Supreme Court of India
M/S. BECILversusARRAYCOM INDIA LTD. & ORS.
- Citation
- 2009 INSC 1187
- Decided
- 20 October 2009
- Disposal
- Appeal(s) allowed
Holding
The bid paragraph was ambiguous; the reasonable interpretation permitted addition of sales tax, and the High Court’s interference was unwarranted.
Summary
Prasar Bharati issued a tender for two 1 MW transmitters. BECIL and Arraycom submitted technically qualified bids. Arraycom’s financial bid of Rs 51.57 crore stated that Central Sales Tax (CST) was inclusive but also required concessional forms C/D, creating ambiguity. BECIL’s lower bid of Rs 47.35 crore quoted sales tax as extra. The Delhi High Court held that Arraycom’s bid was inclusive of tax and set aside BECIL’s award, prompting a writ petition by Arraycom. The Supreme Court found the second paragraph of Arraycom’s bid ambiguous, held that a reasonable interpretation allowed tax to be added, and emphasized limited judicial review in administrative tender decisions. Consequently, the Court set aside the High Court judgment and restored BECIL’s award as the lowest bidder.
Issues considered
- The correct interpretation of the second paragraph of Arraycom’s bid regarding whether CST was inclusive or could be added.
- Whether the Delhi High Court erred in intervening in the administrative tender decision.
- The scope of judicial review in public procurement matters.
Legislation cited
- Central Sales Tax Act, 1956
- Constitution of Indias. Article 14
Subjects
public tendercontract interpretationsales taxcentral sales taxjudicial reviewadministrative lawlowest bidderambiguityArticle 14
Judgment
[2009] 15 (ADDL.) S.C.R. 277
( M/S. BECIL A
v.
ARRAYCOM INDIA LTD. & ORS.
(Civil Appeal No. 6978 of 2009)
OCTOBER 20, 2009
B
[MARKANOEY KATJU _AND ASOK KUMAR
GANGULY, JJ.]
Contract:
c
Tender - Acceptance of bid by public authority -
lnterfererlce by High Court - Scope of - Prasar Bharati
inviting tenders for supply of transmitters - Appellant and
respondent no. 1. offering quotations - As regards sales tax,
_,. respondent no. 1 quoting price inclusive of sales tax but at D
'
the same time asking for concessional CID forms -
Department accepting appellant's bid being the lowest - High
Court allowing writ petition of respondent no. 1 - HELD: In
administrative matters, scope of judicial review is limited and
the judiciary must exercise judicial restraint in such matters
E
- Moreover, the view of Prasar Bharati also appears
reasonable as it has to pay the amount inclusive of sale tax,
since there is no concessional form - If Prasar Bharati has
-1-
taken up one possible interpretation, High Court should not
have intervened - Paragraph 2 of the bid of respondent no.
1 relating to sales tax is ambiguous and this is the fault of F
respondent no. 1 itself by giving such an ambiguous proposal
- Respondent no. 1 should ~ave given a clear cut bid -
Paragraph 2 of bid of respondent no. 1 has two interpretations
(i) it is an inclusive bid; and (ii) that sales tax can be added
to that bid - Prasar Bhara(i ha·s.. taken the second G
+ interpretation, which is a reasonable and possible
interpretation - Judgment of High Court set aside - Judicial
review.
277 H
278 SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R.
A Tata Cellular vs. Union of/ndia AIR 1996 SC 11= (1994)
6 sec 651, relied on. '
Case Law Reference:
(1994) 6 sec 651 relied on para 14
B
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
6978 of 2009.
From the Judgment & Order dated 2.2.2009 of the Division
Bench of the High Court of Delhi at New Delhi in W.P. (Civil)
C No. 7865 of 2008.
WITH
Civil Appeal No. 6979 of 2009.
D Mohan Parasaran and G.E. Vahanvati, ASG, T.S. Doabia,
Neeraj Malhotra, T.V.S. R. Sreyan, Nikhil Nayyar, Manoj Goel,
Shuvodeep Roy, Wajeeh Shafiq, Gopal Verma, Puja Jain (for
Dua Associates), Ranjana Narayan and Rashmi Malhotra (for
D.S. Mehra) for the appearing parties.
E
The following Order of the Court was delivered
ORDER
Civil Appeal No.6978 of 2009 @ SLP(C) 5461/2009
F
Leave granted.
This Appeal has been filed against the impugned judgment
of the Division Bench of the High Court of Delhi dated 02nd
February, 2009 passed in Writ Petition(C) No. 7865 of 2008.
G
The facts in brief are:
Respondent No.2 (Prasar Bharti) issued a Notice Inviting
Tender (NIT) on 20th October, 2006 for the supply of two
H transmitters of 1000 KW (or 1 MW) each. The bidding was a
MIS BECIL v. ARRAYCOM INDIA LTD. & ORS. 279
· two-stage process involving a technical bid and a financial bid. A
f There is no dispute that the respondent No.1 (Arraycom) and
the appellant (BECIL) were both technically qualified.
In respect of the financial bid which was opened on 30th
July, 2007, the quotation given by Arraycom was for a sum of
B
Rs.51.57 cro,res and it was stated therein that:
"1. Prices at INR including Custom Duty, Packaging,
.... Forwarding, Freight & Insurance .
-· 2. CST (Central Sales Tax) is inclusive in thr above prices. c
AIR will have to give concessional forms CID.
3. Billing will be done from our Naida office.
-.
'::$ ~
4. Validity of offer upto 120 days from the date of opening
(I.e. up to 16.06.2007)." D
'
The quotation given by BECIL was for Rs.47.35 crores and
it was stated that:
"1. Prices in INR. FOR destination, including Freight,
Insurance & Customs Duty. E
2. Sales Tax extra @ 4% against form CID.
-~
3. Sales Tax extra @ 12.5% in case form CID is not
provided. F
...
4. Validity of offer upto 31.05.2007."
- For the purposes of this decision, we are only concerned
with the sales tax element in the price bid. We may note, as a
matter of fact. that there is no dispute that Form C under the
Central Sales Tax Act, 1956 is not relevant to the facts of the
G
+ case and Form D under the Central Sales Tax Act, 1956 was
abolished with effect from 1st April, 2007. There is also no
dispute that the bids of Arraycom and BECIL were valid and
subsisting at all material times. H
280 SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R.
A Based on the quotations, quoted above; Prasar Bharti
submitted the following chart of quoted prices before the High
Court:
Arraycom BECIL
B Basic price (in. 49,58,65,385 47,37,48,792
Rs.)
With 4% sales tax 51 ,57,00,000 49,24,90,743
(in Rs.)
With 12.5% sales 55, 78, 00,000 53,66,00,000
c tax (in Rs.)
In contracts to be given by Government authorities or
statutory bodies or instrumentalities of the State, Article 14 of
the Constitution applies. Hence, there should be transparency
0 by holding an open public auction/tender because such
contracts often involve huge amounts of public money.
Ordinarily, the lowest bidder should be given the contract,
although it is not an invariable rule in all cases. In the present
case, the Prasar Bharti found that the appellant's bid was the
E lowest bid on the basis of the chart which we have quoted
above.
Respondent No.1 before us filed a writ petition in the High
Court of Delhi which has been allowed by the imp.ugned
judgment and hence this appeal before us.
F
In our opinion, the whole controversy is about' the
interpretation of the second paragraph submitted by respondent
No.1 (Arraycom). According to the High Court, the bid of
Rs.51.57 crores was an inclusive bid and no amount of central
G sales tax could have been added to that amount. We regret we
cannot agree.
It may be seen that paragraph 2 of the bid of Arraycom
consists of two sentences. The first sentence, no doubt, states
that the central sales tax is inclusive in the price of Rs.51.57
H crores: Had paragraph 2 stopped there, the submission of
M/S BECIL v. ARRAYCOM INDIA LTD. & ORS. 281
learned counsel for Arraycom would have been correct. A
f However, in paragraph 2, there is a second sentence to the
effect that AIR (All India Radio) will have to give concessional
forms C/D. Thereafter there is no third sentence in paragraph
2 of the bid that even if the concessional forms are not given,
yet the bid of Rs.51.57 crores is an inclusive bid and nothing B
can be added to the bid.
Thus, in our opinion, paragraph 2 of the bid of Arraycom
is ambiguous and this is the fault of Arraycom itself by giving
such an ambiguous proposal. Respondent No.1 should have
given a clear cut bid either by stopping after the first sentence, C
or by adding another sentence after the second sentence that
even if the concessional forms CID are not given the bid of
Rs.51.57 crores is an inclusive bid.
Thus, paragraph 2 of Arraycom's bid has two D
interpretations (i) it is an inclusive bid; and (ii) that sales tax
can be added to that bid. Prasar Bharti, who has to make the
payment, has taken the second interpretation which, in our
opinion, is a reasonable and possible interpretation.
E
In administrative matters, the scope of judicial review is
limited and the judiciary must exercise judicial restrain in such
matters, as held by this Court in Tata Cellular vs. Union of India
-~ AIR 1996 SC 11=(1994)6 SCC 651. Moreover, the view of
Prasar Bharti also appears reasonable because Prasar Bharti
has to pay the amount inclusive of sales tax, since there is no F
concessional forms. If Prasar Bharti has taken up one .possible
interpretation, the High Court should not have intervened. The
scope of judicial review in administrative matters is limited.
For the reasons given above, this appeal is allowed and G
the impugned judgment of the High Court is set aside. No order
....; as to costs.
H
282 SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R.
A Civil Appeal No.6979 of 2009 @ SLP(C) No.9381 of 2009
Leave granted.
This Appeal has been filed challenging the same
impugned judgment dated 02nd February, 2009 passed by the
B High Court of Delhi.
Since, we have allowed the Civil Appeal No.6978 of 2009
arising from S.L.P.(C) No.5461 of 2009, this appeal is also .,.
allowed on the same terms. No order as to costs.
R.P. Appeals allowed.
+
--r
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