Gandharva Infrastructure And Projects LTD Through Director Santosh Kumar Bagla vs. Union Of INDIA Through Secretary & Ors.

Facts

The appellant, Gandharva Infrastructure and Projects Ltd., participated in a tender issued by Respondent No. 3 for construction works. The appellant submitted a bid on July 25, 2019, depositing an Earnest Money Deposit (EMD) of Rs. 28,02,000/-. Subsequently, the appellant claimed an inadvertent clerical mistake in its bid, having excluded the GST component from its quoted rates. The appellant sought modification of its bid from Rs. 16,92,35,282.70/- to Rs. 19,45,87,340.00/-. On August 6, 2019, Respondent No. 3 issued a work order accepting the appellant's initial bid. The appellant continued to make representations for modification and refund of EMD. On November 13, 2019, Respondent No. 3 cancelled the work order due to non-fulfillment of contract conditions and forfeited 100% of the EMD. The appellant contended that only 50% of the EMD could be forfeited as per Clause 16 of the Notice Inviting Tender (NIT). A writ petition filed by the appellant was dismissed by the learned Single Judge, leading to the present Letters Patent Appeal.

Held

The Court held that once the work order was issued on August 6, 2019, accepting the appellant's bid at the initially quoted price, Clause 16 of the NIT, which pertains to the validity of the tender and forfeiture of 50% EMD, ceased to be applicable. The issuance of the work order signified the acceptance of the offer and the conclusion of the contract, leaving only the formal agreement to be executed. Therefore, the appellant's subsequent withdrawal from the tender on October 1, 2019, occurred after the contract had effectively commenced. The Court found the appellant's claim of an inadvertent mistake to be an afterthought, especially considering it was a public limited company participating in the tender process. The reasoning was that allowing such modifications after bid acceptance would undermine the sanctity of the tender process. The learned Single Judge was deemed to have rightly declined the relief, relying on the principle that the sanctity of a submitted bid must be respected. The forfeiture of 100% EMD was upheld as justified under the circumstances.

Key Issues

1. Whether the appellant, having realized an inadvertent clerical mistake of excluding the GST component from its quoted rates, should have been permitted to modify its bid after submission and before the issuance of the work order? Petitioner/Appellant's Argument: The appellant argued that the mistake was inadvertent and clerical, and Respondent No. 3 should have allowed the modification. They relied on the Supreme Court's decision in Civil Appeal No. 224/2022, which held that forfeiture of EMD for inadvertent mistakes cannot be sustained. They further contended that even if modification was not allowed, only 50% of the EMD should have been forfeited as per Clause 16 of the NIT, and the learned Single Judge erred in dismissing the writ petition. Revenue/State's Argument: The respondents argued that once the work order was issued, Clause 16 of the NIT was no longer applicable. They contended that the appellant, being a public limited company, participated with open eyes, and the claim of an inadvertent mistake was an afterthought. They asserted that the sanctity of the submitted bid must be respected, and the forfeiture of 100% EMD was justified.