# WEST BENGAL STATE ELECTRICITY BOARD v. PATEL ENGINEERING CO. LTD. AND ORS

- **Citation:** [2001] 1 S.C.R. 352
- **Court:** Supreme Court of India
- **Decided:** 2001-01-15
- **Case number:** Civil Appeal No. 4921 of 2000
- **Bench:** S.S.M. Quadri, S.N. Phukan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/west-bengal-state-electricity-board-v-patel-engineering-co-ltd-and-ors-17731
- **Pages:** 24

## Headnote

Government Contracts;
Tender-Bids-Correction of-State Electricity Board invited tenders
C for a proposed power project-The Instructions to Bidders (/Tf!), iter alia,
provided that in case of discrepancy between the unit rate and the line item
total resulting from multiplying the unit rate by the quantity, the unit rate
as quoted would govern-After su.bmission of bids, one of the bidders informed
the Board that there was "a repetitive systematic computer typographical
D transmission failure" and requested that it be corrected-It was further pointed
out that the Indian Rupee unit stated in the first line Item 0.2 was repeated
in the next two succeeding lines, which was clerical in nature and not an
arithmetic error-Board evaluated the bid and informed the bidder that
there were number of errors and requested for their response-Bidder filed
a writ petition-Single Judge by an interim order directed the Board to
E consider representation of the bidder-The decision taken by the Board not
approved by High Court-Therefore, Single Judge directed the Board to
reconsider representation of the bidder-Division Bench dismissed appeals
and cross objections-Correctness of-Held: A mistake may be unilateral or
mutual but it is always unintentional-If it is intentional it ceases to be a
F
mistake-The mistakes were not beyond the control of the bidder-Such
mistakes could have been corrected before submission of bid-Jn an
inlernational competitive bidding. bidders should have the assistance of
technical experts-Great degree of care is required in such bidding-No
change in the price or substance of the bid after its opening can be sought,
offered or permitted-Hence, High Court erred in permitting the bidders to
G correct the errors in their bids.
H
Tender-Bids-Lowest bid-Contract-Awarding of-Principles-Held:
Principle of awarding of contract to lowest tenderer applies when all things
are equal-Merely because a bid is lowest compliance of rules and conditions
cannot be dispensed with-On facts, lowest bid directed not to be considered
352
W. BENGAL STATE ELEC. BOARD v. PATEL ENG. CO. LTD.
353
~
due to inconsistencies between particulars of bids and total bid amount.
A
~
The appellant invited tenders for a power project. Clause 29.1 of the
Instruction to Bidders (ITB) provided, inter alia, that in case of discrepancy
between the unit rate and the line item total resulting from multiplying the
unit rate by the quantity, the unit rate as quoted would govern. Respondents
B
I to 4 after submission of their bids .informed the appellant that there was
"a repetitive systematic computer typographical transmission failure" and
lT
requested that it be corrected. Respondents I to 4 further pointed out that
Indian Rupee unit stated in the first line Item 0.2 was repeated in the next
two succeeding lines, which was clerical in nature and not an arithmetic
error. Respondents I to 4 also emphasised that their bids were the lowest c
and assured that they would maintain the bid price. The appellant evaluated
their bids and informed respondents I to 4 that a number of errors were
)(
discovered and requested for their response.
Being aggrieved respondents I to 4 filed a writ petition before the High
Court. Single Judge by an interim order directed the appellant to consider D
the representation of respondents 1 to 4. The decision taken by the appellant
was not approved by the High Court. Therefore, the Single Judge directed
the appellant to reconsider the representation of respondents I to 4. The
...
Division Bench dismissed the appeals and cross objections filed by the
appellant and respondents 1 to 4 respectively and upheld the order of the E
Single Judge. Hence this appeal.
Allowing the appeal partly, the Court
-·
HELD: I. The only prohibition contained in the Instruction to Bidders
(ITB) is that no change in the price or substance of the bid after its opening F
can be sought, offered or permitted. In that regard the appellant had made
its position clear. The prohibi

## Text

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A
WEST BENGAL STATE ELECTRICITY BOARD
v.
PATEL ENGINEERING CO. LTD. AND ORS.
JANUARY 15, 2001
B
[S.S.M. QUADRI AND S.N. PHUKAN, JJ.]
Government Contracts;
Tender-Bids-Correction of-State Electricity Board invited tenders
C for a proposed power project-The Instructions to Bidders (/Tf!), iter alia,
provided that in case of discrepancy between the unit rate and the line item
total resulting from multiplying the unit rate by the quantity, the unit rate
as quoted would govern-After su.bmission of bids, one of the bidders informed
the Board that there was "a repetitive systematic computer typographical
D transmission failure" and requested that it be corrected-It was further pointed
out that the Indian Rupee unit stated in the first line Item 0.2 was repeated
in the next two succeeding lines, which was clerical in nature and not an
arithmetic error-Board evaluated the bid and informed the bidder that
there were number of errors and requested for their response-Bidder filed
a writ petition-Single Judge by an interim order directed the Board to
E consider representation of the bidder-The decision taken by the Board not
approved by High Court-Therefore, Single Judge directed the Board to
reconsider representation of the bidder-Division Bench dismissed appeals
and cross objections-Correctness of-Held: A mistake may be unilateral or
mutual but it is always unintentional-If it is intentional it ceases to be a
F
mistake-The mistakes were not beyond the control of the bidder-Such
mistakes could have been corrected before submission of bid-Jn an
inlernational competitive bidding. bidders should have the assistance of
technical experts-Great degree of care is required in such bidding-No
change in the price or substance of the bid after its opening can be sought,
offered or permitted-Hence, High Court erred in permitting the bidders to
G correct the errors in their bids.
H
Tender-Bids-Lowest bid-Contract-Awarding of-Principles-Held:
Principle of awarding of contract to lowest tenderer applies when all things
are equal-Merely because a bid is lowest compliance of rules and conditions
cannot be dispensed with-On facts, lowest bid directed not to be considered
352
W. BENGAL STATE ELEC. BOARD v. PATEL ENG. CO. LTD.
353
~
due to inconsistencies between particulars of bids and total bid amount.
A
~
The appellant invited tenders for a power project. Clause 29.1 of the
Instruction to Bidders (ITB) provided, inter alia, that in case of discrepancy
between the unit rate and the line item total resulting from multiplying the
unit rate by the quantity, the unit rate as quoted would govern. Respondents
B
I to 4 after submission of their bids .informed the appellant that there was
"a repetitive systematic computer typographical transmission failure" and
lT
requested that it be corrected. Respondents I to 4 further pointed out that
Indian Rupee unit stated in the first line Item 0.2 was repeated in the next
two succeeding lines, which was clerical in nature and not an arithmetic
error. Respondents I to 4 also emphasised that their bids were the lowest c
and assured that they would maintain the bid price. The appellant evaluated
their bids and informed respondents I to 4 that a number of errors were
)(
discovered and requested for their response.
Being aggrieved respondents I to 4 filed a writ petition before the High
Court. Single Judge by an interim order directed the appellant to consider D
the representation of respondents 1 to 4. The decision taken by the appellant
was not approved by the High Court. Therefore, the Single Judge directed
the appellant to reconsider the representation of respondents I to 4. The
...
Division Bench dismissed the appeals and cross objections filed by the
appellant and respondents 1 to 4 respectively and upheld the order of the E
Single Judge. Hence this appeal.
Allowing the appeal partly, the Court
-·
HELD: I. The only prohibition contained in the Instruction to Bidders
(ITB) is that no change in the price or substance of the bid after its opening F
can be sought, offered or permitted. In that regard the appellant had made
its position clear. The prohibition is, therefore, not aitracted. In these
circumstances any reasonable person in the position of the appellant would
have sought clarification from respondents I to 4. Even assuming that no
clarification was required to be sought by the appellant, it cannot but be held G
that correction of the errors taking note of the unit rates which are mere
~·
repetitions of the unit rates quoted for a different work item is mechanical
and without application of mind by the appellant. Such a correction is far
beyond the scope of Clause 29 of the ITB. From the description of the
mistakes and the correction and evaluation made by the appellant, it is
evident that except the error in the first line against the work item 'Rock H
•
354
SUPREME COURT REPORTS
[2001] I S.C.R.
A Excavation' and Schedule 'N' day work, all other mistakes/errors arc beyond
the scope of Clause 29.1, so Clause 29.2 will not be attracted. It follows that
the corrections in the bid documents of respondents I to 4 carried out by
the appellant, evaluation of bid under clause 29.2 and the impugned
communications of the appellant are unsustainable and of no consequence.
B
c
D
1368-D-E-F-G)
2. The mistakes/errors in question, it is stated, are unintentional and
occurred due to the fault of the computer termed as "a repetitive systematic
computer typographical transmission 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 I 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
)I,
month of opening of the bids will also be violative of the ITB.1369-F-Gl
3. 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
,.
E to maintain the sanctity and integrity of process of tender/bid and also award
of a contract. The appellant, respondents I to 4 and respondents I 0 and 11
are all bound by the ITB, which should be complied with scrupulously. In a
work of this nature and magnitude bidders who fulfil pre-qualification alone
are invited to bid. Adherence to the instructions cannot be given a go-bye by
branding it as a pedantic approach; otherwise it will encourage and provide
F scope for !liscrimination, 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 condition,
unless so provided under ITB, by the State or its agencies (the appellant) in
G 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. Such an approach should always be avoided. Where power
to relax or waive a rule or a condition exists under the Rules, it has to be
H done strictly in compliance with the Rules. Therefore, adherence to ITB or
W. BENGAL STATE ELEC. BOARDv. PATliL ENG. CO. LTD.
355
Rules is the best principle to be followed, which is also in the best public A
interest. 1369-H; 370-A-B-C-D]
4.1. The project undertaken by the appellant is undoubtedly for the
benefit of the public. The mode of execution of the.workof the project should
also ensure that the public interest is best served. Tenders are invited on the
basis of competitive bidding for execution of the work of the· project as it B
serves dual purposes. On the one hand it offers a fair opportunity to all those
who are interested in competing for the contract relating to execution of the
work and on the other hand it affords the appellant a choice to select the best
of the competitors on competitive price without prejudice to the quality of the
work. Above all it eliminates favouritism and discrimination in awarding . C
public works to contractors. The contract is, therefore, awarded normally to
the lowest tenderer, which is in public interest. The principle of awarding
contract to the lowest tenderer applies when all things are equal. It is equally
in public interest to adhere to the rules and conditions subject to which bids
are invited. Merely because a bid is the lowest the requirements of compliance
of rules and conditions cannot be ignored. It is obvious that the bid of D
respondents 1 to 4 is the lowest of the bids offered. As the bid documents
of respondents 1 to 4 stand without correction there will be inherent
inconsistency between the particulars given in the annexure and the total bid
amount, it cannot be directed to be considered along with the other bids on
the sole ground of being the lowest. 1374-A-B-C-D]
E
4.2. In a highly competitive bid of global tender, the appellant was
justified in not permitting respondents 1 to 4 to correct the errors of the
nature and the magnitude which, if permitted, will give a different complexion
to the bid. The High Court erred in directing the appellant to permit
respondents 1 to 4 to correct the errors in the bid documents. [370-E]
p
Tata Cellular v. Union of India, 1199416 SCC 65; Moffett, H & CCo.
v. Rochester, 178 U.S. 373; Hearne v. Marine Ins. Co., 22 Led 306; Spina
Asphalt Paving Excavating Contractors, Inc. v. Borough of Fairview; 404
N.J. Super 425 and American Jurisprudence (Second Edn)) Vol. 64 para 84
p. 944, referred to.
G
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4921 of
2000 ..
From the Judgment and Order dated 4th April, 2000 passed by the
Hon'ble Division Bench of the High Court of Calcutta in Appeal No. M.A.T. H
356
SUPREME COURT REPORTS
[2001] 1 S.C.R.
A· No. 398 of2000.
Altaf Ahmed, ASG, P. Chidambaram, Sudipto Sarkar, Anil B. Diwan,
Ashok H. Desai, R.F. Nariman, Bhaskar P. Gupta H.K. Puri, S.K. Puri, Udayan
Sen, Rajesh Srivastava, Ms. Anindita Gupta, Padam Khaitan, Ms. Gauri
R.asgotra, Suman J. Khaitan, Rajiv Chopra, B.V. Desai, Ms. Kumud Singh,
B Keshar Thakur, Girish Mishra, Gourab K. Banerjee, C.R. Addy, P. Addy, S.
Saxena, G. Joshi, T.C. Sharma, S.B. Upadhyay, Pawan Upadhyay, Ravi Kant,
M.C. Dhingra and Ujjal Banerjee for the appearing parties.
The Judgment of the Court was delivered by
C
SYED SHAH MOHAMMED QUADRI, J. This appeal by the West
Bengal State Electricity Board is from the common judgment of a Division
Bench of the High Court at Calcutta in M.A.T. No. 398 of 2000, C.A.N. No.
1089 of2000 and M.A.T. No. 523 of2000 with cross objections (C.O.T. No.
522 of 2000) dated April 4, 2000 dismissing the appeals and cross objections
D and confirming the order of the learned Single Judge in W.P. No. 22458(W)
of 1999 dated February 3, 2000.
To appreciate the controversy in this case narration of the following
relevant facts will be necessary.
E
As a pragmatic solution to meet the peak demand of the energy/power
by the West Bengal and also to cater to the requirements of the entire Eastern
Region, the West Bengal State Electricity Board (for short, 'the appellant')
formulated "Purulia Pumped Storage Project" (for short, the Project), at an
estimated cost of about Rs. 3,188.9 crores with an installed capacity of 900
M. W. For funding that project the Central Government entered into a loan
F agreement with the Overseas Economic Cooperative Fund now Japan Bank of
International Cooperation (for short, 'the J.B.l.C.'). The Project is proposed
to be completed in six Lots of which Lot No. 4 relates to main civil works.
For carrying out the work of Lot No. 4, the appellant, after complying with
the formalities and after satisfying itself of the pre- qualification of the bidders,
G invited revised tenders (hereinafter referred to as, 'the tenders'). The bids
were to be submitted on or before April 27, 1998. Three bidders are now in
fray. The first is a consortium of four companies (respondent Nos. I to 4), the
second is Mis. Taisei Corporation (respondent No. I 0) and the third is Mis.
Skanska International (respondent No. I I). They submitted their bids along
with the summary sheets thereof. On September 8, 1999 the bids were opened
H in the presence of the representatives of the bidders and they were read out;
W. BENGAL STATE ELEC. BOARD, .. PATEL ENG CO LTD. [QUADRI, J.]
357
the bid of respondent Nos. I to 4 was Rs. 647.90 crores, of respondent No. I I A
~
was Rs. 691.22 crores and of respondent No. I 0 was 726.50 crores. While the
details of the bid were under scrutiny, by letter dated October 25, 1999,
respondent Nos. I to 4 informed the appellant that there was "a repetitive
systematic computer typographical transmission failure" and requested that
it be corrected. On December 17, 1999 they sent another letter stating that B
they had reason to believe that the appellant was evaluating their price bid
by an illogical and incorrect application of the Instructions To Bidders (for
'Y
short, the ITB) and pointed out that the mistake indicated in their letter of
October 25, 1999 was that Indian Rupee unit rate stated in the first line Item
0.2 was repeated in the next two succeeding lines, which is clerical in nature
and not an arithmetic error. They emphasised that their bid was the lowest c
at Rs. 647.90 crores and assured that they would maintain the said bid price.
Under the !TB, the appellant evaluated their bid and on December 18, 1999
informed them that during checking of their bid documents a good number
of arithmetic errors was discovered. Copies of duly corrected documents were
communicated to the said respondents for their response to be sent in writing D
to the appellant before December 27, 1999 ( 1700 IST). A ·caveat was also
eniered that the said letter did .not provide any confirmation towards
acceptance of their bid and subsequent award of contract by the appellant.
"
,.._
Challenging the validity of the said letter of the appellant dated December
18, 1999, respondent Nos. I to 4 filed the aforementioned writ petition in the E
High Court at Calcutta. On December 21, 1999 a learned Single Judge of the
High Court granted an interim direction to the appellant to consider the
representation which would be made to it by the writ petitioners (respondent
. Nos. I to 4). A representation was accordingly made to the appellant on
~
December 23, 1999, which was decided by the Evaluation Committee of the
appellant on January 6, 2000. The decision taken by the appellant pursuant F
to the order of the High Court dated December 21, 1999 did not meet with the
approval of the High Court. On February 3, 2000, while disposing of the writ
petition, a learned Single Judge of the High Court directed the appellant to
reconsider the representation of respondent Nos. I to 4, after giving hearing
to them, and to pass and communicate a reasoned order within one week from G
the date of the order. Against the said order of the learned Single Judge, the
~
aforementioned appeals and cross-objections were filed both by the appellant
as well as by respondent Nos. I to 4. A Division Bench of the High Court at
Calcutta, by the impugned common judgment, dismissed the appeals and the
cross-objections upholding the order of the learned Single Judge, directed the
appellant to per!T!it respondent Nos. I to 4 to correct the errors in the bid H
358
SUPREME COURT REPORTS
[200 I] I S.C.R.
A documents and then consider their bid along with the other bids and take a
decision objectively and rationally.
+-
Mr. Altaf Ahmed, the learned Additional Solicitor General, appearing for
the appellant, has submitted that the appellant is bound by the !TB and it
acted accordingly. The letter dated October 25, 1999 of respondent Nos. I to
B 4 did not indicate the errors in the bid documents and the correction sought
by them. Even their letter of December 17, 1999 did not specify in any detail
the desired corrections, therefore, the appellant proceeded to evaluate the bid
~
in terms of !TB. The actual scope of correction sought by respondent Nos. I
to 4 came to light in their representation dated December 23, 1999, tiled after
c approaching the High Court. The appellant, submitted the learned Additional
Solicitor General, committed no wrong in rejecting the representation as the
same was not acceptable in terms of Clause 29 of the !TB because neither the
unit rate can be changed nor the price bid can be altered at the request of
'i
the bidder; the unit rate quoted is final and the appellant can correct only
arithmetic mistakes in the line total on the basis of the quoted unit rate.
D
Mr. Ashok H. Desai, the learned senior counsel appearing for respondent
No. I I, argued that the resolution of the appellant rejecting the representation
on January 6, 2000 was in accordance with Clause 29. l(b) of the !TB and that
there was no case for interference by the High Court. The decision of the
~
appellant in evaluating the bid documents in terms of !TB, submitted the
~
E learned counsel, could not be termed as arbitrary or illegal; in the example:
A x B = C; B being the quantity for which the bid is offered; A and C being
the unit rate and the result of the multiplication respectively, are unalterable
at the instance of the bidder. If any arithmetic error in arriving at the line total
is noticed by the appellant, that alone could be corrected by it. But, the
F correction sought by respondent Nos. I to 4, was in effect a change in the
~
unit rate which was impermissible and, therefore, the decision of the appellant
could not have been interfered with by the High Court.
Mr. Bhaskar P. Gupta, the learned senior counsel appearing for
respondent No. I 0, submitted that the unit rate given by respondent Nos. I to
:
G 4 was an essential term which would be evident from Clauses 14, 27 and 29
of the ITB, so permitting them to correct the bid would tantamount to modifying
the essential term of the bid and as such the High Court ought not to have
-tdirected the appellant to permit correction of bid documents and further to
consider their bid along with the other bids.
H
Mr. P. Chidambaram, the learned senior counsel appearing for respondent
W. BENGAL STATE ELEC BOARD r. PATEL ENG. CO. LTD. [QUADRI, l]
359
Nos.I to 4, argued that in Annexures l to 9 which comprised of 749 items A
_,.._
there were mistakes in only 37 items due to the fault of the computer; the
nature of mistake was not arithmetic (which would mean in multiplication or
addition) but mechanical, attributable to the computer and that such mistakes
are not covered by Clause 29 of the ITB; in a case of an unintended mistake,
a court of equity would not be a silent spectator and the High Court, being B
both a court of law and equity, had rightly directed the appellant to permit
correction of the mistakes by respondent Nos. I to 4. It was submitted that
having regard to the nature of the mistakes, the appellant itself ought to have
sought clarification from the said respondents under Clause 27 of!TB instead
of evaluating the bid on the basis of an unintended unit rate to reach an
astonishing figure which was wholly dis proportionate to the cost of the c
Project. His contention is that once the total bid price is maintained, the unit
rate is a matter of arithmetic exercise which should have been corrected by
the appellant; further the mode of payment by the appellant for the work done
is not on the basis of each unit but on the basis of bid price. Accepting that
the bid price is unalterable, the unit rate should be regarded as adjustable. D
It was also argued by Mr. Chidambaram that there was no mistake in giving
the unit rate as such; the mistake was in giving the conversion equivalent in
US Dollars and, therefore, the correction not being the one falling under
•
Clause 29 of the ITB was rightly permitted to be corrected by the High Court .
~
Finally, he contended that their bid being less than the bids of respondent
Nos. I! and I 0 by Rs. 40 crores and Rs. 80 crores respectively, the High Court E
rightly directed consideration of the bid of respondent Nos. I to 4 after due
correction of the bid documents in public interest which did not warrant
interference by th is Court.
In the light of the above contentions, we have to examine as to what
is the permissible course of action under ITB. A,_ reference to the relevant F
clauses of the ITB will be apposite here. Clause 14. l says that unless stated
otherwise in the bid documents, the Contract shall be for the whole Works
as described in sub-clause 1.1 thereof based on the schedule of unit rates and
prices submitted by the bidder. Clause 14.2 enjoins all the bidders to fill in
rates and prices for all items of the Works described~n the Bill of Quantities G
..
both in figures and words and cautions that items against which no rate or
price is entered by the bidder will not be paid for by the Employer (the
appellant herein) on the execution of items of those works and the same shall
be deemed covered by the other rates and prices in the Bill of Quantities. With
regard to the currencies of the bid, Clause 15. I directs that unit rates and
prices shall be quoted by the bidder in Indian Rupee (INR) and either in H
360
SUPREME COURT REPORTS
(2001] I S.C.R.
A U.S. Dollar oi· Japanese Yen. The bidders are given option to assess the
component of currency requirements as follows:
B
(a)
for those inputs to the Works which the bidder expects to
supply from within the Employers country (the appellants country
- India) in Indian Rupee; and
(b) for those inputs to the Works which the bidder expects to
supply from outside the Employers i.e., outside India in U.S.
Dollar or Japanese Yen.
In regard to modification and withdrawal of bids, Clause 24.1 provides that
C the bidder may modijj1 or withdraw his bid after bid submission but before
the deadline for submission of bids. The mandate of Clause 24.3 of the ITB
is that no bid shall be modified by the bidder after the deadline for submission
of bids.
Inasmuch as Clauses 27 and 29 of the ITB deal with clarification of bids
D and correction of errors respectively and their true interpretation has a bearing
on the decision in this case, it will be apt to quote them here :
E
F
G
H
"27. Clariflcution of Bids
27. I To assist in the examination, evaluation and comparison of bids,
the Employers authorised representative may, at his discretion,
ask any or all bidders for clarification of his/their Bids, including
breakdowns of unit rates, technical information, documents and
materials after opening of the Bid. The request for clarification
and the response shall be in writing or by cable, but no change
in the price or substance of the Bid after opening the Price Bid
shall be sought, offered or permitted except as required to confirm
the correction of arithmetic errors discovered by the Employers
authorised representative in the evaluation of the bids in
accordance with Clause 29 of ITB.
29. Correction of Errors
29.1 Bids determined to be substantially responsive will be checked
by the Employers authorised representative for any arithmetic
errors. Errors will be corrected by the Employers authorised
representative as follows:
(a) where there is a discrepancy between the amounts in figures
...
••
W. BENGAL STATE ELEC. BOARD v. PATEL ENG. CO. LTD. [QUADRI, J]
361
and in words, the amount in weirds will govern; and
A
(b) where there is a discrepancy between the unit rate and the
line item total resulting from multiplying the unit rate by the
quantity, the unit rate as quoted will govern.
(c) Where there is a discrepancy between figures and in words B
of an unit rate, the unit rate as quoted in words will govern.
29.2 The amount stated in the Form of Bid will be adjusted by the
Employers authorised representative in accordance with the
above procedure for the correction of errors and shall be
communicated to the Bidder in writing for his acceptance iri C
writing within seven (7) days from the date of issue of such
communication. Such corrections however shall be binding
upon the Bidder. If the Bidder does not accept the corrected
amount of bid, his bid will be rejected, and the bid security
shall be forfeited in accordance with sub-clause 17 .6(b) of ITB.
D
It may be seen that Clause 27.1 enables the appellant or its authorised
representative to ask any or all bidders for clarification of his/their bids,
including breakdowns of unit rates, technical information, documents and
materials after opening of the bid. The request for such clarification is required
to be made in writing or by cable, so also the response to such request. It E
is important to note that the said clause prohibits seeking, offering or permitting
any change in the price or substance of the bid after opening of the price bid,
The exception provided to that mandate is correction of arithmetic errors
discovered by the appellant's authorised representative in the evaluation of
the bids in accordance with Clause 29 thereof.
A plain reading of Clause 29.1 shows it has two limbs; the first limb
imposes a duty on the appellants authorised representative to check bids
determined to be substantially responsive for any arithmetic errors and the
second postulates correction of such errors by the authorised representative
F
in the manner laid down in sub-clauses (a) to (c) thereof. Sub-clause (a) says G
that in the event of discrepancy between the amounts in figures and in words,
the amount in words will govern; sub-clause (b), which is germane for our
· discussion, provides that in case of a discrepancy between the unit rate and
the line item total resulting from multiplying the unit rate by the quantity,
the unit rate as quoted will govern; and the import of sub-clause ( c) is that
in case of a discrepancy between figures and in words of any unit rate, the H
362
SUPREME COURT REPORTS
[2001] I S.C.R.
A unit rate as quoted in words will govern. Where errors are corrected in
accordance with the above guidelines by the appellants authorised
representative, Clause 29.2 specifies the procedure to adjust the amount
stated in the Form of _Bid. The authorised representative has to communicate
the correction of errors to the bidder in writing for his written acceptance
B within seven days from the date of issue of such communication. It also
provides that such corrections shall be binding upon the bidder and in the
event of the bidder not accepting the corrected amount of bid, his bid will
be rejected and the bid security is liable to be forfeited in accordance with
sub- clause 17.6 (b) of the ITB.
C
Now adverting to the Annexures, the statement of"B. Upper Dam" price
bid submitted by respondents i to 4 discloses that with reference to each
work item the quantity thereof is mentioned. The bidder is expected to give
the unit price in Indian Rupee as well as in U.S. Dollar both in figures as well
as in words and ~:nter the line item total resulting from multiplying the unit
D rate by the quantity. A plain reading of sub-clause (b) of Clause 29.1, referred
to above, leaves no room for doubt that once the unit rate and line item total
are filled in by the bidder, both the quoted unit rate and item total are treated
as unalterable at the instance of the bidder though arithmetic errors in arriving
E
at line item total by multiplication are permitted to be corrected by the
~
appellants authorised representative.
This being the intendment of the ITB, we shall now examine : (i) whether
the correction made by the appellant in the bid documents of respondent
Nos. I to 4 and consequential evaluation of their bid communicated with letter
dated December 18, 1999 are valid in law; and (ii) whether respondents I to
F 4 are entitled to seek correction in their bid documents either under ITB or
in equity and the direction given by the High Court to the appellant to permit
the correction of errors, is sustainable.
Before proceeding to ascertain answers to the above questions, it will
G be useful to bear in mind the principles governing the exercise of power of
judicial review by the High Courts. We consider it unnecessary to refer to
cases on the scope of the power of judicial review of administrative action
by the High Court as a three Judge Bench of this Court has, after exhaustive
consideration of long line of authori~es, succinctly summarised the position
and laid down the following principles in Tata Cellular v. Union of India,
H [1994] 6 sec 651:
W. llENGi\L STATE ELEC. BOARD"· Pi\ TEL ENG CO. LTD. (QUADRI, J.]
363
"(I) The modern trend· points to judicial restraint in administrative A
action.
(2)
The court does not sit as a court of appeal but merely reviews
the manner in which the decision was made.
(3)
The court does not have the expertise to correct the B
administrative decision. If a review of the administrative decision
is permitted it will be substituting its own decision, without the
necessary expertise which itself may be fallible.
(4)
The_ terms of the invitation to tender cannot be open to judicial C
scrutiny because the invitation to tender is in the realm of
contract. Nornially speaking, the· decision to accept the tender
or award the contract is reached by process of _negotiations
through several tiers. More often than not, such decisions are
made qualitatively by experts.
D
(5)
The Government must have freedom of contract. In other words,
a fair play in the joints is a necessary concomitant for an
administrative body functioning in an administrative sphere or
quasi-administrative sphere. However, the decision must not E
only be tested by the application of Wednesbury princ-iple of
reasonableness (including its other facts pointed out above) but
must be free from arbitrariness not affected by bias or actuated
by mala fides.
(6)
Quashing decisions may impose heavy administrative burden on F
the administration and lead to increased· and unbudgeted
expenditure".
In the light of these principles, we shall determine the aforementioned
points. Taking up the first question first; it will be necessary to understand G
~
the nature of errors, correction made by the appellant and the relief sought
by respondent Nos. I to 4 in respect of 37 items in the bid documents. We
shall extract here, as a sample of errors in 37 items, the price bid submitted
by respondent Nos. I to 4 relating to 'B Upper Dam' found on page No. 70
of Vol. IV of the documents (marked 'A'). It reads thus:
H
364
SUPREME COURT REPORTS
12001) 1 S.C.R.
A Annexure
B. Upper Dam
'A'
Price Bid as Submitted
Unit Price
INR
Clause
B
US$
In
Esc.
Spcciti cations
Item Work
Coeff. Rem- Unit
Quan- Figure
Words
Amount
Item
arks
tity
I. Care of river
c
02 Rock ExcaCum
1000
148.08
One hundred
48.077.97
7.4
vation
forty-eight
point
nil eight
148.08 One hundred
3.384.64
D
forty-eight
point nil eight
03 lmperviCum
148.08
One hundred
328.418.53 9.5
ous Core
forty-eight
Embankment
point nil eight.
1.92
One point
7.506.71
E
ninety-two
According to respondents I to 4, the above price bid should be corrected to
read as given in the following statement (marked B):
'B'Unit Price
F
~
INR
Clause
USS
In
Esc.
Specifications
Item Work
Coeff. Rem- Unit
Quan- Figure
Words
Amount
Item
arks
lily
G
I. Care of river
02 Rock
Cum
1000
148.08
One hundred
148.077.97 7.4
Excavation
forty eight point
nil eight
3.38
Three point
3.384.64
H
thirty eight
W. BENGAL STATE ELEC. BOARD v. PA TEL ENG. CO LTD. lQUADRI, J]
365
03 Impervious Core
Emhak1ncnt
Cum
3.900 84.21
1.92
Eight four point 328,4 I 8.53 9.5
A
twenty one
One point
ninety two
7,506.71
A perusal of the !Jrice bid statement A shows that the unit price filled B
in by the bidder in the first line against Item (02) - Work lte!n -, Rock
Excavation is repeated in two lines - in t~e second line of the same item and
in the first line of Item (03) - Work item - 'Impervious Core Embankment'. In
the quantity column, '1000' is noted by the appellant. The unit rate for Rock
Excavation is given by respondent Nos. I to 4 in the first line in Indian Rupee C
as Rs.148.08 both in figures as well as in words. In the amount column
Rs.148,077.97 is entered which is arrived at by multiplying quantity, 1000, by
unit rate, Rs.148.08. It contains an arithmetic error; instead of Rs.148,080.00,
it is noted as Rs.148,077.97. It has been noticed above that under Clause
29. l(b) of the !TB, such an error in the line total in the amount column is
amenable for correction and not the unit rate noted by the bidder in the figure D
column. In the second line, the same entry is repeated though that line should
contain unit rate in U.S. Dollar which is rupee equivalent of the unit rate
mentioned in the first line. Respondent Nos. I to 4 seek correction of' 148.08'
in the second line as '3.38' in the figure column and also in words to conform
to 3,384.64 which is noted in the amount column, to wit as US Dollar equivalent E
of 148,077.97 Indian Rupee in the first line. This appears to be the import of
their letter of December I 7, 1999.
Respondent Nos. I to 4 seek co~rection of the entries in the third line
also which is the first line against work item 'Impervious Core Embankment'.
It is plain that .against this Work Item the entries in the first line are quite F
different. The quantity column is blank, though '3900' should have been
noted therein. In that line also the entries in the first line are repeated. There
the correction sought is that the figure column should read as 84.21 both in
figure and words. It is stated that in the second line the unit rate 1.92 both
in figures and words, represents U.S. Dollar equivalent of 84.21 Indian Rupee G
which is now sought to be inserted. The errors in other 36 items are said to
be similar. Had the errors been confined to these aspects, it would not have
resulted in material change in the unit rate because the unit rate in one of the
permissible currencies is correctly given and there will be no discrepancy as
envisaged in sub-clause (b) of Clause 29.1. It would not really be a case of
incorporatir
a new unit rate but a case of either recording U.S. Dollar H
366
SUPREME COURT REPORTS
[2001] 1 S.C.R.
A equivalent of the unit rate already noted in Indian Rupee or vice versa as
given in statement 'B' above. In such a case, perhaps, they would have been
entitled to equitable relief of rectification of mistake. But here, as would be
shown presently, the position is different.
With regards to the mistakes in the bid documents, for the first time
B respondent Nos. I to 4 informed the appellant in their letter of October 25, 1999
which runs as follows :
"Re : Purulia Pumped Storage Project lot 4 - Main Civil Works -
Resubmit/a/ Price Bid.
C
Dear Sirs,
We regret that certain repetitive systematic computer typographical
data transmission failure have occurred in items as per attached annexure
~
in our bid submitted to you on 08.09.99.
D
In order to dispel any doubts, we hereby unconditionally declare that
we stand by the amounts (both INRs and US $) against the affected
schedules A to I, announced at the opening of the revised price bid on the
8th of September at WBSEB and reiterate that there is no change in the price
E
F
G
or substance of our bid. Our unit bid prices should be computed accordingly
-4
for the aforesaid items.
This letter is strictly without prejudice to our rights and contentions ...
It may be noticed that in this letter they informed that certain mistakes had
crept in the items mentioned in the annexure to the letter and declared that no change
in the price or substance of the bid was asked for and that they stood by the
amounts announced at the time of the bids on September 8, 1999. However,
the actual mistakes are not pointed out.
In their letter of December 17, 1999 they attempted to clarify the position.
The relevant excerpt of that letter may be quoted here:
"West Bengal State Electricity Board,
Office of the Project Manager,
Mr. S.K. Roy Choudhury,
H
The Project Manager,
~
~
W. BENGAL STATE ELl:C BOARD v. PATEL ENG. CO l TD. [QUADRI, J.J
367
Purulia Pumped Storage Project,
Vidyut Bhawan, 5th Floor,
Salt Lake City, Calcutta - 700 091, India,
Fax No. 0091 33 3591854 I 3581533
1999-12-17
Purulia Pumped Storage Project
Dear Sir,
We refer to our telefax dated 25th October 1999. A copy thereof is
again enclosed for your convenience.
We request that "the systematic computer typographical transmission
failure" pointed out in the said telefax is merely clerical in nature and
not arithmetical and do not in any way affect the validity of our bid.
Its nature is fully explained below.
I.
The computer has unfortunately systematically copied, in the
first page (Serial items 2 & 3) of the BOQ (Schedule A to I),
the INR unit rates stated in line I Serial Item 2 to the next two
succeeding lines i.e. the computer has overwritten the unit
rates in US$ terms for the serial item no.2 and the !NR unit
rates for the immediately succeeding serial item.
However. the figures appearing the amount column of the BOQ
for the said I in es/items in which the above mentioned errors
have occurred are the correct tendered figures both in US$ terms
as well as JNR terms.
II.
Further the BOQ quantities stated in the quantity column of
serial item no.3 on each and every page has been erased.
Enclosed is an al/achment which would show the applicable unit
rates (in the lower half) and the unit rates which were overwritlen
due to computer failure (in the upper half).
It is an admitted position that at the time of opening of the tender
on 8th September 1999, our bid was the lowest at Rs. 647.90 crores.
The bid of Skanska was Rs. 691.22 crores and that of Taisei was Rs.
726.50. We confirm that we have all along maintained and still maintain
A
B
c
D
E
F
G
the said bid price of Rs.647.90 crores.
H
368
A
SUPREME COURT REPORTS
[2001] I SCR
However, we have reasons to believe that you have chosen to ignore
our said letter and have proceeded to evaluate our price bid by an
illogical and mis-application of the rules for the evaluation of the bids
set down in the ITB.
We, therefore, once again call upon you to evaluate our bid after
B
taking into consideration the applicable unit rates. As already
mentioned in our earlier fax th~re is no change in the price or substance
of our bid as mentioned in the amount column of the BOQ".
c
(Emphasis supplied)
Here, though the nature of mistakes are pointed out yet the scope of the
correction sought is not indicated.
The appellant could not have ignored these letters. Had the appellant
taken note of these letters and the mistakes occurring due to repetition of
entries in 37 items in the bid documents, it would not have proceeded with
D correction of such mistakes and evaluation of their bid without first seeking
clarification from respondents I to 4 under Clause 27. I. We have already
referred to the gist of that clause. The only prohibition contained therein is
that no change in the price or substance of the bid after its opening can be
sought, offered or permitted. In that regard they had made their position clear.
The prohibition is, therefore, not attracted. In these circumstances any
E reasonable person in the position of the appellant would have sought
clarification from respondent Nos. I to 4 under Clause 27.1.