CORPORATE INFOTECH PRIVATE LIMITED  Vs SOUTH DELHI MUNICIPAL CORPORATION & ORS.

W.P.(C.) No. 4515 /2020 Page 1 of 25
* IN THE HIGH COURT OF DELHI AT NEW DELHI

Judgment reserved on: 13.01.2021

% Judgment delivered on: 22.01.2021

+ W.P.(C) 4515/2020 & CM APPL. 16253/2020
CORPORATE INFOTECH PRIVATE LIMITED ….. Petitioner
Through: Mr.Tanmaya Mehta, Adv.

versus

SOUTH DELHI MUNICIPAL CORPORATION & ORS.
….. Respondents
Through: Mr.Sanjay Poddar, Sr. Adv. with
Ms.Aakanksha Kaul, standing
Counsel, Mr.Govind Kumar &
Mr.Manek Singh, Advs.
CORAM:
HON’BLE MR. JUSTICE VIPIN SANGHI
HON’BLE MS. JUSTICE REKHA PALLI
.
J U D G M E N T

VIPIN SANGHI, J.

1. This writ petition has been preferred by the petitioner primarily to
assail the decision of the respondent, namely South Delhi Municipal
Corporation (SDMC) to cancel the E -tender Notice No.
DIT/SDMC/2020/1 5/D-09 dated 30.04.2020, which was a Request of
Proposal (RFP) for selection of vender for providing internet bandwidth,
AMC & Maintenance of IT Infrastructure, Network Management for the
three Municipal Corporation s of Delhi , communicated to the petitione r vide
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order dated 16.07.2020. The petitioner also seeks a direction to the
Administrative Officer of the South Delhi Municipal Corporation to
complete the process of tender in pursuance of E –tender notice dated
30.04.2020 from the stage as was on 03.06.2 020.
2. The petitioner is a company engaged in the business of providing
Information Technology Services. The petitioner has disclosed that in the
year 2009, the then Municipal Corporation of Delhi had awarded a contract
to M/S Tech Mahindra Ltd . for providi ng services of the kind in respect
whereof the aforesaid RFP was issued on 30.04.2020. In January 2012, the
Municipal Corporation of Delhi was trifurcated into three Municipal
Corporations, namely the South, North and East Delhi Municipal
Corporations. T he petitioner further states that as per its information , M/s
Tech Mahindra sub -delegated the work to Leading Edge Communication
Pvt. Limited which is presently providing the relevant services. The
petitioner further states that the contract with M/s Tech Mahindra came to an
end on 31.12.2019, yet the respondent is continuing to avail services from
Leading Edge Communication Pvt. Limited. On 06.12.2019, the South
Delhi Municipal Corporation floated a tender vide E -tender notification No.
DIT/SDMC/2019 -20/14/D -899 for selection of a vendor for providing
Internet Bandwidth, AMC & maintenance of IT Infrastructure, Network
Management for South, North and East Municipal Corporations of Delhi ,
calling upon the prospective bidders to submit tender s upto 26.12.202 0.
3. The petitioner states that it participated in the said process. However,
on 15.04.2020, the Tender Evaluation Committee recommended the
scrapping of the ongoing tender process, and to invite fresh tenders. This
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recommendation of the Tender Evaluation Committee was accepted by the
Commissioner, SDMC , and consequently that tender was cancelled. On
30.04.2020, fresh o nline tenders were invited for the second time vide a
tender notice No. DIT/SDMC/2020/15/D -09, by the IT Department, South
Delhi Municipal Corporation (SDMC) for selection of vendor for providing
Internet Bandwidth, AMC & Maintenance of IT Infrastructure, Network
Management for South, North and East Delhi Municipal Corporations. On
06.05.2020, a pre -bid meeting was organised , where 9 prospec tive bidders
participated. The petitioner states that it submitted its bid on 19.05.2020.
The last date for submitting the bid was up to 03:00 PM on 20.05.2020.
4. In all , seven vendors made their offers. On 20.05.2020, the Techno
Commercial Bids of all the bidders were opened on the E -Tendering Portal
of SDMC. Five of the seven bidders qualified, including the petitioner.
They were eligible and qualified for further evaluation. On 03 .06.2020, the
SDMC after evaluating the Techno Commercial Bids , decla red 3 bidders as
qualified which included the petitioner, apart from Bharti Airtel Ltd ., and
Square System Technologies Ltd. The petitioner states that its financial bid
was the lowest. Consequently, the petitioner had a legitimate expectation
that its b id would be approved and it would be issued a Letter of
Acceptance. However, suddenly, on 16.07.2020, the SDMC issued the
impugned orders/ communication – cancelling the tender Notice dated
30.04.2020. The impugned communication did not give any reason f or
cancellation of the tender process for the second time. The said impugned
notice reads as follows:

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“
SOUTH DELHI MUNICIPAL CORPORATION
INFORMATION & TECHNOLOGY DEPARTMENT
24TH FLOOR, DR. SPM CIVIC CENTRE
J.L. NEHRU MARG, NEW DELHI – 110002
NO. DIT/SDMC /2020/15/D -180
NOTICE
South Delhi Municipal Corporation (SDMC)had floated an e -tender
(No.DIT/SDMC/2020/15/D -09 dated 30.04.2020) by issuing RFP for
Selection of vendor for providing internet bandwidth, AMC & maintenance
of IT infrastructure, network m anagement for the three Municipal
Corporations of Delhi.”
The Competent Authority in SDMC has decided to cancel the above cited
tender.
Sd/-
Administrative Officer (IT) ”

5. It is in this background that the petitioner preferred the present w rit
petition. The writ petition came up , for the first time, before the Court on
24.07.2020. The Court issued notice to the respondents. The respondents
were represented through counsel. The respondents, through their counsel,
gave the reason for cance llation of the said tender process which is recorded
in paragraph 5 of the said order. The same reads as follows:
“Mr. Sanjay Poddar, learned Sr. Advocate leading
Ms.Aakanksha Kaul, Advocate for the respondent
No.1/SDMC accepts notice and states that ther e were bona
fide reasons for scrapping the entire tender process and in
any event, the tender document itself state in para 8.5, that
the SDMC reserves its right to scrap the tender without
offering any reasons. He states the reasons that weighed
with the respondent No.1/SDMC for scrapping the tender
process was the high quotations of all the bidders
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including the petitioner herein for all the three works
involved ”
6. The Court directed the respondents to file their counter affidavit and
gave an opportunity to the petitioner to file its rejoinder. The Court also
restrained the respondent SDMC from floating a fresh tender for selection of
a vendor for the work, subject matter of the writ petition.
7. The SDMC has filed its short counter affidavit and the petitio ner has
also filed its rejoinder to the said counter affidavit.
8. The respondent SDMC in its counter affidavit has defended its action.
Firstly, it is stated that the respondent SDMC had reserved its right to reject
any, or all of the bids without assigni ng any reasons there for, and that the
SDMC may terminate the RFP process at any time without assigning any
reason and upon such termination, SDMC shall not be responsible for any
direct or indirect loss o r damage arising out of such a termination.
9. Clause 7 .4(I) was referred to, which states “This RFP is not an offer
and is issued with no commitment. Corporations reserve the right to
withdraw the RFP and change or vary any part thereof at any stage …”
10. Reference is also made to Clause 7.7 which provides “ The
Corporations may terminate the whole bidding process at any time and
without assigning any reason. ”
11. The respondents also relied upon Clause 8.5 which, inter alia,
provides “ The Corporations also reserve the right to accept or reject any or
all bid(s), wit hout thereby incurring any accountability to the affected
Bidder(s) or any responsibility to inform the affected Bidder(s) of the
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reasons of accept or reject any or all Proposal(s) The acceptance of the
RFP response will rest with the Corporations, which does not bind
themselves to accept any specific bid and reserve the right to reject any or
all proposals received, without assigning any reason ”
12. The respondents also rely upon Clause 9.2 which describes the
“Overall Evaluation Process” and, inter alia, pro vides:
“I. Proposals will be evaluated by the Committee appointed by
the Corporations or their designated representative(s).
Corporations or such other authority designated by
Corporations as the case may be is also referred to herein as
the Committee…
III….. Corporations may seek inputs from their professional,
external experts, external consultants in the Technical and
Price Bid evaluation process.
IV. The Price Bids for the technically qualified bidders will then
be opened and reviewed to determine whe ther the Price Bids
are substantially responsive.”
13. The stand of the respondents is that under Clause 11.1 , the L1 Bidder
will be “considered” for award of contract, implying thereby that the L1
Bidder does not automatically get a vested right to be awarded the contract.
14. It is well settled in law that a Request for Proposal is only an
invitation to offer. In respon se to the Request for Proposal , the bidder
submits its proposal/ bid, which constitutes an offer under the Indian
Contract Act , 1872. That off er may, or may not be , accepted and unless
accepted, a binding contract does not come into being. The entity inviting
offers is not bound to accept any offer, including the highest or the lowest
offer, as the case may be. This position is not only well e stablished in law ,
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but invariably is also expressly so stated in the Request for Proposal / NIT.
Even, in the present case, as noticed herein above, the said position was
clearly set out in more than one ways in the RFP by the respondents.
15. Having said th is, we cannot lose sight of the fact that the RFP was
invited not by any private entity , but by the SDMC which is a public
authority and its actions are, therefore, liable to tested on the touchstone of
Article 14 of the Constitution of India. The respond ents can, therefore, be
called upon to show that they have acted bona fide and for good reason in
the matter of withdrawal of the RFP after having invited bids, and after
opening them. Whenever a challenge is laid to such an action, the Courts do
call for an explanation and the reasons which prompted the taking of such a
decision. After all, RFP’s are not issue d and bids are not invited in a casual
manner and, even though, there may be no vested right in any bidder to
claim that the RFP should culminate i n the award of a contract, much less to
itself, the bidders do have the legitimate right to, at least, find out as to what
are the reasons for the cancellation , and assail those reasons if they are
arbitrary, whimsical or mala fide . The scope of interfere nce in such
situations is, therefore, confined to call for the reasons which prompted the
action taken by the public authority in cancelling the RFP/ NIT, and to
examine whether those reasons are germane and provide sufficient
justification for the decisio n taken. It is only when the reasons are non –
existent, or arbitrary, whimsical or mala fide that the Court may interfere,
and not otherwise.
16. We may now proceed to take note of the reasons disclosed by the
respondent SDMC in its counter affidavit for can cellation of the RFP. In
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this regard, we may quote the relevant paragraphs from the counter affidavit,
which reads as follows:
“7. That the decision to cancel the tender process and recall the tender
with suitable modifications was taken after considering the observations of
the Finance Department that the rates quoted by the petitioner were much
higher than those of the existing vendor and estimated costs and the
variation in this regard is wide. Having compared the rates, a decision
was taken to cancel the tender process and recall the tender so that more
firms may participate and hence, SDMC may get better rates which would
be conducive under the exceptional situation of financial hardships in the
Corporations and in the interest of public money . Few f actors leading to
the decision are as under:
7.1 The cost of various components that form a part of the tender in
dispute was estimated by M/s. WIPRO, a leading IT company in the market
and consultant of e -GOV project of the answering respondent.
7.2 The r ates in the financial bid submitted by the Petitioner were found
to be higher in respect of certain components than the costs estimated by
M/s. WIPRO in respect of those components. The difference was as under:
S.No. Component Estimated Cost Quote of the
petitioner Variance
(%)
1. AMC Charges of
network equipment
including network
monitoring software 10,85,00,000 6,97,14,400 +20.79
2. AMC for Hardware
peripherals
including anti virus 5,79,61,600
3. AMC charges of
printers and
scanners 33,77,160
4. Internet bandwidth 11,95,00,000 9,79,59 ,636 -18.02
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5. CSB IT assistant
cum operators cost 4,27,00,000 4,77,90,000 +11.92
6. Maintenance &
support cost
including helpdesk
software, resources
etc. 1,33,00,000 3,29,62,000 +147.83
TOTAL 28,41,00,000 30,97,64,796 +9.03

7.3 That the aforegoing table clearly shows that the bid of the petitioner
was much higher for many components than the estimated cost. Reference
may be made to serial n umbers 1 -3,5 and 6 of the table. It is also apropos to
mention that the estimated cost also considered a sum of Rs.2,84,00,000/ –
(Rupees Two Crores and Eighty Four Lakhs Only) as a “Contingency
Budget” created for factors in network feasibility, remote of fice locations
and dilapidated infrastructure. However, the same was over and above the
scope of the tender and hence, not considered while comparing with the bid
of the petitioner.
7.4 Besides the Finance Department pointed out that whereas the existing
vendor is providing AMC for 6,400 desktops and 1,000 workstations at an
annual rate of Rs. 1.01 crore, the Petitioner had quoted an annual rate of
Rs. 1.93 crore for the same service for a substantially lesser number of
desktops (i.e. 4,000) and workstatio ns (i.e.800) . As per M/s WIPRO, the
estimated cost of AMC of 4000 desktops and 800 workstations is Rs.1.58
crore. Thus, the quote of the Petitioner is 22% above the estimated cost.
7.5 Similarly, for AMC of Network Component, LAN support including
networ k monitoring software, M/s. WIPRO had estimated Rs. 1.15 crores
and the rate of the existing vendor is Rs.1 crore. For the same item, the
Petitioner has quoted Rs.2.32 crores. Thus, the quote of the Petitioner is
102% above the estimated cost.
7.6 For CS B IT Assistant cum Operators Cost, M/s WIPRO estimated
Rs.1.42 crores and the rate of the existing vendor is Rs. 1.45 crore.
However, the Petitioner has quoted Rs.1.59 crores. Thus, the quote of the
petitioner is 12% above the estimated cost.
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7.7 The o verall financial implication of appointing the Petitioner was
estimated by the Finance Department to be Rs.10,32,54,932/ – per year as
against the existing arrangement of Rs. 9,84,59,617/ – (for a higher
number of desktops and workstations). As per the Fina nce Department, if
the number of desktops and workstations are reduced to the extent of the
RFP then the financial implications of existing vendor would come to Rs.
9,48,88,465/ -. As per the bills of existing vendor, it was found that
Rs.76.41 lacs were b eing paid per month which comes to Rs.9.16 crores
per year
7.8 In view of the aforesaid and also the fact that the answering
respondent is facing an acute financial crunch in the prevalent times, the
Finance Department suggested reconsidering the proposal to award the
work to the Petitioner and/ or engaging in negotiations with the Petitioner.
However, the CVC has issued guidelines on post tender negotiations (vide
its circular dated 03.03.2007 & dated 20.01.2010). The CVC has observed
that post tender neg otiations can often be a source of corruption. For this
reason and others the CVC does not permit post tender negotiations other
than in exceptional circumstances.
7.9 Accordingly, the decision to withdraw the tender was taken with the
bona fide intention of ensuring the lowest rates to the answering respondent
saving unnecessary expense to the public exchequer. ” (emphasis supplied)
17. The submission of Mr. Mehta, learned counsel for the petitioner is that
from the counter affidavit of the respondents, first ly, it is not clear as to why
the respondents have relied upon the estimate provided by M/s. WIPRO.
The answer to this submission is found in paragraph 7.1 of the counter
affidavit which we have reproduced herein above , and the same is that M/s.
WIPRO is the consultant of e -GOV project of the SDMC. Thus, the
respondents relied upon the expert opinion of its consultant. This only
shows that the respondents have acted bona fide and in a transparent manner ,
and the decision has not been taken on the basis o f a view formed by either a
political figure or by anybody in the bureaucracy , who may not have
expertise in the matter.
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18. Mr. Mehta further submits that since the petitioner was the L1 Bidder,
it was entitled to be considered for award of the contract. Th ere is no quarrel
with this proposition. However, that does not mean that the L1 Bidder
would get a vested right to be awarded the contract. Mr. Mehta has taken us
through the tabulation contained in the counter affidavit, and also the
averment that the existing vender is providing the AMC for 6400 desktops
and 1000 work stations at an annual rate of Rs.1.01 crores, in respect
whereof the petitioner has quoted the annual rate of Rs. 1.93 crores. He
submits that even M/s. WIPRO had estimated the cost of A MC of 4000
desktops and 800 work stations at Rs. 1.58 crores. He raises a doubt as to
how the existing vendor is offering its AMC at a much reduced rate of
Rs.1.01 crores per annum , when the estimated cost of AMC is Rs. 1.58
crores for a lesser number of desktops and work stations.
19. Here we may observe that, in the present case, we are examining
whether there were good and germane reasons for the respondents to take the
decision to scrap the RFP. The reason emerging from the counter affidavit is
that the petitioner’s offer was 22% above the estimated cost. The
respondents have stated that all the offers received by them , including that of
the petitioner – which was the lowest offer, were on the much higher side.
We are not considering, in the present pe tition, as to why and how the
existing vendor is providing annual rates which are less than even those
estimated by the consultant M/s. WIPRO. That is the existing vendor’s
outlook .
20. Mr. Mehta next argued that the overall financial implication of
appointme nt of petitioner was estimated by the Finance Department to be
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Rs. 10,32,54,932/ – per year, against the existing arrangement of Rs.
9,84,59,617/ -. Thus, there was not much of a difference. Here we may
observe that a perusal of Clause 7.7 of the counter a ffidavit shows that,
firstly, the existing bill is lower by about 48 lakhs per annum when
compared to the petitioner’s financial bid. Moreover, the present vendor is
providing its services for a higher number of desktops and work stations
than those covere d by the offer of the petitioner which, in any event, is
higher. Pertinently, it is disclosed that as per the bill of the existing vendor,
it was being paid Rs.76.01 lakhs per month and the annual amount works to
an even lesser figu re of Rs. 9.16 crores p er year. Thus, this submission has
no merit. In any event, the petitioner cannot insist that its offer – which
would increase the financial burden on the respondents , should be accepted.
21. The next submission of Mr. Mehta is that the petitioner being th e L-1
bidder, it should have been called for negotiation, and if the petitioner had
been called for negotiation, it could have matched the rates being offered by
the current vendor. On this aspect, we may observe that the respondent is
not bound to enter into any negotiations with any bidder, including the L -1
Bidder. That is the right reserved by the respondents in Clause 12.2 of the
tender conditions. However, it is not obliged to do so. Moreover, the CVC
has issued guidelines, taken note of in paragr aph 7.8 of the counter affidavit,
wherein the CVC has not favoured post tender negotiations on the ground
that it can often be a source of corruption. In this light, we do not find the
petitioner’s grievance – that it was not called for negotiations des pite it being
the L -1 Bidder, to have any merit.
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22. Mr. Mehta has argued that the guidelines issued in the Manual of
Procurement of Works, 2019 by the Government of India, Ministry of
Finance, Department of Expenditure in relation to rejection of all bids/ re –
tender, inter alia, provide:
“5.6.8 Rejection of All Bids/ Re -tender
i) The Procuring Entity may cancel the process of
procurement or rejecting all bids at any time before intimating
acceptance of successful bid s under circumstances mentioned
below . In c ase where responsive bids are available, the aim
should be to finalise the tender by taking mitigating measures
even in the conditions described below. If it is decided to rebid
the tender, the justification should balance the perceived risks
in finalisati on of tender (marginally higher rates) against the
certainty of resultant delays, cost escalations, loss of
transparency in re -invited tender. After such decision, all
participating bidders would be informed and bids if not opened
would not be opened and i n case of manual tenders be returned
unopened:
a) If the quantity and quality of requirements have changed
substantially or there is an un -rectifiable infirmity in the
bidding process;
b) When none of the tenders is substantially responsive to the
requir ements of the Procurement Documents;
c) None of the technical Proposals meets the minimum technical
qualifying score;
d) If effective competition is lacking. However , lack of
competition shall not be determined solely on the basis of the
number of Bidder s. (Please refer to para above also regarding
receipt of a single offer);
e) The Bids’/Proposals’ prices are substantially higher than
the updated cost estimate or available budget;
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f) If the bidder, whose bid has been found to be the lowest
evaluated bi d withdraws or whose bid has been accepted, fails
to sign the procurement contract as may be required, or fails to
provide the security as may be required for the performance of
the contract or otherwise withdraws from the procurement
process, the Procurin g Entity shall cancel the procurement
process. Provided that the procuring entity, on being satisfied
that it is not a case of cartelization and the integrity of the
procurement process has been maintained, may, for cogent
reasons to be recorded in writing , offer the next successful
bidder an opportunity to match the financial bid of the first
successful bidder, and if the offer is accepted, award the
contract to the next successful bidder at the price bid of the first
successful bidder.
ii) Approval for r e-tendering should be accorded by the CA
after recording the reasons/ proper justification in writing. The
Procuring Entity should review the qualification criteria, and
technical and commercial terms of the tender before re –
tendering and also consider wid er publicity to attract an
adequate number of responses . The decision of the Procuring
Entity to cancel the procurement and reasons for such a
decision shall be immediately communicated to all bidders that
participated in the procurement process. Before re tendering,
the Procuring Entity is first to analyse the reasons leading to
retender and check whether, while floating/issuing the enquiry,
all necessary requirements and formalities such as standard
conditions, industry friendly qualification criteria, and
technical and commercial terms, wide publicity, sufficient time
for bidding, and so on, were fulfilled. If not, a fresh enquiry is
to be issued after rectifying the deficiencies. ”
(emphasis supplied)
23. A perusal of the aforesaid Clause itself would s how that one of the
reasons for rejection of all bids/ re -tender, recognized in the said guidelines
is where the bids/ proposal’s prices are substantially higher than the updated
cost estimate, or the available budget. As noticed herein above, the offer
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made by the petitioner is substantially higher than the estimate prepared by
the expert M/s. WIPRO Limited. Thus, the cancellation of the RFP is in
accordance with the aforesaid guidelines.
24. Another aspect raised by Mr. Mehta is that the respondents, whil e
issuing the RFP , did not disclose estimated cost of the work. He has drawn
our attention to the RFP , which shows the estimated cost as “0”. We do not
find any merit in this submission of Mr. Mehta for the reason, firstly, that the
petitioner did not ra ise the said aspect by approaching the Court when the
RFP was floated. If the petitioner had any grievance with the non -disclosure
of the estimated cost, it was for the petitioner to approach the Court even
before participating in the bidding process. Ha ving participated in the
bidding process without raising any grievance in this regard, the petitioner
cannot now turn around to raise the said aspect is an infirmity. Even if this
submission of the petitioner is accepted – that there was an infirmity in t he
RFP, that itself would provide sufficient justification for its cancellation,
which has been done. That apart, the respondents have disclosed in their
short counter affidavit the reasons for not disclosing the estimated cost in the
following words:
“That it is also submitted that the estimated cost could not have
been released along with the tender document as it would have
had a deleterious effect on free and competitive bidding. There
are only a few players/ prospective bidders capable of
participati ng in the bid. Hence, there is much short of a perfect
market. Major variation in the bids of the petitioner itself
shows that in case the estimated costs were released, the bids
would have been hinged on the said rates without any
competitive bids. For example, the bid of the petitioner in
respect of “Internet Bandwidth” component is more than 18%
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less than the estimated cost. Such an offer/ bid would not be
available, if the estimated costs were released before hand.
Hence, the same were not released in the interests of the
revenue. Moreso in the present circumstances, when the
answering respondent is facing several financial stress.”
25. The aforesaid justification offered by the respondents cannot be said
to be either arbitrary, or whimsical.
26. Mr. Meh ta has also drawn our attention to Clause 2.7 of Chapter II of
the Manual for Procurement of Works, 2019 and the CVC guidelines vide
OFF-1-CTE -1 dated 05.02.2004 and in particular Clause 2.7 thereof, as well
as to OFF -1-CTE -1 dated 05.02.2004, which reads as follows:
“(e) Common Irregularities in the award of contracts
The CTE Organisation of the Central Vigilance Commission conducts
independent intensive examinations of various types of works and contracts
executed by the organizations under its purview. T he lapses and deficiencies
observed during the course of such examinations are brought to the notice
of the CVOs, for suitable corrective action. With a view to prevent
recurrence of such lapses and irregularities and for improving the systems
and procedur es in the organizations, a few booklets have also been issued
by the CTEO. However, it is observed that certain common deficiencies and
irregularities continue to plague the /systems in a large number of
organizations. Some of these, noticed during recent i nspections are
enumerated as under:
Appointment of consultants continues to be done in an arbitrary
manner . At times , two or even three consultants are appointed for a work
with no clear cut and some times over lapping responsibilities. A PSU, in a
recent case, in addition to the engineering and project management
consultants appointed an „inspection and expediting ‟ consultant with no well
defined role for them.
The tendency of over dependence on the consultants continues. All
activities are left complete ly to the consultants. In a recent inspection of an
Oil PSU, the tenders for a big work of about Rs.20 crores were issued on the
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basis of a single page estimate submitted by the consultants and the same
was revised by the later upwards by 20 after opening of price bids, in order
to justify the quoted rates. A detailed and realistic estimate must be
prepared before issue of tender.
Some organizations prefer limited tendering system, restricting
competition to their approved contractors. The selection of the se contractors
at times is arbitrary and due to lack of competition or cartel formation
amongst such group of contractors, the contracts are awarded at high rates.
This need to be discouraged and the organizations must ensure that
contracts are awarded on the basis of competitive bidding at reasonable
rates.
• The works are awarded without preparing any market rate
justification. The comparison at times is made with works which were
awarded few years back. This procedure cannot be considered objective and
appropriate for justifying the awarded rates. The justification should be
based on realistic prevailing rates.
• In a recent inspection of an Oil PSU, it was noticed that revised
price bids were asked from all the bidders, as rates were high vis -à-vis the
estimate. This tantamount to negotiations with firms other than L -1 and is a
clear violation of CVC instructions in this regard. The negotiations should
be an exception rather than a rule and should be conducted if required, only
with the L -1 bidder.
• The organizations generally make provisions for a very small
amount of say Rs.50,000/ – or R.1 lakh as earnest money. This amount is
grossly insufficient to safeguard the organization ‟s interest in high rate
tenders running into several crores of rupees. Thi s needs to be revised to a
sufficient amount.
• The post award amendments issued by the organizations, at times
recommended by consultants, without taking into account he financial
implications favour the contractors. Such post award deviations without
financial adjustments are unwarranted and against the principles of
competitive tendering.
• The tender documents and the agreement are maintained in loose
condition, are not page numbered and not signed by bother parties. This is
highly objectionable. In o rder to ensure that agreements are enforceable in
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court of law, it is imperative that the agreements are well bound, page
numbered, signed by both the parties and well secured. This shall also
prevent any possibility of interpolation and tampering of the d ocuments.
• Loose & incomplete implementation of contract clauses p ertaining
to insurance, Workmen‟ s Compensation Act, ESIC, Labour Licenses etc. has
been noticed, which give undue financial benefit to the contractors.
• Time is the essence of any contra ct. It has been observed that at
times the work is extended and even payments released without a valid
extension to the agreement. This has legal implications and in case of
disputes, may jeopardize the interests of the organization. Timely extensions
to the contracts and BGs if any must be ensured.
In order to make contract management more transparent and
professional CVOs are requested to circulate this memorandum to the
concerned officials in their organizations. This OM is also available in the
Commiss ion‟s website ”
27. Mr. Mehta submits that the respondents have not followed the
aforesaid guidelines. We do not find any merit in this submission since
there is no basis for the same. The petitioner ’s claim that the aforesaid
“Common Irregularities” existed in the RFP in question, is a shot in the dark.
We cannot assume that the “Common Irregularity” noticed in the aforesaid
two clauses were present in the RFP in question. Moreover, even if this
submission of Mr. Mehta were to be accepted, the same would o nly justify
its cancellation, which has been done by the respondents.
28. Lastly, Mr. Mehta has argued that the counter affidavit filed by the
respondents is not pr emised on the record. The petitioner has not had the
occasion to look at the record, and even this submission of Mr. Mehta is not
founded on any credible document or evidence. Nevertheless, we called for
the Original Record to satisfy our conscience , whether the reasons disclosed
by the respondents in their counter affidavit for cancellation of t he RFP are,
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indeed, forming part of the record, or whether they have been stated in the
counter affidavit as an afterthought. The Original Record has been produced
before us in a sealed cover, and we have perused the same. The record
contains a detailed note by the Consultant (h/w) dated 11.07.2020. The said
note reads as follows:
“ नगर नग
Office of CA cum FA
07/F&G/SDMC/2020/307/224 Dated: 08/07/2020
Sub: Selection of vendor for providing internet bandwidth, AMC & maintenance of IT
infrastructure network management for the three Municipal Corporations of Delhi

Deptt. in its note at page 64/N stated that the estimated cost for
various components was prepared by M/s. Wipro, who is one of the leading
IT company in the market and consultant of e -GOV project of MCD. The
rates of the proposed contractor in some items are higher than the estimated
prepared by M/s. Wipro as well as of existing vendor like the estimate cost
of AMC of Desktops (4000 nos. & Workstation (800 nos.) is 1.58 crores and
the rate of existing vendor is Rs. 1.01 crores for 6400 desktops & 1000
Workstations, against which L1 vendor quoted RS. 1.93 crores for 4000
desktops & 800 workstations (22% above the estimated cost).
Similarly in item no 5 & 6 the M/s. WIPRO estimated Rs. 1.15 crores
and the rate of existing vendor is Rs. 1.00 crore against wh ich L1 quoted
Rs.2.32 crores ( 102% above of estimated amt.) and Rs. 1.42 crores & Rs.
1.45 cr. against which L1 quoted Rs. 1.59 crores (12% above estimated
cost) respectively.
M/s. Wipro vide its email dated 12/Oct. 2019 (at page 121/C) stated
that there for AMC & bandwidth there may be a variation of 10 -15% on
competition at that time.
As there is huge variation in estimation rates and quantities of these
components, reason(s) for not opt for negotiation with L1 vendor maybe
placed on record.
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Even the overall financial implication of proposed vendor is Rs.
10,32,54,932/ – against the existing arrangement of Rs. 9,84,59,617/ -(with
6400 desktop & 1000 workstations). If the number of desktops and
workstations reduced to the extent of RFP quantities for the existing vendor,
then the financial implications of existing vendor comes to Rs. 9,48,88,465/ -.
As per bills of existing vendor, it has been observed that per month
Rs. 76.41 lacs is being paid which comes to Rs. 9.16 crores per year. Thus
the rates of lowest bidder is highe r than the payment being made at present.
Since, SDMC is facing acute financial crunch, department may
reconsider its proposal.
This issues as per approval of CA cum FA.

Subject: – Selection of vendor for providing inter net bandwidth , AMC &
maintenance of IT infrastructure, network management for the three
Municipal Corporations of Delhi.
May kindly see the observations of finance department on pre -page
w.r.t the proposal of IT department vide notes on page 56 -57/N.
2. Finance department has observed as under:
(i) Rate of the proposed contractor in some items are higher than the
estimated cost prepared by M/s Wipro as well as of the existing vendor like
(a) The estimate cost of AMC of Desktops, etc.
(b) AMC of network components, LAN support, including network
monitoring software, etc.
(c) CSB operations
(ii) Wipro vide its email dated 12 Oct 2019 (page 121/ c) stated that for
AMC & bandwidth there may be a variation of 10 -15% on competition at
that time.
3. Finance Department is of the opinion that there is huge variation in
the estimated rates and quantities of the components and has therefore,
requested to place on record reasons for not opting for negotiation with the
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L1 Vendor. They have also stated that SDMC is facing acute financial
crunch and has requested to reconsider the proposal.
4. As already stated in the earlier clarification to point -4 on page 64/N,
the bids received in response to the present RFP cannot be compared with
the services provided by the s ub vendors of Tech M who are providing
support services presently. Because, the new vendor is to be selected on
fresh parameters in terms of scope of work, technology changes, more
qualified manpower (hardware engineers & CSB Operators). For example,
finance department has pointed out that the existing vendor is providing
AMC for Desktop (6400 Nos.) and Work stations (1000 Nos.) at an annual
rate of Rs. 1.01 crore whereas, the L1 vendor as quoted an annual of Rs.
1.93 crore for the same service for a less number of desktop (4000 Nos.) and
workstations (800 Nos.). It may be mentioned here that the estimate cost of
Rs.1.58 Crore for one year of AMC for desktop (4000 Nos.) and
workstations (800 Nos.) includes provision of antivirus software. The
existing ve ndor does not provide antivirus software. Similarly, AMC of
printer and scanner, network monitoring software (NMS Tool), earthing at
92 locations (EDMC HQ, 79 regional offices & 12 zonal offices), helpdesk
software tools (CA -Tools), providing bandwidth at EDMC HQ are not
within the scope of work of the existing vendor. However, all these activities
are within the scope of work of the instant RFP. Moreover, the rates quoted
by the L1 vendor is for a period of three years, whereas the above
comparison has been made on annual basis only.
5. The component -wise estimated cost approved for the present RFP vis –
à-vis the rates quoted by the L1 bidder is given the table below:
Sl.
No. Component Estimated Cost L1 Quote
1. AMC Charges of network
equipment includi ng
network monitoring
software 10,85,00,000.00 6,97,14,400.00
2. AMC for Hardware
peripherals including anti
virus 5,79,61,600.00
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3. AMC charges of printers
and scanners 33,77,160.00
4. Internet bandwidth 11,95,00,000.00 9,79,59,636.00
5. CSB IT assi stant cum
operators cost 4,27,00,000.00 4,77,90,000.00
6. Maintenance & support cost
including helpdesk software,
resources etc. 1,33,00,000.00 3,29,62,000.00
7. Contingency Budget (To
factors in network
feasibility, remote office
locations, dilapidated
infrastructure) 2,84,00,000.00 ———

Total 31,25,00,000.00 30,97,64,796.00

6. From the above table, it may be seen that although the total price bid
of the L1 bidder is within the total estimated co st approved, the rates quoted
by the L1 bidde r for some components of the RFP are higher than the
estimated cost for those components, as observed by finance department.
The estimated cost for the first three items in the above table is Rs. 10.85
Crore, w hereas L1 bidder has quoted Rs. 13,10,53,160/ -. Similarly, for item
No. 5, the estimated cost is Rs. 4.27 Crore whereas L1 bidder has quoted Rs.
4,77,90,000/ -; and for item No. 6, the estimated cost is Rs. 1.33 Crore
whereas L1 bidder has quoted Rs. 3,29,6 2,000/ -.
7. Regarding the suggestion of finance department for negotiation with
the L1 bidder, it is mentioned that CVC has issued guidelines on post tender
negotiations vide its circular dated 3.3.2007 and subsequent clarification
vide circular dated 20.0 1.2010. The above circulars of CVC are placed in
file. Relevant extract from CVC circular dated 3.3.2007 is reproduced
below;
“Reference is invited to the Commission‟s circulars of even number,
dated 25.10.2005 and 3.10.2006, on the above cited subject. In
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supersession of the instructions contained therein, the following
consolidated instructions are issued with immediate effect; –
(i) As post tender negotiations could often be a source of corruption,
it is directed that there should be no post -tender nego tiations with L –
1, except in certain exceptional situations. Such exceptional
situations would include, procurement of proprietary items, items with
limited sources of supply and items where there is suspicion of a
cartel formation. The justification and details of such negotiations
should be duly recorded and documented without any loss of time
(ii) In cases where a decision is taken to go for re -tendering due to
the unreasonableness of the quoted rates, but the requirements are
urgent and a re -tender fo r the entire requirement would delay the
availability of the item, thus jeopardizing the essential operations,
maintenance and safety, negotiations would be permitted with L -1
bidder(s) for the supply of a bare minimum quantity. The balance
quantity shoul d, however, be procured expeditiously through a re –
tender, following the normal tendering process. ”
8. CVC circular dated 3.3.2007, as may be seen from the extract
reproduced above, allows negotiation with L1 bidder only in exceptional
situations which in clude, procurement of proprietary items, items with
limited sources of supply and items where there is suspicion of a cartel
formation. The instant tender/ RFP is for selection of vendor for providing
internet bandwidth, AMC & maintenance of IT infrastruc ture, network
management for the three Municipal Corporations of Delhi, which may not
perhaps fall in the “exceptional situations” mentioned in CVC circular
dated 3.3.2007.
9. In view of the above, it is for orders whether the ongoing tendering
process may be canceled in view of the fact that the rates quoted by the L1
bidder for the components mentioned in para 6 above are on higher side and
also that SDMC is facing acute financial crunch as pointed out by finance
department, and a fresh tender may be floa ted.
Submitted Please
Sd/-
Consultant (h/w) ”
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29. The said note was approved by all the Officers in the hierarchy up to
the Commissioner, SDMC. The aforesaid note reflects the same reasons as
are disclosed in the counter affidavit. Thu s, it cannot be said that the
respondents have cooked up their justification for cancellation of the RFP
after the cancellation , and only with a view to justify their actions before this
Court. The reasons for cancellation existed on the record before the
cancellation took place , and it is on the basis of those reasons that the RFP
was cancelled. Therefore, we do not find any reason to doubt the bona fides
of the respondent s in cancelling the RFP. Though Mr. Mehta has stated that
the RFP has been cancell ed with a view to favour one particular bidder, but
this plea is completely non -substantiated. We fail to understand as to how
any particular bidder would benefit if the RFP is cancelled.
30. Another submission of Mr. Mehta is that the RFP has been cancelled
so that the existing vendor could continue to perform the work. In our view,
this submission is far -fetched. Merely because the previous contract may
have expired, is no reason to discontinue the taking of work from the pre –
existing contractor till the new contractor is appointed . After all, the
respondents need service providers to maintain their computer systems on a
day to day basis. The existing situation is not that the respondents are
having to shell out much higher amount s to procure the relevan t services ,
than what has been offered by the petitioner. Therefore, there is no reason
for us to accept the petitioner’s submission that the cancellation of the RFP
has been done with a view to favour the existing service provider.
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31. For all the aforesai d reasons, we do not find any merit in the present
writ petition. The same is dismissed leaving the parties to bear their
respective costs.

(VIPIN SANGHI)
JUDGE

(REKHA PALLI )
JUDGE
JANUARY 22, 2021
N.Khanna

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