M/S. INDIAN RAILWAYS CATERING & TOURISM CORPORATION LIMITED AND ANR.versusM/S. DOSHION VEOLIA WATER SOLUTIONS (P) LIMITED AND ORS.

                     [201 O] 13 (ADDL.) S.C.R. 76

A         M/S. INDIAN RAILWAYS CATERING & TOURISM
                CORPORATION LIMITED AND ANR.
                                    v.
    M/S. DOSHION VEOLIA WATER SOLUTIONS (P) LIMITED
                          AND ORS.
B           (Civil Appeal Nos. 8545-8546 of 2010)
                         OCTOBER 04, 2010
           [ALTAMAS KABIR AND A.K. PATNAIK, JJ.]

C         Contract - Government Contract - Turnkey project -
    Tender notice published by appellant-IRCTC - Two bidders,
    '/' and 'D' - 'D' objected to the bid of '/' on the ground that '/'
    violated the Instructions to Bidders by offering 1% discount
    on the quoted price and further violated the terms and
D   conditions of the tender by not indicating the excise duty
    amount in its bid - Objection negated by the appellant and
    bid of 'I' accepted - Writ petition filed by 'D' dismissed by
    Single Judge of High Court - Order set aside by the Division
    Bench - Justification of - Held: Not justified - The offer of
E   discount on the quoted price and non-mentioning of excise
    duty amount in the bid of '/' were not in breach of the essential
    terms of the tender documents, therefore, it was for the
    appellant to evaluate the valid offers of the two bidders on the
    merits of the two offers - On the basis of recommendations
F   of Tender Committee, the Accepting Authority of the
    appellant-IRC TC found the offer of'/' to be better than the offer
    of 'D' and also that tax and duties including excise duty had
    no adverse financial implications on the appellant-IRCTC and
    accordingly accepted the offer of '/' - By reversing this
G   decision of the Accepting Authority of the appe/lant-IRCTC,
    the Division Bench of the High Court acted as an appellate
    court and exceeded its power of judicial review in a matter
    relating to award of contract - Judicial Review.


H                                  76
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION   77
          VEOLIA WATER SOLUTIONS (P) LTD.

    Appellant no.1- IRCTC published a tender notice for A
a turnkey project in regard to a packaged drinking water
bottling plant. In response, two tenderers, Ion Exchange
and Doshion, submitted their technical and financial bids,
with Doshion quoting a total price of Rs.18.65 Crores,
and Ion Exchange quoting a price of Rs.18.66 Crores B
alongwith a discount of 1% thereon (thereby the net price
worked out to Rs.18.47 Crores).

     Doshion objected to the bid of Ion Exchange on the
ground that Ion Exchange violated the Instructions to C
Bidders by offering 1% discount on the quoted price and
further violated the terms and conditions of the tender by
not indicating the excise duty amount in its bid. In this
regard, Doshion relied upon Clauses 1.10, 1.11 and 1.12
of the Instructions to Bidders and Clauses 2.1 and 9.0 of
the Special Terms and Conditions of the tender D
documents. The Tender Committee of IRCTC made
recommendation that taxes and duties (including the
excise duty) had no financial implication on IRCTC and
that the 1% discount offered in the bid of Ion Exchange
can be considered. The Accepting Authority of IRCTC E
accepted the said recommendation and issued a letter of
acceptance to Ion Exchange.

     Doshion filed two writ petitions, one praying for a
writ of mandamus restraining IRCTC from taking any step     F
in furtherance of the tender; and another praying for
quashing the letter of acceptance issued in favour of Ion
Exchange. The Single Judge of the High Court dismissed
both the writ petitions.

      In writ appeal, the Division Bench quashed the G
acceptance of the offer of Ion Exchange. However, it
declined to award the contract to Doshion (as prayed ,by
it) leaving it for IRCTC to take a decision in the matter.

    In the instant cross-appeals, the questions which       H
    78    SUPREME COURT REPORTS [2010) 13 (ADDL.) S.C.R


A   arose for consideration were: 1) whether the offer of 1%
    discount on the quoted price made by Ion Exchange was
    in breach of any essential term of the tender notification
    or the tender format as held by the High Court and 2)
    whether the High Court was right in coming to the
B   conclusion that by not indicating the excise duty amount
    in rupees in its offer, Ion Exchange committed breach of
    an essential term or condition of the tender notification
    or the tender format.

        Allowing the appeals of IRCTC and Ion Exchange
C   and dismissing the appeal of Doshion, the Court

         HELD: 1.1. Clause 1.10 of the Instructions to Bidders
    states that rates are to be quoted in the Prescribed Price
    Schedule format only and it shall be inclusive of all taxes,
D   levies and duties. This clause does not say that the
    tenderer will not quote any discount on the price. Clause
    1.11 of the Instructions to Bidders states that every page
    of the tender document shall be signed and properly
    stamped by the authorized person or persons submitting
E   the tender and no over-writing will be permitted. Clause
    1.12 of the Instructions to Bidders states that failure to
    comply with either of these conditions will render the
    tender void. Since there is no condition either in Clause
    1.10 or Clause 1.11 that the tenderer will not quote
F   discount on the price, in case a tenderer offers a discount
    on his quoted price his tender will not be rendered void
    under Clause 1.12 of the Instructions to Bidders. [Para
    14) [92-D-F]

      1.2. Clause 2.1 of the Special Terms and Conditions
G states that the vendor shall quote for lump sum price
  along with detailed break-up as per price schedule
  ?nclosed with the bid document and the cost of plants
  and equipments as quoted in the price schedule will
  constitute contract price/contract value. This clause also
H
   INDIAN RAILWAYS CAT & TOURISM COR. LTD. v.           79
    DOSHION VEOLIA WATER SOLUTIONS (P) LTD.
does not say that the vendor will not quote a discount A
on the lump sum price. Clause 9.0 of the Special Terms
and Conditions states that the vendor should clearly spell
out in his offer his acceptance of the terms and conditions
as indicated in the Special Terms and Conditions and in
case of deviation, his offer may be rejected. There is B
nothing in this clause also to show that the vendor
cannot quote a discount on ·the price. In the Prescribed
Price Schedule also there is no mention anywhere that
the tenderer will not offer any discount on his quoted
price. In the absence of any express stipulation in the c
Instructions to Bidders or the Special Terms and
Conditions or in the Prescribed Price Schedule
prohibiting the tenderer from quoting a discount on the
price offered by him, the High Court could not have come
to the conclusion that by offering a discount of 1% on 0
the quoted price, Ion Exchange has committed a breach
of the essential terms of the tender notification or the
tender format. [Para 14] [92-F-H; 93-A-C]

     1.3. Unless the offer of rebate or discount is in breach ·
of the clear stipulations in the notice inviting tenders, it E
cannot be held that such offer is in breach of the essential
terms and conditions of the notice inviting tenders. [Para
15] (94-C-D].

     1.4. Since IRCTC did not clearly stipulate in the F
Instructions to Bidders or in the Special Terms and
Conditions or in the Prescribed Price Schedule or in any
other part of the tender documents that a tenderer will not
offer any discount on the prices quoted by him and if any
such discount is offered the tender will be rejected, the G
offer of discount on th.e price made by Ion Exchange
cannot be treated to be in breach of the essential terms
or conditions of the tender documents. To hold that the
State or its agencies can reject a tender for breach of a
term or condition in the tender document, which is not H
    80    SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A   explicit in the tender documents, is to give room to the
    State or its agencies to arbitrarily reject tenders even
    where the clear terms or conditions of the tender
    documents are complied with. [Para 17] [95-G-H; 96-A-B]

        Kanhaiya Lal Agrawal v. Union of India and Others (2002)
8
    6 sec 315 - relied on.

         WB. State Electricity Board v. Patel Engineering Co. Ltd.
    and Others (2001) 2 SCC 451 and Dutta Associates Pvt. Ltd.
    v. lndo Merchanti/es Pvt. Ltd. (1997) 1 SCC 53 - referred to.
c
         2.1. The language of Clauses (i) and (ii) of the Note
    appended to the Prescribed Price Schedule makes it
    clear that the prices quoted are to be lump sum inclusive
    of all duties and taxes etc. and the vendor should indicate
0   total excise duty amount included in the prices for plants
    and equipments. The Note does not indicate the
    consequences that will follow if the vendor does not
    indicate the total excise duty amount included in the
    prices for plants and equipments. The Note does not say
E   that if the vendor does not indicate the total excise duty
    amount included in the prices for plants and equipments,
    the offer of the vendor "shall" be rejected. In the absence
    of any mention of the consequence of rejection of the
    offer for not indicating the total excise duty amount in
    rupees included in the price of plants and equipments in
F   the tender documents, the High Court could not have
    held that Ion Exchange had committed breach of an
    essential term or condition of the tender notification or
    the tender format. [Para 18) [97-A-D]

G        2.2. If on the recommendation of the Tender
    Committee, the Accepting Authority did not find the
    deviation from Clause (ii) of the Note by Ion Exchange
    very material and accepted the offer of Ion Exchange, the
    Division Bench of the High Court could not have held
H   that Ion Exchange committed a breach of an essential
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION           81
          VEOLIA WATER SOLUTIONS (P) LTD.

term by not mentioning the excise duty amount in rupees            A
in its offer. [Para 18) [97-G]

    Kanhaiya Lal Agrawal v. Union of India and Others (2002)
6 SCC 315 and G.J. Fernandez v. State of Karnataka (1990)
2 sec 488 - relied on.                                             B
      3. As the offer of 1% discount on the quoted price
and the non-mentioning of excise duty amount in rupees
in· the bid of Ion Exchange were not in breach of the
essential terms of the tender documents, it was for IRCTC
to evaluate the valid offers of Ion Exchange and Doshion           C
on the merits of the two offers. On the basis of
recommendations of the Tender Committee, the
Accepting Authority of IRCTC found the offer of Ion
Exchange at a net price of Rs.18,47,34,000/- to be better
than the offer of Doshion at the price of Rs.18,66,00,000/         D
- and that tax and duties including excise duty had no
adverse financial implications to IRCTC and accordingly
accepted the offer of Ion Exchange. By reversing this
decision of the Accepting Authority of the IRCTC, the
Division Bench of the High Court acted as an appellate             E
court and exceeded its power of judicial review in a
matter relating to award of contract. [Para 19) [97-H; 98-
A-D]

      Tata Cellular v. Union of India, (1994) 6 SCC 651 - relied
on.
                                                                   F

                      Case Law Reference: .
      (2002) 6 sec 315         relied on             Para 7
      (1994) s sec 651         relied on             Para 8        G

      (2001) 2 sec 451         referred to           Para 12
      (1997) 1 sec 53          referred to           Para 17
      (1990) 2 sec 488         relied on             Para 18       H
    82    SUPREME COURT REPORTS [2010) 13 (ADDL.) S.C.R. ·


A       CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
    8545-8546 of 2010.

      From the Judgment & Order dated 29.04.2010 of the High
  Court of Madras in WA No. 726 of 2010 & WA No. 727 of
B 2010.

                                 WITH

    Civil Appeal No. 8547-48 of 2010.

C Civil Appeal No. 8549 of 2010.

      Ghoolam Vahanvati, AGI, Gourab Banerji, ASGI, Dr.
  Abhishek M. Singhvi, A. Mariarputham, Jaideep Gupta, Sourav
  Agrawal, Rajiv Dubey, Harseb, Sahil, Dinish Girdhar,
  Kamlendra Mishra, P. Parmeswaran; Jaiveer Shergill, Azim H.
D Laskar, Karthik Rajan, Sachin Das, Abhijit Sengupta and P.
  Parmeswaran for the appearing parties.

         The Judgment of the Court was delivered by

         A. K. PATNAIK, J. 1. Leave granted.
E
        2. These Appeals are against. the judgment and order
    dated 29.04.2010 passed by the Div.is ion Bench of the Madras
    High Court in Writ Appeal Nos. 726 and 727 of 2010.

F      3. The relevant facts very briefly are that M/s Indian Railway
  Catering and Tourism Corporation Limited (for short 'IRCTC')
  planned to set up a packaged drinking water bottling plant at
  Palure, near Chennai, to produce drinking water under the
  brand name "Rail Neer" for railway passengers. In November
G 2008, the civil work for construction of the plant building was
  started. In February 2009, IRCTC published a tender notice for
  turnkey project for design, engineering, supply, installation,
  commissioning, operation and maintenance of the packaged
  drinking water bottling plant. Pursuant to the tender notice, three
H tenderers, namely, Mis Thermax, M/s Ion Exchange (I) Ltd. and
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION           83
  VEOLIA WATER SOLUTIONS (P) LTD. [AK PATNAIK, J.]

M/s: Doshion Veolia Water Solutions (P) Limited submitted A
their offers, but as the offers were conditional, it was not
possible to evaluate them and to decide the inter-se position
of the three tenderers in an objective manner and therefore the
Tender Committee of the IRCTG recommended for discharge
of the tender and to invite fresh tenders after incorporating all B
the relevant revisions in the tender document to avoid
anomalies. On 04.08.2009, a fresh tender notice was
advertised by IRCTC and in response to this fresh tender notice
M/s Ion Exchange (I) Limi.ted (for short 'Ion Exchange') and M/
s. Doshion Veolia Water Solutions (P) Limited (for short            c
'Doshion') submitted their technical and financial bids in
separate sealed covers. The technical bids were opened on
24.08.2009 and both Ion Exchange and Doshion were informed ·
on 26.08.2009 that their financial bids would be opened on
27.08.2009. When on 27.08.2009 the financial bids of Ion D
Exch"lnge and Doshion were opened, it was found that Doshion
had quoted a total price of Rs. 18.65 Crores, whereas Ion
Exchange had quoted a total price of Rs. 18.66 Crores and had
also quoted a discount of 1% on the quoted price. The result
was that the net price quoted by Ion Exchange after deducting
the discount of 1% worked out to Rs.18,47,34,000/- as against E
the price of Rs.18,66,00,000/- quoted by Doshion.

       4. On 28.08.2009, Doshion submitted a letter to IRCTC
 saying that the offer of discount on the quoted price made by
 Ion Exchange was in violation of Clause 1.10 of the Instructions   F
to Bidders. Again on 03.09.2009, Doshion submitted a letter
reiterating its objection to the offer of discount made by Ion
 Exchange and also saying that the excise duty amount had not
been indicated in rupees by Ion Exchange in its financial bid
contrary to the terms and conditions of the tender. On              G
18.10.2009, the Tender Committee of IRCTC met and made
its first recommendation to the Accepting Authority of IRCTC.
In the recommendation, the two members of the Tender
Committee gave their opinion that the discount of 1% offered
by Ion Exchange was not valid and that the non-mentioning of        H
    84    SUPREME COURT REPORTS (2010] 13 (ADDL.) S.C.R.


A the excise duty amount in Rupees by Ion Exchange was a major
   deviation. The third member gave his dissent in the
 , recommendation saying that the excise duty could be easily
   ascertainable by applying the normal methodology of calculation
   and so calculated the excise duty amount in the bid of Doshion
B was Rs.69,26,080/- and that of Ion Exchange was
   Rs.55, 12,050/-. The third member also gave his opinion that
   the bid amount of Ion Exchange was Rs.17 Lacs lesser and if
   the set off received in service tax for operation and maintenance
   part of the contract is taken into account, then the additional
C benefit of MODVAT would get neutralized and therefore even
   if excise duty amount was not quoted by Ion Exchange in its
   financial bid, this was not a material deviation. On 13.10.2009,
   the Accepting Authority of IRCTC directed the Tender
   Committee to look into the financial implications of excise duty
D on plant and equipment/ MO OVA T credit. Regarding the
   discount of 1%, the Accepting Authority directed the Tender
   Committee to look into the prevalent practice being followed
   by Government Departments and Public Sector Undertakings
   regarding discount and thereafter make their recommendations.
   On 02.11.2009, the Tender Committee made its second
E recommendation. In this recommendation, all the three
   members of the Tender Committee were of the unanimous view
   that excise duty should not be taken into account for tender
   evaluation because if the offer of Ion Exchange in totality was
   considered, there was no adverse financial implication to
F IRCTC. Regarding discount, the Tender Committee could not
   find any instruction relating to the prevalent practice followed
   by Government Departments and Public Sector Undertakings.
   On 13.11.2009, the Accepting Authority considered the second
   recommendation of the Tender Committee and asked the
G Tender Committee for further clarification on excise duty and
   to make a review of the cases of Central Vigilance
   Commission, Chief Technical Examiner's Organization and
   Stores Directorate Compendium, Railway Board on the
   discount aspect. On 20.11.2009, the Tender Committee made
H its third recommendation. In the third recommendation, the
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION            85
  VEOLIA WATER SOLUTIONS (P) LTD. [A.K. PATNAIK, J.]
members of the Tender Committee were of the unanimous view           A
that taxes and duties (excise duty in particular) had no adverse
financial implication to IRCTC. Two of the three members of
the Tender Committee after taking into consideration the
guidelines/observations in the Railway Stores Directorate
Compendium, Central Vigilance Commission, Chief Technical            B
Examiner's Organization, the bid documents of other Public
Sector Undertakings in respect of discounts and after
verification from Railways and Railway Public Sector
Undertakings, took the view that unconditional discount
available alongwith the offer should be considered. The third
member of the Tender Committee, however, did not agree with
                                                                     c
this view and maintained his earlier view that unconditional
discount offers should not be considered when price bid does
not speak of discount as part of the bid conditions. The
Accepting Authority of the IRCTC accepted the unanimous
recommendation of the Tender Committee that taxes and duties         D
(including the excise duty) had no financial implication on
IRCTC. The Accepting Authority also accepted the majority
recommendation of the Tender Committee that the 1% discount
offered in the bid of Ion Exchange can be considered.
Accordingly, the Accepting Authority decided to accept the offer     E
of Ion Exchange and on 17.12.2009 letter of acceptance was
issued to Ion Exchange.

     5. On 21.12.2009, Doshion filed Writ Petition No. 27074
of 2009 in the Madras High Court praying for a writ of               F
mandamus restraining IRCTC from taking any step in
furtherance of the tender. On 23.12.2009, learned Single Judge
of the Madras High Court issued an interim injunction till
15.01.2010 and posted the matter for 05.01.2010. On
05.01.2010, IRCTC filed its detailed counter affidavit in reply      G
to the writ petition. On 17.01.2010, Doshion filed Writ Petition
No. 1059 of 2010 praying for quashing the letter of acceptance
dated 17.12.2009 issued in favour of Ion Exchange. IRCTC and
Ion Exchange filed their respective counter affidavits in reply to
the Writ Petition and Doshion also filed its rejoinder affidavit.
                                                                     H
        86     SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


    A After hearing, the learned Single Judge of the Madras High
      Court dismissed the two Writ Petitions on 16.02.2010. On
      08.04.2010, Doshion filed Writ Appeal Nos. 726-727 of 2010
      before the Division Bench of the Madras High Court and on
      12.04.2010 the Division Bench passed the order of status quo
    B while admitting the appeals. After hearing the appeals, the
      Division Bench passed the impugned judgment and order dated
      29.04.2010 setting aside the order dated 16.02.2010 of the
      learned Single Judge in Writ Petition Nos. 27074 of 2009 and
      1059 of 2010 and allowed the Writ Petitions of the appellant
    C and quashed the acceptance of the offer of Ion Exchange. The
      Division Bench, however, refused to grant the prayer in the Writ
      Petition to award the contract to Doshion and instead observed
      in the impugned judgment and order that it is for IRCTC to take
\     a decision in the light of the findings in the impugned judgment.
      Aggrieved, the IRCTC and Ion Exchange have filed appeals
    D against quashing of acceptance of the offer of Ion Exchange
      by the Division Bench of the High Court and Doshion has filed
      the appeal against the refusal of the Division Bench of the High
      Court to grant the prayer in the writ petition to award the contract
      to Doshion.
    E
             6. Mr. Goolam E. Vahanvati, learned Attorney General for
        India appearing for IRCTC, submitted that the Division Bench
        of the High Court quashed the acceptance of the offer of Ion
        Exchange by IRCTC on the ground that the offer of discount of
    F   1% over the quoted price and the non-mentioning of excise
        duty amount in rupees in the offer of Ion Exchange were contrary
        to the provisions of the tender notification and the tender format
        and, therefore, the acceptance of the offer of Ion Exchange was
        unfair and arbitrary and violative of Article 14 of the Constitution.
    G        7. He argued that the terms and conditions of the tender
        documents did not contain any express provision prohibiting a
        tenderer from quoting a discount on the price offered by him
        and in the absence of an express provision in this regard, an
        implied provision cannot be read into the terms and conditions
    H
INDIAN RAILWAYS CAT & TOURISM COR. LTD. v. DOSHION            87
  VEOLIA WATER SOLUTIONS (P) LTD. [AK. PATNAIK, J.]
of the tender documents prohibiting a tenderer from quoting a A
discount on the quoted price. He urged that in the facts of the
present case, the majority of the members of the Tender
Committee, after taking into consideration the guidelines/
observations in the Railway Stores Directorate Compendium,
Central Vigilance Commission, Chief Technical Examiner's B
Organization and the bid documents of other Public Sector
Undertakings in respect of discounts and after verification from
Railways and Railway Public Sector Undertakings, had given
the opinion in their thirfl recommendation on 20.11.2009 that
unconditional discount along with the offer should be considered c
and the Accepting Authority had accordingly considered the 1%
discount offered on the quoted price of Ion Exchange and
accepted the offer of Ion Exchange. He cited the decisloJW>f-
this Court in Kanhaiya Lal Agrawal v. Union of India and Others
[(2002) 6 sec 315] in which rebates offered by a tenderer as
                                                                 0
an additional inducement to accept his offer was not treated
as breach of the terms and conditions of the invitation to
tender.

      8. Regarding the non-mentioning of excise duty in rupees
 in the offer of Ion Exchange, Mr. Vahanvati contended that the     E
 members of the Tender Committee ·in their third
 recommendation made on 20.11.2009 were unanimous in their
 view that taxes and duties including excise duty had no adverse'
 financial implication on IRCTC and this recommendation of the
Tender Committee was accepted by the Accepting Authority.           F
 He submitted that the Division Bench of the High Court has
acted as an appellate court over the Tender Committee and
the Accepting Authority by holding that the non-mentioning of
excise duty in rupees in the offer of Ion Exchange
                                            I
                                                       amounted
to breach of the essential terms and conditions of the tender       G
notification and tender format and has exceeded the power of
judicial review in matters relating to tenders and award of
contracts. He cited the decision of this Court in Tata Cellular
v. Union of India [(1994) 6 SCC 651] in which it has been held
that it is not the function of the Judge to act as Super Board      H
    88    SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A   over the decisions of the administrator in matters relating to
    tenders.

          9. qr. Abhishek Manu Singhvi, learned senior counsel
    appearing for Ion Exchange, submitted that in the impugned
B   judgment and order, the Division Bench of the High Court has
    referred to Clause. 1.10 of the Instructions to Bidders which
    provides that rates are to be quoted in the prescribed price
    schedule format only and has also referred to Clause 1 .12 of
    the Instructions to Bidders which states that failure to comply
    with either of the conditions will render the tender void. He
C   submitted that the Division Bench of the High Court appears
    to have taken the view that Clause 1.12 is attracted in case of
    failure of the tenderer to comply with Clause 1.10, but a careful
    reading of Clause 1.12 would show that it will apply when the
    tenderer fails to comply with either of the two conditions in
D   Clause 1.11 of the Instructions to Bidders and will not apply
    when the tenderer does not comply with Clause 1.10 of the
    Instructions to Bidders. He contended that excise duty rate is
    8.24% on the value of the plants and equipments and therefore
    the excise duty amount in rupees can always be calculated by
E   IRCTC and it made no difference whether the excise duty was
    quoted in rate or in rupees. He submitted that for these reasons,
    mentioning of excise duty in rupees for the plants and
    equipments cannot constitute an essential term of the tender
    notification or tender format as held by the Division Bench of
F   the High Court.

         10. Dr. Singhvi argued that the fact remains that the price
    offered by Ion Exchange with 1% discount is less than that of
    Doshion and for this reason was accepted by IRCTC and hence
G   the Division Bench of the High Court should not have quashed
    the acceptance of the offer of Ion Exchange. He cited Jagdish
    Manda/ v. State of Orissa and Others ((2007) 14 SCC 517] in
    which this Court has held that so long as a decision relating to
    award of contract is bona fide and is in the public interest,
    courts will not interfere by exercising power of judicial review
H
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION           89
  VEOLIA WATER SOLUTIONS (P) LTD. [AK. PATNAIK, J.]

even if a procedural aberration or error in assessment or            A
prejudice to a tenderer is made out.

      11. Mr. Jaideep Gupta, learned senior counsel appearing
for Doshion, on the other hand, supported the impugned
judgment and order of the Division Bench of the High Court           B
quashing the acceptance of offer of Ion Exchange by IRCTC.
He submitted that when IRCTC published the first notice inviting
tenders in February, 2009, the bid- of Dosh ion was the lowest
and yet IRCTC cancelled the tender process on the ground that
the offer made by the three tenderers were conditional and it
was not possible to evaluate them. He submitted that when the
                                                                     c
fresh tender notice was advertised on 04.08.2009 for the very
same work, IRCTC revised the tender conditions and the tender
format and in Clause 1.10 of the Instructions to Bidders clearly
stipulated that rates are to be quoted in the Prescribed Price
Schedule only. He submitted that the IRCTC further stipulated        D
in Clause 1.12 of the Instructions to Bidders that failure to
comply with either of the conditions in Clauses 1.10 or 1.11 of
the Instructions to Bidders will render the tender void. He
contended that on a reading of these two tender conditions, it
will be clear that rates were to be quoted in the Prescribed         E
Price Schedule only and no tenderer could quote any discount
on the quoted price, and further any offer of discount on the
quoted price would be in breach of Clause 1.10 of the
Instructions to Bidders and the tender would be rendered void
under Clause 1.12 of the Instructions to Bidders. He submitted       F
that it would be also clear from Clause 2.1 of the Special Terms
and Conditions of the tender documents that the vendor was
required to quote a lump sum price along with detailed break-
up as per price schedule enclosed with the bid documents and
Clause 9.0 of the Special Terms and Conditions stated that the       G
vendor should clearly spell out in his offer his acceptance of the
Special Terms and Conditions and in case of deviation, his offer
may be rejected. He also referred to the Prescribed Price
Schedule to show that there was no scope for a bidder to quote
any discount. Mr. Gupta next submitted that Note (ii) at the         H
    90    SUPREME COURT REPORTS [2010) 13 (ADDL.) S.C.R.


A bottom of the price schedule provides that the vendor sho.uld
  indicate total excise duty amount included in the price for plants
  and equipments, and yet Ion Exchange did not mention the total
  excise duty amount in its offer. He argued that since Ion
  Exchange quoted a discount on the price and did not indicate
B the excise duty amount in its offer, the Division Bench of the
  High Court rightly held that the offer of Ion Exchange did not
  comply with the essential terms and conditions of the tender
  notification and tender format and was ought to have been
  rejected by IRCTC.
c       12. Mr. Gupta relied. upon the observations of this Court
  in W. B. State Electricity Board v. Patel Engineering Co. Ltd.
  and Others [(2001) 2 SCC 451] that the very purpose of issuing
  Rules/Instructions to bidders is to ensure their enforcement lest
  the rule of law should be a casualty and relaxation or waiver of
D a rule or condition, unless provided in the Instructions to
  Bidders, by the State or its agencies in favour of one bidder
  would create justifiable doubts in the minds of the other bidders
  and would impair the rule of transparency and fairness and
  provide room for manipulation to suit the whims of the State
E agencies in picking and choosing a bidder for awarding
  contracts. He also relied upon Kanhaiya Lal Agrawal v. Union
  of India and Others (supra) for the proposition that if the
  consequence of non-compliance of a condition in the notice
  inviting tenders is rejection of the tender, then the condition is
F an essential condition of the invitation to tender. Mr. Gupta
  submitted that the Division Bench of the High Court therefore
  was right in quashing the offer of Ion Exchange on the ground
  that it was in breach of the essential terms and conditions of
  the tender notification and the tender format. He submitted that
G as the tender of Doshion was the only other valid tender, the
  High Court should have directed IRCTC to award the contract
  to Doshion. He urged that we should allow the appeal of
  Doshion on this point and direct IRCTC to award the contract
  to Doshion.
H
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION           91
  VEOLIA WATER SOLUTIONS (P) LTD. [AK. PATNAIK, J.]
     13. The first question that we have to decide in this case     A
is whether the offer of 1% discount on the quoted price made
by Ion Exchange was in breach of any essential term of the
tender notification or the tender format as held by the High
Court. Mr. Gupta, learned counsel for Doshion, has relied upon
Clauses 1.10, 1.11 and 1.12 of the Instructions to Bidders and      B
Clauses 2.1 and 9.0 of the Special Terms and Conditions of
the tender documents to support this finding of the High Court,
which are quoted hereinbelow:

"Instructions to Bidders:
                                                                    c
      1.10 Rates are to be quoted in the prescribed price
           schedule format only and it shall be inclusive of all
           taxes, levies and duties.

      1.11 Every page of the tender document shall be signed
                                                                    0
           on the left hand side bottom corner and stamped
           properly by the authorized person or persons
           submitting the tender in token of his/their having
           acquainted himself/themselves with the general
           conditions of contract, technical specifications etc.    E
           as laid down. Any tender is liable to be treated as
           defective and is liable to be rejected if any of the
           documents is not signed. The initials of the tenderer
           must attest all erasures and alterations made while
           filling the tender. Over-writing of figures is not
           permitted.                                               F

      1.12 Failure to comply with either of these conditions will
           render the tender void. No advice of any change in
           rate after opening of the tender will be entertained.
                                                                    G
Special Terms & Conditions:

     2.1   Vendor shall quote for lump sum price along with
           detailed break-up as per price schedule enclosed
           with this bid document. The cost of plants and
                                                                    H
    92    SUPREME COURT REPORTS (2010] 13 (ADDL.) S.C.R.


A               equipments as quoted in the price schedule will
                constitute contract price/contract value.

                Deviation to Terms and Conditions:

                The vendor should clearly spell out in his offer his
B               acceptance of the terms & conditions indicated
                above. In case of deviation, his offer may be
                rejected.

                Deviations proposed, if any, should be raised in pre-
c               bid meeting and decision taken there and conveyed
                to all parties will be final and binding.''

        14. Clause 1.10 of the Instructions to Bidders quoted
  above states that rates are to be quoted in the Prescribed Price
  Schedule format only and it shall be inclusive of all taxes, levies
D and duties. This clause does not say that the tenderer will not
  quote any discount on the price. Clause 1.11 of the Instructions
  to Bidders states that every page of the tender document shall
  be signed and properly stamped by the authorized person or
  persons submitting the tender and no over-writing will be
E permitted. Clause 1.12 of the Instructions to Bidders states that
  failure to comply with either of these conditidns will render the
  tender void. Since there is no condition either in Clause 1.10
  or Clause 1.11 that the tenderer will not quote discount on the
  price, in case a tenderer offers a discount on his quoted price
F his tender will not be rendered void under Clause 1.12 of the
  Instructions to Bidders. Clause 2.1 of the Special Terms and
  Conditions quoted above states that the vendor shall quote for
  lump sum price along with detailed break-up as per price
  schedule enclosed with the bid document and the cost of plants
G and equipments as quoted in the price schedule will constitute
  contract price/contract value. This clause also does not say that
  the vendor will not quote a discount on the lump sum price.
  Clause 9.0 of the Special Terms and Conditions states that the
  vendor should clearly spell out in his offer his acceptance of the
H terms and conditions as indicated in the Special Terms and
 INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION          93
   VEOLIA WATER SOLUTIONS (P) LTD. [AK PAT.NAIK, J.]

Conditions and in case of deviation, his offer may be rejected.     ·A
There is nothing in this clause also to show that the vendor
cannot quote a discount on the price. In the Prescribed Price
Schedule also there is no mention anywhere that the tenderer
will not offer any discount on his quoted price. In the absence
of any express stipulation in the Instructions to Bidders or the    B
Special Terms and Conditions or in the Prescribed Price
Schedule prohibiting the tenderer from quoting a discount on
the price offered by him, the High Court could not have come
to the conclusion that by offering a discount of 1% on the quoted
price Ion Exchange has committed a breach of the essential          c
terms of the tender notification or the tender format.

     15. For this conclusion, we are supported by a direct
authority of this Court in Kanhaiya Lal Agrawal v. Union of India
and Others (supra) cited by Mr. Vahanvati. In this case, the
conditions in the tender notice required that the rates at which    D
the supply was to be made had to be stated in words as well
as in figures against each item of work as per Schedule
attached thereto and that the tenders submitted with any
omissions or alteration of the tender document were liable to
be rejected, but permissible corrections could be attached with     E
due signature of the tenderers. Kanhaiya Lal Agrawal submitted
along with his tender a covering letter that if his offer was
accepted within the stipulated time the following rebates would
be offered by him:
                                                                    F
      (a)   5% reduction in rates if the contract is given to him
            within 45 days,

      (b)   3% reduction in rates if the contract is given within
            60 days, and
                                                                    G
      (c)   2% reduction in rates if the contract is given within
            75 days."

The Union of India accepted the tender offered by Kanhaiya
Lal Agrawal on the rates subject to the rebate. Another tenderer,
                                                 I                  H
    94     SUPREME COURT REPORTS (2010] 13 (ADDL.) S.C.R.


A whose rates would have been the lowest if the rebates offered
  by Kanhaiya Lal Agrawal would not have been considered,
  filed a writ petition in the Madhya Pradesh High Court
  contending that the offer of Kanhaiya Lal Agrawal was
  conditional and not valid and succeeded both before the
B learned Single Judge and before the Division Bench of the
  High Court. Kanhaiya Lal Agrawal carried an appeal to this
  Court and this Court held that the offer of rebates made by
  Kanhaiya Lal Agrawal "did not militate against the terms and
  conditions of inviting tender". From the decision of this Court
c in Kanhaiya Lal Agrawal v. Union of India (supra), therefore,
  it is clear that unless the offer of rebate or discount is in breach
  of the clear stipulations in the notice inviting tenders it cannot
  be held that such offer is in breach of the essential terms and
  conditions of the notice inviting tenders.
D         16. The observations of this Court in WB. State Electricity
    Board v. Patel Engineering Co. Ltd. and Others (supra), on
    which Mr. Gupta relied upon, is of no assistance to Doshion.
    In that case the West Bengal State Electricity Board invited
    bids for the Purulia Pumped Storage Project and the bids,
E   which were submitted, were opened on 08.09.1999 and while
    the details of the bids were under scrutiny, respondents 1 to 4
    in the appeal before this Court informed the State Electricity
    Board that there was a repetitive systematic computer
    typographical transmission failure on account of which there
F   were errors in their bid and requested that the errors be
    corrected. On 17.12.1999, they sent another letter stating that
    they had reason to believe that the State Electricity Board was
    evaluating their price bid by an incorrect application of the
    Instructions to Bidders and that their bid was the lowest. The
G   State Electricity Board evaluated their bid and on 18.12.1999
    sent a letter to them saying that during checking of their bid
    documents a good number of arithmetical errors were
    discovered. Respondents 1 to 4 challenged the validity of the
    letter dated 18.12.1999 of the State Electricity Board in a writ
H   petition filed in the High Court at Calcutta. Learned Single
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION            95
  VEOLIA WATER SOLUTIONS (P) LTD. [AK. PATNAIK, J.]

Judge of the High Court directed the State Electricity Board to      A
consider the representation of Respondents 1 to 4 and to
communicate a reasoned order to them. Against the order of
the learned Single Judge, the State Electricity Board filed
appeals. Cross-objections were also filed by Respondents 1
to 4. The Division Bench of the High Court dismissed the             B
appeals and the cross-objections upholding the order of the
learned Single Judge and directed the State Electricity Board
to permit Respondents 1 to 4 to correct the errors in the bid
documents and then consider their bid along with the other bids
and take a decision objectively and rationally. On these facts,      c
this Court held that Respondents 1 to 4 in that appeal were
bound by the Instructions to Bidders which should be complied
with scrupulously and adherence to the instructions cannot be
given a go-by by branding it as a pedantic approach, otherwise
it will encourage and provide scope for discrimination,
                                                                     D
arbitrariness and favouritism which are totally opposed to the
rule of law and constitutional values. This Court further observed
that the very purpose of issuing rules/instructions is to ensure
their enforcement lest the rule of law should be a casualty and
relaxation or waiver of a rule or condition, unless so provided
under the Instructions to Bidders, by the State or its agencies      E
in favour of one bidder would create justifiable doubts in the
minds of other bidders, would impair the rule of transparency
and fairness and provide room for manipulation to suit the
whims of the State agencies in picking and choosing a bidder
for awarding contracts.                                              F

     17. These observations made by this Court in W.B. State
Electricity Board v. Patel Engineering Co. Ltd. and Others
(supra) rather come to the aid of Ion Exchange in this case.
Since IRCTC did not clearly stipulate in the Instructions to         G
Bidders or in the Special Terms and Conditions or in the
Prescribed Price Schedule or in any other part of the tender
documents that a tenderer will not offer any discount on the
prices quoted by him and if any such discount is offered the
tender will be rejected, the offer of discount on the price made     H
    96     SUPREME COURT.REPORTS (2010] 13 (ADDL.) S.C.R.


A   by Ion Exchange cannot be treated to be in breach of the
    essential term or condition of the tender documents. To hold
    that the State or its agencies can reject a tender for breach of
    a term or condition in the tender document, which is not explicit
    in the tender documents, is to give room to the State or its
s   agencies to arbitrarily reject tenders even where the clear terms
    or conditions of the tender documents are complied with. In
    Dutta Associates Pvt. Ltd. v. lndo Merchantiles Pvt. Ltd.
    [(1997) 1 SCC 53), this Court found that the offer of the lowest
    tenderer for wholesale supply of rectified spirit (Grade 1) to the
c   Excise Department of the Government of Assam was not
    accepted on the ground that the price offered did not come
    within the "viability range" and this Court held that the tender
    process was vitiated for the reason that the tender notice did
    not specify the "viability range" nor did it say that only the tenders
    coming within the "viability range" will be considered. The Court
0
    further observed that whatever procedure the Government
    proposes to follow in accepting the tender must be clearly
    stated in the tender notice and the consideration of tenders
    received and the procedure to be followed in the matter of
    acceptance of a tender should be transparent, fair and open.
E
       18. The next question, which falls for consideration in this
  case, is whether the High Court was right in coming to the
  conclusion that by not indicating the excise duty amount in
  rupees in its offer, Ion Exchange committed breach of an
F essential term or condition of the tender notification or the
  tender format. Clauses (i) and (ii) of the Note appended to the
  Prescribed Price Schedule, which relate to duties and taxes,
  are quoted hereinbelow:

         "Note:
G
          (i)     The prices quoted are lump sum inclusive of all
                  duties and taxes etc.

          (ii)    Vendor should indicate total Excise Duty amount
H                 included in above prices (for Plants & Equipments)"
INDIAN RAILWAYS CAT. & TOURISM COR. LTD. v. DOSHION             97
  VEOLIA WATER SOLUTIONS (P) LTD. [AK. PATNAIK, J.)

The language of Clauses (i) and (ii) of the Note quoted above         A
is clear that the prices quoted are to be lump sum inclusive of
all duties and taxes etc. and the vendor should indicate total
excise duty amount included in the prices for plants and
equipments. The Note does not indicate the consequences
that will follow if the vendor does not indicate the total excise     B
duty amount included in the prices for plants and equipments.
The Note does not say that if the vendor does not indicate the
total excise duty amount included in the prices for plants and
equipments, the offer of the vendor "shall" be rejected. In the
absence of any mention of the consequence of rejection of the         c
offer for not indicating the total excise duty amount in rupees
included in the price of plants and equipments in the tender
documents, the· High Court could not have held that Ion
 Exchange had committed breach of an essential term or
condition of the tender notification or the tender format. For        D
this conclusion, we are again supported by the decision in
Kanhaiya Lal Agrawal v. Union of India and Others (supra) in
which this Court relying on G.J. Fernandez v. State of Kamataka
 [(1990) 2 sec 488) held:

     "Whether a condition is essential or collateral could be         E
     ascertained by reference to the consequence of non-
     compliance thereto, If non-fulfillment of the requirement
     results in rejection of the tender, then it would be an
     essential part of the tender otherwise it is only a collateral
     term."                                                           F

Hence, if on the recommendation of the Tender Committee,
the Accepting Authority did not find the deviation from Clause
(ii) of the Note by Ion Exchange very material and has accepted
the offer of Ion Exchange, the Division Bench of the High Court       G
could not have held that Ion Exchange committed a breach of
an essential term by not mentioning the excise duty amount in
rupees in its offer.

    19. As the offer of 1% discount on the quoted price and
                                                                      H
    98       SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A the non-mentioning of excise duty amount in rupees in the bid
  of Ion Exchange were not in breach of the essential terms of
  the tender documents, it was for IRCTC to evaluate the valid
  offers of Ion Exchange and Doshion on the merits of the two
  offers. We find that on the basi$ of recqmniendattions of the
B Tender Committee, the Accepting Authority oflRCTC found the
  offer of Ion Exchange at a net price of Rs.18,47,34,000/- to be
  better than the offer of Doshion at the price of Rs.18,66,00,000/
  - and that tax and duties including excise duty had no adverse .
  financial implications to IRCTC and accordingly accepted the
c offer of Ion Exchange. By reversing this decision of the
  Accepting Authority of the IRCTC, the Division Bench of the
  High Court, in our considered opinion, acted as an Appellate
  Court and exceeded its power of judicial review in a matter
  relating to award of contract contrary to the law laid down by
  this Court in the leading case of Tata Cellular (supra).
0
        20. In the result, we set aside the impugned judgment and
    order of the Division Bench of the High Court and allow the
    appeals of IRCTC and Ion Exchange and dismiss the appeal
    of Doshion. There shall be no order as to costs.
E
    B.B.B.                                 Appeals disposed of.