REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL N.  1127    OF 2009 (Arising out of SLP (C) No. 111 of 2009)  

M/s. Sorath Builders                         ..…Appellant

Versus

Shreejikrupa Buildcon Limited & Anr.                          .….Respondents

JUDGMENT

Dr. Mukundakam Sharma, J.

1. Leave Granted.

2. In  the  present  appeal  what  is  under  consideration  is  the

construction  of  Veterinary  College  building  at  Navsari  Agricultural

University,  Gujarat  (hereinafter  referred  to  as  “University”).   Since

construction  of  the  aforesaid  building  was  required  to  be  done

immediately, University released the grant which was going to lapse on

31.03.2009.  The University issued a Tender Notice No. 20/2008-09 on

21.11.2008 inviting tenders for construction of Veterinary College building

at Navsari Agricultural University, Gujarat.  The tender notice was widely

advertised through publication in newspaper “Sandesh”, being the largest

local daily in the State of Gujarat.  The tender notice was also published

on the internet.  The notice inviting tenders required the following from

the bidders:

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a) Pre qualification documents had to be sent by 27.11.2008,

failing which the tender would be liable for rejection and

will not be opened;

i) “AA”  Class  certificate  with  minimum  80%  of  the  project  cost

turnover audited in the last financial year 2007-08;

ii) Bidding capacity value should be more than project cost;

iii) II Building category registration and above.

All the above documents have to be readily available with

any  builder  having  continuous  work  for  different

authorities.  

b) Last  date  of  “On  Line”  submitting  of  “Price  bid”  was

28.11.2008.

c) Tender  fees,  Earnest  Money  Deposit  (EMD)  and  other

documents can be submitted by 04.12.2008.

3. Pursuant to the aforesaid advertisement three bids were received by

the University out of which one was disqualified at the threshold for not

having the requisite experience.  Out of the remaining two, the bid of the

appellant – M/s. Sorath Builders was the lowest.  One of the terms and

conditions of the bid was that pre-qualification documents were required

to  be  sent  by  27.11.2008.   Since  the  bid  of  respondent  no.  1,

Shreejikrupa Buildcon Limited was sent  on 01.12.2008 i.e.  three days

after the last date of receiving these documents by the University the bid

of  respondent  no.  1  could  not  have  been  opened  as  it  was  received

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beyond  the  time  stipulated  and  accordingly  it  was  not  taken  into

consideration.   

4. The University considered the following stipulation in the tender:

“Late  date  of  “On  Line”  submission  of  price  bid  is  dated 28/11/2008  upto  18.00  hrs.   All  documents,  tender  fees, registration,  bank  solvency,  bank  guarantee  and  EMD  etc. duly  scan  along  with  the  tender  documents  should  be submitted  “On  Line”.   Last  date  for  submission  of  pre- qualification  documents  by  R.P.A.D./Speed  Post  is 27/11/2008.   Any  violation  in  the  above  instructions,  the tender will be liable for rejection and will not be opened”.

In terms of and in accordance with the mandate of the tender notice

the tender of respondent no. 1 - Shreejikrupa Buildcon Limited was not

opened.  Being  so  situated,  the  respondent  no.  1  filed  a  writ  petition

before  the High Court  of  Gujarat  praying for  quashing the decision of

respondent  no.  2  –  University  dated  8.12.2008  considering  the

respondent no. 1 as disqualified from participating in the tender selection

process  for  the  construction  of  Veterinary  College  building  at  Navsari

Agricultural University, Gujarat.   

5. The said writ petition was placed before the Division Bench  and

after looking into the records and after hearing the parties the Division

Bench  held  that  the  University  acted  arbitrarily  in  requiring  the  pre

qualification documents to be sent physically so as to reach the University

by R.P.A.D./Speed Post by 27.11.2008, inasmuch as it meant that the

contractor had to send pre qualification documents by the aforesaid mode

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by dispatching the same latest by 25.11.2008.  Consequently, the writ

petition was allowed and the decision of the respondent no. 2 - University

dated 10.12.2008 accepting the bid of the appellant was quashed and set

aside with a further direction that the University shall issue a fresh tender

notice with the same terms and conditions but it would also provide seven

days time for submitting the pre qualification documents after the end

date for downloading the bid documents.

6. Being aggrieved by the aforesaid Judgment and Order the present

appeal was filed in which several contentions were raised on behalf of the

parties.   

7. It is the case of the appellant before us that the High Court has

wrongly set  aside  a settled contract  pursuant  to  the tender  issued by

respondent no. 2 – University on the ground that the terms of the tender

were  arbitrary.   It  was also  argued that  the  High Court  has not  only

interfered with the terms and conditions of the tender but has written the

terms of  the  tender  itself  by  directing  the  University  to  issue  a  fresh

tender on the terms and conditions suggested in the said order.  It was

also submitted that jurisdiction of the writ court to interfere in the terms

of a contract is very limited and that even if two views are possible and

the authorities granting tender takes a particular view, the courts should

not interfere.   It  was also submitted by the counsel  appearing for  the

appellant that the time period which was granted by the University cannot

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be said to be too short for it was possible for the respondent no. 1 to

submit the bid after satisfying all the requirements.  It was also pointed

out  that  the  respondent  came  to  know  about  the  tenders  only  on

27.11.2008  as  he  was  undertaking  various  construction  works,  and

therefore  could not submit  the required pre qualification documents in

time within the stipulated date.  It was also submitted that so placed and

situated, the respondent no. 1 was not entitled to and competent to take

up  a  plea  that  he  did  not  receive  sufficient  time  to  submit  the  pre

qualification documents.

8. The  case  of  respondent  no.  1  on  the  other  hand  was  that  by

providing arbitrary time limit to submit pre qualification documents the

University tried to shut out competition and permitted only two eligible

parties to enter the fray.  It was also submitted that the price bid offered

by  respondent  no.  1  was  much  lower  than  the  appellant,  being  only

6.38% above the estimated contract value while  bid offer of appellant

was 21.21% above the estimated contract value, which would mean that

the University would be unnecessarily spending public money to the tune

of more than Rs. 1 crore.   

9. We  have  carefully  considered  the  aforesaid  submissions  of  the

counsel  appearing for  the parties.   So far  as the issue with regard to

stipulation  that  pre  qualification  documents  to  be  sent  latest  by

27.11.2008  for  the  estimated  contract  value  of  Rs.  8.40  crores,  is

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concerned,  three  parties  applied  and  submitted  their  tenders  and  on

scrutiny  it  was  found  that  one  out  of  the  three  did  not  satisfy  the

requirements,  and  therefore,  his  tender  was  rightly  rejected  by  the

parties.  So far as the tenders of the appellant and respondent no. 1 are

concerned, on going through the record we find that the respondent no. 1

never specifically raised the issue regarding paucity and shortage of time

as one of the grounds for challenging the decision of the University.  The

only stand that was taken by respondent no. 1 for late submission of his

pre qualification documents is that he came to know about the tenders

only on 27.11.2008 as he was undertaking various construction works,

and  therefore,  could  not  submit  all  the  required  pre  qualification

documents in time stipulated in the notice inviting tenders.  The aforesaid

stand  makes  it  crystal  clear  that  respondent  no.  1  was  prevented  in

submitting the required documents in time due to his personal difficulty

and not for  the time schedule attached to the notice  inviting tenders.

That was also not one of his grounds taken specifically in the writ petition

at any stage.  But only during the course of hearing such a contention

seems to have been raised which found favour with the High Court.  No

other intending bidder came to the court on any such plea that they were

deprived of an opportunity of submitting their tender due to paucity of

time and that any prejudice is caused to anyone due to time schedule

provided by the University. It appears that only during the hearing stage

a plea was raised which found favour with the High Court but as stated

above the aforesaid plea is without any merit for the advertisement was

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issued  on  21.11.2008  requiring  the  parties  to  submit  their  pre

qualification documents only by 27.11.2008.  Therefore, sufficient time

was provided to submit tender papers.  The University also permitted pre

qualification  documents  to  be  submitted  “On  Line”.   Therefore,  the

contention that the time was too short for submission of pre qualification

documents by 27.11.2008 is without any merit.   

10. We also find on record that the tender submitted by the appellant

was the lowest and the same was accepted as the same was found to be

reasonable, tenable, plausible and valid.  The High Court went beyond its

jurisdiction in setting aside the decision of the University in accepting the

bid of  the  appellant.   We are  of  the opinion that  there  is  no fault  or

arbitrariness in the decision making process of the University.  The said

decision cannot be said to be in any manner arbitrary or unreasonable.

The respondent no. 1 submitted his pre qualification documents late for

which he is only to be blamed.  The University has taken a specific stand

before us that the price settled for the tender is neither unreasonable nor

excessive in comparison with the project.  It was also stated before us

that the main interest of the University is to get a good quality Veterinary

College within the stipulated time because the grant  out  of  which the

payment of construction of the college is to be made would lapse on 31st

March, 2009 and that the University has already started the process of

admission  to  the  batch  of  students  for  the  coming  academic  year.

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Consequently  we feel  that a time bound completion  of  a good quality

Veterinary College has become a necessity.

11. We are of the considered opinion that there is definitely urgency in

the aforesaid project, and therefore, the process of awarding the contract

of construction should be expedited and the same should not be stalled in

between.   The  process  which  is  suggested  by  the  High  Court  in  its

Judgment and Order if allowed to be gone through the same would mean

prolonged delay in the completion of the project.   The project is time

bound and money must be utilized by 31st March, 2009.  The process of

re-tendering and allotment of fresh tender would mean delay and would

also be time consuming.   

12. The Supreme Court in number of decisions has held that there is a

vital  distinction  between  administrative  and  contractual  law.  In

Puravankara  Projects  Ltd.   vs.  Hotel  Venus  International  and

Others,  reported  in  (2007)  10  SCC 33,  in  which  one  of  us,  namely,

Justice Arijit Pasayat was a party, it was held as follows:

“tender  terms are contractual  and it  is the privilege of the Government which invites its tenders and courts do not have jurisdiction to judge as to how the tender terms should be framed.  By observing that there was an implied term which was not there in the tender, and postponing the time by which the bank guarantee had to be furnished, in essence the High Court directed modification of a vital term of the contract”.   

It further held that  

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“the statutory parameters have to be kept in view and the High Court can never alter or amend a contract entered into between the parties”.   

In Raunaq International Ltd. vs. I.V.R. Construction Ltd. and

Others, reported in (1999) 1 SCC 492, this Court had occasion to dispose

of a case of paramount importance of Government contract.  In the said

decision this Court has observed as follows:  

“where  rational  non-discriminatory  norms  have  been  laid down for granting of tenders, a departure from such norms can only be made on valid principles. The award of contract cannot  be  by  stopping  the  performance  of  the  contract  so awarded, there is a major detriment to the public because the construction of two thermal power units is held up on account of the dispute”.  

The court further held:  

“the award of a contract, whether it by a private party or by a public  body  or  the  State,  is  essentially  a  commercial transaction.   In  arriving  at  a  commercial  decision, considerations  which  are  of  paramount  importance  are commercial considerations, and the same would be:

(1) The price at which the other side is willing to do the work;

(2) Whether the goods or services offered are of the requisite specifications;

(3) Whether the person tendering has the ability  to deliver  the  goods  or  services  as  per  specifications.   When large  works  contracts  involving  engagement  of  substantial manpower or  requiring specific skills are to be offered, the financial ability of the tenderer to fulfil the requirements of the job is also important;

(4)    The  ability  of  the  tenderer  to  deliver  goods  or services  or  to  do  the  work  of  the  requisite  standard  and quality;

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(5) Past experience of the tenderer and whether he has successfully completed similar work earlier;

(6) Time which will be taken to deliver the goods or services; and often

(7) The  ability  of  the  tenderer  to  take  follow-up action, rectify defects or to give post-contract services”.

It was also held in the said decision:  

“the public would also be interested in the quality of the work undertaken or goods supplied by the tenderer for poor quality of  goods  can  lead  to  tremendous  public  hardship  and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in re-doing the entire work – thus involving larger outlays of public money and delaying the availability of services, facilities or goods”.  

13. The  prime  consideration  on  which  the  High  Court  set  aside  the

award of contract in favour of the appellant is that if the bid of respondent

no. 1 was considered in the tender process there would have been  saving

of public money.  However, that would not in any manner justify in going

through  once  again  the  same  tender  process,  which  is  always  time

consuming.  Any delay in awarding the contract would only mean increase

in the cost of expenditure for cost of construction would go up with the

passage of time.

14. In W.B. State Electricity Board  vs. Patel Engineering Co. Ltd.

and Others, reported in (2001) 2 SCC 451, this Court while considering

the issue with regard to the process of tender held:

“where bidders who fulfil prequalification alone are invited to bid, adherence to the instructions cannot be given a go-by by

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branding it as a pedantic approach, otherwise it will encourage and  provide  scope  for  discrimination,  arbitrariness  and favouritism which are totally opposed to the rule of law and constitutional values”.   

It was also held:

“the  very  purpose  of  issuing rules/instructions is  to  ensure their enforcement lest the rule of law should be a casualty”.   

It was further held:  

“the  contract  is  awarded,  normally,  to  the  lowest  tenderer which  is  in  public  interest  and  that  it  is  equally  in  public interest to adhere to the rules and conditions subject to which bids are invited”.

15. Following the aforesaid legal principles laid down by this Court, we

are of the considered opinion that the respondent no. 1 was negligent and

was not sincere in submitting his pre qualification documents within the

time schedule  laid down despite the fact that  he had information that

there is a time schedule attached to the notice inviting tenders.  Despite

being  aware  of  the  said  stipulation  he  did  not  submit  the  required

documents within the stipulated date.  Pre-qualification documents were

received by the respondent no. 2 – University only after time schedule

was over.  The terms and conditions of the tender as held by the Supreme

Court  are  required  to  be  adhered  to  strictly,  and  therefore,  the

respondent  no.  2  – University  was justified  in not  opening the tender

submitted by respondent no. 1 on 01.12.2008, which was late by three

days.  According to us no grievance could also be made by the respondent

no. 1 as lapse was due to his own fault.  The High Court proceeded to

interfere with the entire process as if acting as an appellate authority over

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the decision of the University which was beyond the jurisdiction of the

Court. The High Court was not justified in accepting the contentions of

respondent  no.  1  and  thereby  upsetting  the  entire  process  of  inviting

tenders  by  interfering  with  the  terms  and  conditions  of  inviting  the

tenders and by rescheduling and directing the process of re-tendering,

which would only cause further delay and would increase the burden on

the exchequer of the University.  

16. In that view of the matter, we set aside the Judgment and Order of

the High Court and upheld the decision of the University in awarding the

contract in favour of appellant.  Accordingly, the appeal stands allowed.

      ……………….……………………..J.                     [Dr. Arijit Pasayat]

……………....………………………J.             [Dr. Mukundakam

Sharma]

New Delhi, February   20, 2009

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