Rejection of technical bid due to defect of missing notary stamp on some tender documents held as untenable

Rejection of technical bid due to curable defect of missing notary stamp on some of the tender documents held as untenable and bad in law. The Bidder acted in a capricious manner resulting in discrimination. Delhi High Court 

ABCAUS Case Law Citation:
ABCAUS 2009 (2017) (07) HC

The Grievance:
The Petitioner was aggrieved by the rejection of its technical bid by IRCTC. The bid was submitted in response to a Notice Inviting Tender (“NIT”) for selection of developer for setting up & operation of “Rail Neer” Packaged Drinking Water Plants.

Important Case Laws Cited/relied upon:
Satish Chander Saxena v. Delhi Administration &Ors (2001) 92 DLT 2008
Indian Oil Corporation Ltd. vs. Kapil Bagri [(2015) 222 DLT 461 (DB)]

Brief facts of the case:

The Petitioner submitted its technical and financial bids in accordance with the procedure prescribed in the revised NIT. The technical bids were opened and no deficiency in the bids was pointed out to the petitioner at that time. However, thereafter, the petitioner came to know from IRCTC that its technical bid was rejected on the ground that a notarial stamp was not affixed on certain Tender documents (Appendix).

The Petitioner, contended that its bid was rejected on purely frivolous grounds and minor curable defects could not be a ground to defeat the substantive rights of an applicant who could not be knocked out on frivolous technical pleas. The Petitioner relied on case laws where absence of stamp/signatures of Notary Public was held to be not fatal to a person’s claim and a curable defect.

Observations made by the High Court:

The Hon’ble High Court opined that missing Notary’s stamp per se did not undermine the effectiveness of the documents. Possibly, in a court of law, the inadequacy of stamp would have resulted in impounding of the instrument leading to payment of penalty and the requisite stamp amount. However, that view would have arisen, only in the event of a dispute pertaining to the contents or dispute impinging upon something where the documents occupied a center stage. In other words, the documents were not in issue; a notary public attested them.

The Hon’ble High Court  also observed that in the case of the party who was awarded the contact (the second respondent) the requisite documents were not on the record. However, the tender committee observed that such documents were merely ancillary given that the registration number of the company was disclosed.

It was also noted by the Hon’ble High Court  that undisputedly, there was no tender condition, which demarcated between basic or primary and secondary or ancillary documents. Likewise, there was no indication that all conditions would be deemed essential or that some were inessential. In these circumstances, the option exercised by the tender committee to treat the petitioner’s documents as non-compliant and the omission or failure of second respondent to file documents deemed necessary in the NIT, was exercise of arbitrary power.

The Hon’ble High Court  observed that there are substantial number of case law to show that procedure is a device of justice and is not to be used to thwart the same purpose. Various decisions of the Hon;ble Supreme court speak of how minor procedural defects which are curable should not be allowed to defeat substantive rights or to cause injustice.

The Hon’ble High Court  was of the view that by not giving the due and equal consideration to the Petitioner, in considering their technical bid, as was given to the other bidder, IRCTC had acted in a capricious manner resulting in discrimination. Their rejection of the Petitioner’s technical bid based on the evidently curable defect of a missing notarial stamp on some of their tender documents was thereby untenable and bad in law.

Held:
The rejection of the petitioner’s bid in the above circumstances was held unjustified. The award of the tender to the second respondent was quashed. However rather than setting aside the entire tender process, the IRCTC was directed to evaluate the two bids (i.e., the petitioners’ and that of second respondent) afresh and finally decide the award the contract.