Gangaramchak Mining Pvt. Ltd vs National Thermal Power ...
2023 Latest Caselaw 3185 Jhar

     IN THE HIGH COURT OF JHARKHAND AT RANCHI
                       W.P(C) No. 4617 of 2023
     Gangaramchak Mining Pvt. Ltd.         ... ...        ...   Petitioner
                                 Versus
     1. National Thermal Power Corporation Ltd.
     2. Union of India                     ... ...        ...   Respondents
                                 ---------
     CORAM:          SRI SANJAYA KUMAR MISHRA, C.J.
                          SRI ANANDA SEN, J.
                                ---------
     For the Petitioners:   M/s. Sumeet Gadodia & Ankit Kumar,
                            Advocates
     For the Respondents:   M/s. Prashant Pallav, Parth Jalan & Shivani
                            Jaluka, Advocates
     For the UOI:           Mr. Sunil Kumar, Advocate
                                ---------
     03/ 28.08.2023

           Upon hearing the learned counsel for the parties, this Court
passed the following, (Per. Sanjaya Kumar Mishra, C.J.)
                                      ORDER

2. By filing this writ application, the petitioner, a registered company under the Companies Act, 1956/2013 has prayed for issuance of a writ in the nature of certiorari for quashing and setting aside Online Communication dated 14th August, 2023 (Annexure-7 to the writ application) communicated by respondent no.2 wherein the bid of the petitioner pertaining to Bid No. GEM/2023/3478349 dated 24.5.2023 pertaining to the work of 'Development and Operation of Badam Coal Block, State of Jharkhand, India' has been disqualified on the ground that the petitioner has not submitted Bank Guarantee in requisite format towards Earnest Money Deposit.

It also prayed for issuance of writ of certiorari for quashing and setting aside the Online Communication dated 17.8.2023 (Annexure-10 to the writ application) communicated by respondent no.2, wherein representation filed by the petitioner pursuant to the rejection of its bid on the alleged ground of non-submission of Earnest Money Deposit in the requisite format has been rejected.

Thirdly it prays for issuance in the writ of mandamus, directing the respondents to accept the Bank guarantee towards Earnest Money Deposit submitted by the petitioner in accordance with the format made available to it by respondent no.2 and consequentially declare the technical

bid of the petitioner as qualified and to allow the petitioner to participate in the Tender process.

Ultimately, it prays to direct the respondents to allow the petitioner to submit the Earnest Money Deposit in the format of Bank Guarantee as prescribed under Appendix-2 of the Request for proposal Document and to thereafter, declare the Technical Bid of the petitioner as qualified and allow the petitioner to participate in the Tender process, especially because for no fault of the petitioner, the petitioner's bid has been disqualified only on the ground of submission of Bank Guarantee not as per requisite format. He has also made general prayer for appropriate orders or issuance of writ.

3. On 8th December, 2017, the Government e-Marketplace (hereinafter referred to GEM for brevity) has notified that Union of India in exercise of powers conferred under Clause (3) of Article 77 of the Constitution of India has made amendment in 'Government of India (Allocation of Business), Rules 1961 for providing 'Development, Operation & Maintenance of National Public Procurement Portal-Government e- Marketplace'. A tender has been invited by the NTPC through GEM portal pertaining to the work of 'Development & Operation of Badam Coal Block, State of Jharkhand. The petitioner claiming to have wide experience in operating as a Mine Developer Operator participate in the tender process. All communications regarding filing of the bid etc. was made through GEM Portal and the petitioner on 03.06.2023 downloaded the format of the EMD Bank guarantee from the GEM portal. The petitioner obtained EMD amount of Rs.17 crores through its banker on 09.06.2023. The petitioner in such process has to spend a sum of about Rs.11lakhs as the dues of the bank. On 14.08.2023 the petitioner received online communication wherein it was informed that the Technical bid of the petitioner has been disqualified on the ground that the petitioner has not submitted bank guarantee in the requisite format of Earnest Money Deposit.

4. In the process, altogether four bidders participated and only bid of the petitioner was rejected as being disqualified. The petitioner filed an online representation on the same day on 14.08.2023 challenging the rejection of its bid document.

Apart from the said online representation, the petitioner has also filed a manual representation wherein the petitioner specifically stated that it has submitted the Bank Guarantee strictly in terms of the Bank Guarantee Format communicated to it by respondent no.2 and there was no fault on the part of the petitioner in submission of the said bank guarantee. On 17.8.2023 he again received an online communication from the respondent no.2 wherein it was communicated that the representation of the petitioner was rejected. The rejection of the bid of the petitioner on the ground of furnishing of incorrect format of Bank Guarantee towards Earnest Money Deposit is stated to be illegal, arbitrary, hence this writ application has been filed. Petitioner relies upon an online clarification issued by NTPC in respect of similar development and operation project of 'East Pit of Talaipali Coal Block' wherein the respondent-NTPC has specifically clarified that the sample format of EMD available on GEM portal is required to be ignored and the bid security and EMD is to be provided as per the format provided in the instructions to bidders. As a part of Annexure-1 a standard bid document is at page 120 of the writ application. The format of the bank guarantee for EMD companies have provided as Appendix-2. It is necessary to quote part of Appendix-2 at paragraph 3 of the Format of Bank Guarantee which reads as follows herein:-

"We, the ................(Name & address of the Bank) having our Head Office at............... (#)....... guarantee and undertake to pay immediately on demand by NTPC the amount of.......... without any reservation, protest, demand and recourse. Any such demand made by NTPC shall be conclusive and binding on us irrespective of any dispute or difference raised by the Bidder."

5. The document however, submitted by the petitioner (Annexure-

4) which is at page 126 of the writ petition, provides undertaking of the bank as follows:-

"We undertake to pay the Beneficiary up to the above amount upon receipt of its first written demand, without the Beneficiary having to substantiate its demand, provided that in its demand

the Beneficiary will note that the amount claimed by it is due to it owning to the occurrence of one or both the two conditions specifying the occurred condition or conditions."

6. Now, the questions arises is whether this stipulation of giving unconditional guarantee is an essential condition of the bid document or bid process.

7. Learned counsel for the petitioner raise only two argument in this connection. Firstly, it is submitted by the learned counsel for the petitioner that after downloading the document the petitioner received online communication whereby the format of EMD bank guarantee was given to him by GeM which is at Annexure-4 and, therefore, his bid should not have been rejected as GeM is the agent for the Principal i.e National Thermal Project Corporation (hereinafter referred to NTPC for brevity).

8. However, learned counsel appearing on behalf of NTPC Mr. Prashant Pallav, Advocate submits that in case of any such discrepancies, the bid document should be given preference to and it would take precedence over any other communication. He draws attention of the Court to Clause 6.2.1 of the bid document which is appearing at page 65 of the writ petition being part of Annexure-3. The provision reads as follows:-

"6.2.1. Issue of RFP Document-

a) Bids are to be submitted through Government e-Marketplace (GeM) website (https://gem.gov.in/). Bidders must use their GeM Seller ID and Password for participation in the tender. Bidders who do not have GeM Seller ID must register themselves as Seller in GeM Portal by visiting government e-Marketplace Website- https://gem.gov.in/. Bidders may also refer to the Seller Help Document for GeM registration & participating in the tender which is uploaded on GeM website. Subsequent to registration on GEM Portal, bidders shall be required to add "Service for Mine Development and Operation" from " Add New Offering" under Catalogue Tab on GeM Portal. Bidder shall download the RFP Documents from Government e-Marketplace Website- https://gem.gov.in/

and promptly upon download of RFP documents, the Bidder shall fully satisfy itself that RFP documents is complete in all respects. Notice of any discrepancy shall be given to NTPC immediately. The Bidder shall confirm that the RFP Documents is complete in all respects. In the event that the RFP Documents or any part thereof is mutilated or missing the Bidder must notify NTPC immediately.

b) RFP documents are being incorporated in the GeM bid. The provisions stipulated in RFP documents shall supersede those in GeM GTC and STC/SLA in case of any conflicting provisions. (underlined to supply emphasis)".

9. Learned counsel for the respondents also draws attention of this Court to Clause 3.1.7 of the bid document which defines Bid Document or Bidding Document or Document or RFP Document or RFP which means document issued by NTPC vide RFP Bid Specification No.SSC-C&M-P- 20032023 for selection of Mine Developer cum Operator (MDO) for the development and operation of Badam Coal Block, State of Jharkhand, India, through Domestic Competitive Bidding (DCB) and shall include any modifications, amendments/corrigenda or alterations or clarification thereto. The documents are listed thereafter which includes notice inviting tender, RFP document, Project Agreement etc. Approved Mine closure plan, approved revised Mining Plan etc. Thus it is clear from the aforesaid documents that in case of any doubt or discrepancy it is the notice inviting tender NIT which shall prevail. Any communication received from the agent has to be ignored by the bidder. The second question which arises in this case is whether the decision of the employer in rejecting the bid document of the petitioner holding the deficiency to be substantial one, is correct or not.

10. Learned counsel for the petitioner relies upon three judgments and submits that the petitioner's case should not have been rejected by the respondent-NTPC. In the case of Poddar Steel Corporation Vrs. Ganesh Engineering Works & Ors. reported in (1991) 3 SCC 273 the Hon'ble Supreme Court was examining a question whether the employer has any discretion in accepting a bid document when there is deficiency in the same holding the same to be non-essential condition of eligibility.

In that case the employer has accepted the plea of the bidder which was challenged by the petitioner. The Hon'ble Supreme Court has held that as a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirement in a tender notice can be classified into two categories- those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case, the Hon'ble Supreme Court further held that the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases. In that particular reported case the certified cheque of the Union Bank of India drawn on its own branch must be treated as sufficient for the purpose of achieving the object of the condition and the Tender Committee took the abundant caution by obtaining a further verification from the bank. In this situation, the Hon'ble Supreme Court further held that it is not correct to hold that the Govt. (Diesel Locomotive Works, Indian Railways) had no authority to waive the technical literal compliance of the tender condition specially when it was in its interest not to reject the said bid which was the highest. The observation made in the Poddar Steel Corporation (Supra) does not come to the rescue of the petitioner as we are of the opinion that question which arose before the Hon'ble Supreme Court in that case is simply different from the question which is before us. In that case employer has taken a decision that certain compliance though different from the requirement will not be treated as a substantial or essential condition of the tender document and in that case the Court did not interfere in that matter. However, here the petitioner wants that decision taken by the authorities in holding the deviation to be substantial and rejecting the bidders tender offered to execute the work be quashed by issuing the writ of certiorari and also with a writ of mandamus. Therefore we are of the view that the aforesaid judgment does not hold good to the case of the petitioner.

11. The second case relied upon by the learned counsel for the petitioner is the case of Rashmi Metaliks Ltd. & Anr. Vrs. Kolkata Metropolitan Development Authority & Ors., reported in (2013) 10 SCC 95, wherein Hon'ble Supreme Court was considering two terms of invitation to tender appearing at Clause (i) & (j) thereof. Clause (i) provided that a declaration in the form of affidavit in a non-judicial stamp paper should be submitted stating clearly that the applicant is not barred/delisted/blacklisted by any government bodies in DI pipe supply tender during last five years, and if any, such incident is found at any point of time, the tender will be cancelled summarily without assigning any reason whatsoever. Clause (j) provided that valid PAN No., VAT No., copy of acknowledgment of latest income tax return and professional tax return should be filed. Answering the question at paragraph 18 the Hon'ble Supreme Court, after taking into consideration the various judgments, held that the income tax return would have assumed the character of an essential term if one of the qualification was either the gross income or the net income on which tax was attracted. The Hon'ble Supreme Court further held that in many cases this is a salutary stipulation, since it is indicative of the commercial standing and reliability of the tendering entity. The feature being absent, the Hon'ble Supreme Court though that the filing of the latest income tax return was a collateral term, and accordingly the Tendering Authority ought to have brought this discrepancy to the notice of the appellant Company and if even thereafter no rectification had been carried out, the position may have been appreciably different. Thus, the Hon'ble Supreme Court allowed the appeal and set aside the judgment impugned thereby clarifying the appellant to participate in the bid. However, facts of this case are different as will be demonstrated by us in the succeeding paragraphs.

12. The third judgment relied upon by the learned counsel for the petitioner in the case of Central Coalfields Ltd. & Anr. Vrs. SLL-SML (Joint Venture Consortium) & Ors., reported in (2016) 8 SCC 622, wherein the Hon'ble Supreme Court while considering the question stated in paragraph 4 of the said judgment that whether furnishing a bank guarantee in the format prescribed in the bid documents is an essential requirement in the bidding process of Central Coalfields Ltd. and specifically whether a bid not

accompanied by a bank guarantee in the format prescribed in the bid documents of Central Coalfields Ltd. could be treated as non-responsive in view of the Clause 15.2 of the general terms and conditions governing the bidding process. The Hon'ble Supreme Court answered the question at paragraph 49 and held that looking at it from the point of view of the employer if the courts take over the decision-making function of the employer and make a distinction between essential and non-essential terms contrary to the intention of the employer and thereby rewrite the arrangement, it could lead to all sorts of problem including the one that the Supreme Court was grappling with. An example was taken by the Hon'ble Supreme Court in which GTC specifically provided in Clause 15.2 that "Any bid not accompanied by non-acceptable Bid Security/ EMD shall be rejected by the employer as non-responsive". The CCL ex-facie intended this term to be mandatory yet the High Court held that the bank guarantee in a format not prescribed by it ought to be accepted since that requirement was non- essential term of the GTC. From the point of view of CCL, the GTC has been impermissibly rewritten by the High Court and holding that the Hon'ble Supreme Court further observed that while deciding the question whether a term of NIT is essential or not is a decision taken by the employer which should be respected. Even if the term is essential, the employer has the inherent authority to deviate from it provided the deviation is made applicable to all bidders and potential bidders. However, the Hon'ble Supreme Court further held that if the term is held by the employer to be ancillary and subsidiary, even that decision should be respected. The lawfulness of that decision can be questioned on very limited grounds, as mentioned in the various judgments discussed by the Hon'ble Supreme Court in previous paragraphs but the soundness of the decision cannot be questioned, otherwise the Court would be taking over the function of the tender issuing authority, which it cannot. Thus, this third reported case is also not improving the case of the petitioner.

13. In this case we have seen that the document which the petitioner is required to submit i.e bank guarantee should contain an unconditional undertaking whereas document that has been submitted by the petitioner has two conditions to it as we have quoted the same and duly underlined to

supply emphasis. So, in our considered opinion the decision of the employer i.e NTPC not awarding the tender and holding the petitioner as technically disqualified because of discrepancy, should be respected by the Court and this Court in excess of power of judicial review under Article 226 of the Constitution should not rewrite the conditions of the tender document.

14. Learned counsel appearing on behalf of the NTPC has relied upon the judgments of the Hon'ble Supreme Court in the case of N.G Project Ltd. Vrs. M.S. Vinod Kumar Jain & Ors. reported in (2022) 6 SCC 127 wherein Hon'ble Supreme Court took into consideration various judgments including Tata Cellular Vrs. Union of India reported in (1994) 6 SCC 651, the Central Coalfields Ltd. & Anr. (Supra), Afcons Infrastructure Ltd. Vrs. Nagpur Metro Rail Corporation Ltd. & Anr. reported in (2016) 16 SCC 818 and Silppi Construction Contractors Vrs. Union of India & Ors., reported in 2019 SCC Online SC 1133 and held that the Court being the guardian of fundamental rights is duty bound to interfere when there is arbitrariness, irrationality, malafides and bias. However, the court in all the aforesaid decisions has cautioned time and again that the courts should exercise a lot of restrain while exercising their powers of judicial review in contractual or commercial matters. The Hon'ble Supreme Court further held that it normally loathe to interfere in contractual matter unless a clear cut case of arbitrariness or malafides or bias or irrationality is made out. One must remember that today many public sector undertaking compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are state within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts. But this discretionary power must be exercised with great deal of restraint and caution. The Hon'ble Supreme Court further held that the court must realize their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in judges' robes do not have the necessary and requisite expertise to adjudicate upon a technical issues beyond our domain. As laid down in the judgment referred by the Hon'ble Supreme Court as mentioned above the courts should not use a magnifying

glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer.

15. Thus, this Court is of the opinion that this case do not fall within the parameters and guidelines issued by the Hon'ble Supreme Court in the aforesaid judgments which has taken into consideration several of its earlier judgment.

16. Another aspects, the learned counsel for the petitioner raised before us that after completion of the technical bid there has to be reverse bidding but as yet no reverse bidding has taken place, and therefore, he should be given a chance to participate in the bidding process by filing bank guarantee again.

17. We are of the opinion that cause of action for the present litigation arose when the petitioners technical bid was rejected, hence he is not concerned with anything that has taken place thereafter unless it is shown that some kind of arbitrariness or malafides activities has been undertaken by the public sector undertaking and there is no specific plea to that effect.

18. In that view of the matter, we hereby dismissed the writ application being devoid of merit.

19. All pending Interlocutory Applications stand disposed of.

20. No orders as to costs.

20. Urgent copies as per Rules.

(Sanjaya Kumar Mishra, C.J.)

(Ananda Sen, J.) Anjali/Cp2 AFR