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CASE NO.: Appeal (civil) 4921  of  2000

PETITIONER: WEST BENGAL STATE ELECTRICITY BOARD

       Vs.

RESPONDENT: PATEL ENGINEERING CO.  LTD.  & ORS.

DATE OF JUDGMENT:       15/01/2001

BENCH: S.S.M.Quadri, S.N.Phukan

JUDGMENT:

L.....I.........T.......T.......T.......T.......T.......T..J

     J U D G M E N T

     Syed Shah Mohammed Quadri, J.

     This appeal by the West Bengal State Electricity Board is  from the common judgment of a Division Bench of the High Court at Calcutta in M.A.T.  No.398 of 2000, C.A.N.  No.1089 of  2000  and M.A.T.  No.523 of 2000 with  cross  objections (C.O.T.   No.522 of 2000) dated April 4, 2000 dismissing the appeals and cross objections and confirming the order of the learned  Single  Judge  in  W.P.No.22458(W)  of  1999  dated February  3,  2000.  To appreciate the controversy  in  this case  narration  of  the following relevant  facts  will  be necessary.   As a pragmatic solution to meet the peak demand of  the energy/power by the West Bengal and also to cater to the  requirements  of  the entire Eastern Region,  the  West Bengal  State Electricity Board (for short, the appellant) formulated  Purulia  Pumped Storage Project (for  short, the  Project),  at an estimated cost of  about  Rs.3,188.9 crores  with an installed capacity of 900 M.W.  For  funding that  project  the  Central Government entered into  a  loan agreement  with  the Overseas Economic Cooperative Fund  now Japan  Bank  of International Cooperation (for  short,  the J.B.I.C.).   The Project is proposed to be completed in six Lots  of  which Lot No.4 relates to main civil  works.   For carrying  out  the  work of Lot No.4, the  appellant,  after complying  with the formalities and after satisfying  itself

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of  the  pre- qualification of the bidders, invited  revised tenders  (hereinafter  referred to as, the tenders).   The bids  were  to  be submitted on or before  April  27,  1998. Three bidders are now in fray.  The first is a consortium of four  companies (respondent Nos.1 to 4), the second is  M/s. Taisei  Corporation (respondent No.10) and the third is M/s. Skanska  International  (respondent No.11).  They  submitted their  bids  along  with  the summary  sheets  thereof.   On September  8,  1999 the bids were opened in the presence  of the  representatives of the bidders and they were read  out; the  bid  of respondent Nos.1 to 4 was Rs.647.90 crores,  of respondent  No.11  was  Rs.691.22 crores and  of  respondent No.10  was 726.50 crores.  While the details of the bid were under scrutiny, by letter dated October 25, 1999, respondent Nos.1  to  4  informed  the appellant  that  there  was  a repetitive  systematic  computer typographical  transmission failure  and requested that it be corrected.  On  December 17,  1999  they  sent another letter stating that  they  had reason  to  believe that the appellant was evaluating  their price  bid by an illogical and incorrect application of  the Instructions  To Bidders (for short, the ITB) and  pointed out  that  the mistake indicated in their letter of  October 25, 1999 was that Indian Rupee unit rate stated in the first line Item 0.2 was repeated in the next two succeeding lines, which  is  clerical in nature and not an  arithmetic  error. They  emphasised that their bid was the lowest at  Rs.647.90 crores  and  assured that they would maintain the  said  bid price.  Under the ITB, the appellant evaluated their bid and on  December 18, 1999 informed them that during checking  of their  bid documents a good number of arithmetic errors  was discovered.   Copies  of  duly   corrected  documents   were communicated  to the said respondents for their response  to be sent in writing to the appellant before December 27, 1999 (1700  IST).  A caveat was also entered that the said letter did not provide any confirmation towards acceptance of their bid  and  subsequent  award of contract  by  the  appellant. Challenging the validity of the said letter of the appellant dated  December  18, 1999, respondent Nos.1 to 4  filed  the aforementioned  writ petition in the High Court at Calcutta. On  December  21,  1999 a learned Single Judge of  the  High Court  granted  an  interim direction to  the  appellant  to consider the representation which would be made to it by the writ  petitioners (respondent Nos.1 to 4).  A representation was  accordingly made to the appellant on December 23, 1999, which  was  decided  by  the  Evaluation  Committee  of  the appellant  on  January 6, 2000.  The decision taken  by  the appellant  pursuant  to  the order of the High  Court  dated December 21, 1999 did not meet with the approval of the High Court.   On  February 3, 2000, while disposing of  the  writ petition,  a learned Single Judge of the High Court directed the appellant to reconsider the representation of respondent Nos.1  to  4, after giving hearing to them, and to pass  and communicate  a reasoned order within one week from the  date of  the order.  Against the said order of the learned Single Judge,  the aforementioned appeals and cross-objections were filed  both by the appellant as well as by respondent  Nos.1 to  4.   A Division Bench of the High Court at Calcutta,  by the  impugned common judgment, dismissed the appeals and the cross-objections  upholding the order of the learned  Single Judge,  directed the appellant to permit respondent Nos.1 to 4  to  correct  the  errors in the bid  documents  and  then consider  their  bid  along with the other bids and  take  a decision  objectively and rationally.  Mr.  Altaf Ahmed, the learned  Additional  Solicitor  General, appearing  for  the appellant,  has submitted that the appellant is bound by the

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ITB  and it acted accordingly.  The letter dated October 25, 1999 of respondent Nos.1 to 4 did not indicate the errors in the  bid documents and the correction sought by them.   Even their  letter  of December 17, 1999 did not specify  in  any detail  the  desired corrections, therefore,  the  appellant proceeded  to evaluate the bid in terms of ITB.  The  actual scope  of correction sought by respondent Nos.1 to 4 came to light in their representation dated December 23, 1999, filed after  approaching the High Court.  The appellant, submitted the learned Additional Solicitor General, committed no wrong in  rejecting  the  representation  as   the  same  was  not acceptable  in terms of Clause 29 of the ITB because neither the  unit  rate  can  be changed nor the price  bid  can  be altered  at the request of the bidder;  the unit rate quoted is  final  and  the appellant can  correct  only  arithmetic mistakes  in the line total on the basis of the quoted  unit rate.    Mr.Ashok  H.Desai,  the   learned  senior   counsel appearing  for respondent No.11, argued that the  resolution of  the appellant rejecting the representation on January 6, 2000  was  in accordance with Clause 29.1(b) of the ITB  and that  there was no case for interference by the High  Court. The  decision  of  the  appellant   in  evaluating  the  bid documents  in  terms of ITB, submitted the learned  counsel, could  not  be  termed  as arbitrary  or  illegal;   in  the example:  A x B = C;  B being the quantity for which the bid is  offered;  A and C being the unit rate and the result  of the  multiplication  respectively,  are unalterable  at  the instance of the bidder.  If any arithmetic error in arriving at  the  line total is noticed by the appellant, that  alone could  be  corrected by it.  But, the correction  sought  by respondent  Nos.1  to 4, was in effect a change in the  unit rate which was impermissible and, therefore, the decision of the  appellant  could not have been interfered with  by  the High  Court.  Mr.Bhaskar P.Gupta, the learned senior counsel appearing for respondent No.10, submitted that the unit rate given  by respondent Nos.1 to 4 was an essential term  which would  be evident from Clauses 14, 27 and 29 of the ITB,  so permitting  them  to  correct the bid  would  tantamount  to modifying the essential term of the bid and as such the High Court  ought  not to have directed the appellant  to  permit correction  of  bid documents and further to consider  their bid  along  with  the  other  bids.   Mr.P.Chidambaram,  the learned  senior counsel appearing for respondent Nos.1 to 4, argued that in Annexures 1 to 9 which comprised of 749 items there were mistakes in only 37 items due to the fault of the computer;   the nature of mistake was not arithmetic  (which would  mean  in multiplication or addition) but  mechanical, attributable  to the computer and that such mistakes are not covered by Clause 29 of the ITB;  in a case of an unintended mistake,  a court of equity would not be a silent  spectator and  the  High Court, being both a court of law and  equity, had  rightly directed the appellant to permit correction  of the  mistakes  by respondent Nos.1 to 4.  It  was  submitted that  having  regard  to  the nature of  the  mistakes,  the appellant itself ought to have sought clarification from the said  respondents  under  Clause  27   of  ITB  instead   of evaluating  the bid on the basis of an unintended unit  rate to   reach   an   astonishing   figure  which   was   wholly disproportionate to the cost of the Project.  His contention is  that  once the total bid price is maintained,  the  unit rate  is  a matter of arithmetic exercise which should  have been  corrected  by  the  appellant;  further  the  mode  of payment  by  the appellant for the work done is not  on  the basis of each unit but on the basis of bid price.  Accepting that  the bid price is unalterable, the unit rate should  be

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regarded  as  adjustable.   It  was   also  argued  by   Mr. Chidambaram  that  there was no mistake in giving  the  unit rate  as  such;   the mistake was in giving  the  conversion equivalent  in US Dollars and, therefore, the correction not being the one falling under Clause 29 of the ITB was rightly permitted  to  be corrected by the High Court.  Finally,  he contended  that  their  bid  being less  than  the  bids  of respondent  Nos.11  and 10 by Rs.40 crores and Rs.80  crores respectively,  the High Court rightly directed consideration of  the bid of respondent Nos.1 to 4 after due correction of the  bid documents in public interest which did not  warrant interference  by  this  Court.  In the light  of  the  above contentions,   we  have  to  examine  as  to  what  is   the permissible  course of action under ITB.  A reference to the relevant  clauses of the ITB will be apposite here.   Clause 14.1 says that unless stated otherwise in the bid documents, the  Contract  shall be for the whole Works as described  in sub-clause  1.1 thereof based on the schedule of unit  rates and prices submitted by the bidder.  Clause 14.2 enjoins all the bidders to fill in rates and prices for all items of the Works  described  in the Bill of Quantities both in  figures and  words and cautions that items against which no rate  or price  is entered by the bidder will not be paid for by  the Employer (the appellant herein) on the execution of items of those  works  and  the same shall be deemed covered  by  the other  rates  and  prices in the Bill of  Quantities.   With regard  to  the currencies of the bid, Clause  15.1  directs that  unit rates and prices shall be quoted by the bidder in Indian  Rupee  (INR) and either in U.S.  Dollar or  Japanese Yen.   The bidders are given option to assess the  component of  currency requirements as follows:  (a) for those  inputs to  the Works which the bidder expects to supply from within the  Employers country (the appellants country - India) in Indian Rupee;  and

     (b)  for  those inputs to the Works which  the  bidder expects  to supply from outside the Employers i.e.  outside India in U.S.  Dollar or Japanese Yen.

     In  regard  to  modification and withdrawal  of  bids, Clause  24.1 provides that the bidder may modify or withdraw his  bid  after bid submission but before the  deadline  for submission  of bids.  The mandate of Clause 24.3 of the  ITB is  that  no bid shall be modified by the bidder  after  the deadline for submission of bids.  Inasmuch as Clauses 27 and 29 of the ITB deal with clarification of bids and correction of  errors respectively and their true interpretation has  a bearing  on  the  decision in this case, it will be  apt  to quote  them  here  :  27.  Clarification of Bids  27.1  To assist  in  the  examination, evaluation and  comparison  of bids,  the Employers authorised representative may, at  his discretion,  ask  any  or all bidders for  clarification  of his/their   Bids,  including  breakdowns   of  unit   rates, technical information, documents and materials after opening of  the Bid.  The request for clarification and the response shall  be in writing or by cable, but no change in the price or substance of the Bid after opening the Price Bid shall be sought,  offered or permitted except as required to  confirm the  correction  of  arithmetic  errors  discovered  by  the Employers  authorised  representative in the evaluation  of the bids in accordance with Clause 29 of ITB.

     29.  Correction of Errors

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     29.1  Bids  determined to be substantially  responsive will  be checked by the Employers authorised representative for  any arithmetic errors.  Errors will be corrected by the Employers authorised representative as follows:

     (a)  where there is a discrepancy between the  amounts in  figures  and in words, the amount in words will  govern; and  (b) where there is a discrepancy between the unit  rate and  the line item total resulting from multiplying the unit rate  by the quantity, the unit rate as quoted will  govern. (c)  Where  there  is a discrepancy between figures  and  in words of an unit rate, the unit rate as quoted in words will govern.   29.2 The amount stated in the Form of Bid will  be adjusted  by  the  Employers authorised  representative  in accordance  with  the above procedure for the correction  of errors  and  shall be communicated to the Bidder in  writing for his acceptance in writing within seven (7) days from the date  of  issue  of such  communication.   Such  corrections however  shall  be binding upon the Bidder.  If  the  Bidder does not accept the corrected amount of bid, his bid will be rejected,  and  the  bid  security  shall  be  forfeited  in accordance  with sub-clause 17.6(b) of ITB. It may be seen that  Clause  27.1 enables the appellant or  its  authorised representative  to ask any or all bidders for  clarification of  his/their  bids,  including breakdowns  of  unit  rates, technical information, documents and materials after opening of  the bid.  The request for such clarification is required to  be made in writing or by cable, so also the response  to such  request.  It is important to note that the said clause prohibits  seeking, offering or permitting any change in the price  or  substance of the bid after opening of  the  price bid.   The exception provided to that mandate is  correction of   arithmetic  errors  discovered   by   the   appellant’s authorised  representative in the evaluation of the bids  in accordance  with  Clause  29 thereof.  A  plain  reading  of Clause  29.1 shows it has two limbs;  the first limb imposes a duty on the appellants authorised representative to check bids  determined  to  be substantially  responsive  for  any arithmetic  errors  and the second postulates correction  of such  errors by the authorised representative in the  manner laid down in sub-clauses (a) to (c) thereof.  Sub-clause (a) says that in the event of discrepancy between the amounts in figures  and  in  words, the amount in  words  will  govern; sub-clause  (b),  which  is   germane  for  our  discussion, provides that in case of a discrepancy between the unit rate and  the line item total resulting from multiplying the unit rate  by the quantity, the unit rate as quoted will  govern; and  the  import  of  sub-clause (c) is that in  case  of  a discrepancy  between figures and in words of any unit  rate, the  unit rate as quoted in words will govern.  Where errors are corrected in accordance with the above guidelines by the appellants authorised representative, Clause 29.2 specifies the  procedure  to adjust the amount stated in the  Form  of Bid.   The authorised representative has to communicate  the correction  of  errors  to  the bidder in  writing  for  his written  acceptance within seven days from the date of issue of   such  communication.   It   also  provides  that   such corrections  shall  be  binding upon the bidder and  in  the event  of  the bidder not accepting the corrected amount  of bid, his bid will be rejected and the bid security is liable to  be forfeited in accordance with sub- clause 17.6 (b)  of the  ITB.  Now adverting to the Annexures, the statement  of B.Upper  Dam  price bid submitted by respondents 1 to  4 discloses that with reference to each work item the quantity thereof  is  mentioned.  The bidder is expected to give  the

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unit  price in Indian Rupee as well as in U.S.  Dollar  both in figures as well as in words and enter the line item total resulting from multiplying the unit rate by the quantity.  A plain  reading of sub-clause (b) of Clause 29.1, referred to above,  leaves no room for doubt that once the unit rate and line item total are filled in by the bidder, both the quoted unit  rate and item total are treated as unalterable at  the instance  of the bidder though arithmetic errors in arriving at  line  item total by multiplication are permitted  to  be corrected  by  the  appellants  authorised  representative. This being the intendment of the ITB, we shall now examine : (i)  whether the correction made by the appellant in the bid documents  of  respondent  Nos.1  to  4  and   consequential evaluation  of  their  bid communicated  with  letter  dated December  18,  1999  are  valid in law;   and  (ii)  whether respondents  1 to 4 are entitled to seek correction in their bid  documents  either  under  ITB  or  in  equity  and  the direction given by the High Court to the appellant to permit the correction of errors, is sustainable.  Before proceeding to  ascertain  answers  to the above questions, it  will  be useful to bear in mind the principles governing the exercise of power of judicial review by the High Courts.  We consider it  unnecessary to refer to cases on the scope of the  power of  judicial  review  of administrative action by  the  High Court  as  a  three  Judge Bench of this  Court  has,  after exhaustive  consideration  of  long   line  of  authorities, succinctly  summarised  the  position   and  laid  down  the following  principles  in Tata Cellular Vs.  Union of  India [1994  (6)  SCC  651] :  (1) The modern  trend  points  to judicial  restraint in administrative action.  (2) The court does  not  sit as a court of appeal but merely  reviews  the manner  in which the decision was made.  (3) The court  does not  have  the  expertise  to  correct  the   administrative decision.   If  a review of the administrative  decision  is permitted  it will be substituting its own decision, without the  necessary expertise which itself may be fallible.   (4) The  terms  of  the invitation to tender cannot be  open  to judicial scrutiny because the invitation to tender is in the realm  of  contract.   Normally speaking,  the  decision  to accept  the  tender  or  award the contract  is  reached  by process  of negotiations through several tiers.  More  often than  not, such decisions are made qualitatively by experts. (5)  The Government must have freedom of contract.  In other words,  a fair play in the joints is a necessary concomitant for  an administrative body functioning in an administrative sphere   or  quasi-administrative   sphere.   However,   the decision  must  not  only be tested by  the  application  of Wednesbury  principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not  affected  by  bias  or actuated  by  mala  fides.   (6) Quashing decisions may impose heavy administrative burden on the  administration  and  lead to increased  and  unbudgeted expenditure.  In  the light of these principles, we  shall determine  the  aforementioned points.  Taking up the  first question  first,  it  will be necessary  to  understand  the nature  of errors, correction made by the appellant and  the relief  sought  by  respondent Nos.1 to 4 in respect  of  37 items  in  the bid documents.  We shall extract here,  as  a sample  of  errors in 37 items, the price bid  submitted  by respondent  Nos.1 to 4 relating to B.  Upper Dam found  on page  No.70  of  Vol.IV of the documents (marked  A).   It reads thus:  Annexure

     B.  Upper Dam A

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     Price Bid as Submitted

     Item

     Work Item

     Esc.

     Coeff.

     Remarks

     Unit

     Quantity Unit Price

     Amount

     Clause In Specifica- tions

     INR

     US$

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     Figure Words

     1.Care of river

     02 Rock Excavation

     I

     Cum

     1000

     148.08

     One hundred forty-eight point nil eight

     148,077.97 7.4

     148.08

     One hundred forty-eight point nil eight

     3,384.64

     03 Impervious Core Embankment I

     Cum

     148.08

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     One hundred forty-eight point nil eight

     328,418.53 9.5

     1.92

     One point ninety-two

     7,506.71

     According  to respondents 1 to 4, the above price  bid should  be  corrected  to  read as given  in  the  following statement (marked B):

     B

     Item

     Work Item

     Esc.  Coeff.

     Remarks

     Unit

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     Quantity Unit Price

     Amount

     Clause In Specifica- tions

     INR

     US$

     Figure Words

     1.Care of river

     02 Rock Excavation

     I

     Cum

     1000

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     148.08

     One hundred forty-eight point nil eight

     148,077.97 7.4

     3.38

     Three point thirty eight

     3,384.64

     03 Impervious Core Embankment I

     Cum

     3,900

     84..21

     Eight four point twenty one

     328,418.53 9.5

     1.92

     One point ninety-two

     7,506.71

     A  perusal  of the price bid statement A shows  that the  unit  price filled in by the bidder in the  first  line against  Item  (02)  -  Work Item -,  Rock  Excavation  is repeated  in two lines - in the second line of the same item and in the first line of Item (03) - Work item - Impervious Core  Embankment.  In the quantity column, 1000 is  noted by  the  appellant.   The unit rate for Rock  Excavation  is given  by respondent Nos.1 to 4 in the first line in  Indian Rupee  as Rs.148.08 both in figures as well as in words.  In the  amount column Rs.148,077.97 is entered which is arrived at  by multiplying quantity, 1000, by unit rate,  Rs.148.08. It  contains an arithmetic error;  instead of Rs.148,080.00, it  is  noted as Rs.148,077.97.  It has been  noticed  above that  under Clause 29.1(b) of the ITB, such an error in  the

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line  total in the amount column is amenable for  correction and  not  the  unit rate noted by the bidder in  the  figure column.   In  the  second line, the same entry  is  repeated though  that  line  should contain unit rate  in  U.S.Dollar which  is rupee equivalent of the unit rate mentioned in the first  line.   Respondent  Nos.1  to 4  seek  correction  of 148.08  in the second line as 3.38 in the figure  column and  also in words to conform to 3,384.64 which is noted  in the  amount  column,  to  wit as  US  Dollar  equivalent  of 148,077.97  Indian Rupee in the first line.  This appears to be  the  import  of  their  letter  of  December  17,  1999. Respondent  Nos.1 to 4 seek correction of the entries in the third  line  also which is the first line against work  item Impervious Core Embankment.  It is plain that against this Work Item the entries in the first line are quite different. The quantity column is blank, though 3900 should have been noted  therein.  In that line also the entries in the  first line  are repeated.  There the correction sought is that the figure column should read as 84.21 both in figure and words. It is stated that in the second line the unit rate 1.92 both in  figures and words, represents U.S.  Dollar equivalent of 84.21  Indian Rupee which is now sought to be inserted.  The errors  in  other 36 items are said to be similar.  Had  the errors  been  confined to these aspects, it would  not  have resulted  in  material change in the unit rate  because  the unit  rate in one of the permissible currencies is correctly given  and  there  will be no discrepancy  as  envisaged  in sub-clause  (b)  of Clause 29.1.  It would not really  be  a case  of incorporating a new unit rate but a case of  either recording  U.S.  Dollar equivalent of the unit rate  already noted  in  Indian Rupee or vice versa as given in  statement B  above.   In such a case, perhaps, they would have  been entitled  to  equitable relief of rectification of  mistake. But  here,  as  would be shown presently,  the  position  is different.   With  regards  to  the   mistakes  in  the  bid documents, for the first time respondent Nos.1 to 4 informed the appellant in their letter of October 25, 1999 which runs as follows :

     Re  :   Purulia Pumped Storage Project Lot 4 -  Main Civil  Works - Resubmittal Price Bid.  Dear Sirs, We  regret that  certain  repetitive systematic computer  typographical data  transmission  failure  have occurred in items  as  per attached  annexure in our bid submitted to you on  08.09.99. In  order  to dispel any doubts, we  hereby  unconditionally declare  that  we stand by the amounts (both INRs and US  $) against  the  affected  schedules A to I, announced  at  the opening  of the revised price bid on the 8th of September at WBSEB  and reiterate that there is no change in the price or substance  of  our  bid.   Our unit  bid  prices  should  be computed  accordingly for the aforesaid items.  This  letter is   strictly   without   prejudice  to   our   rights   and contentions.  It  may be noticed that in this letter  they informed  that  certain  mistakes  had crept  in  the  items mentioned in the annexure to the letter and declared that no change  in  the price or substance of the bid was asked  for and  that they stood by the amounts announced at the time of the bids on September 8, 1999.  However, the actual mistakes are  not pointed out.  In their letter of December 17,  1999 they  attempted  to  clarify  the  position.   The  relevant excerpt  of  that letter may be quoted here:  West  Bengal State  Electricity Board Office of the Project Manager,  Mr. S.K.   Roy  Choudhury, The Project Manager,  Purulia  Pumped Storage  Project, Vidyut Bhawan, 5th Floor, Salt Lake  City,

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Calcutta - 700 091, India,

     Fax No.0091 33 3591854 / 3581533 1999-12-17

     Purulia Pumped Storage Project

     Dear Sir,

     We  refer  to our telefax dated 25th October 1999.   A copy thereof is again enclosed for your convenience.

     We    request   that     the   systematic   computer typographical transmission failure pointed out in the said telefax  is  merely clerical in nature and not  arithmetical and  do not in any way affect the validity of our bid.   Its nature is fully explained below.

     I.   The  computer  has  unfortunately  systematically copied,  in  the first page (Serial items 2 & 3) of the  BOQ (Schedule  A  to  I), the INR unit rates stated  in  line  1 Serial  Item  2 to the next two succeeding lines  i.e.   the computer has overwritten the unit rates in US$ terms for the serial  item no.2 and the INR unit rates for the immediately succeeding serial item.

     However,  the  figures appearing the amount column  of the  BOQ  for  the  said  lines/items  in  which  the  above mentioned  errors  have  occurred are the  correct  tendered figures both in US$ terms as well as INR terms.

     II.  Further the BOQ quantities stated in the quantity column  of serial item no.3 on each and every page has  been erased.

     Enclosed  is  an  attachment   which  would  show  the applicable unit rates (in the lower half) and the unit rates which were overwritten due to computer failure (in the upper half).

     It is an admitted position that at the time of opening of  the tender on 8th September 1999, our bid was the lowest at  Rs.647.90  crores.   The bid of  Skanska  was  Rs.691.22 crores and that of Taisei was Rs.726.50.  We confirm that we have  all  along maintained and still maintain the said  bid price of Rs.647.90 crores.

     However,  we  have  reasons to believe that  you  have chosen  to  ignore  our said letter and  have  proceeded  to evaluate  our price bid by an illogical and  mis-application of  the rules for the evaluation of the bids set down in the ITB.

     We,  therefore,  once again call upon you to  evaluate our  bid after taking into consideration the applicable unit rates.   As already mentioned in our earlier fax there is no change  in the price or substance of our bid as mentioned in the amount column of the BOQ. (Emphasis supplied)

     Here,  though  the nature of mistakes are pointed  out yet  the  scope of the correction sought is  not  indicated. The appellant could not have ignored these letters.  Had the appellant  taken  note  of these letters  and  the  mistakes occurring  due  to repetition of entries in 37 items in  the bid  documents, it would not have proceeded with  correction of  such mistakes and evaluation of their bid without  first

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seeking  clarification from respondents 1 to 4 under  Clause 27.1.   We have already referred to the gist of that clause. The  only prohibition contained therein is that no change in the  price or substance of the bid after its opening can  be sought,  offered or permitted.  In that regard they had made their  position  clear.  The prohibition is, therefore,  not attracted.   In these circumstances any reasonable person in the   position   of   the   appellant  would   have   sought clarification  from respondent Nos.1 to 4 under Clause 27.1. Even assuming that after the letter of December 17, 1999, no further  clarification  was  required to be  sought  by  the appellant,  we cannot but hold that correction of the errors taking  note of the unit rates which are mere repetition  of the  unit  rates  quoted  for  a  different  work  item   is mechanical and without application of mind by the appellant. In  our  view such a correction is far beyond the  scope  of Clause  29.   From  the description of the  mistakes,  noted above,  and  the  correction  and  evaluation  made  by  the appellant,  it is evident that except the error in the first line  against  the work item Rock Excavation and  Schedule N day work, all other mistakes/errors are beyond the scope of  Clause  29.1, so Clause 29.2 will not be attracted.   It follows  that  the  corrections  in  the  bid  documents  of respondent  Nos.1  to  4  carried   out  by  the  appellant, evaluation  of  bid  under  Clause  29.2  and  the  impugned communication  of the appellant dated December 18, 1999  are unsustainable  and of no consequence.  Now, reverting to the relief  of correction of errors, Mr.  Chidambaram has argued that  in  the two lines against each of the Work Items,  the first  line  denotes 50 per cent of the quoted unit rate  in Indian Rupee and the second line represents the other 50 per cent of the unit rate in U.S.  Dollar.  According to him the actual rate quoted for quantity 1000 is the sum total of two lines  i.e.   148.08  in  Indian Rupee  plus  3.38  in  U.S. Dollar.   This  is not noted either in statement A  or  in statement  B.  Be that as it may, quoting the unit rate 50 per  cent in Indian Rupee and 50 per cent in U.S.  Dollar is not  provided in the ITB.  Nothing is brought to our  notice to  justify splitting of unit rate in that ratio.  There  is no  indication  of  this  fact in the  price  bid  documents submitted  by the said respondents to explain that the  unit rate  has  been so quoted.  This is also not  in  conformity with  Clause  15  of ITB which, as noted above,  requires  a bidder  to  quote unit rates and prices in Indian Rupee  and either   in  U.S.Dollar  or   Japanese  Yen.   The   learned Additional  Solicitor General, in our view, is right in  his submission that till the representation was made by the said respondents   on  December  23,   1999,  after  the  interim direction  of  the High Court, the appellant was unaware  of the  quoted unit rate being in such proportion.  A  combined reading  of ITB and the annexure, extracted above, makes  it clear  that the second line against each work item is  meant for  writing U.S.  Dollar or Japanese Yen equivalent of  the unit  rate and line total in the amount column entered  in the  first line and not for writing bifurcated unit price in different  currencies  in the ratio of 50 :  50.   On  these facts,  the  errors  cannot be termed as  mere  clerical  or mechanical.   Permitting correction of such errors, if  they can  be so called, would result in not only re-writing  unit rates  in  37 entries in which such errors are said to  have been  committed  but also appending an  explanation  thereto regarding splitting of unit rates in terms of representation dated  23.12.1999 of respondent Nos.1 to 4.  Neither Clauses 27  and  29  nor any other clause in the  ITB  permits  such corrections.  The mistakes/errors in question, it is stated,

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are  unintentional and occurred due to the fault of computer termed  as a repetitive systematic computer  typographical transmission  failure.   It  is difficult to  accept  this contention.  A mistake may be unilateral or mutual but it is always  unintentional.  If it is intentional it ceases to be a  mistake.   Here the mistakes may be unintentional but  it was  not  beyond  the control of respondent Nos.1  to  4  to correct  the  same before submission of the bid.   Had  they been  vigil  in  checking  the bid  documents  before  their submission,  the mistakes would have been avoided.  Further, correction  of  such mistakes after one and a half month  of opening  of the bids will also be violative of Clauses 24.1, 24.3  and  29.1  of ITB.  The controversy in this  case  has arisen at the threshold.  It cannot be disputed that this is an  international competitive bidding which postulates  keen competition and high efficiency.  The bidders have or should have  assistance  of technical experts.  The degree of  care required in such a bidding is greater than in ordinary local bids  for  small  works.  It is essential  to  maintain  the sanctity  and  integrity of process of tender/bid  and  also award  of a contract.  The appellant, respondent Nos.1 to  4 and  respondent  Nos.10 & 11 are all bound by the ITB  which should  be  complied with scrupulously.  In a work  of  this nature   and  magnitude  where   bidders  who  fulfil   pre- qualification  alone  are invited to bid, adherence  to  the instructions  cannot  be given a go-bye by branding it as  a pedantic  approach  otherwise it will encourage and  provide scope for discrimination, arbitrarinessand favouritism which are   totally   opposed  to  the   Rule  of  law   and   our Constitutional   values.   The  very   purpose  of   issuing Rules/instructions  is to ensure their enforcement lest  the Rule  of law should be a casuality.  Relaxation or waiver of a  rule  or condition, unless so provided under ITB, by  the State  or  its  agencies (the appellant) in  favour  of  one bidder would create justifiable doubts in the minds of other bidders,  would impair the rule of transparency and fairness and  provide room for manipulation to suit the whims of  the State agencies in picking and choosing a bidder for awarding contracts  as in the case of distributing bounty or charity. In  our view such approach should always be avoided.   Where power  to relax or waive a rule or a condition exists  under the Rules, it has to be done strictly in compliance with the Rules.  We have, therefore, no hesitation in concluding that adherence  to  ITB  or  Rules is the best  principle  to  be followed,  which  is also in the best public interest.   For all these reason, in such a highly competitive bid of global tender,  the  appellant  was  justified  in  not  permitting respondent  Nos.  1 to 4 to correct the errors of the nature and the magnitude which, if permitted, will give a different complexion  to  the bid.  The High Court erred in  directing the appellant to permit respondent Nos.1 to 4 to correct the errors  in  the  bid   documents.   Mr.Chidambram,  however, submitted  that  in  equity respondent Nos.1 to 4  would  be entitled  to  relief of correction of mistakes.  He  invited our  attention  to  para 84 of  the  American  Jurisprudence (Second Edition, Volume 64, Page No.944).  It will be useful to  quote  the  relevant  part of that para  here:   As  a general  rule, equitable relief will be granted to a  bidder for  a public contract where he has made a material  mistake of  fact in the bid which he submitted, and where, upon  the discovery of that mistake, he acts promptly in informing the public  authorities and requesting withdrawal of his bid  or opportunity  to  rectify his mistake particularly  where  he does  so  before any formal contract is entered into.  The principle  is based on the judgment of the Supreme Court  of

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U.S.A.   in Moffett, H.  & C.  Co.  Vs.  Rochester, 178 U.S. 373;   44 L Ed 1108, 20 S Ct 957.  There the plaintiff  gave proposals  by  way  of bid for two works  of  excavation  of earth,  quoting  the  unit  rate 1.5 Dollar  instead  of  15 Dollars  and  50 cents instead of 70 cents per  cubic  yard. The City of Rochester which called for tenders, was promptly informed  of the mistake by the plaintiffs agent as soon  as it  was  discovered  but   before  entering  into  contract. However,  the proposal of the plaintiff was accepted by  the City  of Rochester in regard to one work and the other  work was  allotted to another bidder.  The plaintiff declined  to enter  into a contract with the City of Rochester which took steps  to enforce execution of the contract.  The  plaintiff filed the suit for correction of proposals to conform to the asserted  intention in making them and for execution of  the contract  on  corrected  rates  or  alternatively  for   the recission  of  the  proposals.  It  also  sought  injunction against  the officers of the City of Rochester declaring  it to  be  defaulter, its bond forfeited or enforced.   It  was found  that  the price noted was grossly inadequate and  far below  what  would be the actual cost of the work under  the most  favourable circumstances.  The trial court decreed the suit  holding that the proposals of the bidder be rescinded, cancelled  and  declared  null, void, and of no  effect  and granting  the  injunction  prayed for.  But  on  appeal  the decree  was  reversed by the circuit court of  appeals.   On further  appeal  to  the  Supreme Court of  U.S.A.,  it  was observed  that both the courts below found that there was  a mistake  and  while  the trial court opined  it  was  clear, explicit and undisputed, the court of appeal was of the view that  it  was  not a mistake in any legal sense  but  was  a negligent omission arising from an inadequate calculation of the  cost  of  the work and held that the  mistake  was  not sufficient  to  preclude a claim for relief if  the  mistake justified  it.   The Supreme Court relied on  the  following observation  in an earlier judgment of that Court in  Hearne Vs.   Marine  Ins.  Co.  22 L ed.  305, A mistake  on  one side  may be a ground for rescinding, but not for reforming, a  contract.   Where the minds of the parties have  not  met there  is no contract, and hence none to be rectified. And it  was  concluded that the last two propositions  might  be claimed  to  be  pertinent  to that  case  even  though  the transactions   between  the  parties  be  considered  as   a completed  contract and held that the action of the City  of Rochester  in  awarding one contract to another  bidder  and forcing  the  plaintiff  to enter into the  second  contract after  it  had declared there was a mistake in its  proposal was  inequitable.  Exceptions to the above general principle of seeking relief in equity on the ground of mistake, as can be  culled  out  from the same para, are :   (1)  where  the mistake  might have been avoided by the exercise of ordinary care and diligence on the part of the bidder;  but where the offeree of the bid has or is deemed to have knowledge of the mistake,  he cannot be permitted to take advantage of such a mistake.   (2) where the bidder on discovery of the  mistake fails  to  act  promptly  in   informing  to  the  concerned authority  and  request  for  rectification,  withdrawal  or cancellation of bid on the ground of clerical mistake is not made  before  opening of all the bids, (3) where the  bidder fails  to follow the rules and regulations set forth in  the advertisement  for  bids  as to the time  when  bidders  may withdraw   their  offer;   however   where  the  mistake  is discovered  after  opening  of  bids,   the  bidder  may  be permitted to withdraw the bid.  In the instant case, we have also  noted  that  the  mistakes in  the  bid  documents  of

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respondent  Nos.1  to  4 even though caused  on  account  of faulty  functioning of computer, could have been  discovered and  notified  by  the  said respondents  with  exercise  of ordinary care and diligence.  Here, the mistakes remained in the  documents  due to gross negligence in not checking  the same  before the submission of bid.  Further Clauses 24  and 27  of  ITB permit modification or withdrawal of bids  after bid  submission but before the dead line for submissions  of the  bids  and  not thereafter.  And  equity  follows  the law.   Having submitted the bid they did not promptly  act in  discovering  the  errors and informing the same  to  the appellant.  Though letters were written on October 25, 1999, and   December   17,   1999,  yet   the   real   nature   of errors/mistakes  and corrections sought were not pointed out till  December  23, 1999 when representation was made  after interim  direction  of the High Court was given on  December 21,  1999.  Indeed it appears to us that they improved their claim  in  the  representation.   In   our  view  the   said respondents   are   not  entitled    to   rectification   of mistakes/error  for  being considered along with  the  other bidders.   Mr.   Chidambaram relied upon a decision  of  the Superior  Court  of  New  Jersey  in  Spina  Asphalt  Paving Excavating  Contractors, Inc., Vs.  Borough of Fairview [304 N.J.   Super 425] to justify the claim for rectification  of mistakes.   In  that case, the Borough of  Fairview  invited tenders.  Spina and one Tomaro participated in the bid.  The bid  was  on  a  unit price basis  and  the  proposals  were submitted  on  Forms  supplied  by  the  Borough.   The  bid specifications  provided, inter alia :  in the event there is  a  discrepancy between the unit price and  the  extended total,  the unit price shall prevail.  The Borough  reserved the  right  to waive any informality if deemed in  the  best interests  of the owner. On the evening when the bids were opened,  Spina discovered that its secretary had erroneously indicated the unit price for one of the items as 400 dollars per  square  yard though it should have been 4  dollars  per square  yard  as reflected in the total bid for  that  work. Spina  faxed  the Borough indicating that the intended  unit price  was  4 dollars per square yard.  On the basis of  400 dollars  per  square yard Spinas bid was  calculated  which obviously  worked  out  far  higher than  the  intended  bid amount.   Taking note of that amount the Borough awarded the contract  to Tomaro.  Spina instituted action claiming  that the Borough arbitrarily failed to recognise that its bid was lower  than that of Tomaro.  The Law Division held that  the error  in  the bid was non-material and subject  to  waiver. The  Superior  Court  while agreeing with the  Law  Division observed  that they did not hold that generally an error  in the  statement of a price could be treated as immaterial and it  was  only when as in that case the error was patent  and the  true  intent of the bidder obvious that such  an  error might  be disregarded.  The Superior Court held that when as in that case the failure to waive the deviation would thwart the  aims  of the public bidding laws, the municipality  was obliged  to  grant the waiver.  (Emphasis  supplied)  Though Clause  29 in this case appears to be similarly worded as in the  bid documents in Spinas case (supra), a close  reading of  these clauses shows that no power of waiver is  reserved in the case on hand.  That apart, the nature of the error in these two cases is entirely different.  There, the error was apparent  $  400 for $ 4, non-material and waiveable by  the Corporation;   in  the present case the errors  pointed  out above  are not simply arithmetic and clerical mistake but  a deliberate  mode of splitting the bid which would amount  to re-writing  the  entries in the bid document and  cannot  be

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treated as non-material.  Therefore, the judgment in Spinas case  (supra)  does  not help respondent Nos.1  to  4.   The submission  that  remains  to be considered is that  as  the price  bid  of respondent Nos.1 to 4 is lesser by 40  crores and  80  crores  than  that  of  respondent  Nos.11  and  10 respectively,  public  interest  demands  that  the  bid  of respondent  Nos.1  to 4 should be considered.   The  project undertaken  by the appellant is undoubtedly for the  benefit of public.  The mode of execution of the work of the project should  also ensure that the public interest is best served. Tenders  are invited on the basis of competitive bidding for execution  of  the  work of the project as  it  serves  dual purposes.   On the one hand it offers a fair opportunity  to all  those who are interested in competing for the  contract relating  to execution of the work and on the other hand  it affords  the  appellant a choice to select the best  of  the competitors  on  competitive price without prejudice to  the quality  of  the work.  Above all it eliminates  favouritism and  discrimination in awarding public works to contractors. The  contract is, therefore, awarded normally to the  lowest tenderer  which  is  in public interest.  The  principle  of awarding  contract  to the lowest tenderer applies when  all things  are  equal.   It is equally in  public  interest  to adhere to the rules and conditions subject to which bids are invited.    Merely  because  a  bid   is  the   lowest   the requirements of compliance of rules and conditions cannot be ignored.   It is obvious that the bid of respondent Nos.1 to 4  is  the lowest of bids offered.  As the bid documents  of respondent  Nos.1 to 4 stands without correction there  will be  inherent inconsistency between the particulars given  in the annexure and the total bid amount, it cannot be directed to  be considered along with other bid on the sole ground of being  the lowest.  We find no force in the submission  that as under Clause 14.2 items against which no rate or price is entered  by the bidder will not be paid by the employer when executed  and shall be deemed covered by the other rates and prices  in  the bill of quantities, the unit price in  items containing  errors  be ignored and the bid be considered  on the  basis  of total price bid which is the lowest.  In  our view,  there  is  a basic distinction between a  case  where against  some items no rates or prices are quoted and a case where  some rate is quoted.  Whereas in the former case  the bidder will not be entitled to claim any specific amount for the  work  done by him in the absence of any rate  for  that work,  because in the aforementioned clause it is  clarified that  the bidders will not be paid by the employer and  that the  execution of the work shall be deemed covered by  other rates and prices in the bill of quantities but in the latter case  the  bidder  will be entitled to claim  for  the  work executed  on  the  basis  of  quoted  price/rate.   We  may, however,  clarify that the appellant is not obliged to award contract  to  any of the bidders at their quoted price  bid. It  is  always open to the appellant to negotiate  with  the next lowest bidder for awarding the contract on economically viable  price  bid.  For the reasons abovementioned,  though the  impugned order of the High Court insofar as it  relates to  quashing  of letter of the appellant dated December  18, 1999,  falls within the purview of judicial review, yet  the direction to the appellant to permit correction of errors by respondents 1 to 4 in their bid documents and consider their bid  along  with  other bid, goes far beyond  the  scope  of judicial  review,  as  elucidated  by  this  Court  in  Tata Cellular  (supra).   In the result, we uphold  the  impugned order  of  the  Division  Bench insofar  as  it  relates  to quashing of communication and letter dated December 18, 1999

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and  set  aside  that  part of  the  impugned  order  giving direction  to the appellant to permit respondent Nos.1 to  4 to  correct  bid documents and to consider their  bid  after correction  along  with  other  bids.  The  appeal  is  thus allowed  in part.  On the facts and in the circumstances  of this case we leave the parties to bear their own costs.