PRL PROJECT AND INFRASTRUCTURE LIMITED Vs. RSRDC

JUDGEMENT

(1.) The petitioner company (hereinafter 'the company') is aggrieved of the non-consideration of its technical and financial bid for the construction of railway over bridge (hereinafter 'ROB') (excluding railway portion) at LC No. 36-C on Kuchaman City - Makrana Section of Manglana Road SH-2B on Km. 8. The company has also challenged the selection of respondent No. 3 - Bharat Spun Pipe and Construction Company (hereinafter 'the BSPCC), Jaipur as the successful bidder for the job, seeking cancellation of the selection of BSPCC as the contractor for the construction of ROB in issue. Direction has further been sought inter alia against the Rajasthan State Road Development & Construction Corporation, Jaipur (hereinafter 'the RSRDC') and its Project Director at Merta City, Merta to consider the technical and financial bid of the company and award the contract to it in pursuance to its tender in the event the bid of the company on consideration afresh is found to be the lowest. The facts of the case are that the RSRDC invited bids for the construction of a ROB. The approximate value of the contract to be awarded to the successful bidder was Rs. 5.15 crore and the contract was to be completed within nine months. Relevant to the issue in the writ petition, participants in the tender floated by the RSRDC were required to deposit a bid security @ 2% of the approximate value of the contract i.e. Rs. 5.15 crore aggregating to Rs. 10.30 lakhs as a pre-condition for participation in the bid. As per the E-tender relevant to making of bids, the bid securities were to be deposited either in the form of a bank guarantee or fixed deposit receipt/Demand Draft in favour of the Project Director, RSRDC Ltd., Unit Merta City at Merta by 14-3-2013. The company submitted its bid with the requisite amount of EMD of 2% of the approximate value of the contract in the form of a fixed deposit receipt (hereinafter 'FDR') in favour of Project Director, RSRDC, Unit Merta City, Jaipur. The FDR was thus made payable at Jaipur not Merta city if at all owing to the mis-description of the beneficiary. On the opening of the bid documents on 15-3-2012 the bid of the company was rejected by the RSRDC on the ground that the FDR payable at Jaipur furnished as bid security was discrepant to the requirement of it being payable at Merta City as indicated in the tender conditions. The company was telephonically informed of the discrepancy. On being communicated the aforesaid fact the company states to have written a letter to the FDR issuing bank i.e. the Union Bank of India, Punjabi Bagh Branch (West), New Delhi. The Bank in turn sought to explain the discrepancy with regard to the pay ability of the FDR on the ground that the financial banking system used by the Bank required the Pin code of the city where the FDR was payable and as the Union Bank of India had no branch in Merta City, the Bank had generated the FDR payable at the nearest link Branch i.e. at Jaipur. The company claims that thereupon it also wrote a letter to the Project Director, RSRDC Limited at Merta City rationalising the discrepancy as being occasioned by the fortuitous circumstance of its bankers not having a Merta branch and submitted that on a technical not substantive breach; it could not be excluded from the consideration of its tender for the work in issue. It has been stated by the company that despite the clarification of the Union Bank of India issued on 18-3-2013, the Project Director, RSRDC Limited, Merta City, Unit at Merta proceeded to arbitrarily over-look and not consider the bid of the company. Thereupon respondent No. 3 BSPCC was found to be the lowest bidder amongst the other two bidders and the contract was awarded to the said company. It has been submitted that the bid of the company was lower than that of the successful bidder i.e. respondent No. 3 BSPCC and the rejection of the bid of the company on an apparently technical ground superfluous to its substantive capacity to execute the work of construction of ROB was wholly unjust and arbitrary. It has been submitted that in the circumstances the award of the contract to respondent No. 3 BSPCC was liable to be cancelled, the bid of the company directed to be considered as a valid and responsive bid which on evaluation vis-a-vis others were entitled to succeed.

(2.) On notice, reply to the writ petition has been filed by the RSRDC. It has been submitted that the bid made by the company was a non-responsive bid lacking in the fundamental and essential requirement of a valid bid security. It was submitted that the FDR suffered a mis-description of the beneficiary and was issued in favour of the Project Director, RSRDC, Unit Merta City, at Jaipur, when it has been categorically and repeatedly provided in the tender documents that the FDR was to be made payable in favour of RSRDC Ltd., Unit Merta City at Merta. It has been submitted that even though it was not obligatory for the RSRDC to seek any clarifications about the validity of the FDR as submitted by the company and the RSRDC could reject the bid on the face of the invalid security deposit, acting bona fide and with absolute fairness, RSRDC requested its bankers SBBJ, Merta City to comment on the validity of the discrepant FDR submitted. It has been submitted that in response to the query by RSRDC on 15-3-2013, SBBJ at Merta City under its letter dated 18-3-2013 informed it that the FDR No. 406303030124623 dated 12-3-2013 issued by the Punjab Bagh Branch, New Delhi of Union Bank of India in favour of the Project Director, RSRDC Ltd., Unit at Merta city, at Jaipur was not a valid banking instrument encashable on demand at Merta City owing to a discrepancy in the name of the city where the said FDR was to be encashed. SBBJ, Merta City advised the Project Director, RSRDC at Merta that without the FDR being amended and made payable at Merta City upon the event of its encashment being required, the SBBJ at Merta City would not be in a position to collect or deposit the amount under the FDR to the C.D. account of RSRDC Limited at Merta City. It has been averred that it was a mandatory condition of the tendering process that the bid security encashable at Merta City was an absolute pre-requisite condition for opening of the bids of the prospective bidders and the bid security instrument submitted by the company being invalid for discrepancy with regard to the place of payment/encashment of the FDR it was not a proper and valid security consequent to which neither the technical bid nor the financial bid of the company was considered and as a necessary consequence had to be rejected. It has been empathetically submitted that a valid bid security was an essential and vital part of a responsive bid as the bid security was the only manner in which a defaulting bidder could have been subjected to immediate financial punishment by way of forfeiture of the said amount. It has been submitted that the discrepant FDR had the potential of creating a situation where in spite of default by the company in the event of it being successful in the tendering process, the respondent No. 2-RSRDC would not have been able to forfeit the amounts of bid security by encashing the FDR at Merta City. It has been finally submitted that the Bank of the respondent RSRDC had also advised it on inquiry being made, that the FDR as submitted by the company could not be encashed at Merta City in terms of the requirement of the tender conditions. In the circumstances aforesaid it has been submitted that the technical and financial bid of the company was rightly not considered and the company is not deserving of any indulgence at the hands of this Court in the exercise of its equitable jurisdiction under Article 226 of the Constitution of India. It has been finally submitted that subsequent to the rejection of the petitioner's company bid, the remainder of the eligible bidders were evaluated and thereafter the respondent No. 3 BSPCC was found to be the lowest bidder and contract awarded to it in the execution whereof there is urgency because of pressing requirement of smooth traffic flow.

(3.) Mr. R.N. Mathur, Sr. Advocate assisted by Mr. Punit Singhvi, appearing for the company has fundamentally submitted that the discrepancy in the bid security submitted by way of the FDR was not fatal to the company's bid as it did not tantamount to breach of an essential condition. He submits that the furnishing of the FDR by the company by itself indicates that the company intended to comply with the conditions of the tender and furnish the bid security for entering into a contract in the event it was found to be the lowest bidder and selected for the construction of ROB. It has been submitted that if at all the event of default were to arise after the award of contract to the company and the bid security (FDR) were required to be encashed, the FDR having been issued in the name of Project Director, RSRDC Limited, Merta City, Unit at Jaipur would have been a good and valid banking instrument and the amounts thereunder would have certainly been paid to the Project Director, RSRDC as clarified by Union Bank of India. Counsel has submitted that the respondent RSRDC should not have been quick to reject an otherwise valid security on specious grounds. Counsel submitted that the bid of the company was atleast Rs. 2-3 lacs lower than the bid of the successful bidder i.e. respondent No. 3 BSPCC. Counsel submitted that consequently the action of the respondent RSRDC in non-consideration of the company's bid in the facts and circumstances of the case is wholly arbitrary and liable to be quashed and set aside. Reliance has been placed by Sr. Counsel on the judgment of Hon'ble the Supreme Court in the case of Tata Cellular v. Union of India, 1994 6 SCC 651, wherein it has been held that a mistake in relation to a non essential matter which is peripheral or collateral to a bid should not be treated to be as fatal and where the bidder has every intention to comply with the terms of the bid it should not be excluded from consideration.