Jharkhand High Court
M/S Ampl-Mil Jv vs Union Of India on 14 July, 2025
Author: Rajesh Shankar
Bench: Rajesh Shankar
2025:JHHC:18993-DB
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (C) No. 3436 of 2025
M/S AMPL-MIL JV, a joint venture of AMPL Resources Pvt. Ltd. and
M/S Mahalaxmi Infra Contract Ltd. having its registered office at
Circular Court, Block No. 92, 9th Floor, 8, A.J.C. Bose Road, P.O., P.S.
& District Kolkata through its authorized signatory namely Om Prakash
Pareek, son of Late Radheshyam Pareek, aged about 64 years, resident
of A-2, Laxmi Ganesh Apartment, Kanke Road, P.O. Ranchi University
and P.S. Morahbadi, District Ranchi.
... Petitioner
Versus
1. Union of India, through Secretary Ministry of Coal, Government of
India, having its office at 120, 1st Floor, F-wing, Shastri Bhawan,
P.O. & P.S District New Delhi.
2. Coal India Ltd., through its Chief Managing Director, having its
registered office at Coal Bhawan Premise No-04 MAR, Plot No-AF-
III, Action Area-1A, Newtown, P.O. & P.S. Rajarhat, District
Kolkata.
3. Central Coalfields Limited, (A Subsidiary of Coal India Limited),
Represented by Chairman-cum-Managing Director, Having its office
at Central Coalfields Limited, Darbhanga House, P.O. & P.S.
Kutchery Road, District Ranchi-834029, Jharkhand
4. The General Manager (CMC), Central Coalfields Limited,
Darbhanga House, Kutchery Road, P.O. GPO, P.S. Kotwali, District
Ranchi-834029, Jharkhand.
5. Government E-Market Place (GEM) through its Managing Director,
a Government of India Enterprise, having its Office at 3rd Floor,
Jeevan Bharti Building, Tower-2, Connaught Circus, P.O., P.S. and
District New Delhi.
6. Caliber (JV), (A Joint Venture), having its registered corporate
office at Office No. 1101, Naniks Ashtavinayak Park Avenue, near
Nagpur Urban Nagpur M Corp, Nagpur, P.O- Sadar Bazar, P.S. -
Sadar Police Station, District Nagpur, Maharashtra-440001 through
its Authorized Signatory, namely T. Krishna Shahu, aged about 56
years, son of Late T. Raghu Sahu, Resident of 63/129, B T Road,
Vivek Nagar, Titagarh (M), P.O. Titagarh & P.S. Khardah, District-
North 24 Parganas, West Bengal-700119.
... Respondents
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CORAM: HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJESH SHANKAR
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For the Petitioner: Mr. Rajiv Ranjan, Sr. Advocate
Mr. Rohitashya Roy, Advocate
Mr. Piyush Chitresh, Advocate
Mr. Vibhor Mayank, Advocate
Mr. Shivam Kumar, Advocate
For Respondents-CCL: Mr. Tushar Mehta, Sr. Advocate (Solicitor
General of India)
Mr. Amit Kumar Das, Advocate
For Resp. No.5/GEM: Ms. Khushboo Kataruka, Advocate
Mr. Shubham Kataruka, Advocate
For Pvt. Resp. No.6: Mr. Sumeet Gadodia, Advocate
Mr. Ritesh Kumar Gupta, Advocate
Mr. Ashutosh Agarwal, Advocate
Ms. Nidhi Lall, Advocate
---------
Reserved on: 11.07.2025 Pronounced on: 14/07/2025
Per M.S. Ramachandra Rao, C.J.
The background facts
1. The petitioner is a Joint Venture based in Kolkata. The
respondent no.6 is also a Joint Venture based in Nagpur, Maharashtra.
2. The Central Coalfields Limited (3rd respondent), a subsidiary of
Coal India Limited (2nd respondent) issued NIT No.
CCL/GM(CMC)/A&C/GeM/2024/48 dt. 05.12.2024 (hereinafter
referred to as the “Tender”).
3. The scope of the work was Hiring of HEMM for removal of Over
Burden, Extraction of coal by Surface Miner, Transportation to Shivpur
Siding and Surface Stockyard under different lead slabs, and Wagon
loading of coal at Shivpur Siding at Amrapali OCP, Amrapali-
Chandragupt Area for 07 years (Production period) and 360 days
(Development period) (i.e. 2915 days). The estimated value of the
tender was Rs.10206.53 Crore.
4. The said e-tender notice was floated on the GeM Portal
(Respondent 5 in the writ petition) i.e. Government e-Marketplace, a
Government of India enterprise.
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5. The petitioner participated in the Tender and quoted 13.16%
below the estimated value/ cost.
6. The respondent no.6 quoted 18.90% below the estimated value/
cost.
7. Thus, the respondent no.6 became L-1 and the petitioner was L-2
and the other 7 bidders had quoted higher than both of them and so we
are not concerned with them.
8. The financial bid was opened on 28.4.2025 and respondent no.6
was issued the Letter of Acceptance on 2.7.2025 and thereafter, on
2.7.2025, the site for work was also handed over to it.
9. Importantly, this Writ Petition had been filed on 1.7.2025, a day
before the issuance of Letter of Acceptance to the respondent no.6 on
2.7.2025 and it was registered on 10.7.2025.
10. We may point out that annexed to the tender were Additional
Terms and Conditions (for short ‘ATC’) (Instruction to Bidder).
Clause 23.6 of ATC, insofar as it is relevant for this case, states as
under –
“23.6 There should be no provision in the Bid Documents
regarding submission of Additional Security Deposit/Bank
Guarantee (BG) in case of Abnormally Low Bids. There shall
be a provision in the Bid document regarding Abnormally Low
Bid that the Procuring Entity may in such cases seek written
clarifications from the Bidder, including detailed price analyses
of its bid price in relation to scope, schedule, allocation of risks
and responsibilities, and any other requirements of the bids
document If, after evaluating the price analyses, Procuring
Entity determines that the Bidder has substantially failed to
demonstrate its capability to deliver the contract at the offered
price, the Procuring Entity may reject the bid/ proposal.
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Such Additional Performance Security (APS) shall be
applicable if the bid price is below 15% of the updated/justified
cost Finalized by the Owner as on the last date of Bid
submission. The amount of such APS shall be the difference
between 85% of the updated/justified cost Finalized by the
Owner as on the last date of Bid submission and quoted price.
xxx xxx xxx
xxx xxx xxx
xxx xxx xxx
xxx xxx xxx
xxx xxx xxx
xxx xxx xxx
xxx xxx xxx
xxx xxx xxx"
11. Thus though abnormally low bids may be given without
Additional Performance Security, if such bid is below 15% of
updated/justified cost Finalized by the Owner ( for short the ‘estimated
value/ cost’), Additional Performance Security has to be provided.
12. The issue in this Writ Petition revolves as to the binding nature of
this clause in the ATC on the respondents 3,4 and 6 (since the bid of the
respondent no.6 was admittedly below 15% of the estimated value/
cost) , and whether it prevails over the contents of the Service Level
Agreement (SLA) which forms part of Special Terms and
Conditions(STC).
Contentions of petitioner
13. It is the contention of petitioner that though the petitioner was in
a position to quote below 15%, it was precluded from doing so due to
the clause 23.6 of the ATC of the Tender which mandates the giving of
Additional performance Security for such a bid; and if such a clause
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had not been there, petitioner also would have made a more
aggressive/competitive bid.
14. It is contended that as per Clause 23.6 of the ATC (referred to
in para 10 supra), the respondent no.6, whose bid was admittedly
18.90% less than the estimated value/cost i.e below 15% of the
‘estimated value/ cost’, was bound to offer Additional Performance
Security of Rs.337 Crores as per the 2nd paragraph of Clause 23.6, and
the said clause is attempted to be waived by respondent No.s 3 and 4 to
favor respondent no.6.
15. It is contended that the financial condition of the respondent no.6
was not good; in the immediately preceding financial year, its working
capital was negative as per a recently filed DRHP for an IPO; that as on
31.12.2024, even the cash credit facility and working capital facility
was also utilized by more than 85%; and if the respondent no.6 is
awarded the work, it will not be able to execute the work causing
damage to public interest, and the respondent nos. 3 and 4 will again
have to invite fresh tenders which will cause much loss to public
exchequer.
16. It is contended that the respondents 3 and 4 were contemplating
to waive the requirement of furnishing of Additional Performance
Security in order to enable respondent no.6 to get the work order and
execute an agreement in its favor.
17. It is contended that there is clear malafide on part of the officers
of the respondents 3 and 4 as the clause 23.6 of the ATC was
deliberately retained in the Tender to prevent or preclude other bidders
from quoting aggressively below 15 %. Once the other bidders quoted
more (i.e. more than 85% of the estimated value/cost), they would be
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out of the race, and then the clause 23.6 will be clandestinely waived
for respondent no.6 by the respondents 3 and 4.
18. Counsel for the Petitioner placed on record the Letter of
Acceptance dt. 02.07.2025 issued to respondent no.6 along with the
Letter dt. 02.07.2025 handing over the site to the respondent no.6 for
work and stated that the apprehensions of the petitioner have come true
as the Letter of Acceptance dt. 02.07.2025 issued by respondents 3 and
4 does not ask the respondent no.6 to furnish Additional Performance
Security of Rs.337 crores, and thus the respondent no.6 has been
favored by the said respondent Nos.3 and 4.
19. Counsel contended that in the Letter of Acceptance dt.
02.07.2025, the respondent no.6 was asked to furnish only a normal
Performance Security, that there is no mention of Additional
Performance Security, and the respondent nos. 3 and 4, being bound by
the ATC, could not have granted any waiver to the respondent no.6 of
the requirement of furnishing the Additional Performance Security.
20. The learned Senior Counsel refers to Clause 26.2 of the ATC
which states “the notification of the Letter of Acceptance will constitute
the formation of the contract and the issue of the Letter of Acceptance
will supersede the contract generated on the GeM Portal”; and
contends that it was not open to the respondents to issue the Letter of
Acceptance and later the Work Order to the respondent no.6 excluding
the requirement of furnishing the Additional Performance Security
which is mandated by Clause 23.6 of the ATC.
21. Learned Senior Counsel also drew our attention to the General
Terms and Conditions on GeM 4.0 (Version 1.19) dt. 26.09.2024 which
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stated in Clause 5 (page 23 thereof) ( for short “GTC of GeM) as
under:
“5. Contract(s)
Following documents shall be construed to be part of the
contract generated through GeM:
i. Scope of supply including price as enumerated in the
Contract Document
ii. General Terms and Conditions (GTC).
iii. Product/ Service specific Special Terms and Condition
(STC).
iv. Product / Track / Domain Specific sTC of Particular Service
including its SAL (Service Level Agreement).
v. Bid / RA specific Additional Terms and Conditions (ATC).
The Terms and Conditions stipulated in STC & SLA will
supersede those in GTC and Terms and Conditions stipulated in
ATC will supersede those in GTC and STC in case of any
conflicting provisions.”
(Emphasis supplied)
22. The learned Senior Counsel contends that the last portion of the
last paragraph of Clause 5 states specifically that terms and conditions
stipulated in the Additional Terms and Conditions(ATC) will supersede
those in the General Terms and Conditions (GTC) and Special Terms
and Conditions (STC), in case of any conflicting provisions; that the
Service Level Agreement (SLA) is part of the Special Terms and
Conditions (STC); and even if the Service Level Agreement (SLA)
deleted the requirement of furnishing Additional Performance Security
for a Bidder (like the respondent no.6 whose bid price is below 15% of
the estimated vale/cost), the Bidder was bound to provide the
Additional Performance Security in view of Clause 23.6 of the ATC;
and the respondent Nos.3 and 4 failed in their duty to direct the
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respondent no.6 to do so arbitrarily and therefore, the award of contract
to the respondent no.6 has to be set aside.
Contentions of respondents
23. The learned Solicitor General appearing for the respondent No.3
and 4 refuted the said contentions of the petitioner.
24. In para 22 of the counter affidavit filed by respondent no.3, it is
contended that the sentence ” There should be no provision in the Bid
documents regarding submission of Additional Security Deposit/BG in
case of Abnormally Low bids” in the first para of clause 23.6 , clearly
points out that there is no requirement to provide Additional
Performance Security; that requirement to provide Additional
Performance Security is not automatically triggered; that this is also
clarified by Annexure 13 at page 135 of the Writ Petition and clause 27
of the ATC at page 92 of the Writ Petition.
25. He pointed out that in the Service Level Agreement (SLA) which
forms of the Special Terms and Conditions (STC), Clause 4.6 deals
with Additional Performance Security as provided in Clause 23.6 of the
ATC, but the same was specifically struck off, and therefore, there was
no necessity for respondent No.s 3 and 4 to insist that the respondent
no.6 give the Additional Performance Security.
26. According to him, the Service Level Agreement (SLA) contained
in the Special Terms and Conditions (STC) overrides the General
Terms and Conditions (GTC) and also the Additional Terms and
Conditions (ATC) (which contained in the 2nd paragraph of clause 23.6,
the requirement of providing Additional Performance Security by a
Bidder whose bide price is below 15% of the estimated value/cost).
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27. He also sought to contend that the price bid was opened on
28.04.2025, but in spite of the same, the petitioner did not file the writ
petition at that time and waited till July, 2025 (2 months) ; that in the
meantime, Letter of Acceptance and even Work Order had been issued
to the respondent no.6; and on the ground of unexplained laches, the
petitioner has to be denied relief in the Writ petition.
28. According to him, the filing of the writ petition is an afterthought
and any intervention by this Court at the behest of the petitioner would
cause huge loss to the respondents.
29. He also sought to contend that GTC of GeM (i.e., the General
Terms and Conditions on GeM 4.0 (Version 1.19) dt. 26.09.2024), on
which reliance is placed by the petitioner, is general in operation and
will not prevail over the Service Level Agreement (SLA) in the Special
Terms and Conditions (STC); and when the requirement of providing
Additional Performance Security by a Bidder whose bid is below 15%
of estimated value/cost is specifically struck off in the Service Level
Agreement (SLA), the GTC of GeM will have no application.
30. He also contended that since the respondent no.6 was the lowest
bidder and there is a difference of 5% between the bid of petitioner and
respondent no.6 running into Rs.500 Crore, no illegality was committed
by the respondent No.s 3 and 4 in preferring the lowest bidder and not
awarding the contract to the petitioner.
31. He pointed out that it is not as if the petitioner has quoted 15%
below the estimated contract price or even close to the bid by the
respondent no.6, and therefore, public interest will not suffer if the
award of contract to the respondent no.6 is sustained by not interfering
in this Writ petition with the action of the respondent Nos. 3 and 4.
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32. According to him, there was a pre-bid meeting held as per Clause
8 of the Additional Terms and Conditions, and the petitioner should
have sought clarification on this aspect of giving of Additional
Performance Security in that pre-bid meeting if he really intended to
quote less than 15% from the estimated contract price; and having not
chosen to do so, he cannot be now permitted to raise the said dispute.
According to him, the petitioner had sought clarification on other
aspects in the pre-bid meeting but not this aspect.
33. In the counter affidavit it is pleaded at para 30 that the respondent
no.6 had given a Chartered Accountant’s certificate which had been
verified by the respondent no.3 and the same indicates that respondent
no.6 has working capital of Rs.253.86 crores which is more than the
required working capital as per the Tender.
34. In para 36 of the counter affidavit, it is also stated that no
relaxation had been given to any bidder.
35. Though respondent no.6 did not file any counter affidavit, the
counsel for the respondent no.6 adopted the submission of the learned
Solicitor General.
Consideration by the Court
36. We have noted the submissions of the parties.
37. The Writ Petition had been filed on 1.7.2025 and registered on
10.7.2025 alleging that respondent No.s 3 and 4 would award the work
to the respondent no.6 arbitrarily waiving the requirement of giving
Additional Performance Security of Rs.337 Crores which it was bound
to give as its bid was below 15% of the estimated value/cost.
38. On 2.7.2025, the Letter of Acceptance was issued to respondent
no.6 without any provision for Additional performance Security. This
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subsequent event can certainly be relied on by this Court and it can
mould relief appropriately, when there is larger public interest involved,
if there is merit in the petitioner’s contention as there exist pleadings in
the Writ Petition on the aspect. (PRP Exports v. State of T.N1 and All
India Railway Recruitment Board v. Shyam Kumar2)
39. The scope of interference by the courts in the decision-making
process regarding award of tenders has been subject-matter of several
judgments of the Supreme Court.
40. In Tata Cellular v. Union of India3, the Supreme Court held
that it cannot be denied that the principles of judicial review would
apply to the exercise of contractual powers by Government bodies in
order to prevent arbitrariness or favouritism.
It held that however, there are inherent limitations in exercise
of that power of judicial review.
The right to refuse the lowest or any other tender is always
available to the Government, but the principles laid down in Article 14
of the Constitution have to be kept in view while accepting or refusing a
tender.
The right to choose cannot be considered to be an arbitrary
power, but if the said power is exercised for any collateral purpose, the
exercise of that power will be struck down.
It declared that the grounds upon which an administrative
action is subject to control by judicial review are illegality, irrationality,
namely Wednesbury unreasonableness and procedural impropriety.
However, it stated that the court does not sit as a court of appeal but
merely reviews the manner in which the decision was made.
1
(2014) 13 SCC 692
2
(2010) 6 SCC 614
3
(1994) 6 SCC 651
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While accepting that Government must have freedom of contract,
it held that however, the decision must not only be tested by the
application of Wednesbury principle of reasonableness, but must be
free from arbitrariness not affected by bias or actuated by mala fides.
41. The issue of binding nature of terms of tender fell for
consideration in the celebrated judgment of the Supreme Court in
Ramana Dayaram Shetty v. International Airport Authority of
India4.
In that case, there was a condition in the tender describing
eligibility which required that the person submitting the tender must be
conducting or running a registered 2nd class hotel or restaurant and he
must have 5 years’ as such experience, and if he did not satisfy the
condition of eligibility, his tender would not be eligible for
consideration.
The Supreme Court in the said case held that it is a settled rule of
administrative law that an executive authority must be rigorously held
to the standards by which it professes its actions to be judged, and it
must scrupulously observe those standards on pain of invalidation of an
act in violation of them.
The Supreme Court held in the said case that this was the
standard or norm of eligibility laid down by Respondent 1, that it is
binding, and since the Respondent 4 did not satisfy this standard or
norm, it was not competent on the part of Respondent 1 to entertain the
tender of Respondent 4.
Thus a condition or norm prescribing eligibility to bid was held
binding.
4
(1979) 3 SCC 489
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42. In Air India Ltd. v. Cochin International Airport Ltd.5, also
it was held that the State, its corporations, instrumentalities and
agencies are bound to adhere to the norms, standards and procedures
laid down by them and cannot depart from them arbitrarily. It
elucidated:
” 7. … … The award of a contract, whether it is by a private
party or by a public body or the State, is essentially a
commercial transaction. In arriving at a commercial decision
considerations which are paramount are commercial
considerations. The State can choose its own method to arrive
at a decision. It can fix its own terms of invitation to tender and
that is not open to judicial scrutiny. It can enter into
negotiations before finally deciding to accept one of the offers
made to it. Price need not always be the sole criterion for
awarding a contract. It is free to grant any relaxation, for bona
fide reasons, if the tender conditions permit such a relaxation. It
may not accept the offer even though it happens to be the
highest or the lowest. But the State, its corporations,
instrumentalities and agencies are bound to adhere to the
norms, standards and procedures laid down by them and cannot
depart from them arbitrarily. Though that decision is not
amenable to judicial review, the court can examine the decision-
making process and interfere if it is found vitiated by mala fides,
unreasonableness and arbitrariness. The State, its corporations,
instrumentalities and agencies have the public duty to be fair to
all concerned. Even when some defect is found in the decision-
making process the court must exercise its discretionary power
under Article 226 with great caution and should exercise it only
in furtherance of public interest and not merely on the making
out of a legal point. The court should always keep the larger
public interest in mind in order to decide whether its
intervention is called for or not. Only when it comes to a5
(2000) 2 SCC 617, at page 623Page 13 of 25
2025:JHHC:18993-DBconclusion that overwhelming public interest requires
interference, the court should intervene.”
(emphasis supplied)
43. In B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd6, also
same view of taken. It was held:
“66. We are also not shutting our eyes towards the new
principles of judicial review which are being developed; but
the law as it stands now having regard to the principles laid
down in the aforementioned decisions may be summarised 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 he 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 substantially6
(2006) 11 SCC 548
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conditions were laid down, the same may not ordinarily be
interfered with;
(vi) the contractors cannot form a cartel. If despite the same,
their bids are considered and they are given an offer to
match with the rates quoted by the lowest tenderer, public
interest would be given priority;
(vii) where a decision has been taken purely on public
interest, the court ordinarily should exercise judicial
restraint.
67. Law operating in the field is no longer res integra. The
application of law, however, would depend upon the facts
and circumstances of each case. …. ….
68. The employer concededly is not bound to accept a bid
only because it is the lowest. It must take into consideration
not only the viability but also the fact that the contractor
would be able to discharge its contractual obligations”.
(emphasis supplied)
44. Therefore, the main question to be considered is:
“Whether the 2nd paragraph of Clause 23.6 in the Additional
Terms and Conditions in the tender ( which mandates the
furnishing of an Additional Performance security by a bidder
whose bid is below 15% of the estimated value/ cost) would
prevail?
or
whether the Service Level Agreement contained in the Special
Terms and Conditions (which omitted the requirement of
providing Additional Performance Security if the bid is below
15%) would prevail?”
45. Admittedly, the tender in question was placed on the portal of
Government e-Marketplace.
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46. Note (xiv) of the Tender after para 2 ( at pg .6 of the tender)
thereof stated as under –
“xiv. Procurement of Services through GeM for
Services
i) The guidelines issued by GeM/GoI from time to time
through Notification/Circular/ Office Memorandum will
be followed for procurement through GeM, (only if
mandated by GeM Portal), even if the same are either
not specially indicated in the Bid Document or not in
line with the provisions of Chapter – 6 of CIL’s CMM.
ii) The other provisions which are not mandated by GeM
portal shall be guided as per respective Manuals/
Guidelines.”
(Emphasis supplied)
47. Thus as per the above clause contained in the tender itself, the
directives of the GeM as mandated in the GeM portal will apply. Thus
they bind the respondents as well as all bidders including the petitioner
and respondent no.6.
48. The GTC of GeM (i.e., General Terms and Conditions on GeM
4.0 (Version 1.19) dt. 26.09.2024) states in para-1 thereof that the
document is an electronic record published by GeM under the
provisions of the Information Technology Act, 2000 and the rules made
thereunder as applicable and shall act as valid agreement between
Seller/Service Provider and Buyer.
49. The said para also states that the GeM Portal for Sale/Purchase of
Goods/Services and the resulting contracts shall be governed by the
General Terms and Conditions unless otherwise superseded by
Product/Service specific Special Terms and Conditions (STC),
Product/Track/Domain Specific STC of Particular Service including its
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SLA (Service Level Agreement) and BID/Reverse Auction Specific
Additional Terms and Conditions (ATC) as applicable.
50. Clause 5 of the GTC of GeM ( also extracted at para 21 supra
states:
“5. Contract(s)
Following documents shall be construed to be part of the
contract generated through GeM:
i. Scope of supply including price as enumerated in the
Contract Document
ii. General Terms and Conditions (GTC).
iii. Product/ Service specific Special Terms and Condition
(STC).
iv. Product / Track / Domain Specific sTC of Particular Service
including its SAL (Service Level Agreement).
v. Bid / RA specific Additional Terms and Conditions (ATC).
The Terms and Conditions stipulated in STC & SLA will
supersede those in GTC and Terms and Conditions stipulated in
ATC will supersede those in GTC and STC in case of any
conflicting provisions.”
(Emphasis supplied)
51. There are thus a list of five documents which would form part of
the “contract” generated through GeM including General Terms and
Conditions (GTC), Special Terms and Condition (STC) including
Service Level Agreement (SLA) and Additional Terms and Conditions
(ATC) which are Bid/RA specific.
The first portion of this clause makes it clear that the Terms and
Conditions stipulated in the Special Terms and Conditions(STC) and
Service Level Agreement (SLA) will supersede those in the General
Terms and Conditions (GTC). To this extent, there is no problem.
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But it goes further in the later part of the last para therein and
states that Terms and Conditions stipulated in Additional Terms and
Conditions (ATC) will supersede those in General Terms and
Conditions (GTC) and Special Terms and Conditions (STC) in case of
any conflict.
Since the Service Level Agreement (SLA) is included in the
Special Terms and Conditions (STC), in view of Clause 5, the
Additional Terms and Conditions (ATC) would prevail over the Service
Level Agreement (SLA) as well.
52. Therefore, notwithstanding the fact that Clause 4.6 of the Service
Level Agreement (SLA) dealing with Additional Performance Security
is struck off, such striking off would have no effect since the ATC
would prevail over the Service Level Agreement (SLA) in the Special
Terms and Conditions(STC); and so Clause 23.6 of the ATC which
specifically mandates in the 2nd paragraph that if the Bid is below 15%
of estimated value/cost, Additional Performance Security has to be
given , will continue to operate.
53. Therefore the action of the respondent No.s 3 and 4 in not asking
the respondent no.6 to give such Additional Performance Security
though it’s bid was below 15% of the estimated value/cost is clearly in
the nature of a relaxation of the said essential condition, though the
respondent No.s 3 and 4 deny that they have given such a
relaxation/waiver.
54. The plea in the counter affidavit filed by the Respondent 3 in
paragraph 22 at page 15 that the Service Level Agreement (SLA) would
override the General Terms and Conditions (GTC) does not assist the
3rd respondent because the requirement of providing of Additional
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Performance Security is contained in the ATC; and as per Clause 5 of
GTC of GeM, the ATC will prevail over the Service Level Agreement
(SLA).
55. The further plea of counsel for respondent no.6 that it is stated in
the Specimen Work Order (Annexure-XIII to the Additional Terms and
Conditions (ATC) of the Tender Document), that Performance Security,
Retention Money and Additional Performance Security, if any, would
be as per the relevant clause of General Terms and Conditions of
Service Level Agreement (SLA) and so it need not be insisted upon,
cannot be accepted for the reason that it is only a proforma/specimen
copy which is subject to suitable modification. A clause in a proforma
cannot supersede the clause 23.6 of the ATC.
56. The importance of the Clause 23.6 of the ATC which requires
providing of Additional Performance Security if the bid price is below
15% of the estimated vale/cost is that many times bidders quote
abnormally low bids with a view to ensure that the business opponents
do not get the contracts. Later, after securing the contract with the
lowest bid, they fail to execute the contract, thereby causing loss to the
exchequer and retendering has to be done to complete the work. So the
Additional Performance Security will compensate such loss. The
requirement to give such Additional Performance Security is thus
undoubtedly in public interest.
57. That is why, though the 1st paragraph in Clause 23.6 states that
for abnormally low bids, there may not be a provision for Additional
Security Deposit, in the very next paragraph it is clarified that if the bid
price is below 15%, then the Additional Performance Security would be
applicable.
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58. The respondent no.3 cannot rely on the first para in clause 23.6
and ignore its second para and justify its action in not asking the
respondent no.6 to give Additional Performance Security.
59. We are of the opinion that undoubtedly, public interest would be
compromised if the Additional Performance Security of Rs.337 crores
as mandated in Clause 23.6 of the Additional Terms and Conditions (if
the bid price is below 15% of the estimated value/cost) is not insisted
upon by respondent no.3 and 4 to a person like the respondent no.6.
There is no justification for exempting the respondent no.6 of
complying with the said requirement and undoubtedly this action on
part of respondents 3 and 4 is not bonafide, and is arbitrary, illegal,
unreasonable and violates Art.14 of the Constitution of India.
60. There has to be level playing field for all bidders and favoritism
cannot be shown by respondent No.s 3 and 4 to respondent no.6 after it
made a bid below 15% of the estimated cost/value, thus becoming the
lowest bidder, and they cannot thereafter clandestinely grant a
relaxation of the said condition of giving Additional Performance
Security.
61. In Reliance Energy Ltd. v. Maharashtra State Road
Development Corpn. Ltd.,7 it was held:
“Standards applied by courts in judicial review must be
justified by constitutional principles which govern the proper
exercise of public power in a democracy. Article 14 of the
Constitution embodies the principle of “non-discrimination”.
However, it is not a free-standing provision. It has to be read in
conjunction with rights conferred by other articles like Article
21 of the Constitution. The said Article 21 refers to “right to
life”. It includes “opportunity”. In our view, as held in the
7
(2007) 8 SCC 1, at page 21
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latest judgment of the Constitution Bench of nine Judges in I.R.
Coelho v. State of T.N.3, Articles 21/14 are the heart of the
chapter on fundamental rights. They cover various aspects of
life. “Level playing field” is an important concept while
construing Article 19(1)(g) of the Constitution. It is this
doctrine which is invoked by REL/HDEC in the present case.
When Article 19(1)(g) confers fundamental right to carry on
business to a company, it is entitled to invoke the said doctrine
of “level playing field”. We may clarify that this doctrine is,
however, subject to public interest. In the world of
globalisation, competition is an important factor to be kept in
mind. The doctrine of “level playing field” is an important
doctrine which is embodied in Article 19(1)(g) of the
Constitution. This is because the said doctrine provides space
within which equally placed competitors are allowed to bid so
as to subserve the larger public interest. “Globalisation”, in
essence, is liberalisation of trade. Today India has dismantled
licence raj. The economic reforms introduced after 1992 have
brought in the concept of “globalisation”. Decisions or acts
which result in unequal and discriminatory treatment, would
violate the doctrine of “level playing field” embodied in Article
19(1)(g). Time has come, therefore, to say that Article 14 which
refers to the principle of “equality” should not be read as a
stand alone item but it should be read in conjunction with
Article 21 which embodies several aspects of life. There is one
more aspect which needs to be mentioned in the matter of
implementation of the aforestated doctrine of “level playing
field”. According to Lord Goldsmith, commitment to the “rule
of law” is the heart of parliamentary democracy. One of the
important elements of the “rule of law” is legal certainty.
Article 14 applies to government policies and if the policy or
act of the Government, even in contractual matters, fails to
satisfy the test of “reasonableness”, then such an act or
decision would be unconstitutional.”
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62. Again in Central Coalfields Ltd. v. SLL-SML (Joint Venture
Consortium)8, this principle of ‘level playing field’ was reiterated as
under:
” 38. In G.J. Fernandez v. State of Karnataka9 both the
principles laid down in Ramana Dayaram Shetty ( 4 supra)
were reaffirmed. It was reaffirmed that the party issuing the
tender (the employer) “has the right to punctiliously and
rigidly” enforce the terms of the tender. If a party approaches
a court for an order restraining the employer from strict
enforcement of the terms of the tender, the court would decline
to do so. It was also reaffirmed that the employer could deviate
from the terms and conditions of the tender if the “changes
affected all intending applicants alike and were not
objectionable”. Therefore, deviation from the terms and
conditions is permissible so long as the level playing field is
maintained and it does not result in any arbitrariness or
discrimination in Ramana Dayaram Shetty ( 4 supra) sense.”
(emphasis supplied)
63. The plea of respondents that the petitioner did not come to the
Court immediately after the price bid was opened on 28.04.2025 and
waited till the contract was awarded to file the writ petition, and so it is
guilty of laches, cannot be accepted.
Only in the Letter of Acceptance dt.2.7.2025, it came to light
that the respondent no.6 was exempted by respondent No.s 3 and 4 of
the requirement of furnishing Additional Performance Security. The
Writ was filed on 1.7.2025 (and registered on 10.7.2025) suspecting
such conduct on part of respondent Nos. 3 and 4.
8
(2016) 8 SCC 622 : (2016) 4 SCC (Civ) 106, at page 633 :
9
(1990) 2 SCC 488
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2025:JHHC:18993-DBIt is not the case of the respondents that they had proclaimed
this exemption by notice to all bidders much before 01.07.2025 or at the
time of opening of the price bid on 28.4.2025 intending to bid below
15% of the estimated contract price.
64. It may be that in the pre-bid meeting no query in regard to
furnishing of Additional Performance Security for bidders quoting less
that 15% of the estimated value/cost was raised by petitioner. Unless a
bidder has benefit of foresight and is clairvoyant, it cannot always
anticipate all events/issues which might occur after the pre bid meeting,
and raise them in such a meeting. There can be no acquiescence
inferred on petitioner’s part to the conduct of respondent no.3 and 4
from such failure to raise the issue in the pre bid meeting. It also does
not give an excuse to respondent Nos. 3 and 4 to clandestinely waive an
essential condition which is in public interest to favor the respondent
no.6.
65. The tender was issued on 05.12.2024 and the respondents had
taken almost 07 months to issue the Letter of Acceptance to the
respondent no.6 on 2.7.2025. The duration of the contract according to
the Tender Document is 07 years and 360 days and by now not even
one month from the date of issuance of Letter of Acceptance has
elapsed. So no great prejudice is caused to respondents if this Court
interferes with the arbitrary and illegal act of the respondent no.3 and 4
in granting clandestinely relaxation of an essential condition i.e giving
of Additional performance Security as per clause 23.6 of the ATC since
its bid was below 15% of the estimated value/cost .
66. The mere fact that the bid of the respondent no.6 is less than
Rs.500.00 Crore than what is quoted by the petitioner is of no avail,
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because the respondent no.3 was not bound to accept the lowest bid,
when such a bid made by the respondent no.6 is 18.9% below the
estimated contract price and it had not been asked to give the
Additional Performance Security of Rs.337 crores.
67. As pointed out above public interest may be jeopardized if the
respondent no.6 walked out after making such a low quotation without
giving an Additional Performance Security.
68. There is also no merit in the contention of the respondent no.6
that the petitioner acted male fide by delaying filing of the writ petition
after the price bid was opened on 28.04.2025. It was not known then
that respondent no.3 and 4 would waive clandestinely an essential
condition which is in public interest to favor the respondent no.6.
69. We also do not accept the contention of the 3rd respondent that it
had acted in accordance with law and its action cannot be said to be
unjust, unfair, arbitrary or unreasonable or capricious or in colourable
exercise of powers.
70. In our opinion, the 3rd respondent had undoubtedly shown
favouritism to the respondent no.6 by waiving the requirement of giving
Additional Performance Security in spite of the bid of the 6th
respondent’s bid being below 15% of the estimated contract price and
in spite of Clause 23.6 of the ATC making it necessary for the 6th
respondent to give Additional Performance Security.
71. No doubt, the petitioner had inter alia also contended that some
of the clauses in the tender were ambiguous, though we do not deem it
appropriate to go into it. But such a plea is in conformity with the law
laid down by the Hon’ble Supreme Court in Reliance Energy Ltd.
(7 supra), in which the Supreme Court held at paragraph 38 that when
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tenders are invited, terms and conditions must indicate with legal
certainty, norms and benchmarks; that this legal certainty is an
important aspect of the rule of law; and if there is vagueness or
subjectivity in the said norms, it may result in unequal and
discriminatory treatment and violate the doctrine of “level playing
field”
72. The judgment in Agmatel India Private Limited v. Resoursys
Telecom and Others10 cited by the counsel for the respondent no.6 is
distinguishable since it turns on different facts. In that case, there was a
question – “whether the words “smart-phones” and “Tablets” have to be
taken a similar category product for the tender process or not?”.
Observations of the Supreme Court made in such a context have no
applicability to cases like the instant case.
73. For all the aforesaid reasons, the Writ petition is allowed and, the
Letter of Acceptance dt. 02.07.2025 and Work order issued by the
respondent No.3 in favour of the respondent no.6 for the subject tender
are both set aside; and the respondents are directed to invite a fresh
tender for the same work and then take an appropriate decision in
accordance with law. No costs.
74. Pending Interlocutory Applications, if any, stand disposed of.
(M.S. Ramachandra Rao, C.J.)
(Rajesh Shankar, J.)
N.A.F.R.
Manoj/-
10
(2022) 5 SCC 362
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