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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  6978 of 2016 (ARISING OUT OF SLP (CIVIL) NO.5695 OF 2016)

BAKSHI SECURITY AND PERSONNEL  SERVICES PVT. LTD. …APPELLANT

VERSUS

DEVKISHAN COMPUTED PVT. LTD.  AND ORS. …RESPONDENTS

J  U  D  G  M  E  N  T

R.F. Nariman, J.

1. Leave granted.

2. On  20.11.2014,  the  Commissioner  of  Transport,

Government  of  Gujarat,  floated  a  tender  seeking  bids  for

services inter alia of supervisors, computer programmers, data

entry operators, and electrician staff at 11 RTO check-posts.  A

few material clauses of the tender are set out hereinbelow:-

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“2.5.5 Commercials  

The  Commercial  Bids  should  strictly  conform  to  the formats provided in Annexure 2 of this tender document.

2.5.6 Fixed Price

Prices  quoted  by  the  Bidder  shall  be  fixed  and  no variation will  be allowed under  any circumstances during the entire  period  of  the  project.   No open-ended  Bid  shall  be entertained  and  the  same  is  liable  to  be  rejected straightaway.

2.8.3 Rejection of Bid

The hard-bound copy of Technical Bid Document shall be submitted in the form of printed document.  Bids submitted by Telex,  fax  or  email  shall  not  be  entertained.   Any  bid  not secured in accordance with Clause 2.8 mentioned above, shall be  rejected  by  COT without  any  further  correspondence,  as non-responsive.  A bid that does not meet all  pre-qualification criteria or is not responsive or not fulfilling technical evaluation shall be rejected by COT, and may not subsequently be made responsive by correction or withdrawal of the non-conforming deviation or reservation by the Bidder.

3.4.5  

It shall be the responsibility of the Bidder to abide by the provisions of the labour welfare legislations, like The Payment of  Wages Act,  1936,  The Payment  of  Bonus Act,  1965,  The Minimum Wages Act, 1948, The Equal Remuneration Act, 1976, The  Payment  of  Gratuity  Act,  1972,  The  Employees’  State Insurance Act, 1948, Contract Labor Act, 1970, The Workmen’s Compensation Act,  1923 and other  similar  legislations,  rules, and orders as issued from time to time.

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Annexure – 2 (Financial Bid)

Format for Financial Bid

Price  Bid:  (Financial/Commercial  Bid  submitted  in  physical  form shall  be  liable  for  rejection.   It  should  be  submitted  online  only  at https://www.nprocure.com)

Please  provide  price  bid  for  supply  of  Man  Power  to  be  deployed  at different Check-posts/CMC.

Sr. No.

Particulars Qty Cost per person per month without tax

Total  cost for  24 months without tax

1 Data  Entry operator

120

2 Computer Engineer

02

3 Electrician 12

4 Supervisor 12

Total

Additional Service Tax %

Grand Total

1. Salary paid to the deployed manpower should not be less than the minimum wages published as per the notification issued by state  govt.  labour  department  or  other  statutory  benefits applicable.  In  case of  revision  of  minimum wages/DA by the labour department, agency would be entitled to get the revised rates from Commissioner of transport.  

2. Break-up of  salary  for  each category of  employee should  be provided  indicating  clearly  the  wages,  DA,  other  mandatory statutory benefits & the service charges.

3. If  the  component  of  salary  quoted is  less  than the  minimum wages  prescribed  or  the  components  of  mandatory  statutory

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benefits are not included in the break-up, the bid is liable to be rejected.  

4. The quantity of manpower required may vary and the supplier may be asked to supply upto 25% extra manpower at the rate quoted above.  

5. L1 will be decided on grand total.  

Signature: Date: Designation: Seal:”

3. The financial bids were opened on 10.12.2014.  9 bidders

gave financial  bids  of  which  only  three  were  qualified.   The

Appellant  bid  for  a  total  amount  of  Rs.2,92,93,944/-;

Respondent  No.1  bid  for  Rs.2,77,68,000/-,  and  one  Airan

Consultants Pvt. Ltd. made a bid for Rs.3,03,83,184/-.

4. On 26.2.2015, the Technical Evaluation Committee, after

taking  into  account  the  opinion  of  the  Labour  Department,

arrived  at  a  minimum  wage  figure  of  Rs.3,00,92,346/-.

Inasmuch as both the Appellant as well  as Respondent No.1

gave bids which were below this figure, (which would, therefore,

be  less  than  the  amount  required  as  minimum  wages,  in

accordance with the tender conditions read with the Annexure 2

thereof), both the Appellant as well as Respondent No.1 were

held to be ineligible.  A decision was, therefore, taken to award

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the tender to the third bidder, namely, M/s Airan Consultants

Pvt. Ltd.  Respondent No.1 approached the Gujarat High Court

in  a  writ  petition  challenging  the  aforesaid  decision.   By  its

judgment dated 11.8.2015, the High Court ultimately came to

the  conclusion  that  the  tender  in  favour  of  M/s  Airan

Consultants Pvt. Ltd. ought to be quashed and set aside with

the further direction that the Government of Gujarat shall give

an opportunity to all three tenderers to resubmit their bids after

being  appraised  of  the  minimum  wage  figure  given  by  the

Labour Department.  This was done as the High Court was of

the opinion that all  the bidders ought to have been given an

opportunity  to  revise  their  bills  subsequent  to  the  minimum

wage calculated by the Labour Department.  

5. In  pursuance  of  the  aforesaid  judgment,  the  Transport

Department of the Government of Gujarat furnished to all the

competing  bidders  the  Labour  Department’s  calculation  that

minimum  wages  plus  bonus  payable  for  the  contract  was

Rs.3,00,92,346/-.  

6. In  response  to  the  above,  the  Appellant  wrote  a  letter

dated  2.11.2015  sticking  to  the  original  bid  figure  of 5

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Rs.2,92,93,944/-.  On 3.9.2015, Respondent No.1, in response

to the minimum wage figure disclosed, wrote to the Government

of Gujarat, as follows:-

“(6.3) Thus,  it  can  be  seen  that  according  to  the calculation,  Minimum  Wages  and  other  statutory benefits payable to the employees for 730 days [2 years of contract] comes to Rs.3,00,92,346 [without service tax].  The price at which I am ready to work is  Rs.2,77,68,000  [without  service  tax].   Thus, against payment of wages and all statutory benefits of  Rs.3,00,92,346/-  and  service  tax  thereon,  am ready  and  willing  to  accept  Rs.2,77,68,000  [plus service  tax]  from  the  Government.   This  would enable  the  Government  to  save  Rs.23,24,346.00 and  service  tax  thereon,  and  the  ultimate beneficiary would be public exchequer.  

(6.4) I have undertaken in past in writing that I am ready to incur loss as well.  The price I have offered shall have no impediment on wages and statutory benefits to be paid to the employees as calculated by  the  Technical  Evaluation  Committee  based  on the  report/  opinion  of  the  Labour  Commissioner. The tender document itself binds the contractor to abide by all labour welfare legislation, and therefore, there is no question of resiling from performing that part of contract from my end.  

(6.5) Even  in  my  previous  letters  also,  I  have undertaken that I shall conform to all labour welfare legislations even after  accepting Rs.2,77,68,000 + Service  Tax  from  the  Government.   I  have  also undertaken  that  I  shall  bear  the  burden  of  loss incurred on account of the margin between my bid and the amount  of  minimum wages and statutory benefits  payable  to  my  employees.   The  margin between the two shall not be hindrance in quality of

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services  I  would  offer  through  my  employees  on these check-posts.  

(6.6) Without prejudice to above, I am to state that I am  ready  to  accept  even  Rs.3,00,92,346.00  + Service  Tax,  being  the  bare  minimum  wages payable  to  the  employees  during  the  life  of  the contract from the Government as calculated by the Technical  Evaluation  Committee  based  on  the report of the Labour Commissioner, such offer will result into ‘No Profit No Loss’ business for me, but at  the  same  time,  it  would  create  a  burden  of Rs.23,24,346.00 on the State Funds.”

7. On 12.10.2015, the Labour  Department gave a second

opinion that though Data Entry Operators are ordinarily to be

treated  as  “skilled  workers”,  for  the  purpose  of  the  present

tender they should be treated as “semi skilled workers”. In view

of this decision, the Government, on 30.10.2015, arrived at a

decision that the actual minimum wage plus bonus worked out

to  Rs.2,91,00,000/-,  and  thus  revised  their  earlier  figure  of

Rs.3,00,92,346/-.  In the judgment under appeal, the High Court

has stated, and it is not controverted before us, that this figure

was not disclosed to either party.  

8. On  2.11.2015,  Respondent  No.1  again  knocked  at  the

doors of the High Court in a second writ petition filed by it.  By

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the  impugned  judgment  dated  22.2.2016,  the  High  Court

allowed Respondent no.1’s petition in the following terms:-

“8. Under the circumstances, the decision of the authorities to shortlist respondent No.3 for awarding the contract is set aside.  The offer of the petitioner shall  be  treated  as  matching  with  the  revised minimum wage calculation.  The petitioner shall give such offer  in  clear  writing  and undertaking to  the authorities  latest  by  25.2.2016.   The  respondent authorities, unless there is any other disqualification of the petitioner to carry out the contract, being the lower, shall accept the same.

9. Petition is disposed of.”

9. Being aggrieved by the aforesaid judgment, the Appellant

is before us.  

10. Shri Harin Raval, learned senior advocate appearing on

behalf  of  the  Appellant,  has  pointedly  referred  to  the  tender

conditions and has argued before us that Respondent No.1’s

writ petition was not at all maintainable in view of the fact that

Respondent No.1 stuck to its earlier offer of Rs.2,77,68,000/-

which was lower than the figure of Rs.3,00,92,346/- as well as

the figure of  Rs.2,91,00,000/-  fixed by the Government  upon

advice given by the Labour Department, of minimum wage plus

bonus.   According  to  him,  the  without  prejudice  offer  of

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Rs.3,00,92,346/- flew in the face of the tender conditions and,

therefore, the writ petition being not maintainable, ought to have

been dismissed both on the ground that the figure quoted by

Respondent No.1 was below the minimum wage fixed as also

on  the  ground  that  no  open  ended  bid  is  liable  to  be

entertained.  He further argued that the Court cannot make a

contract  between  the  parties  by  treating  the  offer  of  the

Respondent No.1 as matched with the revised minimum wage

calculation.   He  further  argued that  a  Mandamus cannot  be

issued to straightaway award the tender to a person who does

not conform to the essential conditions of the tender.

11. Countering  these  submissions,  Shri  Shyam  Divan,

learned  senior  counsel  appearing  on  behalf  of  Respondent

No.1,  has argued that  it  is  an admitted fact  that  the revised

figure of minimum wage was never disclosed to either of the

parties and this being so, the judgment under appeal is correct.

He  also  stated  that  though  the  High  Court  did  not  find

malafides, yet it went out of its way to comment on the secret

manner in which the Labour Department re-fixed the minimum

wage at  Rs.2,91,00,000/-,  which is  only  one  lakh  above the

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Appellant’s figure of  Rs.2,92,00,000/-  and that,  therefore,  the

said  non-transparent  process  rendered  the  decision  of  the

Government to award the tender to the Appellant as bad in law.

He further argued that if the offer of the Respondent No.1 was

treated as matching with the revised minimum wage calculation,

the State will benefit by an amount of Rs.1 lakh and that this

was well within the discretion of the High Court while exercising

jurisdiction under Article 226 of the Constitution.  

12. Having heard learned counsel for the parties, we agree

with Shri  Raval’s contention that  Respondent No.1’s bid was

contrary to the terms of the tender.  

13. First  and  foremost,  under  tender  condition  2.5.5,

commercial bids have to strictly conform to the format provided

in  Annexure  2  of  the  tender  document.   Annexure  2  which

contains the format  for  the price  bid  makes it  clear  that  the

salary paid to deployed manpower should not be less than the

minimum wage.   It  further  goes  on  to  state  in  paragraph  3

thereof that if the component of salary quoted is less than the

minimum wage prescribed, the bid is liable to be rejected.  On

this  ground  alone,  Respondent  No.1‘s  bid  is  liable  to  be 10

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rejected  inasmuch  as,  vide  its  letter  dated  3.9.2015,

Respondent No.1 stuck to its original figure of Rs.2,77,68,000/-

which  is  way  below  the  minimum  wage  fixed  by  the

Government. Secondly, Shri Raval is also right in stating that

the without prejudice offer of Rs.3,00,92,346/- is an offer which

is not fixed, but open ended.  This is clear from the fact that it

was up to the Government then to pick up either figure by way

of acceptance.  This is clearly interdicted by clause 2.5.6 of the

tender which states that prices quoted by the bidder have to be

fixed,  and no open ended bid can be entertained,  the same

being  liable  to  be  rejected  straightaway.  Such  condition  is

obviously an essential condition of the tender which goes to the

eligibility of persons who make offers under the tender.

14. Unfortunately,  even  though  the  High  Court  noticed  the

open ended nature of Respondent No.1’s bid, it went on to add

that the offer of Respondent No.1 shall be treated as matching

with  the  revised  minimum  wage  calculation  and  that  it  is

nowhere envisaged by the tender conditions that rejection of an

offer  which  may  have  the  potential  of  causing  loss  to  the

tenderer  is  present.   It  is  not  for  the High Court  to  revisit  a

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condition contained in Annexure 2 read with 2.5.5 of the tender

in the manner aforesaid.  Once the tender condition states that

the  tender  must  strictly  conform  to  the  format  provided  in

Annexure 2, and Annexure 2 in turn clearly states that if  the

component  of  salary quoted is  less than the minimum wage

prescribed, the bid is liable to be rejected, and the High Court

cannot hold otherwise.   The High Court’s further finding that

Respondent No.1’s offer was “clear” is wholly incorrect.  It was

a  without  prejudice  offer  which  muddied  the  waters  and

rendered the price quoted by the bidder as variable and not

fixed.   

15. The law is settled that an essential condition of a tender

has to  be  strictly  complied with.  In  Poddar  Steel  Corpn.  v.

Ganesh Engineering Works, (1991)  3 SCC 273,  this  Court

held as under:-

“…  The  requirements  in  a  tender  notice  can  be classified  into  two  categories  —  those  which  lay 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  the  other cases it  must  be open to the authority  to deviate from  and  not  to  insist  upon  the  strict  literal

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compliance of the condition in appropriate cases….” [para 6]

16. Similarly  in  B.S.N.  Joshi  &  Sons  Ltd.  v.  Nair  Coal

Services Ltd., (2006) 11 SCC 548, this Court held as under:-

“…(i)  if  there  are  essential  conditions,  the  same must be adhered to;

(ii)  if  there  is  no  power  of  general  relaxation, ordinarily the same shall not be exercised and the principle  of  strict  compliance  would  be  applied where it is possible for all the parties to comply with all such conditions fully;

(iii) if, however, a deviation is made in relation to all the  parties  in  regard  to  any  of  such  conditions, ordinarily again a power of relaxation may be held to be existing;

(iv) the parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance with another part  of  tender  contract,  particularly  when the was also  not  in  a  position  to  comply  with  all  the conditions of tender fully, unless the court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction;

(v)  when  a  decision  is  taken  by  the  appropriate authority  upon  due  consideration  of  the  tender document  submitted  by  all  the  tenderers  on  their own  merits  and  if  it  is  ultimately  found  that successful  bidders  had  in  fact  substantially complied  with  the  purport  and  object  for  which essential conditions were laid down, the same may not ordinarily be interfered with; …” [para 66]

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17. We also agree with the contention of Shri Raval that the

writ  jurisdiction  cannot  be  utilized  to  make  a  fresh  bargain

between parties.  

18.  In General  Assurance  Society  Ltd.  V.  Chandmull

Jain, (1996)  3  SCR  500,  this  Court,  in  a  slightly  different

context, stated:  

“In other respects there is no difference between a contract of insurance and any other contract except that in a contract of insurance there is a requirement of uberrima fides i.e.  good faith on the part of  the assured  and  the  contract  is  likely  to  be construed contra  proferentem that  is  against  the company in case of ambiguity or doubt. A contract is formed when there is an unqualified acceptance of the  proposal.  Acceptance  may  be  expressed  in writing  or  it  may  even  be  implied  if  the  insurer accepts the premium and retains it. In the case of the assured, a positive act on his part by which he recognises or seeks to enforce the policy amounts to  an  affirmation  of  it.  This  position  was  clearly recognised  by  the  assured  himself,  because  he wrote, close upon the expiry of the time of the cover notes that either a policy should be issued to him before  that  period  had  expired  or  the  cover  note extended in time. In interpreting documents relating to a contract of insurance, the duty of the court is to interpret  the  words  in  which  the  contract  is expressed by the parties, because it is not for the court to make a new contract, however reasonable, if the parties have not made it themselves. Looking at  the  proposal,  the  letter  of  acceptance  and the cover notes, it is clear that a contract of insurance

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under the standard policy for fire and extended to cover flood, cyclone etc. had come into being.”

19. In the light of the aforesaid judgment, the High Court was

not correct in treating Respondent No.1’s offer as matching with

the revised minimum wage calculation, as that would make a

new  contract  between  the  parties  that  the  parties  have  not

made themselves.

20. It is also well to remember the admonition given by this

Court  in  Michigan  Rubber  (India)  Limited  v.  State  of

Karnataka and Others, (2012) 8 SCC 216 in cases like the

present, as under:-

“In Jagdish Mandal v. State of Orissa, [(2007) 14 SCC 517], the following conclusion is relevant:

“22. Judicial review of administrative action is  intended  to  prevent  arbitrariness, irrationality,  unreasonableness,  bias  and mala fides. Its purpose is to check whether choice or decision is made ‘lawfully’ and not to  check  whether  choice  or  decision  is ‘sound’. When the power of judicial review is invoked  in  matters  relating  to  tenders  or award of contracts, certain special features should  be  borne  in  mind.  A contract  is  a commercial  transaction.  Evaluating  tenders and  awarding  contracts  are  essentially commercial  functions.  Principles  of  equity and natural justice stay at a distance. If the

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decision relating to award of contract is bona fide and is in public interest, courts will not, in  exercise  of  power  of  judicial  review, interfere even if  a procedural  aberration or error  in  assessment  or  prejudice  to  a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest,  or  to  decide  contractual  disputes. The tenderer or contractor with a grievance can always seek damages in  a  civil  court. Attempts  by  unsuccessful  tenderers  with imaginary  grievances,  wounded  pride  and business rivalry, to  make mountains out  of molehills  of  some  technical/procedural violation  or  some  prejudice  to  self,  and persuade  courts  to  interfere  by  exercising power of judicial review, should be resisted. Such  interferences,  either  interim  or  final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore,  a  court  before  interfering  in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:

(i)  Whether  the  process  adopted  or decision made by the authority is mala fide or intended to favour someone;

OR Whether the process adopted or decision

made is so arbitrary and irrational  that  the court can say: ‘the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached’;

(ii) Whether public interest is affected.

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If  the  answers  are  in  the  negative,  there should be no interference under Article 226. Cases involving blacklisting or imposition of penal  consequences  on  a  tenderer/ contractor  or  distribution  of  State  largesse (allotment of  sites/shops, grant  of  licences, dealerships  and  franchises)  stand  on  a different footing as they may require a higher degree of fairness in action.”[Para 21]   

21. We have seen that the present tender has not gotten off

the ground since May 2015, and one year’s precious time has

been wasted due to litigation between the parties.  We must

hasten to add that the Government of Gujarat is partly to blame

for this inasmuch as it arrived at a minimum wage figure and did

not disclose the same to the tendering parties twice.  Even in

the second round of litigation, the Government did not disclose

the newly arrived at minimum wage figure of Rs.2,91,00,000/-

to the two persons in the fray before us.  Ordinarily, therefore,

we would have asked the Government to disclose the second

figure  of  minimum  wage  and  restart  the  tendering  process.

However, we do not think that the justice of the case requires

us to do so, for two reasons.  First and foremost, Respondent

No.1 before us has clearly violated the strict terms of the tender

condition on every occasion and hence cannot be given relief.

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And, secondly, we already find that due to litigation the present

tender has not taken off for over one year.  In the absence of

malafides, and indeed the High Court judgment has found that

malafides did not vitiate the calculation of minimum wage by the

Labour Department, we cannot accept Shri Divan’s submission

that the figure of Rs.2,91,00,000/- was tailor made to suit the

bid offered by the Appellant herein.  We, therefore, set aside the

decision of the Gujarat High Court and allow the Government to

proceed further in finalizing the tender in favour of the Appellant

herein. The appeal is, accordingly, allowed with no order as to

costs.  

……………………J. (Dipak Misra)

……………………J. New Delhi; (R.F. Nariman) July 26, 2016

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