Tender conditions prohibiting below-par bonus quotations do not bar above-par bids.

The petitioner, a technically qualified railway contractor, participated in a tender for Integrated Housekeeping Services of Brahmaputra Mail and NE Express at Coaching Depot, Kamakhya, North East Frontier Railway. The petitioner was ranked L2, while respondent no. 4 was declared L1 and awarded the contract.

The petitioner challenged the award on the ground that respondent no. 4 had quoted above the prescribed rate for the bonus component under Item No. 1 of Schedule 2, allegedly contrary to Clause 12 of the Schedule of Rates. The petitioner contended that the bonus had to be quoted “at par” and that respondent no. 4’s bid was liable to summary rejection.

Respondent no. 4 had quoted a higher gross price but offered a 0.80% rebate, resulting in a net bid lower than the petitioner’s bid and its consequent declaration as L1.

The petitioner’s representation was not accepted, leading to the writ petition under Article 226 of the Constitution.

Whether respondent no. 4’s quotation of an amount above par for the bonus component violated Clauses 12 and 13 of the tender conditions and required summary rejection of its bid?

Whether acceptance of respondent no. 4’s bid, after applying the 0.80% rebate, amounted to adoption of a hidden criterion or otherwise warranted judicial interference under Article 226?

The Court applied the principles governing judicial review of tender and public-contract decisions under Article 226, including the requirement of fairness, objectivity and absence of undisclosed or hidden criteria, as recognised in Md. Makrub Khan @ Md. Junu Khan v. Manuj Kumar Sarmah and Dutta Associates Pvt. Ltd. v. Indo Merchantiles Pvt. Ltd.

At the same time, the Court applied the rule that the tendering authority, being the author and owner of the tender document, is ordinarily entitled to interpret its terms, and that such interpretation should receive judicial deference unless unreasonable or absurd, as stated in Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd.

On the contractual terms, Clause 12 required the bonus component to be reimbursed at the prescribed rate and provided for summary rejection where the bidder quoted below par; Clause 13 required examination of each item after applying any rebate and similarly prohibited the effective bonus rate from falling below par.

The Court interpreted Clauses 12 and 13 together and held that the tender document prohibited quoting the bonus component below par, but did not prohibit quoting it above par.

Although respondent no. 4 initially quoted a higher rate for bonus and submitted a higher gross bid, its 0.80% rebate reduced the effective net bid below the petitioner’s bid. The Court specifically found that, even after applying the rebate, the bonus component did not fall below the prescribed par rate; therefore, the summary-rejection condition under Clause 13 was not attracted.

The Railways’ interpretation was neither unreasonable nor absurd and was entitled to deference as the interpretation of the owner and author of the tender document.

The Court also rejected the allegation of a hidden criterion because the relevant clauses themselves disclosed the applicable restriction, and the petitioner’s reliance on other tenders was immaterial since those tenders contained different conditions expressly prohibiting quotations above par.

The award of the contract to respondent no. 4 was therefore not amenable to interference under Article 226. The writ petition was dismissed, the interim order was vacated, and no order as to costs was made.