ABC Beverages Private Limited Vs. Indian Railway Catering & Tourism Corporation (IRCTC) Ltd. and Ors. - (High Court of Delhi) (28 Jul 2017)

Minor procedural defects which are curable should not be allowed to defeat substantive rights or to cause injustice

MANU/DE/2134/2017

Commercial

Petitioner is engaged in carrying out the business of manufacturing and trading of water, beverages, distilled water etc. It is aggrieved by rejection of its technical bid by first Respondent ("IRCTC") on 7th March, 2017. Bid was submitted in response to a Notice Inviting Tender ("NIT") dated 6th October, 2016 for selection of developer for setting up & operation of "Rail Neer" Packaged Drinking Water Plants at Sankrail (Howrah) & Dist. Hapur (UP.). Petitioner, contending that, its bid was rejected on purely frivolous grounds cited judgment of this court in Satish Chander Saxena v. Delhi Administration & Ors, where it was held that, absence of affixation of notarial stamp on a transfer document is not fatal to a person's claim for being accepted as a member of a cooperative society.

In present case, it is evidently a situation, where technical bid of Petitioner was rejected by IRCTC on technical grounds; rejection was meted out in an arbitrary and discriminatory manner, since Surya, second Respondent was made aware of similar discrepancies for their correction, after submission of bids. Distinction sought to be made between filings in Petitioner's documents and those of Surya, in opinion of Court, is artificial. In Petitioner's case, public notary had attested relevant documents in Annexures-II, III and IV. Only notary's stamp was missing. That per se did not undermine effectiveness of documents. Possibly, in a court of law, inadequacy of stamp would have resulted in impounding of instrument leading to payment of penalty and requisite stamp amount. However, that view would have arisen, only in event of a dispute pertaining to contents or dispute impinging upon something where documents occupied a center stage. Documents were not in issue; a notary public attested them. Likewise, in case of Surya, Second Respondent, requisite documents were not on record. However, tender committee observed that, such documents were merely ancillary given that, registration number of company was disclosed.

There is no tender condition, which demarcates between basic or primary and secondary or ancillary documents. Likewise, there is no indication that, all conditions would be deemed essential or that some are inessential. In these circumstances, option exercised by tender committee to treat Petitioner's documents as non-compliant and omission or failure of second respondent to file documents deemed necessary in NIT, is exercise of arbitrary power. Furthermore, there is substantial case law to show that, procedure is a device of justice and is not to be used to thwart same purpose. Supreme Court cases of T.M. Jacob v. C. Poulose & Ors., Uday Shankar Triyar v. Ram Kalewar Prasad and Anr. and Haryana State Coop. Supply and Marketing Federation Ltd. v. Jayam Textiles and Anr., all speak of how minor procedural defects which are curable should not be allowed to defeat substantive rights or to cause injustice. By not giving due and equal consideration to Petitioner, in considering their technical bid, as was given to other bidders - as in case of Surya, IRCTC has acted in a capricious manner resulting in discrimination. Their rejection of Petitioner's technical bid based on evidently curable defect of a missing not arial stamp on some of their tender documents is thereby untenable and bad in law.

Court is of opinion that, rejection of Petitioner's bid in circumstances was unjustified. Award of tender pursuant to NIT in question to second Respondent is quashed. However, this would not result in undoing of entire tender process itself. Jurisprudence, which has evolved over last two decades, in respect of commercial contracts, is that, there ought to be minimal interference with State or agency's decisions. In case of illegality, procedural irregularity mala fides or manifest arbitrariness, Courts' exercise of jurisdiction under Article 226 of Constitution is warranted.

In present case, interpretation which ousted Petitioner's tender bid was both arbitrary and discriminatory. Yet, rule of minimal interference has to be followed. Rather than setting aside entire tender process, appropriate course would be to correct decision-making and direct first respondent to open financial bid of Petitioner. In case procedure results in a fresh evaluation vis-à-vis successful bidder, i.e., second Respondent, i.e., Surya, IRCON shall proceed to evaluate two bids (i.e., Petitioners' and that of Surya) afresh and finally decide whom to award the contract, in accordance with NIT and the law.

Relevant : Satish Chander Saxena v. Delhi Administration & Ors MANU/DE/0421/2001: (2001) 92 DLT 2008, T.M. Jacob v. C. Poulose & Ors. MANU/SC/0271/1999 : AIR 1998 SC 2939, Uday Shankar Triyar v. Ram Kalewar Prasad and Anr. MANU/SC/2173/2005: AIR 2006 SC 269 and Haryana State Coop. Supply and Marketing Federation Ltd. v. Jayam Textiles and Anr. MANU/SC/0304/2014: 2014 (4) SCC 704

Tags : TENDER BID AWARD LEGALITY