Selvel Media Services Pvt. Ltd. vs State of J. and K. and Others

Manmohan Sarin, C.J.—Appellants, M/s. Selvel Media Services Pvt. Ltd., have filed this appeal assailing the judgment dated 25.4.2008 of

the learned Single Judge dismissing OWP No. 289/2008 and CMP No. 445/2008.

The learned Single Judge by the impugned judgment had dismissed the writ petition filed by the appellant challenging the award of advertising

rights to respondent No. 7, M/s. Sai Advertising. The appellant claimed that it was the highest bidder and its bid had been opened and taken into

consideration. In these circumstances, it was not permissible for the Jammu Municipal Corporation to have awarded the contract to M/s. Sai

Advertising, respondent No. 7 by asking the latter to match the bid price offered by the appellant. The Learned Single Judge dismissed the writ

petition holding that the appellant's bid was not in conformity with the terms of Notice Inviting Tender (NIT). Hence, the appellant was not eligible

for being awarded the contract.

Before we deal with the specific submissions made before us by the learned Counsel for the appellant, it would be appropriate to notice the

relevant facts which are not in dispute.

i) Appellant claims to be a leading player in the field of Advertising with sixty years experience, having impeccable credentials. The Jammu

Municipal Corporation by a public notice published the gist of NIT inviting offers for the ""advertising rights"" of the extended area of the JMC viz,

Rail Head Complex, Trikuta Nagar, Narwal Channi Himat, Kunjwani, Fly Over Sher-e-Kashmir Bridge, Bantalab, Udeywala, Muthi etc. in the

Newspaper. As per the terms of the gist of NIT published, bids addressed to the Commissioner, Jammu Municipal Corporation were required to

reach the office on 10.3.2008 up to 4.00 PM along with CDR/FDR for Rs. 5.00 lac drawn at any nationalized Bank. Other details of the NIT

were available on the Website.

ii) One of the terms relevant for the purposes of the present appeal is Clause (1) of the terms and conditions of Tender Document which reads as

under:(

Offers should be submitted on letter pad of firm(sample bid form enclosed as Annexure 'B') and addressed to ""Commissioner Jammu Municipal

Corporation, town Hall, Jammu 180001"" and should reach office through Registered/Speed post on or before 10/03/08 up to 4 P. M.

Couriers/By hand offers shall not be accepted. Top front of sealed envelope should be super scribed with words. Offer for Advertising Rights;

Due date 10/03/08

iii) In response to the NTT, three parties submitted their bids, namely, M/s Sai Advertising, who had bid a sum of Rs. 54.00 lakh, M/s Rather

Oriental Advertisement Agency who bid a sum of Rs. 52.00 Lac. The third bid of the appellant, M/s Selvel Media Services Pvt. Ltd., who bid Rs.

91,11,111/-. The bid from M/s Sai Advertising and M/s. Rather Oriental Advertisement Agency were received within time, i.e., by 4 P.M. on

10.3.2008, while the bid of appellant was received through Speed Post on 11th March, 2008 at 10.30 A.M.

iv) It is the appellant's case that it had sent the bid earlier on 10th March 2008, but the same could not be received at the Corporation on account

of strike by workers of the Corporation. Support is sought to be derived by reference to press clippings reporting the strike at the relevant time.

The appellant, thereupon sent the bid accompanied with the draft as required by speed post, which reached the Corporation on 11th March 2008.

v) The appellant's bid, it appears from the record produced before us, to which we shall advert a little later, was opened on 11th of March, 2008.

In the event, in the decision making process as revealed from the nothings made by the Contract Committee comprising Joint Commissioner, Chief

Accounts Officer and the Revenue Officer, the Commissioner ordered that M/s. Sai Advertising, i.e., respondent No. 7, be given an offer to

accept and deposit the bid amount of Rs. 91,11,111/- (Rupees ninety one Lakh, eleven thousand, one hundred and eleven), i.e., equivalent to the

highest bid by appellant. In case respondent No. 7 did not agree, fresh tenders may be invited. For facility of reference, we are reproducing below

the notings of the Contract Committee and the order passed by the Commissioner.

Three tenders for advertisement rights were received in the office as per our notification No. DIP/J/87-P/08 dated 22.2.2008. The details are as

under:

1) M/s Selvel Media Service: Rs. 91,11,111/- only.

2) M/s Rather Oriental Adv. Agency: 52.00 lacs.

3) M/s Sai Advertisers: 54.00 lacs.

Tender No. I of M/s Selvel Media Service Ltd. was received on 11.3.08 at 10.30 a.m whereas last date of tenders was 10.3.08 upto 4 p.m.

The other two tenders were received on 10.3.08 at 4 p.m.

Keeping in view the above facts the report is submit for further orders pl.

Sd/- Sd/- Sd/-

JC CAO CRO

25) Since T 3/3 was received late. Normally it should not have been opened but this fact was not brought to the notice of the contract committee

at the time of opening.

26) T 1/3 is highest of two bidders, whose tenders were received in time. He has quoted Rs. 54.0 lacs but the tender received late has quoted Rs.

91,11,111.00 (Ninety one lacs, eleven thousands, one hundred & eleven only).

27) Under these circumstances, may give an offer to T 1/3 to accept and deposit the bid amount of Rs. 91,11,111.00 i.e. equivalent to highest bid.

In case, they don't agree we may invite fresh offers.

In the event respondent No. 7, M/s Sai Advertising, accepted the offer to match the bid. After completion of formalities the 'Letter of Intent' has

been placed and the Contract Licence Agreement entered into with them.

In the aforesaid background of facts, the learned Counsel for the appellant, Mr. U. K. Jalali, Sr. Advocate, submits (i) it was on account of the

strike at the office of the Corporation that appellant's bid could not be received on 10th March, 2008, when sent through Courier. He submits that

in any case the bid thereafter was sent by speed post and received on 11th of March, 2008 after the appellant had brought the factum of strike and

the non-receipt of their bid on 10th of March, 2008, to the attention of the Commissioner. The bid having been received and placed before the

Contract Committee and the same having been taken into consideration by calling upon the respondent No. 7 to match the bid, objections, if any,

to late submission or eligibility of the appellant's bid stood waived.

Mr. Jalali further argued that the requirement of submission of bid through registered post/speed post and not by other means, was not a

fundamental or mandatory condition, the non-observance of which should be fatal. He submitted that strict adherence to the conditions of bid, was

against public interest and detrimental to the public revenue. Moreover, the delayed receipt of the bid was due to the prevailing strike by workers

of the Corporation and beyond the control of the appellant. Hence the same deserved to be condoned.

Learned Counsel for the appellant, Mr. Jalali, in support of his submission that the bid of the appellant even if belatedly having been received

deserved consideration by not insisting on strict adherence to the tender stipulations in public interest. He relied on the following authorities:

i) M/s. Poddar Steel Corporation Vs. M/s. Ganesh Engineering Works and others, . In the cited case, earnest money was required to be tendered

either in cash or by demand draft drawn on the State Bank of India. The appellant had instead submitted two banker's cheques drawn on Union

Bank of India's own branch. The principals, DLW Locomotives had verified the authenticity of the cheques and the assurance of the Bank of its

being honoured. The bid of the appellant had been accepted though not being in compliance with the tender condition of earnest money being

tendered by demand draft drawn on State Bank of India. The Supreme Court 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 requirements in a tender notice cart be classified in two categories: those which Laid 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 authority issuing the tender may be required to enforce them rigidly. In other cases it must be open to the authority to deviate from

and not to insist upon the legally literal compliance of the condition in appropriate cases. In the cited case, the DLW had waived the said

requirement and entertained the bid of the appellant which was the highest. The ratio of the said case as above, in our view, will not advance the

appellant's case. The appellant's case is of submitting the bid after the expiry of the date by which the bid was to be received. The last date of

submission of bid cannot be termed as an ancillary or subsidiary condition. Moreover, in the instant case, there is no power to relax the said

stipulation. Besides, the grounds set up for delay in submission have not been found to be justifiable.

ii) Reference was also made to the decision of Supreme Court reported at M/s. G. J. Fernandez Vs. State of Karnataka and others, . In the cited

case also the question arising for consideration was the lowest tenderer, Mysore Construction Company not complying with a pre-qualifying

requirements as in paragraphs-1 and 5 of the Notice Inviting Tender. The Court found that the principal employer had been issuing tenders to

those who complied with the pre-qualifying conditions. Any deficiency in the general requirements would not disqualify the applicant from receiving

the tender documents and data regarding the said requirements could be supplied later. The case in hand is totally different in as much as it is not a

question of failure to furnish some information so as to qualify for being given the tender. It is the very late submission of the bid. Hence the said

case would not advance the appellant's case.

iii) The next authority relied upon by learned Counsel is B.D. Yadav and Meshram Engineers and Contractors v. Administrator of the City of

Nagpur AIR 1984 Bom 351. The ratio of this cited case is also with regard to distinction being made when tenders are invited subject to certain

conditions, distinction being made between conditions which are essential to the performance of the contract and the conditions which are ancillary

or subsidiary to the main object of the contract. The manner of submission of earnest money in the facts of this case was treated to be ancillary and

subsidiary.

iv) The appellant has also cited Kapsch Metro JV Vs. Union of India (UOI) and Another, ; Ms. Lovneet Kaur and Another Vs. Delhi

Development Authority, and Sachdeva Industries and Another Vs. Union of India and Others, . There is no quarrel with the propositions Lald

down in these cases. However, non-compliance with the conditions was condoned, for instance, in Kapsch Metro JV v. Union of India, Bank

guarantee was permitted to be revalidated and resubmitted since the opening date of the bid itself had been deferred from January 5, 2007 to

January 22, 2007 and the Bank guarantee was to be valid for 180 days - a bona fide mistake, for which intimation was immediately given, was

permitted to be rectified since the deferring of the opening of the bid was not on account of the bidder. In Sachdeva Industries v. Union of India

the bid is stated to have been received three minutes late which was condoned. In Ms. Lovneet Kaur v. Delhi Development Authority there was a

calculation error of Rs. 125, while depositing the bid amount at the fall of the hammer. Relying on the legal maxim, ""De Minimise Non Curat Lex"",

i.e., Law cares not for small things, the petitioner was permitted to make good the deficiency of Rs. 125.

The above cases, it would be seen, are clearly distinguishable. In the case of the appellants, it cannot be said that the last date for submission of the

bid has no sanctity or it is an ancillary or subsidiary term where the delay ought to be condoned even if the bid is received after one day.

Mr. U.K. Jalali submits that once the price offered by him is taken into consideration or whatever purposes may be for receiving the bid of the

eligible bidder, its bid automatically became alive and the appellant along with other eligible bidders should have been permitted to participate in the

negotiation process.

Mr.' D.S. Thakur, learned Counsel, appearing for respondent No. 7, submits that the appellants' plea of being prevented from submitting the bid

on time due to strike of workers of the Corporation does not deserve any credence. He submits that the bid conditions specifically required its

submission through registered post/speed post. It further prohibited submission by any other means, i.e., by personal delivery or courier. It was not

open for the appellant to adopt the prohibited mode and then claim that its bid could not be received on account of strike. Even on the factual

matrix, it is submitted that the bid of the respondent and others had been duly received on time on 10th of March, 2008 by post which would

demonstrate that the prevailing strike, if any, did not come in the way of the receipt of the bid in time.

Refuting the plea of the appellant that once its bid had been opened rightly or wrongly on 11th along with others, it was required to be

processed further and considered, Mr. Thakur submits that opening of an ineligible bid would not create any indefeasible right in the appellant.

Moreover, from the record and the noting made, it was clear that the bid was treated as ineligible bid and only the amount quoted therein was

sought to be used as a measure/standard for requiring the eligible bidder, i.e., respondent No. 7, to match the same in public interest and to

conserve revenue. Mr. Thakur further submits that plea of waiver on the part of the respondent Corporation and other contracting parties would

not arise. Mr. Thakur relies on a decision of this Court in Rajbir Singh Dogra v. University of Jammu 1991 KLJ 204 wherein it was held as under:

...It is elementary that there can be no waiver unless the person against whom it is claimed had full knowledge of his right and the consequences of

the abandonment of such right. The conduct of the person must be such from which it can be easily implied that he has voluntarily relinquished and

abandoned his right. Waiver of a right cannot be lightly inferred and, in any case, it requires something more than inaction.

Elaborating the above, he submits that the appellant cannot claim waiver. For claiming benefit of waiver, the same should be accompanied by a

conscious decision and the parties thereto should do so with full knowledge and of the consequences as well. In the instant case, there is no action

on the part of the Corporation, apart from the bid being opened. All the above essential ingredients for application of the principle of waiver,

namely, the intention, decision and knowledge of consequences of contracting parties are conspicuous by very absence. We find merit in this

submission.

Learned Counsel for the State, Mrs. Seema Shekhar, AAG and Mr. S.S. Nanda for the Corporation, have supported the decision taken by

the Corporation in awarding the contract at the highest amount, though taken from an ineligible bid.

We have perused the records and given our consideration to the submissions made by learned Counsel before us and perused the authorities

cited.

As noted earlier, the appellant has not been able to make out any plausible or tenable cause or justification, for the delayed submission of the

bid. It appears that the appellant had adopted a wrong mode of submission which was prohibited by NIT conditions. By the time the realization

dawned on the appellant of correcting the same, it was too late to catch the train. The NIT terms do not provide for any exercise of discretion for

relaxing the term with regard to receipt of the bid after the last date. In the absence of such power or stipulation in the NIT, the principal employer

can only choose not to award any contract or go in for re-tendering. However, in the instant case, what appears to have happened is that the bid

of the appellant which was not an eligible bid, had been opened, as is apparent from the notings of the Contract Committee. The Commissioner of

the Corporation conscious of appellant's bid being an ineligible one, having been received late, though being the highest amount quoted, ruled that

respondent No. 7, whose bid was the highest among eligible bidders, to match the price quoted by the appellant. The Corporation had before it

two options: first in its discretion to ask the highest eligible bidder to match the price which had been quoted by the ineligible bidder with a view to

protect the interest of revenue; the second option was to go in for re-tendering and invite fresh bids if it was felt that the price quoted by the

appellant was still inadequate and fresh tenders may result in attaining or realisation of yet higher amounts.

We may notice at this stage that the Contract Committee constituted by the Corporation simply appears to have acted as a pen pusher or a

forwarding committee without having applied its mind or having made a recommendation. The Commissioner, however, took the above decision

on behalf of the Corporation as is contemplated under the Statute. Whether the decision taken is correct or could have been different, it is not for

this Court to comment upon. The parameters and principles of judicial review are now sell settled, as held by the Supreme Court in Master Marine

Services Pvt. Ltd. Vs. Metcalfe and Hodgkinson Pvt. Ltd. and Another, , wherein the Apex Court held as under:

The government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest

or any other tender is always available to the Government. But the principles Laid down in Article 14 of the Constitution have to be kept in view

while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the

best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral

purpose, the exercise of that power will be struck down.

Principles of judicial review would apply to the exercise of contractual powers by government bodies in order to prevent arbitrariness or

favouritism. However, there are inherent limitations in exercise of that power of judicial review. The modern trend points to judicial restraint in

reviewing administrative action. The Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made. 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. The Government must have freedom of contract. 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 principles of reasonableness but must be free from arbitrariness not affected by

bias or actuated by mala fides. Quashing decisions may impose heavy administrative burden on the administration and lead to increased and

unbudgeted expenditure.

The Court is concerned not with the merits of the decision, but whether the decision making process has been fair and not influenced by any

arbitrariness. Reference may also be invited to the decision of the Supreme Court in Tata Cellular v. Union of India (1994) 6 SCC 651. Paragraph

92 of the said judgment may be reproduced:

In Sterling Computers Limited v. M & N Publications Ltd. this Court observed thus: (SCC p.455, para 12)

In contracts having commercial element, some more discretion has to be conceded to the authorities so that they may enter into contracts with

persons, keeping any eye on the augmentation of the revenue. But even in such matters they have to follow the norms recognised by courts while

dealing with public property. It is not possible for courts to question and adjudicate every decision taken by an authority, because many of the

Government Undertakings which in due course have acquired the monopolist position in matters of sale and purchase of products and with so

many ventures in and, they can come out with a plea that it is not always possible to act like a quasi-judicial authority while awarding contracts.

Under some special circumstances discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the

overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bona

fide manner although not strictly following the norms Laid down by the courts, such decisions are upheld on the principle Laid down by Justice.

Holmes, that courts while judging the constitutional validity of executive decisions must grant certain measure of freedom of 'play in the joints to the

executive.

Having considered the facts of the instant case, we are of the view that the decision taken by the Commissioner appears to be a well informed one

and to sub serve the public interest as well. This was well within his discretion and fell within the ambit of, what is referred to as ""play in the joints"".

Moreover, the decision also seems to derive support and justification from the past history in relation to these advertisement contracts.

We are informed that the matter of award of contract of advertising sites since 2005 had not had a smooth sailing at all. Learned Counsel for

the Corporation informs that on four occasions when bids were invited, there were no bidders available. Earlier one of the bid for Rs. 17 lacs was

received. Thereafter, it was followed by a bid of approximately Rs. 74.00 lakh and the present bid being higher than the bids received earlier.

Understandably, the Corporation was anxious to conclude the contract.

Mr. U.K. Jalali again submits that once the price offered by him is taken into consideration, his bid automatically became alive and for making

the eligible bidders to match the bid, process of tenders should have been carried forward, the appellant should also have been permitted to

participate in the negotiation.

This was not a case where all the parties were being called for fresh negotiations. It was simply a case where the highest eligible bidder was

being asked to match the prices that had been quoted by an ineligible bidder to conserve public revenue failing which there was to be a fresh

tender. Even otherwise, we do not find any merit in the appellant's submission and are unable to accept the same. The bid which was ineligible

cannot be converted into an eligible bid, in the absence of any waiver or the power to relax the bid conditions.

Mr. Jalali also wishes to raise certain issues questioning the post contractual actions. These had not been specifically raised in the writ petition.

It is for the appellant to avail of his remedies if admissible and available at law to raise them separately. In view of the forgoing discussion, the

appeal is dismissed.