Tender; Bakshi Security And Personnel Services Pvt. Ltd. Vs. Devkishan Computed Pvt. Ltd. [Supreme Court of India, 26-07-2016]

Tender seeking bids for services inter alia of supervisors, computer programmers, data entry operators, and electrician staff at 11 RTO check-posts.

Tender


IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

(Dipak Misra) and (R.F. Nariman) JJ.

July 26, 2016

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.

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:-

“2.5.5 Commercials

The Commercial Bids should strictly conform to the formats provided in Annexure 2 of this tender document.

2.5.6 Fixed Price

Prices quoted by the Bidder shall be fixed and no variation will be allowed under any circumstances during the entire period of the project. No open-ended Bid shall be entertained and the same is liable to be rejected straightaway.

2.8.3 Rejection of Bid

The hard-bound copy of Technical Bid Document shall be submitted in the form of printed document. Bids submitted by Telex, fax or email shall not be entertained. Any bid not secured in accordance with Clause 2.8 mentioned above, shall be rejected by COT without any further correspondence, as non-responsive. A bid that does not meet all pre-qualification criteria or is not responsive or not fulfilling technical evaluation shall be rejected by COT, and may not subsequently be made responsive by correction or withdrawal of the non-conforming deviation or reservation by the Bidder.

3.4.5

It shall be the responsibility of the Bidder to abide by the provisions of the labour welfare legislations, like The Payment of Wages Act, 1936, The Payment of Bonus Act, 1965, The Minimum Wages Act, 1948, The Equal Remuneration Act, 1976, The Payment of Gratuity Act, 1972, The Employees’ State Insurance Act, 1948, Contract Labor Act, 1970, The Workmen’s Compensation Act, 1923 and other similar legislations, rules, and orders as issued from time to time.

Annexure – 2 (Financial Bid)

Format for Financial Bid

Price Bid: (Financial/Commercial Bid submitted in physical form shall be liable for rejection. It should be submitted online only at https://www.nprocure.com)

Please provide price bid for supply of Man Power to be deployed at different Check-posts/CMC.

Sr. No. Particulars Qty Cost per person per month without tax Total cost for 24 months without tax
1 Data Entry operator 120
2 Computer Engineer 02
3 Electrician 12
4 Supervisor 12
Total
Additional Service Tax %
Grand Total

1. Salary paid to the deployed manpower should not be less than the minimum wages published as per the notification issued by state govt. labour department or other statutory benefits applicable. In case of revision of minimum wages/DA by the labour department, agency would be entitled to get the revised rates from Commissioner of transport.

2. Break-up of salary for each category of employee should be provided indicating clearly the wages, DA, other mandatory statutory benefits & the service charges.

3. If the component of salary quoted is less than the minimum wages prescribed or the components of mandatory statutory benefits are not included in the break-up, the bid is liable to be rejected.

4. The quantity of manpower required may vary and the supplier may be asked to supply upto 25% extra manpower at the rate quoted above.

5. L1 will be decided on grand total.

Signature:

Designation:

Date:

Seal:”

3. The financial bids were opened on 10.12.2014. 9 bidders gave financial bids of which only three were qualified. The Appellant bid for a total amount of Rs.2,92,93,944/-; Respondent No.1 bid for Rs.2,77,68,000/-, and one Airan Consultants Pvt. Ltd. made a bid for Rs.3,03,83,184/-.

4. On 26.2.2015, the Technical Evaluation Committee, after taking into account the opinion of the Labour Department, 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 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 judgment dated 11.8.2015, the High Court ultimately came to the conclusion that the tender in favour of M/s Airan Consultants Pvt. Ltd. ought to be quashed and set aside with the further direction that the Government of Gujarat shall give an opportunity to all three tenderers to resubmit their bids after being appraised of the minimum wage figure given by the Labour Department. This was done as the High Court was of the opinion that all the bidders ought to have been given an opportunity to revise their bills subsequent to the minimum wage calculated by the Labour Department.

5. In pursuance of the aforesaid judgment, the Transport 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/-.

6. In response to the above, the Appellant wrote a letter dated 2.11.2015 sticking to the original bid figure of 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:-

“(6.3) Thus, it can be seen that according to the calculation, Minimum Wages and other statutory benefits payable to the employees for 730 days [2 years of contract] comes to Rs.3,00,92,346 [without service tax]. The price at which I am ready to work is Rs.2,77,68,000 [without service tax]. Thus, against payment of wages and all statutory benefits of Rs.3,00,92,346/- and service tax thereon, am ready and willing to accept Rs.2,77,68,000 [plus service tax] from the Government. This would enable the Government to save Rs.23,24,346.00 and service tax thereon, and the ultimate beneficiary would be public exchequer.

(6.4) I have undertaken in past in writing that I am ready to incur loss as well. The price I have offered shall have no impediment on wages and statutory benefits to be paid to the employees as calculated by the Technical Evaluation Committee based on the report/ opinion of the Labour Commissioner. The tender document itself binds the contractor to abide by all labour welfare legislation, and therefore, there is no question of resiling from performing that part of contract from my end.

(6.5) Even in my previous letters also, I have undertaken that I shall conform to all labour welfare legislations even after accepting Rs.2,77,68,000 + Service Tax from the Government. I have also undertaken that I shall bear the burden of loss incurred on account of the margin between my bid and the amount of minimum wages and statutory benefits payable to my employees. The margin between the two shall not be hindrance in quality of services I would offer through my employees on these check-posts.

(6.6) Without prejudice to above, I am to state that I am ready to accept even Rs.3,00,92,346.00 + Service Tax, being the bare minimum wages payable to the employees during the life of the contract from the Government as calculated by the Technical Evaluation Committee based on the report of the Labour Commissioner, such offer will result into ‘No Profit No Loss’ business for me, but at the same time, it would create a burden of Rs.23,24,346.00 on the State Funds.”

7. On 12.10.2015, the Labour Department gave a second opinion that though Data Entry Operators are ordinarily to be treated as “skilled workers”, for the purpose of the present tender they should be treated as “semi skilled workers”. In view of this decision, the Government, on 30.10.2015, arrived at a decision that the actual minimum wage plus bonus worked out 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.

8. On 2.11.2015, Respondent No.1 again knocked at the doors of the High Court in a second writ petition filed by it. By the impugned judgment dated 22.2.2016, the High Court allowed Respondent no.1’s petition in the following terms:-

“8. Under the circumstances, the decision of the authorities to shortlist respondent No.3 for awarding the contract is set aside. The offer of the petitioner shall be treated as matching with the revised minimum wage calculation. The petitioner shall give such offer in clear writing and undertaking to the authorities latest by 25.2.2016. The respondent authorities, unless there is any other disqualification of the petitioner to carry out the contract, being the lower, shall accept the same.

9. Petition is disposed of.”

9. Being aggrieved by the aforesaid judgment, the Appellant is before us.

10. Shri Harin Raval, learned senior advocate appearing on behalf of the Appellant, has pointedly referred to the tender 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 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 Respondent No.1 was below the minimum wage fixed as also on the ground that no open ended bid is liable to be entertained. He further argued that the Court cannot make a contract between the parties by treating the offer of the Respondent No.1 as matched with the revised minimum wage calculation. He further argued that a Mandamus cannot be issued to straightaway award the tender to a person who does not conform to the essential conditions of the tender.

11. Countering these submissions, Shri Shyam Divan, learned senior counsel appearing on behalf of Respondent 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 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. He further argued that if the offer of the Respondent No.1 was treated as matching with the revised minimum wage calculation, the State will benefit by an amount of Rs.1 lakh and that this was well within the discretion of the High Court while exercising jurisdiction under Article 226 of the Constitution.

12. Having heard learned counsel for the parties, we agree with Shri Raval’s contention that Respondent No.1’s bid was contrary to the terms of the tender.

13. First and foremost, under tender condition 2.5.5, commercial bids have to strictly conform to the format provided 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 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 Government. Secondly, Shri Raval is also right in stating that the without prejudice offer of Rs.3,00,92,346/- is an offer which is not fixed, but open ended. This is clear from the fact that it was up to the Government then to pick up either figure by way of acceptance. This is clearly interdicted by clause 2.5.6 of the tender which states that prices quoted by the bidder have to be fixed, and no open ended bid can be entertained, the same being liable to be rejected straightaway. Such condition is obviously an essential condition of the tender which goes to the eligibility of persons who make offers under the tender.

14. Unfortunately, even though the High Court noticed 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 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 Annexure 2, and Annexure 2 in turn clearly states that if the component of salary quoted is less than the minimum wage prescribed, the bid is liable to be rejected, and the High Court cannot hold otherwise. The High Court’s further finding that Respondent No.1’s offer was “clear” is wholly incorrect. It was a without prejudice offer which muddied the waters and rendered the price quoted by the bidder as variable and not fixed.

15. The law is settled that an essential condition of a tender has to be strictly complied with. In