Case Note & Summary
The case arose from a tender called by the Vidarbha Irrigation Development Corporation for balance earthwork in a canal. Three bidders responded: Respondent No. 1 (Rs. 39.53 crores), Respondent No. 2 (Rs. 39.15 crores, the lowest), and Respondent No. 3 (Rs. 46.81 crores). The tender conditions required a performance security bank guarantee valid for 40 months. Respondent No. 2 initially submitted a bank guarantee valid for only 6 months. One day after bid opening, Respondent No. 2 sought to extend the validity to 40 months. The Tender Evaluation Committee accepted the bid on 07.07.2018. Respondent No. 1 challenged this acceptance before the High Court, which set aside the acceptance. The appellant and Respondent No. 2 appealed to the Supreme Court. The Supreme Court examined the tender conditions, particularly Clauses 2.15 and 2.22, and the pre-tender conference where it was clarified that the bank guarantee period could not be modified. The court held that the initial submission of a 6-month bank guarantee was a material deviation that could not be condoned after bid submission. The court emphasized that the tender conditions were clear and that allowing post-bid corrections would undermine the competitive bidding process and give an unfair advantage to the bidder. The court also noted that the difference in bids (Rs. 37 lakhs) did not justify compromising the integrity of the tender process. The Supreme Court dismissed the appeals, upholding the High Court's decision to reject the bid of Respondent No. 2.
Headnote
A) Tender Law - Material Deviation - Performance Security - Bank Guarantee Period - Clause 2.22 of Tender Conditions - The bidder furnished a bank guarantee valid for 6 months instead of the required 40 months. The pre-tender conference clarified that modification of this clause was not permissible. The court held that this was a material deviation that could not be condoned after bid submission, as it affected the employer's rights and the competitive position of other bidders. (Paras 6-10) B) Tender Law - Conditional Tenders - Rejection - Clause 2.15 of Tender Conditions - The tender conditions explicitly stated that conditional tenders or those deviating from terms would be rejected as non-responsive. The court held that the bid with an insufficient bank guarantee period was a conditional tender and liable to rejection. (Paras 6-7) C) Judicial Review - Administrative Decisions - Tender Matters - The court reiterated that judicial review in tender matters is limited to examining whether the decision-making process is arbitrary, irrational, or mala fide. However, where the authority acts contrary to the tender conditions, the court can interfere. (Para 11) D) Public Interest - Competitive Bidding - Savings to Exchequer - While the difference in bids was about Rs. 37 lakhs, the court held that public interest in maintaining the integrity of the tender process and ensuring a level playing field outweighs the mere saving of money. (Para 11)
Issue of Consideration
Whether a bidder's failure to furnish a bank guarantee for the required period (40 months) at the time of tender submission constitutes a material deviation that cannot be condoned subsequently, and whether the acceptance of such a bid by the tender evaluation committee is valid.
Final Decision
The Supreme Court dismissed the appeals, upholding the High Court's judgment that the bid of Respondent No. 2 was non-responsive and liable to rejection.
Law Points
- Tender law
- Material deviation
- Performance security
- Bank guarantee period
- Judicial review of administrative decisions
- Public interest in competitive bidding
