1. Tender for land development works — L1 bidder's delay in submitting additional performance security due to nationwide bank strike — Challenge to work order issuance. (Para 5 , 6 , 7 )
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2023 Supreme(SC) 784
SUPREME COURT OF INDIA
J.K. MAHESHWARI, K.V. VISWANATHAN, JJ.
M/s Om Gurusai Construction Company – Appellant
Versus
M/s V.N. Reddy and Others – Respondents
Civil Appeal No. 5375 of 2023, SLP (Civil) No. 7092 of 2022
Decided On : 23-08-2023
Important Points
IMPORTANT POINTS
(1) Constitutional courts must defer appreciation of tender documents by employer unless there is mala fide or perversity in understanding or appreciation.
(2) Tendering authority cannot be expected to turn a blind eye to undisputed ground realities and compelling necessities.
(1) Constitutional courts must defer appreciation of tender documents by employer unless there is mala fide or perversity in understanding or appreciation.
(2) Tendering authority cannot be expected to turn a blind eye to undisputed ground realities and compelling necessities.
Subject
Tender - PERFORMANCE SECURITY
Act Referred
Headnote
Government Contract – Tender – [Order XXI Rule 84 of Civil Procedure Code, 1908] – Setting aside work order – Breach of one clause of tender – No one can be compelled to perform an impossible task – Appellant has complied with condition of furnishing additional performance security at the earliest possible time, that it could possibly comply – Deposit of additional performance security was in due compliance of Clause 2.22.0 (ix) of tender conditions – There was no breach of that clause – Tendering authority has awarded work after satisfying itself about necessary compliances – Tendering authority cannot be expected to turn a blind eye to undisputed ground realities and compelling necessities – Owner or employer of a project, having authored tender documents, is the best person to understand and appreciate its requirements and interpret its documents – No mala fide has been alleged and interpretation as adopted by tendering authority cannot be said to be perverse – No case of prejudice to public interest by award of work has also been made out – High Court ought not to have interfered with acceptance of tender and issuance of work order – Order impugned set aside. (Paras 19, 23, 24, 25, 26, 31, 32 and 34)
Facts of the case:
Question which arises for consideration in this case is, on the facts herein, can Court construe Clause 2.22.0 (ix) of tender conditions as rigid and unalterable, even if the justice of the cause warranted otherwise?
Findings of Court:
Writ Petition No. 1787 of 2021 on the file of High Court of Judicature at Bombay, Nagpur Bench, Nagpur shall stand dismissed.
Result : Appeal allowed.
Legal Category Hierarchy
Advocates appeared:
For the Appellant(s) : Mr. Satyajit A, Desai, Adv. Mr. Amit K Pathak, Adv. Mr. Siddharth Gautam, Adv. Mr. Abhinav K. Mutyalwar, Adv. Mr. Gajanan N Tirthkar, Adv. Mr. Vijay Raj Singh Chouhan, Adv. Ms. Anagha S. Desai, AOR
For the Respondent(s): Mr. Prashant Shrikant Kenjale, AOR Mr. Uday B. Dube, AOR
For the Appellant(s) : Mr. Satyajit A, Desai, Adv. Mr. Amit K Pathak, Adv. Mr. Siddharth Gautam, Adv. Mr. Abhinav K. Mutyalwar, Adv. Mr. Gajanan N Tirthkar, Adv. Mr. Vijay Raj Singh Chouhan, Adv. Ms. Anagha S. Desai, AOR
For the Respondent(s): Mr. Prashant Shrikant Kenjale, AOR Mr. Uday B. Dube, AOR
Table of Contents
2. Whether a mandatory tender clause prohibiting time extensions for performance security submission can be relaxed in cases of impossibility due to bank strikes. (Para 8 , 13 , 16 , 17 )
3. Tendering authority's decision to accept late security during a bank strike was reasonable, non-perverse, and based on ground realities. (Para 18 , 24 , 25 , 26 )
4. The legal maxim lex non cogit ad impossibilia prevents the law from compelling a party to perform an act that is impossible. (Para 19 , 20 , 21 , 22 , 23 )
5. Appeal allowed — High Court order set aside — Writ petition dismissed. (Para 34 )
6. Does a mandatory deadline in a tender document apply if performance is rendered impossible by external events like a bank strike?
No. Under the maxim lex non cogit ad impossibilia, the law does not compel a person to do that which they cannot possibly perform. If a bank strike makes depositing security impossible, compliance at the earliest possible time is considered due compliance. (Para 19 , 20 , 21 , 22 , 23 )
7. To what extent can constitutional courts interfere with a tendering authority's interpretation of its own tender documents?
Courts must defer to the employer's understanding and appreciation of tender documents unless the decision is mala fide, perverse, arbitrary, or irrational, or if it significantly affects public interest. (Para 25 , 26 , 33 )
8. Should technical or procedural violations in tender submissions lead to automatic disqualification and judicial interference?
Courts should resist interference based on technical or procedural violations resulting from business rivalry or imaginary grievances, as such interferences can delay public works and increase project costs. (Para 33 )
JUDGMENT :
K.V. VISWANATHAN, J.
1. Leave granted.
2. This case brings back to memory the classic words of Justice M. Hidayatullah (as the learned Chief Justice then was) in Mahanth Ram Das vs. Ganga Das, (1961) 3 SCR 763. Though it was in the context of the Code of Civil Procedure, dealing with the powers of a Civil Court, the following passage does repay study for the present facts too:
“......Such procedural orders, though peremptory (conditional decrees apart) are, in essence, in terrorem, so that dilatory litigants might put themselves in order and avoid delay. They do not, however, completely e-stop a Court from taking note of events and circumstances which happen within the time fixed. For example, it cannot be said that, if the appellant had started with the full money ordered to be paid and came well in time but was set upon and robbed by thieves on the day previous, he could not ask for extension of time, or that the Court was powerless to extend it. Such orders are not like the law of the Medes and the Persians.....”
(Emphasis supplied)
3. The question which arises for consideration in this case is, on the facts herein, are we to construe Clause 2.22.0 (ix) of the tender conditions as the law of the Medes and the Persians - rigid and unalterable, even if the justice of the cause warranted otherwise?
4. Clause 2.22.0 (ix) reads as under:
“(ix) L-I shall submit the demand draft/BG or FDR additional performance security in the office of the Executive Engineer, Lower Wardha Project Division, Wardha within 2 days of opening of envelope-2. This duration of 2 days will not be relaxed under any circumstances. Failure to do so will result in forfeiture of EMD and the contractor/Joint Venture (jointly or individually) shall be debarred from participating in any bid of Water Resources Department/VIDC, Nagpur for two years from date of opening of envelope-2. If L-1 fails to submit to additional performance security within prescribed time period then Executive Engineer ask L-2 in writing and if L-2 bidder agree to do work at the rate quoted by L-1 then L-2 bidder shall be considered for acceptance.”
(Emphasis supplied)
Relevant Facts
5. The facts that give rise to the question are short and interesting. On 18.01.2021, the Executive Engineer, Lower Wardha Project Division, Wardha issued a tender calling upon interested bidders to submit their bid. The work, which was the subject matter of the writ petition before the High Court, was for “construction of land development works (Part-I) of Gadegaon main minor offtaking @ R.D. 4995 M on Nandgaon Dy.” Three bidders submitted their bids. The technical bid was opened on 08.02.2021 when the appellant, and the first respondent herein (writ petitioner before the High Court) were found eligible. The financial bid was opened on 12.03.2021 and the appellant’s bid was found to be the lowest.
6. Under Clause 2.22.0 (ix), as set-out above, the appellant was to furnish the additional performance security within a period of two working days. It is not disputed that 13.03.2021 was a Saturday and 14.03.2021 was a Sunday and hence two working days would expire only on 16.03.3021. It is also not disputed that there was a nationwide employees strike in the nationalised banks on 15.03.2021 and 16.03.2021.
7. The additional performance security was submitted on 17.03.2021. The tendering authority, after satisfying itself of the existence of the strike, accepted the bid of the appellant and issued work order on 07.05.2021. Thereafter, the work commencement order was issued on 24.05.2021 to the appellant.
Findings of the High Court on Clause 2.22.0 (ix)
8. Aggrieved, the first respondent herein filed a writ petition on 29.04.2021 challenging the work order and the work commencement order. That writ petition has been allowed by the Division Bench of the High Court through the impugned order wherein the High Court has held, with respect to Clause 2.22.0 (ix):
(a) that condition prescribed in Clause 2.22.0 (ix) was
