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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6772 OF 2013

Rashmi Metaliks Ltd. & Anr. …..Appellants

Versus

Kolkata Metropolitan Development  Authority & Ors. …..Respondents

J U D G M E N T

VIKRAMAJIT SEN, J.

1. We are called upon to decide the correctness of the impugned decision  

of the Division Bench of the High Court of Calcutta which in turn has  

upheld the appreciation of the law as also the facts of the case by a  

learned  Single  Judge  of  that  Court.   Thus,  these  courts  have  

concurrently  concluded  that  the  Appellant-company  had  failed  to  

comprehensively correspond to the essential terms of the tender and,  

therefore,  its  offer  contained  in  the  said  tender  was  ineligible  for  

consideration.

2. The two terms of the subject 'Invitation to Tender' which are germane  

to the case in hand are clauses (i) and (j) thereof, which read thus –

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C.A. No.6772/13....(contd.)

“(i) A declaration in the form of Affidavit in a non judicial stamp  paper should be submitted stating clearly that the applicant is not  barred/delisted/blacklisted  by  any  Government  Department/  Government Undertaking/ Statutory Body/ Municipality and of  the like Government Bodies in DI Pipe-supply tender during last  five years and if any such incident is found at any point of time,  the tender  will  be  cancelled summarily without  assigning any  reason whatsoever.

(j) Valid PAN No., VAT No., Copy of acknowledgement of latest  Income Tax Return and Professional Tax Return.”

3. It must immediately be clarified that so far as clause (i) is concerned,  

the  learned  Single  Judge  had  thought  it  unnecessary  to  analyse  its  

applicability  and  relevance,  having  come  to  the  conclusion  that  a  

violation of clause (j) had been committed by the Appellant-company  

inasmuch as it had failed to file its latest Income Tax Return along with  

its bid.  This position has continued to obtain even before the Division  

Bench  as  will  be  palpably  clear  from  a  perusal  of  the  impugned  

judgment.   The  Division  Bench,  despite  noting  clause  (j),  has  

concerned  itself  only  with  the  legal  implications  flowing  from the  

alleged  non-compliance  of  clause  (i).   The  Division  Bench  has  

predicated  its  decision  on  W.B.  State  Electricity  Board  v.  Patel  

Engineering Co. Ltd. (2001) 2 SCC 451 and has extracted, as we shall  

also do, the following paragraphs therefrom –

“23. The  mistakes/errors  in  question,  it  is  stated,  are  

unintentional and occurred due to the fault of computer termed as  

a  “repetitive  systematic  computer  typographical  transmission  2

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C.A. No.6772/13....(contd.)

failure”.  It is difficult to accept this contention.  A mistake may  

be unilateral or  mutual but  it  is always unintentional.   If it  is  

intentional it ceases to be a mistake.  Here the mistakes may be  

unintentional but it was not beyond the control of Respondents 1  

to 4 to correct the same before submission of the bid.  Had they  

been  vigilant  in  checking  the  bid  documents  before  their  

submission,  the  mistakes  would  have  been  avoided.   Further,  

correction  of  such  mistakes  after  one-and-a-half  months  of  

opening of the bids will also be violative of clauses 24.1, 24.3  

and 29.1 of the ITB.

24. The controversy in this case has arisen at the threshold.  It  

cannot  be  disputed  that  this  is  an  international  competitive  

bidding which postulates keen competition and high efficiency.  

The bidders have or should have assistance of technical experts.  

The degree of care required in such a bidding is greater than in  

ordinary local bids for small works.  It is essential to maintain the  

sanctity and integrity of process of tender/bid and also award of a  

contract.  The appellant, Respondents 1 to 4 and Respondents 10  

and 11 are all bound by the ITB which should be complied with  

scrupulously.   In  a  work of  this  nature  and magnitude  where  

bidders  who  fulfil  prequalification  alone  are  invited  to  bid,  

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,  arbitrariness  and  

favouritism which are totally opposed to the rule of law and our  

constitutional  values.   The  very  purpose  of  issuing  

rules/instructions is to ensure their enforcement lest the rule of  

law should be  a  casualty.   Relaxation or  waiver  of  a  rule  or  

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C.A. No.6772/13....(contd.)

condition, unless so provided under the ITB, by the State or its  

agencies  (the appellant)  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 as in the case of  

distributing bounty or charity.  In our view such approach should  

always be avoided.  Where power to relax or waive a rule or a  

condition exists  under  the  rules,  it  has  to  be  done  strictly  in  

compliance with the rules.  We have, therefore, no hesitation in  

concluding that adherence to the ITB or rules is the best principle  

to be followed, which is also in the best public interest.”

4. The impugned judgment states that clause (j) cannot be viewed as a  

non-essential term and, therefore, should have been corrected before  

the submission of the tender.  This seems to us to be chronologically or  

sequentially impossible; what was obviously meant was that failure to  

adhere to this term would render the bid non-compliant and, therefore,  

beyond the pale of consideration in toto.   The Division Bench also  

opined that the Appellant-company could not be granted the indulgence  

to  correct  this  error,  as  ‘such  facility  was  not  available  to  other  

bidders.’  In saying so, the Division Bench, it appears to us, has diluted  

its view that clause (j) is altogether inviolable.

5. The Respondents have endeavoured to raise the alleged violation of  

clause (i) before us, but we are in no manner of doubt that this effort  

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C.A. No.6772/13....(contd.)

should be roundly rejected.  This is despite the fact that an explanation  

even  in  this  context  has  been  offered  by  Mr.  K.V.  Vishwanathan,  

learned senior counsel appearing for the Appellants.  We shall desist  

from making any observations in regard to this clause (j) since it does  

not feature in the analysis of both the courts below.  Dr. A.M. Singhvi,  

learned  senior  counsel  for  the  Respondents  has  cited  the  following  

cases before us : (i) W.B.  State  Electricity  Board v.  Patel  

Engineering Co. Ltd. (2001) 2 SCC 451 Para 23; (ii)  Kanhaiya Lal  

Agrawal v. Union of India (2002) 6 SCC 315 Paras 5 and 6;  (iii)

Puravankara Projects Ltd. v. Hotel Venus International (2007) 10  

SCC 33 Paras 28 to 30;  (iv)Sorath Builders v. Shreejikrupa Buildcon  

Ltd. (2009) 11 SCC 9 Paras 17 and 28; and (v) Glodyne Technoserve  

Ltd.  v.  State  of Madhya Pradesh (2011) 5 SCC 103 Para 47.   Mr.  

Vishwanathan, learned senior counsel for the Appellants sought to rely  

on Poddar Steel Corporation v. Ganesh Engineering Works (1991) 3  

SCC 273 and Kanhaiya Lal.

6. This Court, and even more so the High Court as well as the subordinate  

courts  have  to  face  lengthy arguments  in each case  because  of  the  

practice of citing innumerable decisions on a particular point of law.  

The correct approach is to predicate arguments on the decision which  

holds the field, which in the present case is Tata Cellular v. Union of  

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C.A. No.6772/13....(contd.)

India (1994) 6 SCC 651 rendered by a three-Judge Bench.  The rule of  

precedence, which is an integral part of our jurisprudence, mandates  

that this exposition of law must be followed and applied even by co-

ordinate or co-equal Benches and certainly by all smaller Benches and  

subordinate Courts.  We hasten to clarify that if a co-ordinate Bench  

considers the ratio decidendi of the previous Bench to be of doubtful  

efficacy, it must comply with the discipline of requesting Hon’ble the  

Chief Justice to constitute a larger Bench.  Furthermore there are some  

instances of decisions even of a Single Judge, which having withstood  

the  onslaughts  of  time  have  metamorphosed  into  high  authority  

demanding  reverence  and  adherence  because  of  its  vintage  and  

following in contradistinction of the strength of the Bench.  This is a  

significant characteristic of the doctrine of stare decisis.  Tata Cellular  

has been so ubiquitously followed, over decades, in almost every case  

concerning  Government  tenders  and  contracts  that  it  has  attained  

heights which dissuade digression by even a larger Bench.  The law of  

precedence  and  of  stare  decisis is  predicated  on  the  wisdom and  

salubrity of providing a firmly founded law, without which uncertainty  

and ambiguity would cause consternation in society.  It garners legal  

predictability, which simply stated, is an essential.  Our research has  

revealed the existence of only one other three-Judge Bench decision  

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C.A. No.6772/13....(contd.)

which has dealt with this aspect of the law, namely, Siemens Public  

Communication Networks Private Limited v. Union of India (2008) 16  

SCC 215, which is in actuality an anthology of all previous decisions  

including  Tata Cellular.   The sheer plethora of precedents makes it  

essential that this Court should abjure from discussing each and every  

decision which has dealt  with a similar question of law.  Failure to  

follow  this  discipline  and  regimen  inexorably  leads  to  prolixity  in  

judgments which invariably is a consequence of lengthy arguments.   

7. It  is  a  capital  exhaustion of Court  time,  lack of  which has  become  

critical.   We shall, therefore, confine ourselves to Tata Cellular.  We  

are  mindful  of  the  fact  that  it  is  a  legitimate  exercise,  perfectly  

permissible for Benches to advance the law provided this exercise does  

not  lead  to  a  conclusion  which  is  irreconcilable  with  a  binding  

precedent.  We also would clarify that the manner in which a Bench  

appreciates the factual matrix before it can obviously be of value only  

if a subsequent case presents identical facts, which remains a rarity.

8. Tata Cellular states thus :  

“77. The duty of the court is to confine itself to the question of  

legality.  Its concern should be :

1. whether a decision-making authority exceeded its powers?

2. committed an error of law,

3. committed a breach of the rules of natural justice,

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4.  reached  a  decision which no reasonable  Tribunals  would  

have reached or,

5. abused its powers.

Therefore,  it  is  not  for  the  Court  to  determine  whether  a  

particular policy or particular decision taken in the fulfilment of  

that policy is fair.  It is only concerned with the manner in which  

those decisions have been taken.  The extent of the duty to act  

fairly will vary from case to case.  Shortly put, the grounds upon  

which an administrative action is subject to control by judicial  

review can be classified as under :

(i) Illegality:  This  means  the  decision-maker  must  understand  

correctly the law that regulates his decision-making power  

and must give effect to it.

(ii) Irrationality, namely, Wednesbury unreasonableness.

(iii) Procedural impropriety.

The above are only the broad grounds but it does not rule out  

addition of further grounds in course of time.  As a matter of  

fact,  in R. v. Secretary of State for the Home Department, ex  

parte Brind, (1991) 1 AC 696, Lord Diplock refers specifically  

to  one  development  namely,  the  possible  recognition  of  the  

principle  of  proportionality.   In all  these  cases  the test  to  be  

adopted is that the Court should, 'consider whether something  

has  gone  wrong  of  a,  nature  and  degree  which  requires  its  

intervention.”

9. Since we have been deluged with decisions,  we must now consider  

whether there have been any material additions to the law which per  

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C.A. No.6772/13....(contd.)

force  are  compatible  with  Tata  Cellular.   W.B.  State  Electricity  

Board reiterated the exposition of law contained in Tata Cellular, as it  

had to do.   On facts it opined that ‘once the unit rate and line item total  

are  filled  in by the  bidder,  they are  unalterable  though arithmetical  

errors can be rectified’.  So far as the law is concerned the position  

remains  the  same  significantly,  as  it  must  do;  the  facts  bear  no  

semblance to those in hand.  The Court held that the private parties  

could  not  bind  the  Government  by  implication.   Although  Sorath  

Builders makes no reference to Tata Cellular but nevertheless is not  

incongruous to it; otherwise it would have been rendered per incuriam.  

It merely reiterates that while reasonableness in the Wednesbury mould  

is  an  integral  part  of  administrative  law  it  has  no  relevance  in  

contractual law; on facts this Court held that since documents had not  

been despatched in accordance with the specified time schedule, the  

bid which had already been received on-line could correctly not be  

considered.  Glodyne Technoserve also applies Tata Cellular; but on  

the factual matrix sounds a discordant note so far as the Respondents  

who rely on it  are  concerned,  inasmuch as  it  recognises  that  it  fell  

within the discretionary domain of the concerned Authority whether or  

not to consider the documents (in that case an ISO Certification) which  

had not  been submitted  as  per  tender  stipulations.   Kanhaiya Lal,  

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relied upon by Shri Vishwanathan, talks in the same timbre in that it  

distinguishes between essential and collateral terms of a tender and in  

the latter case allows elbow room for exercise of discretion.  Although  

it may be seen as a facet of Wednesbury reasonableness, this decision  

can be seen as adding another factor to Tata Cellular viz., the Court is  

empowered to separate the wheat from the chaff.  In this exercise the  

Court  can segregate  the essential  terms forming the bulwark of  the  

compact, and whilst ensuring their strict adherence, can allow leniency  

towards the compliance of collateral clauses.  This analysis of the cited  

case-law shows that there is little or no advantage to be gained from  

the manner in which the Court has responded to the factual matrix as  

other  Courts  may legitimately  place  emphasis  on  seemingly similar  

facts to arrive at a different conclusion.  But the ratio decidendi has to  

be adhered to.  Counsel must therefore exhibit circumspection in the  

number of cases they cite.  The three-Judge Bench in Tata Cellular is  

more than sufficient to adumbrate the law pertaining to tenders; the  

later decision of the co-ordinate Bench in Siemens is in the nature of  

annals of previous decisions on the point.

10.With this brief analysis of the decisions cited at the Bar, we shall now  

return to the essential factors that shall determine our decision.  The  

two  clauses  that  have  been  debated  before  us  have  already  been  

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reproduced by us above.  The learned Single Judge had returned the  

finding that the Appellant-company’s tender did not correspond to the  

essential term of the ‘Invitation to Tender’ in two respects :

(a) The  alleged  blacklisting  of  the  Appellant-company  as  

postulated in clause (i); and

(b) The Appellant-company’s failure to furnish/forward the latest  

Income Tax Return, as envisaged in clause (j).

11.The letter rejecting the Appellant-company’s offer reads thus :

“Subject: KMDA: Disqualify for Tender No.:01/ KMDA / MAT                 / CE/2013-2014

Date : Mon, 22 Jul 2013 18:13:22 +0530 (IST) From: tender tender@eternderwizard.com To: sales.marketingdomestic@rashmigroup.com  

Dear RASHI METALIKS LIMITED,

Important Notice:

This  is  to  inform that  your  bid has  been disqualified  for  the  tender invited by KMDA

Tender No.: 01 / KMDA / MAT / CE / 2013-2014 Line No.: 01

Name of Work :  SUPPLY and DELIVERY OF DIFFERENT  DIAMETERS OF DISS K 7 and K 9 PIPES AT DIFFERENT  LOCATION WITHIN KOLKATA METROPOLITAN AREA

Reason for Disqualification : company not having submitted its  latest income tax return along with its Bid.

With regards

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Tendering Authority”

12.So far as the first point is concerned, it needs to be dealt with short  

shrift for the reason that the Courts below have not thought it relevant  

for discussion, having, in their wisdom, considered it sufficient to non-

suit the Appellant-company for its failure on the second count.  It has,  

however, been explained by Mr. Vishwanathan, learned Senior Counsel  

for  the  Appellant-company  that  at  the  material  time  there  was  no  

blacklisting or  delisting of  the Appellant-company and that  in those  

circumstances it was not relevant to make any disclosure in this regard.  

The  very  fact  that  the  Tendering  Authority,  in  terms  of  its  

communication dated 22nd July 2013 had not adverted to this ground at  

all, lends credence to the contention that a valid argument had been  

proffered had this ground been raised.     Regardless of the weight,  

pithiness  or  sufficiency  of  the  explanation  given  by  the  Appellant-

company in this regard, this issue in its entirety has become irrelevant  

for our cogitation for the reason that it does not feature as a reason for  

the impugned rejection.  This ground should have been articulated at  

the  very  inception  itself,  and  now  it  is  not  forensically  fair  or  

permissible for the Authority or any of the Respondents to adopt this  

ground for the first time in this second salvo of litigation by way of a  

side wind.  The impugned Judgment is indubitably a cryptic one and  

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does not contain the reasons on which the decision is predicated.  Since  

reasons are not contained in the impugned Judgment itself, it must be  

set aside on the short ground that a party cannot be permitted to travel  

beyond the stand adopted and expressed by it in its earlier decision.  

The  following  observations  found  in  the  celebrated  decision  in  

Mohinder Singh Gill vs. The Chief Election Commissioner, New Delhi,  

AIR 1978 SC 851 are relevant to this question :  

“8. The second equally relevant matter is that when a statutory  

functionary makes an order based on certain grounds, its validity  

must  be  judged  by  the  reasons  so  mentioned  and  cannot  be  

supplemented  by  fresh  reasons  in  the  shape  of  affidavit  or  

otherwise.  Otherwise, an order bad in the beginning may, by the  

time it comes to court on account of a challenge, get validated by  

additional  grounds  later  brought  out.   We  may  here  draw  

attention to the observations of Bose J.  in Gordhandas Bhanji  

(AIR 1952 SC 16) (at p.18):

“Public orders publicly made, in exercise of a statutory  

authority cannot be construed in the light of explanations  

subsequently given by the officer making the order of  

what he meant, or of what was in his mind, or what he  

intended to do.  Public orders made by public authorities  

are meant to have public effect and are intended to affect  

the  acting  and  conduct  of  those  to  whom  they  are  

addressed  and  must  be  construed  objectively  with  

reference to the language used in the order itself.

Orders are  not  like old wine becoming better  as  they  

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C.A. No.6772/13....(contd.)

grow order.”

13.So  far  as  clause  (j)  of  the  detailed  notice  inviting  E-tender  

No.01/KMDA/MAT/CE/2013-2014  dated  10.5.2013  emanating from  

the  office  of  the  Chief  Engineer  is  concerned,  it  seems  to  us  that  

contrary to the conclusion in the impugned judgment, the clause is not  

an essential element or ingredient or concomitant of the subject NIT.  

In the course of hearing, the Income Tax Return has been filed by the  

Appellant-company and scrutinized by us.  For the Assessment Year  

2011-2012,  the  gross  income  of  the  Appellant-company  was  

Rs.15,34,05,627, although, for the succeeding Assessment Year 2012-

2013, the income tax was NIL, but substantial tax had been deposited.  

We  think  that  the  Income  Tax  Return  would  have  assumed  the  

character of an essential term if one of the qualifications was either the  

gross income or the net income on which tax was attracted.  In many  

cases  this  is  a  salutary  stipulation,  since  it  is  indicative  of  the  

commercial standing and reliability of the tendering entity.  This feature  

being absent, we think that the filing of the latest Income Tax Return  

was a collateral term, and accordingly the Tendering Authority ought to  

have brought this discrepancy to the notice of the Appellant-company  

and if even thereafter no rectification had been carried out, the position  

may have been appreciably different.  It has been asserted on behalf of  14

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C.A. No.6772/13....(contd.)

the Appellant-company, and not denied by the learned counsel for the  

Respondent-Authority, that the financial bid of the Appellant-company  

is substantially lower than that of the others, and, therefore, pecuniarily  

preferable.   

14.In this analysis, we find that the Appeal is well founded and is allowed.  

The impugned judgment is accordingly set aside.  The disqualification  

of the Appellant-company on the ground of it having failed to submit its  

latest Income Tax Return along with its bid is not sufficient reason for  

disregarding its offer/bid.  The Respondents are directed, therefore, to  

proceed further in the matter on this predication.  The parties shall bear  

their respective costs.

.............................................J .

[T.S. THAKUR]

New Delhi .............................................J.

September 11, 2013. [VIKRAMAJIT SEN]

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