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SUPREME COURT OF INDIA
R.F. Nariman, Navin Sinha, JJ.
Vidarbha Irrigation Development Corporation – Appellant
Versus
M/s Anoj Kumar Garwala – Respondent
Civil Appeal Nos. 1049 & 1050 of 2019 (Arising Out of SLP (C) Nos. 26811 & 27818 of 2018)
Decided On : 23-01-2019
(b) Interpretation of contract – Government tender – Clause 2.35 – Substantially responsive bid – Conforming to all terms, conditions and specifications without any material deviation – Bank guarantee for 6 months instead of for 40 months as mandated by clause 2.22 – Directly inconsistent with tender document and contrary to employers’ right to a bank guarantee for a longer period – Bid ought to have been rejected. (Para 10)
(2016) 8 SCC 446 – Relied upon
(c) Interpretation of contract – Government tender – Clause 2.18 – EMD and Performance security – EMD governed by GR dated 12.04.2017 – Performance security governed by GR dated 12.2.2016 and corrigenda – GR dated 12.04.2017 cannot be referred or followed for performance guarantee. (Para 11)
(d) Interpretation of contract – Government tender – Words used in tender document cannot be ignored or treated as redundant or superfluous – They must be given meaning and their necessary significance – Instantly an essential tender condition not complied with – Lack of such strict compliance cannot be condoned – It would amount to perversity – Interference warranted. (Para 15)
(2016) 16 SCC 818 – Distinguished
Facts of the case:
A Tender was called by the appellant before us on 06.01.2018 for balance earthwork to be done in a canal. The Tender was ultimately replied to by three persons whose bids, respectively, were -Rs.39.53 crores by Respondent No.1, Rs.39.15 crores by Respondent No.2, and Rs.46.81 crores by Respondent No.3. There is no dispute that the bid of Respondent No. 2 was the lowest bid.
The bank guarantee that was furnished for Rs. 42.14 lakhs by Respondent No. 2 before us was initially furnished only for a period of six months on 12.03.2018, in response to the tender. It is common ground between the parties that the period ought to have been 40 (forty) months. The bids were opened on 06.04.2018, and on 07.04.2018, one day later, Respondent No. 2, sought to make up this deficiency by adding a period of 34 months to the bank guarantee which was valid for 6 months only. The aforesaid bid made by Respondent No. 2 was accepted initially on 03.05.2018. A Tender Evaluation Committee then evaluated all the bids on 07.07.2018, and finally, the bid of the Respondent No. 2 was accepted as it was the lowest bidder among the three bids that had been received. The bone of contention between the parties is whether it is possible for the appellant before us to condone the initial bank guarantee being given for an admittedly incorrect period of 6 months.
Finding of the Court:
Bid of the respondent 2 is liable to be rejected.
Result: Appeal dismissed.
JUDGMENT :
Rohinton F. Nariman, J.
Leave granted.
2. A Tender was called by the appellant before us on 06.01.2018 for balance earthwork to be done in a canal. The Tender was ultimately replied to by three persons whose bids, respectively, were -Rs.39.53 crores by Respondent No.1, Rs.39.15 crores by Respondent No.2, and Rs.46.81 crores by Respondent No.3. There is no dispute that the bid of Respondent No. 2 was the lowest bid. At this stage, it is a little important to advert to some of the tender conditions:-
“Contract” is defined by the e-tender in question as follows:-
“1.3.9 CONTRACT :
It shall mean and include following documents.
Tender Documents.
Specifications.
Drawings.
Tender document & information/data submitted by contractor
Common set of conditions/Minutes of pre-Tender conference.”
Clause 2.15 speaks of “Pre-tender Conference” as follows:-
“1. Pre-tenders conference open to all prospective tenderer will be held in the office as stated in this Section, wherein the prospective tenderer will have an opportunity to obtain clarifications regarding the work and the tender conditions.
2. The prospective tenderers are free to ask for any additional clarification either in writing or orally and the reply to the same will be given by the Chief Engineer/Superintending Engineer in writing and these clarifications referred to as common set of conditions, shall form part of tender documents and which will also be common and applicable to all tenderer.
3. The e-tender submitted by the tenderer shall be based on the clarification, additional facility issued (if any) by the Corporation and this tender shall be unconditional. Conditional tenders will summarily be rejected as non-responsive.
4. All tenderers are cautioned that the tenders containing any deviation from the contractual terms and conditions, specifications or other requirements and conditional Tenders will be rejected as non-responsive.”
Clause 2.22 speaks of “Performance Security” as follows:-
“PERFORMANCE SECURITY in case of offer below the cost put to tender as per PWD Circular BDG-2016/BLD-2/Dt.:12/02/2016) & corrigendum on date 17/03/2016/WRD Corrigendum No. Tender 0316/(189/16) Major Projects-1 dated 14.7.16
Condition Regarding payment of performance security (in place of condition for payment of additional security-deposit) if offer quoted by the tenderer is below the cost put to tender.
i. If the tenderer quote upto 1% below the cost put to tender, no additional performance security is required. However, if the tenderer quote his offer more than 1% below the cost put to tender to 10% below the cost put to tender, tenderer shall submit the demand draft or FDR or BG of the amount equal to 1% of cost put to tender towards performance security in Envelope No.2 of tender.
ii. If the tenderer quote his offer more than 10% below (offer below than 10%) the cost put to tender, tenderer shall submit the demand draft or FDR or BG of the cumulative amount which is equal to the amount by which offer is more than 10 % below plus the amount as per (i) above in the Envelop No.2 of tender. (For example, for 14% below rate, 1% + (14%-10%) i.e. 4%, then total 5% of the cost put to tender.
iii. The amount of performance security shall be calculated on rounding of contractors offer upto two decimal places. The offer in envelop No.2 without demand draft or FDR or BG of appropriate amount of performance security shall be treated as invalid offer.
iv. Demand draft/BG/FDR shall be drawn in the name of Executive Engineer, Ghodazari Canal Division Nagbhid.
v. Demand draft/BG/FDR/shall be drawn from Nationalised or scheduled banks.
vi. The BG/FDR shall be valid upto one month after defect liability period. Validity of demand draft shall be minimum 3 months from the date of submission of tender.
vii. Scanned copy of BG/FDR/demand draft shall be uploaded by the contractor at the time of e-tendering.
viii. Contr
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