Summary
A tender required a performance bank guarantee valid for forty months. The lowest bidder furnished one valid for six months and sought extension only after bids opened. This was a material deviation from an essential condition expressly reaffirmed at the pre-tender meeting; the bid could not subsequently be made responsive. Though critical of the High Court’s reasoning and conditional relief, the Court sustained rejection and directed the next bidder, on its undertaking, to execute the work at the lowest bid amount.
Issues
- Whether a six-month performance guarantee could be corrected after bid opening where forty months were mandatory.
- Whether a later government resolution or deference to the employer’s interpretation permitted condonation.
- What relief should follow rejection of the lowest bidder.
Held
- Clauses 2.15, 2.22 and 2.35 required rejection of material deviations and prohibited later correction of a non-responsive bid. The pre-tender refusal to modify guarantee validity gave all bidders clear notice. A six-month guarantee instead of forty months materially reduced the employer’s protection. (¶¶ 2, 3, 6, 7, 8, 9, 10)
- The three-month validity allowed for a demand draft did not excuse a deficient bank guarantee, which was the instrument actually furnished. The 2017 government resolution was incorporated for earnest money; performance security expressly remained subject to the specified 2016 circular and corrigenda. (¶¶ 9, 11, 12)
- Essential tender conditions require strict compliance. Deference to the tender author does not protect condonation that disregards an essential requirement; such application of the tender terms is perverse and calls for judicial interference. (¶¶ 13, 14, 15)
- The argument that the extended guarantee was itself only thirty-nine months did not require decision. The High Court’s affidavit-based reasoning was unsatisfactory, and its conditional possibility of restoring the disqualified bidder could not stand. (¶¶ 16, 17)
- Respondent 1 undertook to match respondent 2’s bid of Rs 39.15 crores. The work was directed to be performed by respondent 1 at that amount and paragraph 8 of the High Court judgment was set aside. (¶¶ 18, 19)
Result
Civil appeals disposed of: rejection of respondent 2’s non-responsive bid sustained on the Supreme Court’s reasons; paragraph 8 of the High Court judgment set aside and work directed to respondent 1 at its undertaking to match Rs 39.15 crores.