Rohinton F. Nariman, J. - (1.) Leave granted.
(2.) A Tender was called by the appellant before us on 06.01.2018 for balance earthwork to be done in a canal. The Tender was ultimately replied to by three persons whose bids, respectively, were - Rs.39.53 crores by Respondent No.1, Rs.39.15 crores by Respondent No.2, and Rs.46.81 crores by Respondent No.3. There is no dispute that the bid of Respondent No. 2 was the lowest bid. At this stage, it is a little important to advert to some of the tender conditions:- "Contract" is defined by the e-tender in question as follows:- "1.3.9 CONTRACT :- It shall mean and include following documents. Tender Documents. Specifications. Drawings. Tender document & information/data submitted by contractor Common set of conditions/Minutes of preTender conference." Clause 2.15 speaks of "Pre-tender Conference" as follows:- "1) Pre-tenders conference open to all prospective tenderer will be held in the office as stated in this Section, wherein the prospective tenderer will have an opportunity to obtain clarifications regarding the work and the tender conditions. 2) The prospective tenderers are free to ask for any additional clarification either in writing or orally and the reply to the same will be given by the Chief Engineer/Superintending Engineer in writing and these clarifications referred to as common set of conditions, shall form part of tender documents and which will also be common and applicable to all tenderer. 3) The e-tender submitted by the tenderer shall be based on the clarification, additional facility issued (if any) by the Corporation and this tender shall be unconditional. Conditional tenders will summarily be rejected as non-responsive. 4) All tenderers are cautioned that the tenders containing any deviation from the contractual terms and conditions, specifications or other requirements and conditional Tenders will be rejected as non-responsive." Clause 2.22 speaks of "Performance Security" as follows:- "PERFORMANCE SECURITY in case of offer below the cost put to tender as per PWD Circular BDG-2016/BLD-2/Dt.:12/02/2016) & corrigendum on date 17/03/2016/ WRD Corrigendum No. Tender 0316/(189/16) Major Projects-1 dated 14.7.16 Condition Regarding payment of performance security (in place of condition for payment of additional securitydeposit) if offer quoted by the tenderer is below the cost put to tender. i) If the tenderer quote upto 1% below the cost put to tender, no additional performance security is required. However, if the tenderer quote his offer more than 1% below the cost put to tender to 10% below the cost put to tender, tenderer shall submit the demand draft or FDR or BG of the amount equal to 1% of cost put to tender towards performance security in Envelope No.2 of tender. ii) If the tenderer quote his offer more than 10% below (offer below than 10%) the cost put to tender, tenderer shall submit the demand draft or FDR or BG of the cumulative amount which is equal to the amount by which offer is more than 10 % below plus the amount as per (i) above in the Envelop No.2 of tender. (For example, for 14% below rate, 1% + (14%-10%) i.e. 4%, then total 5% of the cost put to tender. iii) The amount of performance security shall be calculated on rounding of contractors offer upto two decimal places. The offer in envelop No.2 without demand draft or FDR or BG of appropriate amount of performance security shall be treated as invalid offer. iv) Demand draft/BG/FDR shall be drawn in the name of Executive Engineer, Ghodazari Canal Division Nagbhid. v) Demand draft/BG/FDR/shall be drawn from Nationalised or scheduled banks. vi) The BG/FDR shall be valid upto one month after defect liability period. Validity of demand draft shall be minimum 3 months from the date of submission of tender. vii) Scanned copy of BG/FDR/demand draft shall be uploaded by the contractor at the time of e-tendering. viii) Contractor shall submit the demand draft/FDR/BG in sealed envelope in the office of the Executive Engineer, Ghodazari Canal Division Nagbhid within 5 working days from the date of submission of tender. Name of work and e- tender number shall be written on the envelope. ix) On opening the tender, if papers in Envelop No.1 don't fulfill the essential qualification/ documents requirements, the Executive Engineer shall return the envelope of Demand Draft/BG/FDR to concerned Contractor within 7 days from the date of opening of tender. x) The Executive Engineer shall refund the amount of performance security after completion of work successfully. xi) Demand draft BG/FDR of the second lowest tender shall be returned within 3 days after issuing works order to the lowest tender. xii) EMD of the contractors submitting false documents/demand draft/BG/FDR in above process shall be forfeited and the contractor shall be Black listed. xiii) Executive Engineer shall issue the work order only after encashing the demand draft of the lowest tenderer." "Important Note" "If any of the documents required as per Technical-Envelope-1 is not submitted on- line or/and Financial Bid: in Envelope-II (Commercial) is not properly uploaded, or/and information given in various Undertakings, Proform's, Forms, Formats, Appendices etc, in various Sections-II, III, IV, VI is missing, incomplete/misleading/false tender of the bidder shall be liable for out-right rejection and shall not be considered for further process." Clause 2.35 speaks of "Acceptance of Tender" as follows:- "2.35 x x x 2.35.1 A substantially responsive Bid is one which conforms to all the terms, conditions, and specifications of the Bidding documents, without material deviation or reservation. A material deviation or reservation is one (a) which affects in any substantial way the scope, quality, or performance of the Works, (b) which limits in any substantial way, inconsistent with the Bidding documents, the employer's rights or the Bidder's obligations under the Contract; or (c) whose rectification would affect unfairly the competitive position of other Bidders presenting substantially responsive Bids. 2.35.2 If a Bid is not substantially responsive, it will be rejected by the Employer, and may not subsequently be made responsive by correction or withdrawal of the non-conforming deviation or reservation."
(3.) On the facts in this case, it is undisputed that the bank guarantee that was furnished for Rs. 42.14 lakhs by Respondent No. 2 before us was initially furnished only for a period of six months on 12.03.2018, in response to the tender. It is common ground between the parties that the period ought to have been 40 (forty) months. The bids were opened on 06.04.2018, and on 07.04.2018, one day later, Respondent No. 2, sought to make up this deficiency by adding a period of 34 months to the bank guarantee which was valid for 6 months only. The aforesaid bid made by Respondent No. 2 was accepted initially on 03.05.2018. A Tender Evaluation Committee then evaluated all the bids on 07.07.2018, and finally, the bid of the Respondent No. 2 was accepted as it was the lowest bidder among the three bids that had been received. The bone of contention between the parties is whether it is possible for the appellant before us to condone the initial bank guarantee being given for an admittedly incorrect period of 6 months.;