that Respondent No.1’s writ petition was not at all maintainable in view of the fact that Respondent No.1 stuck to its earlier offer of Rs.2,77,68,000/- which was lower than the figure of Rs.3,00,92,346/- as well as the figure of Rs.2,91,00,000/- fixed by the Government upon advice given by the Labour Department, of minimum wage plus bonus. According to him, the without prejudice offer of 8 Page 8 Rs.3,00,92,346/- flew in the face of the tender conditions and, therefore, the writ petition being not maintainable, ought to have been dismissed both on the ground that the figure quoted by

learned senior counsel appearing on behalf of Respondent JUDGMENT No.1, has argued that it is an admitted fact that the revised figure of minimum wage was never disclosed to either of the parties and this being so, the judgment under appeal is correct. He also stated that though the High Court did not find malafides, yet it went out of its way to comment on the secret manner in which the Labour Department re-fixed the minimum wage at Rs.2,91,00,000/-, which is only one lakh above the 9 Page 9 Appellant’s figure of Rs.2,92,00,000/- and that, therefore, the said non-transparent process rendered the decision of the Government to award the tender to the Appellant as bad in law.

commercial bids have to strictly conform to the format provided JUDGMENT in Annexure 2 of the tender document. Annexure 2 which contains the format for the price bid makes it clear that the salary paid to deployed manpower should not be less than the minimum wage. It further goes on to state in paragraph 3 thereof that if the component of salary quoted is less than the minimum wage prescribed, the bid is liable to be rejected. On this ground alone, Respondent No.1‘s bid is liable to be 10 Page 10 rejected inasmuch as, vide its letter dated 3.9.2015, Respondent No.1 stuck to its original figure of Rs.2,77,68,000/- which is way below the minimum wage fixed by the

open ended nature of Respondent No.1’s bid, it went on to add that the offer of Respondent No.1 shall be treated as matching with the revised minimum wage calculation and that it is nowhere envisaged by the tender conditions that rejection of an offer which may have the potential of causing loss to the tenderer is present. It is not for the High Court to revisit a 11 Page 11 condition contained in Annexure 2 read with 2.5.5 of the tender in the manner aforesaid. Once the tender condition states that the tender must strictly conform to the format provided in

held as under:- “… The requirements in a tender notice can be classified into two categories — those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal 12 Page 12 compliance of the condition in appropriate cases….” [para 6] 16. Similarly in B.S.N. Joshi & Sons Ltd. v. Nair Coal

“…( i ) if there are essential conditions, the same must be adhered to; ( ii ) if there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully; ( iii ) if, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing; ( iv ) the parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance with another part of tender contract, particularly when the was also not in a position to comply with all the conditions of tender fully, unless the court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction; JUDGMENT ( v ) when a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may not ordinarily be interfered with; …” [para 66] 13 Page 13

writ jurisdiction cannot be utilized to make a fresh bargain between parties.

14 Page 14 under the standard policy for fire and extended to cover flood, cyclone etc. had come into being.”

“ 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 JUDGMENT 15 Page 15

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the newly arrived at minimum wage figure of Rs.2,91,00,000/- JUDGMENT to the two persons in the fray before us. Ordinarily, therefore, we would have asked the Government to disclose the second figure of minimum wage and restart the tendering process. However, we do not think that the justice of the case requires us to do so, for two reasons. First and foremost, Respondent No.1 before us has clearly violated the strict terms of the tender condition on every occasion and hence cannot be given relief. 17 Page 17 And, secondly, we already find that due to litigation the present tender has not taken off for over one year. In the absence of malafides, and indeed the High Court judgment has found that

JUDGMENT ……………………J. New Delhi; (R.F. Nariman) July 26, 2016 18 Page 18