M/S OM GURUSAI CONSTRUCTION COMPANYversusM/S V.N. REDDY & ORS

               [2023] 11 S.C.R. 379 : 2023 INSC 760



                            CASE DETAILS
        M/S OM GURUSAI CONSTRUCTION COMPANY
                                     v.
                       M/S V.N. REDDY & ORS.
                     (Civil Appeal No. 5375 of 2023)
                            AUGUST 23, 2023
     [J. K. MAHESHWARI AND K. V. VISWANATHAN, JJ.]

                             HEADNOTES

      Issue for consideration: Under Clause 2.22.0 (ix) of tender conditions,
the appellant was to furnish the additional performance security within a
period of two working days and this duration of two days was not to be
relaxed under any circumstances, whether to construe clause 2.22.0(ix) as
rigid and unalterable, even if the justice of the cause warranted otherwise.
     Tender – The tendering authority had accepted the additional
performance security on 17.03.2021 i.e. after a period of two working
days – Propriety:
      Held: Under Clause 2.22.0 (ix), the appellant was to furnish the
additional performance security within a period of two working days – It is
not disputed that 13.03.2021 was a Saturday and 14.03.2021 was a Sunday
and hence two working days would expire only on 16.03.3021 – It is also
not disputed that there was a nationwide employees strike in the nationalised
banks on 15.03.2021 and 16.03.2021 – Finally, additional performance
security was accepted on 17.03.2021 – This is a case where the appellant
has complied with the condition of furnishing the additional performance
security at the earliest possible time, that it could possibly comply – That
no one can be compelled to perform an impossible task - Lex non cogit
ad impossibilia - is a well-accepted legal principle – Decision making
authorities, like the tendering authority here, cannot be expected to turn a
blind eye to undisputed – ground realities and compelling necessities, like
the one that presented itself here – Thus, there is no hesitation in holding
that the deposit of the additional performance security on 17.03.2021 was
in due compliance of Clause 2.22.0 (ix) of the tender conditions – There
was no breach of that clause. [Paras 6, 9, 23 and 24]
                                     379
380           SUPREME COURT REPORTS                         [2023] 11 S.C.R.


      Tender – Verification by tendering authority:
      Held: In the instant case, the tendering authority, after due verification,
about the non-operation of the banks on 15.03.2021 and 16.03.2021 due to
the strike by the bank employees, had accepted the additional performance
security on 17.03.2021 and awarded the work to the appellant – It is well
settled by a long line of judgments that the owner or the employer of a project,
having authored the tender documents, is the best person to understand and
appreciate its requirements and interpret its documents – It has also been
held that the constitutional courts must defer to this understanding and
appreciation of the tender documents by the employer unless there is mala
fide or perversity in the understanding or appreciation. [Para 25]

       LIST OF CITATIONS AND OTHER REFERENCES

     Mahanth Ram Das vs. Ganga Das [1961] 3 SCR 763; Raj Kumar
Dey and Others vs. Tarapada Dey and Others (1987) 4 SCC 398 : [1988]
1 SCR 118; Jagdish Mandal vs. State of Orissa and Others (2007) 14 SCC
517 – relied on.
      Vidarbha Irrigation Development Corporation and Others vs. Anoj
Kumar Agarwala and Others (2020) 17 SCC 577; Tata Cellular Vs. Union
of India, (1994) 6 SCC 651 : [1994] 2 Suppl. SCR 122 – distinguished.
      HUDA and Another vs. Dr. Babeswar Kanhar and Another (2005) 1
SCC 191 : [2004] 6 Suppl. SCR 282; Rosali V. vs. TAICO Bank and Others
(2009) 17 SCC 690 : [2007] 1 SCR 1169; Dakshayani vs. Branch Manager,
Indian Overseas Bank, AIR 1998 Kant 114; Afcons Infrastructure Limited
vs. Nagpur Metro Rail Corporation Limited and Another, (2016) 16 SCC
818 : [2016] 3 SCR 551; Uflex Limited Vs. Government of Tamil Nadu and
Others (2022) 1 SCC 165 – referred to.

       OTHER CASE DETAILS INCLUDING IMPUGNED
              ORDER AND APPEARANCES

      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5375 of 2023.
     From the Judgment and Order dated 25.03.2022 of the High Court of
Judicature at Bombay at Nagpur in WP No. 1787 of 2021.
       M/S OM GURUSAI CONSTRUCTION COMPANY v.                             381
                 M/S V.N. REDDY & ORS.

     Appearances:
     Satyajit A Desai, Amit K Pathak, Siddharth Gautam, Abhinav K.
Mutyalwar, Gajanan N Tirthkar, Vijay Raj Singh Chouhan, Ms. Anagha S.
Desai, Advs. for the Appellant.
      Prashant Shrikant Kenjale, Sandeep Chopade, Uday B. Dube, Advs.
for the Respondents.

       JUDGMENT / ORDER OF THE SUPREME COURT

                               JUDGMENT
     K. V. VISWANATHAN, J.
     1. Leave granted.
     2. This case brings back to memory the classic words of Justice M.
Hidayatullah (as the learned Chief Justice then was) in Mahanth Ram Das
vs. Ganga Das, [1961] 3 SCR 763. Though it was in the context of the Code
of Civil Procedure, dealing with the powers of a Civil Court, the following
passage does repay study for the present facts too:
     “… Such procedural orders, though peremptory (conditional decrees
     apart) are, in essence, in terrorem, so that dilatory litigants might put
     themselves in order and avoid delay. They do not, however, completely
     estop a Court from taking note of events and circumstances which
     happen within the time fixed. For example, it cannot be said that, if
     the appellant had started with the full money ordered to be paid and
     came well in time but was set upon and robbed by thieves on the day
     previous, he could not ask for extension of time, or that the Court was
     powerless to extend it. Such orders are not like the law of the Medes
     and the Persians….”
                                                        (emphasis supplied)
      3. The question which arises for consideration in this case is, on the
facts herein, are we to construe Clause 2.22.0(ix) of the tender conditions
as the law of the Medes and the Persians - rigid and unalterable, even if the
justice of the cause warranted otherwise?
382           SUPREME COURT REPORTS                          [2023] 11 S.C.R.


      4. Clause 2.22.0 (ix) reads as under: -
      (ix) L-I shall submit the demand draft/BG or FDR additional
      performance security in the office of the Executive Engineer, Lower
      Wardha Project Division, Wardha within 2 days of opening of
      envelope-2. This duration of 2 days will not be relaxed under any
      circumstances. Failure to do so will result in forfeiture of EMD and
      the contractor/Joint Venture (jointly or individually) shall be debarred
      from participating in any bid of Water Resources Department/VIDC,
      Nagpur for two years from date of opening of envelope-2. If L-1 fails
      to submit to additional performance security within prescribed time
      period then Executive Engineer ask L-2 in writing and if L-2 bidder
      agree to do work at the rate quoted by L-1 then L-2 bidder shall be
      considered for acceptance”.
                                                         (emphasis supplied)
      Relevant Facts
     5. The facts that give rise to the question are short and interesting.
On 18.01.2021, the Executive Engineer, Lower Wardha Project Division,
Wardha issued a tender calling upon interested bidders to submit their bid.
The work, which was the subject matter of the writ petition before the
High Court, was for” construction of land development works (Part-I) of
Gadegaon main minor offtaking @ R.D. 4995 M on Nandgaon Dy’’. Three
bidders submitted their bids. The technical bid was opened on 08.02.2021
when the appellant, and the first respondent herein (writ petitioner before the
High Court) were found eligible. The financial bid was opened on 12.03.2021
and the appellant’s bid was found to be the lowest.
       6. Under Clause 2.22.0(ix), as set-out above, the appellant was to
furnish the additional performance security within a period of two working
days. It is not disputed that13.03.2021 was a Saturday and 14.03.2021 was
a Sunday and hence two working days would expire only on 16.03.3021.
It is also not disputed that there was a nationwide employees strike in the
nationalised banks on 15.03.2021 and 16.03.2021.
      7. The additional performance security was submitted on 17.03.2021.
The tendering authority, after satisfying itself of the existence of the strike,
accepted the bid of the appellant and issued work order on 07.05.2021.
Thereafter, the work commencement order was issued on 24.05.2021 to
the appellant.
      M/S OM GURUSAI CONSTRUCTION COMPANY v.                              383
      M/S V.N. REDDY & ORS. [K. V. VISWANATHAN, J.]

     Findings of the High Court on Clause 2.22.0 (ix)
     8. Aggrieved, the first respondent herein filed a writ petition on
29.04.2021 challenging the work order and the work commencement order.
That writ petition has been allowed by the Division Bench of the High Court
through the impugned order wherein the High Court has held, with respect
to Clause 2.22.0(ix):
     a)    that condition prescribed in Clause 2.22.0 (ix) was mandatory
           since the consequences for non-compliance have also been
           prescribed;
     b)    that Clause 2.22.0(ix) is an essential condition;
     c)    that the period for furnishing the additional performance security
           was earlier eight days and was consciously reduced to two days
           with a further condition that the said period would not be relaxed/
           extended under any circumstances whatsoever;
     d)    that the tendering authority had no power under the tender
           document to relax/extend the time specified in a clause which
           warrants strict compliance.
     9. The High Court also referred to the facts qua another bidder, one
M/s Sai Aniruddha Construction, that had submitted its bid for another work,
and had furnished the additional performance security with a demand draft
dated 15.03.2021 from a scheduled bank. This was to demonstrate that it was
possible for a bidder under the same tender notice to furnish the additional
performance security deposit on 15.03.2021.
      10. On the basis of the above findings, the High Court held that the
tender issuing authority could not have accepted the additional performance
security from the appellant herein on 17.03.2021, since 17.03.2021 was the
third working day from the opening of the financial bid.
     On Additional Findings of the High Court
     11. After recording the findings above, the High Court considered
the events subsequent to the issuance of the work order in favour of the
Appellant and found as follows:
     a)    the work order in question was issued on 24.05.2021 and the
           work was to be completed within six months with a period for
           rectification of deficiency within further 24 months;
384          SUPREME COURT REPORTS                       [2023] 11 S.C.R.


      b)   that the appellant had on 04.02.2022 issued a communication
           to the Executive Engineer stating that it could not complete the
           work as allotted and had sought time till 31.03.2023.
     After noticing these facts, the High Court concluded, without any view
having been expressed by the tendering authority and without discussing
any reason given in the letters seeking extension, that the appellant had
not been able to meet the time limit. The High Court further held that the
appellant was not justified in not adhering to the time limit. Therefore, the
High Court interfered in the matter under Article226 on the ground that it
affects public interest.
     12. The High Court should not have ventured into the question with
regard to the time limit for completion of work and the extension sought
by the appellant since that was a matter which would depend on the facts
and circumstances that arise therein. That was for the authorities to decide
keeping in mind the myriad facts that would arise there. Even for deciding
about the need for exercise of discretionary jurisdiction, the High Court
should not have ventured into this aspect without the full facts having
been placed before it. As to, under what circumstances the extension was
sought and what view the authority has taken over the same, even we are
completely oblivious to. The High Court should have just confined itself to
the examination of the question whether the acceptance of the additional
performance security on 17.03.2021 and the consequential issue of the work
order was justified in law or not. Having found that it was not justified, it
should have stopped there and not ventured into this issue, since full facts
were not available on the record.
      On alleged breach of Clause 2.22.0 (ix)
      13. In this background, the primary question that arises is, whether
the High Court was justified in setting aside the work order on the ground
that the tendering authority had breached Clause 2.22.0(ix) by accepting
the additional performance security on 17.03.2021?
     14. We have heard Shri Amit K. Pathak, learned counsel for the
appellant, Shri Prashant Shrikant Kenjale, learned counsel for the first
respondent herein and Shri Uday B. Dube, learned counsel for the tendering
authority.
      M/S OM GURUSAI CONSTRUCTION COMPANY v.                            385
      M/S V.N. REDDY & ORS. [K. V. VISWANATHAN, J.]

     15. The admitted facts are that after the declaration of the appellant
being the L1 bidder (successful bidder) on 12.03.2021, the additional
performance security was to be submitted within two days of opening of
the financial bid. Admittedly, 12.03.2021 being a Friday, 13.03.2021 was a
Saturday and 14.03.2021 was a Sunday. Both these days were bank holidays.
Even the first respondent herein has no case that the additional performance
security could have been given on these days.
      16. The High Court, in the impugned order, noticed the communication
of the Branch Manager, Bank of Maharashtra – the appellant’s Bank, which
had not disputed the fact that on 15.03.2021 and 16.03.2021 there was a
strike of bank employees due to which there was no banking transaction
on these days. It was also not disputed at the Bar that there was indeed
a bank employees strike of the nationalised banks on those two days.
The argument was only that scheduled banks were open and one M/s Sai
Aniruddh Construction had submitted the additional performance security
for another work, under the same tender notice through a scheduled bank.
      17. The appellant countered this point in his reply filed before the
High Court as well as in the grounds before us in the appeal, by stating
that the appellant did not maintain any account in any scheduled bank.
It was averred that the appellant was maintaining the account with the
Bank of Maharashtra. To reinforce their submission, the appellant had also
submitted that, in Form-I of the tender document which stated about the
basic information of the bidder, the appellant had mentioned the bank name
and the address along with the details of its bank account. It was further
submitted that the Undertaking IV of the tender booklet had stated that, the
bidder had to give undertaking in respect of depositing the earnest money
deposit and performance security, through the bank account owned by the
bidder. It was averred that as such the appellant could not use any other
account to perform the bank transaction.
     18. The fact that there was a strike among the employees of the
nationalised banks is also not in dispute. It is also not disputed that the
account of the appellant was in Bank of Maharashtra and it was that account
which was disclosed as part of the basic information, furnished with the
tender document. It is also not disputed that the bidders have given an
undertaking that earnest money deposit and performance security would
be paid through the bank account owned by the bidder. They could not
386           SUPREME COURT REPORTS                          [2023] 11 S.C.R.


have done it through any other bank. From the records of the Appeal, it is
also clear that on a complaint made by the first respondent herein to the
Superintending Engineer, the Superintending Engineer had written a letter
on 12.04.2021 to the Executive Engineer asking for his comments on the
complaint. The complaint was about the appellant submitting the additional
performance security beyond the two days stipulated as per Clause 2.22.0 (ix).
This was the only grievance in the complaint of the first respondent herein.
On 19.04.2021, the Executive Engineer, in his letter to the Superintending
Engineer, mentioned that 13.03.2021 was a Saturday and 14.03.2021 was a
Sunday and also confirmed that on 15.03.2021 since all the nationalized banks
were non-operational due to strike, the appellant had made a request to him
to extend the time till 17.03.2021. He further stated that since 15.03.2021
and 16.03.2021 were the days when banks were non-operational due to
strike, and since the appellant deposited the additional performance security
on 17.03.2021, the deposit seems to be proper and a request was made to
accept the tender of the appellant. Not only this, the Branch Manager of the
Appellant’s Bank, in his letter of 11.05.2021 also does not deny that there
was a strike of bank employees on 15.03.2021 and 16.03.2021.
       19. This is a case where the appellant has complied with the condition
of furnishing the additional performance security at the earliest possible time,
that it could possibly comply. That no one can be compelled to perform an
impossible task - Lex non cogit ad impossibilia- is a well-accepted legal
principle.
      20. This Court in Raj Kumar Dey and Others vs. Tarapada Dey and
Others, (1987) 4 SCC 398, while quoting, approving and applying the maxim
to the facts of that case, had the following to say:
      “6. … The other maxim is lex non cogit ad impossibilia (Broom’s Legal
      Maxims – page 162) – The law does not compel a man to do that which
      he cannot possibly perform. The law itself and the administration of it,
      said Sir W. Scott, with reference to an alleged infraction of the revenue
      laws, must yield to that to which everything must bend, to necessity; the
      law, in its most positive and peremptory injunctions, is understood to
      disclaim, as it does in its general aphorisms, all intention of compelling
      impossibilities, and the administration of laws must adopt that general
      exception in the consideration of all particular cases.”
                                                          (emphasis supplied)
       M/S OM GURUSAI CONSTRUCTION COMPANY v.                             387
       M/S V.N. REDDY & ORS. [K. V. VISWANATHAN, J.]

     21. Applying the same maxim and highlighting its principle, this Court
in HUDA and Another vs. Dr. Babeswar Kanharand Another (2005) 1
SCC 191 stated that every consideration of justice and expediency would
require that the accepted principle which underlies Section 10 of the General
Clauses Act should be applied in cases where it does not otherwise in terms
apply [Para 5].
      22. Closer to the facts of the present case is the judgment in Rosali V.
vs. TAICO Bank and Others (2009) 17 SCC 690. In that case, an auction
was held after 4.00 p.m. when the banks were closed. Order XXI Rule 84
of the Code of Civil Procedure mandates that “on every sale of immovable
property the person declared to be the purchaser shall pay immediately
after such declaration a deposit of twenty-five per cent on the amount of his
purchase-money to the officer or other person conducting the sale, and in
default of such deposit, the property shall forthwith be re-sold”. In Rosali
(supra), the 25% bid amount under Order XXI Rule 84 of the CPC was
directed to be paid the next day and it was so paid. While accepting it as a
valid deposit, this Court quoted the following paragraph from the judgment
of the Karnataka High Court in Dakshayani vs. Branch Manager, Indian
Overseas Bank, AIR 1998 Kant 114:
     “4. On that basis if we interpret the law though there is no power in
     the Court to extend the time fixed by the statute still the expression
     immediately is capable of taking within its sweep a situation where an
     act is impossible of performance on the day on which the auction is
     held as it happened in Savithramma case [ILR 1973 Kant 1277] when
     the bank itself was on strike and no deposit could have been made in
     the bank or in the event the auction-sale is held after court hours, a
     receipt order in that regard cannot be obtained for deposit of such an
     amount. Such amount could be deposited only after obtaining a receipt
     order. If next day also happens to be a holiday, the day immediately
     thereafter coming up which is a working day will be the day on which
     such act will have to be performed. If any other interpretation is given
     it would stultify the very object of law.”
      23. In view of the above, we have no hesitation to hold that the deposit
of the additional performance security on 17.03.2021 was in due compliance
of Clause 2.22.0 (ix) of the tender conditions. There was no breach of that
clause.
388           SUPREME COURT REPORTS                          [2023] 11 S.C.R.


      24. Decision making authorities, like the tendering authority here, could
not have turned a blind eye to undisputed ground realities and compelling
necessities, like the one that presented itself here. After all, they do not live
in ivory towers.
      25. In this case, the tendering authority, after due verification, about the
non-operation of the banks on 15.03.2021 and 16.03.2021 due to the strike
by the bank employees, had accepted the additional performance security
on 17.03.2021 and awarded the work to the appellant. It is well settled
by a long line of judgments that the owner or the employer of a project,
having authored the tender documents, is the best person to understand
and appreciate its requirements and interpret its documents. It has also
been held that the constitutional courts must defer to this understanding
and appreciation of the tender documents by the employer unless there is
mala fide or perversity in the understanding or appreciation. [See Afcons
Infrastructure Limited vs. Nagpur Metro Rail Corporation Limited and
Another, (2016) 16 SCC 818 and Uflex Limited Vs. Government of Tamil
Nadu and Others, (2022) 1 SCC 165)].
      26. In this case, no mala fide has been alleged and the interpretation
as adopted by the tendering authority cannot be said to be perverse. We
also do not find that the decision to accept the additional performance
security on 17.03.2021 and the issuance of the work order was arbitrary
and irrational. We also do not find it to be a decision, which no responsible
authority acting reasonably and in accordance with law could have reached.
On facts, no case of prejudice to public interest by the award of the work
has also been made out. In such circumstances, the High Court ought not
to have interfered with the acceptance of the tender and the issuance of the
work order in the present case.
      27. Learned counsel for the first respondent herein, in his written
submissions, relied upon the judgment of this Court in Vidarbha Irrigation
Development Corporation and Others vs. Anoj Kumar Agarwala and
Others, (2020) 17 SCC 577. We have carefully considered the said judgment.
In that case, the bank guarantee which ought to have been furnished for
forty months was only furnished for six months. The facts of the present
case are completely different and, as such, the said judgment is clearly
distinguishable.
      M/S OM GURUSAI CONSTRUCTION COMPANY v.                           389
      M/S V.N. REDDY & ORS. [K. V. VISWANATHAN, J.]

      28. The other judgment relied upon is the judgment in Tata Cellular
Vs. Union of India, (1994) 6 SCC 651. On the facts herein, it does not
assist the first respondent.
     29. We find nothing wrong in the authority having accepted the tender
and awarding the work to the appellant.
     Other grounds raised by the first respondent
      30. By way of amendments made to the writ petition before the High
Court, certain additional grievances were raised by the first respondent
herein. They were: firstly that the appellant had filed acknowledgment of
income-tax returns only for three years and not five years and secondly the
old partnership deed andthe power of attorney of Shri Devereddy Chinna
Guruvi Reddy, father of Shri D. Guru Maheshwar Reddy was filed. It was
alleged that the father had expired and the Power of Attorney of a dead
person had been filed. These averments have been controverted in the reply
filed by the appellant.
     31. With regard to the requirement of income-tax return
acknowledgements for five years, the answer given was that the firm itself
was in existence only for three financial years before. Even otherwise, we
have not been shown the specific clause requiring acknowledgement of the
income-tax returns for five years. In any case, the tendering authority has
awarded the work, after satisfying itself, about the necessary compliances.
The High Court has also not found it fit to pronounce on these aspects.
Hence, on this ground also, the work order cannot be set aside.
     32. With regard to the submission concerning the reconstituted
partnership deed and the Power of Attorney of the father, the Appellant has
explained it in the counter, by stating:
     a)    that Shri D. Guru Maheshwar Reddy was always a partner since
           inception; that his father had died on 05.05.2020 in the middle
           of the pandemic;
     b)    that after reaching back from the native place from Andhra in
           September, 2020 the Partnership was reconstituted and that the
           reconstituted Partnership Deed was submitted to the office of the
           Registrar of Partnership Firms, Aurangabad on 23.10.2020.
390                SUPREME COURT REPORTS                      [2023] 11 S.C.R.


      c)         that that due to pandemic and lock down, the certified copy of
                 the reconstituted Partnership Deed has not been issued till the
                 submission of the tender form.
      d)         that the Partnership Deed submitted contained the name of D.
                 Guru Maheshwar Reddy and he was a partner right from the
                 registration of the firm.
      Hence, it was contended that the filing of the earlier Partnership Deed
and the Power of Attorney did not vitiate the condition of the tender process
warranting disqualification. In view of the explanation and additionally in
view of the fact that the tendering authority has found no illegality in the
same and further the High Court having not thought it fit to examine this
issue, we do not find merit in these additional grounds.
     33. Before we part, we would do well to remind ourselves of the
words of caution administered by this Court in Jagdish Mandal vs. State
of Orissa and Others, (2007) 14 SCC 517. Speaking for the Court, Justice
R.V. Raveendran said:
      “22. … Attempts by unsuccessful tenderers with imaginary grievances,
      wounded pride and business rivalry, to make mountains out of molehills
      of some technical/procedural violation or some prejudice to self, and
      persuade courts to interfere by exercising power of judicial review,
      should be resisted. Such interferences, either interim or final, may hold
      up public works for years, or delay relief and succour to thousands
      and millions and may increase the project cost manifold. Therefore, a
      court before interfering in tender or contractual matters in exercise of
      power of judicial review, should pose to itself the following questions:
           (i)     Whether the process adopted or decision made by the authority
                   is mala fide or intended to favour someone;
                                            OR
         Whether the process adopted or decision made is so arbitrary and
      irrational that the court can say: “the decision is such that no responsible
      authority acting reasonably and in accordance with relevant law could
      have reached”;
           (ii) Whether public interest is affected.
      If the answers are in the negative, there should be no interference
      under Article226. ….”
       M/S OM GURUSAI CONSTRUCTION COMPANY v.                         391
       M/S V.N. REDDY & ORS. [K. V. VISWANATHAN, J.]

     34. Accordingly, the order impugned is set aside and we direct that
Writ Petition No. 1787 of 2021 on the file of the High Court of Judicature
at Bombay, Nagpur Bench, Nagpur shall stand dismissed. The Appeal is
allowed. No order as to costs.


Headnotes prepared by:                                      Appeal allowed.
Ankit Gyan