Kanhaiya Lal Agrawal vs. Union of India

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Kanhaiya Lal Agrawal vs. Union of India
In Supreme Court of India
Appeal (civil) 4359-4361 of 2002

Petitioner
Kanhaiya Lal Agrawal
Respondent
Union of India

Date of Judgement
29 July 2002

Bench
S. Rajendra Babu & P. Venkatarama Reddi

Facts of the Case –

Respondent No.1 had invited tenders for the execution of five items of work including supply, delivery and stacking of 75,000 cubic metre machine crushed track ballast at the depot at Naurozabad and loading the same into the railway wagons. The supply period was for a period of 24 months. The tender had some conditions stated:

1. That the rates at which the supply was to be made had to be stated in words and figures;

2. That the tenders submitted with any omissions or modifications were liable to be rejected;

3. That the tender must hold the offer for a minimum period of 90 days from the date on which was tender was originally opened;

4. That the tender could lead to rejection for non-compliance of any of the aforementioned conditions.

A total of five tenders were received. The plaintiff made his tender dated 27.02.2001 with a stipulation that if his offer is received within 45 days, 60 days and 75 days then he would offer a rebate of 5%, 3% and 2% respectively on the rates offered by him. Respondent No.5 had made a similar offer and offered to reduce rates by 1.25% and 1% if the tender was accepted in 30 days and 45 days respectively. Respondent No.5 had made this offer after five days of the opening of the letter. Respondent No.5 filed a writ petition claiming that his tender should have been accepted since the rates offered by him are the minimum.

Decision of the Single Judge 

The suit was first presented before the learned Single Judge of the High Court who was of the view that the tender notice did not admit an offer being made in the form of rebate which was offered by the plaintiff. He also held that an offer made by Respondent No.5 after the opening of the tender is of no consequence and gave the direction of taking fresh offers from the appellant and Respondent No.5.

Ruling of the Division Bench 

The matter was placed before the Division Bench of the High Court in appeal which stated that the tender notice did not contain any attachment of conditions by giving rebate which would amount to alteration of the tender document which is impermissible and that the tender should be unconditional. If there is any relaxation it should have been notified to all the tenderers to enable them to modify their rates and that all the tenderers must have been treated equally without any bias or prejudice. The court took the view that the Respondent No. 5 had the tender of lower rate and hence it is acceptable. It quashed the order of the Single Judge. The Division Bench directed that the supply of material by the plaintiff must be put to a halt and the balance material be recovered from the Respondent No.5 at the rate furnished by him.

Judgement of the Supreme Court of India 

The Court was of the opinion that bureaucratic delay is a notorious fact and delay in finalising tenders will cause problems to the tenderer and in such a case, if a businessman makes an offer of concessional rates and if the tender is finalized within a short period, then the rates cannot be subject to conditions. The rates in such a case will be crystal clear so will the time period of acceptance. The offer must be kept open for a minimum period of ninety days. The court held that the offer in this case is complied with these conditions. The concession acts as an additional inducement to except the offer.

The court expressed a view contrary to that of the Division Bench of the High Court since offer of concession to the terms of tender is perfectly valid and not contrary as pointed out by the Division Bench. 

According to the SC, what the plaintiff offered was a part of the tender itself while Respondent No.5 made such an offer at a later time and separately as well.

The Verdict 

Appeals by the plaintiff was allowed and the orders made by the High Court both by the Single Judge and the Division Bench was quashed and so was this Writ Petition.

Edited by Chiranjeeb Prateek Mohanty

Approved & Published – Sakshi Raje