Allowing an appeal in Central Coalfields Limited & Anr v SLL-SML (Joint Venture Consortium) & Ors, the Supreme Court held that an employer’s decision about whether a term in a notice inviting tender (NIT) is essential should be respected and the lawfulness of the decision can be questioned only on very limited grounds.
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SLL-SML, a joint venture consortium, submitted a bid in response to an e-tender notice issued in August 2015 by Central Coalfields (CCL). The bid included a bank guarantee for ₹10 million. The bid was rejected because the bank guarantee was not in the prescribed format, as in the NIT, read with the general terms and conditions.
Aggrieved by the rejection of its bid, SLL-SML petitioned Jharkhand High Court. A division bench set aside the rejection, holding that the submission of the bank guarantee in the prescribed format was a non-essential term of the NIT. CCL appealed against the order before the Supreme Court.
Emphasizing the need for parties to strictly adhere to the terms of documents such as NITs and general terms and conditions, the Supreme Court observed that it is not for the employer or the court to scrutinize every bank guarantee to determine whether it is stricter than the prescribed format or less rigorous. “The fact is that a format was prescribed and there was no reason not to adhere to it. The goalposts cannot be re-arranged or asked to be re-arranged during the bidding process to affect the right of some or deny a privilege to some.”
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The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi.
The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
