Gujarat High Court
Design Dialogues India Pvt. Ltd vs State Of Gujarat on 1 October, 2025
Author: A. S. Supehia
Bench: A.S. Supehia
NEUTRAL CITATION
C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025
undefined
Reserved On : 25/09/2025
Pronounced On : 01/10/2025
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO.7634 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA Sd/- .
and
HONOURABLE MR.JUSTICE L. S. PIRZADA Sd/- .
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Approved for Reporting Yes No
୰
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DESIGN DIALOGUES INDIA PVT. LTD.
Versus
STATE OF GUJARAT & ORS.
Appearance:
MR PINAKIN M RAVAL WITH MR JITENDRA CHAUDHARY FOR PETITIONER
MR G H VIRK, GOVERNMENT PLEADER WITH MS DHARITRI PANCHOLI,
AGP for the Respondent(s) No. 1,2
NOTICE SERVED for the Respondent(s) No. 3,4
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CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR.JUSTICE L. S. PIRZADA
CAV JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA) (1) By way of the present petition, the petitioner-Company prays for the quashing and setting aside of the communication dated 15.04.2025 written by respondent No.4, Additional State Project Director, Samagra Shiksha Gujarat, directing the petitioner to complete the project as per the tender terms, failing which a penalty amounting to 3% of the Bid Value shall be imposed.
Page 1 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined BRIEF FACTS:
(2) The petitioner is a registered supplier that participated in a tender process initiated by the respondent authorities under Bid No.GEM/2024/B/4678089 dated 01.03.2024 for the printing and distribution of printed maps and was declared as an L-1 Bidder. The closing date of the bid was extended vide corrigendum dated 29.03.2024. On 22.05.2024, the petitioner was declared as L-1 Bidder in a reverse bidding process, having been found technically and financially eligible.
(3) On 01.06.2024, the petitioner received an email from the respondent authorities requesting the submission of a sample to be evaluated against ten criteria outlined in the Tender Document. On 03.06.2024, the respondents provided the design for the sample. Pursuant to the request of 01.06.2024 and the email of 03.06.2024, the petitioner submitted a sample on 19.06.2024.
After this sample was rejected, the petitioner requested the respondents to provide an approved sample meeting their specifications. The respondents provided a Page 2 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined sample on 20.07.2024, which the petitioner documented via email on the same date, including photographs of the received sample. In a communication dated 25.07.2024, the petitioner apprised the respondent authorities of a Laboratory Report dated 24.07.2024, emphasizing that the sample submitted on 19.06.2024 (and rejected on 16.07.2024) was, in fact, fully compliant with the bid specifications.
(4) It is the case of the petitioner that the respondents, vide reply dated 02.08.2024, admitted that the sample provided on 20.07.2024 by them did not confirm to the bid specifications but sought to qualify this by stating that it was merely a response to the petitioner's query and not to be used for any other purpose. The petitioner wrote again on 05.08.2024, requesting acceptance of the material based on the sample submitted on 19.06.2024. The petitioner also offered an 18-month warranty, exceeding the respondents' 12 months requirement. Subsequently, by a communication dated 04.09.2024, the respondents demanded fresh samples.
Page 3 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined (5) It is the case of the petitioner that since it faced a technical challenge relating to direct printing with ink on HDPE sheets, it consulted manufacturers and was advised to seek specialized coating and ink solutions from the providers in the USA. The petitioner contacted such specialists, who agreed to provide a solution at additional cost and with an extended time frame. The petitioner apprised the respondents of this development on 08.09.2024. The bid's validity period, calculated as 180 days from 29.03.2024, expired on 25.09.2024.
(6) After the bid's validity had expired, the respondent authorities issued a Work Order to the petitioner on 06.12.2024. The petitioner responded on 11.12.2024, stating that the Work Order, being issued beyond the validity period, was de hors the tender terms and that a contract could therefore not be signed. On 18.12.2024, the petitioner met with officials of the respondent authorities to highlight the irregularities, delays, and faulty specifications. A detailed representation followed on Page 4 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined 23.12.2024, outlining the respondents' delays and negligence that led to the lapse of the validity period.
(7) On 07.01.2025, the petitioner emailed the respondents, seeking a response to the representation of 23.12.2024 and requested a hearing via Video Conference. The respondents replied on 04.02.2025, by intimating that the representation had been rejected and contemplating penal action amounting to 3% of the bid value. Vide representation dated 12.02.2025, the petitioner stated the rejection provided no reasons for disagreeing with the points raised in the representation dated 23.12.2024. However, the respondents issued the impugned communication dated 15.04.2025, which is the subject of the present petition.
SUBMISSIONS ON BEHALF OF THE PETITIONER :
(8) Learned advocate Mr.Jitendra Chaudhry with Mr.Pinakin Raval submitted that the penalty order is de hors the tender terms. He argued that the contract could not be executed Page 5 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined because the Work Order was issued after the validity period had expired. He further submitted that the tender terms do not provide for a penalty in such a situation, rendering the impugned order contrary to the tender conditions, since the figure of 3% of the bid value is unsupported by the tender terms.
(9) It is submitted that the penalty is unjustified and unsustainable in law, as it is premised upon specifications that are inherently faulty, scientifically unsound, and contradictory. It is submitted that the tender required "HD digital printing on both sides (waterproof)" on an HDPE sheet, which is not feasible as it reflects a fundamental misunderstanding, as HDPE's low surface energy makes it incompatible with direct ink adhesion in conventional digital printing without special surface treatments, coatings, and specific inks, none of which were mentioned in the tender document.
(10) It is contended that the petitioner's initial sample, submitted on 19.06.2024, Page 6 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined used vinyl pasting--a technically accepted method for achieving print on HDPE. This sample was rejected by the respondents, who insisted on direct digital printing, and lab testing confirmed that direct printing on HDPE requires processes not mentioned in the tender. The Work Order dated 06.12.2024 was issued after the bid validity expired on 25.09.2024, which is a direct contravention of the bid terms and public procurement principles. It is submitted that a public authority cannot unilaterally revive a lapsed offer, and no penalty can arise from an invalid contract. Lastly, it was submitted that considering the factual matrix, the present writ petition deserves consideration.
SUBMISSIONS ADVANCED ON BEHALF OF THE RESPONDENTS:
(11) Learned Government Pleader, Mr.Virk, appearing for the respondent authorities, submitted at the outset that the petition under Article 226 of the Constitution of India is not maintainable and is liable to be dismissed in limine. While referring to Page 7 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined Clause-4 of the Additional Terms, it is submitted that the conditions therein mandated the L-1 Bidder to submit compliant samples within seven working days of intimation, and despite multiple opportunities, the Petitioner repeatedly failed to comply.
(12) Learned Government Pleader submitted that a communication was issued to the Petitioner on 31.05.2024 to submit a sample within seven working days, and the sample submitted on 19.06.2024 was rejected for violating tender requirements. A second opportunity was provided on 16.07.2024. Instead of rectifying deficiencies, the Petitioner alleged on 25.07.2024 that the department's sample was non-compliant. A third opportunity was granted on 02.08.2024, citing specific deficiencies: one sample was partially printed and unclear; another had no printed map; a third had a tearable sticker, which was non-compliant. The Petitioner was explicitly directed to submit an HD UV digitally printed map directly on the HDPE sheet by 10.08.2024.Page 8 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025
NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined (13) It is contended that the petitioner sent an evasive reply on 05.08.2024 without rectifying the defects, and a fourth and final opportunity was given on 04.09.2024, reiterating that sticker pasting was not permitted. In its reply dated 08.09.2024, the petitioner falsely alleged that no departmental sample had been demonstrated, despite a pre-bid meeting on 07.03.2024 where the product was explained and which the petitioner did not attend. It was submitted that in this same letter dated 08.09.2024, the petitioner acknowledged its willingness to complete the project as per tender conditions without additional compensation. The sample submitted with this letter was subsequently found compliant upon testing by the Central Institute of Plastics Engineering and Technology (CIPET). Hence, a Work Order was issued on 06.12.2024, subject to strict adherence to the tender conditions, with a 90-day supply period.
(14) Learned Government Pleader also referred to the communications dated 11.12.2024 and 23.12.2024, and it is contended that the Page 9 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined petitioner sought a joint meeting, citing price escalation, and requested an extended time frame. Consequently, an Executive Committee meeting was held on 10.01.2025, chaired by the Principal Secretary, and the Committee resolved that failure to comply would attract a 3% penalty. In this regard, he has placed reliance on Clause-6, under which imposition of penalty is specified. By a letter dated 04.02.2025, the petitioner was given a fifth opportunity and informed that the requests for cost revision and timeline extension were rejected, and the petitioner was directed to proceed under the original terms, with a warning of the penalty for non-compliance. It was submitted that the petitioner, instead of complying, raised further untenable arguments on 12.02.2025. The Company continued its failure to comply, and hence, looking to the critical need for the maps in schools, the impugned communication dated 15.04.2025 was rightly issued. Lastly, the learned Government Pleader submitted that the petitioner's eventual submission of a compliant sample on 08.09.2024 disproves its Page 10 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined earlier claims of impossibility. It is urged that the delay in issuing the Work Order was attributable solely to the Petitioner's failure to submit a conforming sample on time. Hence, the impugned letter is justified and requires no interference from this Court.
(15) Learned Government Pleader has placed reliance on a judgment and order dated 30.07.2021 passed by a Division Bench of this Court in Special Civil Application No.11391 of 2020.
ANALYSIS OF THE FACTS:
(16) We have heard the learned advocates for the respective parties at length.
(17) The established facts from the pleadings are as under:
a) The respondent-State Department floated a tender for selecting an Agency for Supply of Printed Maps for Government Schools of Gujarat vide Bid No.GEM/2024/B/4678089 dated 01.03.2024. The Bid opening date was Page 11 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined 22.03.2024 at 20:30:00 hrs. and its validity was for 180 days. The closing date of the bid was extended vide corrigendum dated 29.03.2024.
b) A pre-Bid meeting was held on 07.03.2024 for explaining the nature and specifications of the product to the Bidders; however, the Petitioner did not remain present.
c) On 22.05.2024, the petitioner was declared the L-1 Bidder in a reverse bidding process, having been found technically and financially eligible.
d) The petitioner was called upon to submit a sample of the Map, which was submitted on 19.06.2024, but was rejected as it did not meet the tender specifications. In the third opportunity supplied to him, he produced the samples on 02.08.2024 with various deficiencies. The most relevant was that the Petitioner provided the sample of the Map which had a tearable sticker on it. On 04.09.2024, the respondent informed the petitioner that the use of pasting stickers Page 12 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined is impermissible as per the tender specifications.
e) On 08.09.2024, the petitioner showed his willingness to complete the project by adopting technology from the USA for printing on HDPE sheets, without requesting any additional compensation. Additional production time was also requested. Accordingly, a sample was also sent on 09.09.2024.
f) After the sample was tested and certified by the Laboratory, the respondent authority issued a work order to the Petitioner on 06.12.2024, subject to signing of the contract within 05 (five) working days. The petitioner was directed to complete the work within 90 days from the date of the Work Order.
g) However, the petitioner vide communication dated 11.12.2024, refused to sign the contract by pointing out that the bid validity had expired on 25.09.2024, after a period of 180 days, and the Work Order had been placed on 06.12.2024.
Page 13 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined
h) By the letter dated 23.12.2024, the petitioner raised various issues and sought clarification from the respondents. The relevant issues were extension of bid validity, compensation for additional costs, and departure from tender specifications regarding the printing of Maps.
i) Accordingly, the Committee in its meeting held on 10.01.2025 took the decision to the extent that in case the Petitioner refuses to comply with the tender terms, a penalty of 3% of the bid value will be imposed.
j) Vide communication dated 04.02.2025, the respondents directed the Petitioner to complete the assigned work within the tender cost and within the time frame, failing which a penalty of 3% of the bid value shall be imposed.
k) The petitioner responded on 12.02.2025 and asked the respondents to consider the representation dated 23.12.2024.
l) On 15.04.2024, the respondents again directed the Petitioner to complete the work Page 14 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined as per tender conditions, reiterating the imposition of a 3% penalty on the bid value on failure to comply.
ISSUES RAISED IN THE WRIT PETITION :
(18) The issues, which fall for deliberation are:
a) Whether the petitioner is justified in raising objections to the specification of the product in the tender document ?
b) Whether the petitioner can be compelled to sign the contract and asked to complete the work after the validity of the Tender expired on 25.09.2024 ?
c) Whether the petitioner can be imposed a penalty of 3% for failure to complete the project ?
(19) We shall now deal with the first issue (a) regarding raising objections to the specifications of printing the Maps in the Tender Document. It is the case of the petitioner that the respondents have floated a tender for printing the Maps with Page 15 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined irrational specifications, which are not technologically feasible in India, and that he had to import the technology from the USA, incurring additional cost. It is alleged that the tender document did not specify direct printing on HDPE Sheets, and such printing is not feasible, and constitutes a faulty specification. We find this to be an absolutely incorrect assertion for the following reasons.
(20) The Item Category in the Tender Document mentions as under:
"Non Paper Printing Services - Quantity Based - Map: HD Digital Printing on both sides. Water Proof : HDPE Pure White Virgin Plastic Flexible Stiffness Water Proof."
The Tender Document further stipulates the specifications of printed maps to be supplied by the successful bidder. The relevant specifications are as under:
2. Material: HDPE (Pure White - Virgin Plastic), Flexible Stiffness, Waterproof.
4. Type of Printing: HD Digital Printing on both sides (waterproof)"
In order to ensure that the participating bidders understand the product specification, a pre-bid meeting was also held as per the clause of the Tender. It was Page 16 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined declared in the Tender that the sample would be displayed in the pre-bid meeting, which was held on 07.03.2024; however, the petitioner did not participate.
(21) The petitioner's assertion in his representation dated 08.09.2024, stating that the Tender Document or any corrigendum did not specify that direct printing on HDPE is required, appears to be an afterthought.
This is an incorrect and false assertion made in both the representation and the writ petition. The sample submitted by the petitioner on 02.08.2024 had three deficiencies, and the respondents informed him that he should supply an HD UV digitally printed Map on the HDPE sheet (not sticker) by 10.08.2024. He did not do so despite repeated requests until 08.09.2024. The sample that was sent was found to be compliant as per laboratory testing conducted by the Central Institute of Plastics Engineering and Technology (CIPET), and thereafter a work order was issued on 06.12.2024.
Page 17 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined (22) Thus, it is very outlandish that though the petitioner was well aware of the product specifications, he participated in the tender process and, after being declared as L-1, raised a grievance on the product specifications, claiming that the specification for direct printing on HDPE sheets is faulty and it is not possible to print on HDPE sheets due to ink adhesion issues. He claimed that to achieve such results, he had to manufacture the sample using coating and ink technology from a US- based brand, which was supplied on 09.09.2024. The Petitioner also acknowledged in his representation that this solution imposed a significant cost burden, but nevertheless, he was committed to complete the project without requesting any additional compensation. However, he subsequently refused to sign the contract by raising his concerns about the bid validity and absence of clarification on the issue of additional costs. Had the petitioner attended the pre-bid meeting organized by the respondent for showing the sample specifications, the exact nature of the Page 18 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined product specifications would have been known to him. However, the Tender Document sufficiently clarifies the product specifications. Hence, the ground raised by the petitioner regarding faulty product specifications is absolutely ill-conceived. We may refer to the decision of the Supreme Court in the case of Afcons Infrastructure Limited vs. Nagpur Metro Rail Corporation Limited & Anr., (2016) 16 S.C.C. 818 :
"15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional Courts but that by itself is not a reason for interfering with the interpretation given".
(23) Thus, the Apex court has held that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its Page 19 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined requirements and interpret its documents, and the constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions We do not find any perversity or malafide in understanding the terms and condition of the tender document. Hence, we are not inclined to accept the submissions of the Petitioner on issue (a) relating to faulty specifications.
(24) Now, we shall deal with the second issue
(b).
(25) The expiry of the validity of the tender upon completion of 180 days on 25.09.2024 is not disputed by the respondents. It is also not in dispute, and is in fact admitted by the respondents in their affidavit-in-reply dated 22.07.2025, that the final sample supplied by the petitioner on 08.09.2024 was approved by the Laboratory (CIPET). No date of approving the sample has been pointed to Page 20 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined us. It is pertinent to note that after a period of almost three months from the receipt of the sample, the respondents issued the Work Order on 06.12.2024 i.e. after the validity of the Tender had expired on 25.09.2024. Thus, the sample which met the requirements of the Tender Document was received by the respondents before the expiry of the bid validity. However, the respondents, instead of issuing the Work Order before 25.09.2024, issued it on 06.12.2024, directing the petitioner to sign the contract within 05 (five) working days and complete the work within 90 days. The petitioner, immediately sought various clarifications vide his representation dated 23.12.2024, including the extension of validity of bid, and also about the additional cost escalation. However, the respondents did not respond to various queries raised by the petitioner, and ultimately responded with the impugned communication dated 04.02.2025 asking to complete the assigned work, failing which 3% penalty of the bid value shall be imposed upon him.
Page 21 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined (26) It is true that the petitioner vide communication dated 08.09.2024, while sending the sample, had shown his willingness to complete the project without asking for additional compensation. However, such willingness cannot ipso facto extend the validity period of the tender unless the respondents had positively issued any order / corrigendum extending the validity. The petitioner is also justified in raising the query regarding the additional cost after a delay of three months, as the respondents sat idle on the issue and issued the Work Order on 06.12.2024, asking the petitioner to sign the contract without resolving the concerns raised by him. The petitioner cannot be compelled to complete the project unless the issues of extension of bid validity and the financial implications of signing a contract after the validity date are addressed.
(27) In view of the foregoing discussion, we are of the opinion that the respondents have acted arbitrarily and illegally in directing the petitioner to sign the contract after Page 22 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined the expiry of the tender on 25.09.2024, and to complete the project.
(28) The last issue (c), relates to the imposition of a 3% penalty on the petitioner. Since we have already addressed issue (b), relating to the arbitrary action of the respondents in directing the petitioner to enter into a contract after the validity of the tender, the issue (c) can also be answered accordingly. However, whether the fixation of a 3% penalty was appropriate or not calls for further deliberation.
(29) Clause-6 of the Tender Document governs the imposition of penalty. The same reads thus:
"6. Penalty Clause :
1. If the bidder fails to deliver and install the requisite items within the prescribed time limit as mentioned in the bid, then a sum equivalent to one percent(1%) of the value of unsupplied goods / services shall be deducted from the payment for each subsequent calendar week of delay or part thereof. The amount of penalty for delay in delivery & installation shall be subject to a limit of 10% of the total contract value, post which the following actions will be taken.Page 23 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025
NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined
2. A delay of more than 10 weeks after the prescribed time limit will cause for termination of the contract. In that case, the Performance Bank Guarantee of the bidder will be forfeited. In case, the selected bidder does not supply the ordered items for the reason, the bidder will be liable to pay the difference amount to the purchaser, over and above the performance bank guarantee, which the department has to pay to the next of other selected bidder for purpose of the said items.
3. The State Project Director - GSCE reserves the right to waive the penalty in case of delay due to Force Majeure reasons."
(30) A bare reading of the penalty clause exposits that the imposition of a penalty of 3% is conspicuously missing. While making submissions before us, reliance is placed on Clause 6(1) by the respondents. It is contended that the penalty could have been increased if calculated under the said clause; however, the respondents were generous enough to have restricted it to 3%. We are not impressed with such submission. In the absence of any written and signed contract, and in light of the fact that the tender validity has ended, the respondents are prohibited from invoking the penalty clause. It is pertinent to note that from the minutes of the meeting of the Committee held on 10.01.2025, we do not find that the Page 24 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined Committee constituted by the respondents fixed the penalty of 3% by placing reliance on Clause 6(1), and precisely so, since there was no signed contract in existence. Before fixing the penalty of 3%, which is outside the scope of Clause 6(1), the respondents should have called upon the petitioner, since such a penalty does not find a place in the tender documents. The issue might have been viewed differently had there existed a valid written and signed contract between the parties as per the tender specifications. In its absence, the unilateral fixation of 3% penalty is violative of principles of natural justice. Hence, for want of any enabling provision from the tender document, the respondents cannot fix and impose a penalty of 3% on the petitioner, especially after the expiry of the tender.
(31) We are conscious of the judicial review and the restricted scope of interference, as enunciated by the Supreme Court in the case of Tata Cellular vs. Union of India, (1994) 6 S.C.C. 651, where the Supreme Court Page 25 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined emphasised the need to strike the right balance between administrative discretion and to remedy unfairness, and observed:
"94. (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.
(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."
(32) In the present case, we have noticed and held that the decision of the respondents is Page 26 of 27 Uploaded by BHAVESH P. KATIRA(HC00176) on Wed Oct 01 2025 Downloaded on : Wed Oct 01 22:45:00 IST 2025 NEUTRAL CITATION C/SCA/7634/2025 CAV JUDGMENT DATED: 01/10/2025 undefined not only tainted with arbitrariness but also fails the test of Wednesbury reasonableness. The instant writ petition challenging the arbitrary and unilateral action of the respondents is held to be maintainable.
(33) We answer issue (a) against the petitioner.
The writ petition succeeds on issues (b) and
(c).
(34) On the bedrock of the foregoing discussion and analysis of the facts and pleadings, the case of the petitioner merits acceptance. The impugned action of the respondents is quashed and set aside. Rule made absolute to the aforesaid extent.
Sd/- .
(A. S. SUPEHIA, J)
Sd/- .
(L. S. PIRZADA, J)
***
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