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S.2 Integrity Pact- Employer decision cannot be faulted, when supported by material on record and there is no victimization or colorable exercise: Bombay High Court

The decision of the employer that Section 2 of the Integrity pact is said to be violated can be arrived at with reasonable support of material on record with no direct evidence. Such a decision cannot be said to be faulted especially when there is no case of victimization or colorable exercise. This judgment was passed in the case of O.K. Marine vs. Oil and Natural Gas Corporation Ltd. and Ors.[Writ Petition No.951/2021] by a Double Bench consisting of Hon’ble Justice M.S. Karnik and Hon’ble Justice S.C. Gupte.

The petitioner and Respondent no.1 and Respondent no.4 and no.5 were rival contractors and were awarded the contract pursuant to a bidding process; which is challenged by the petitioner. The petitioner claimed to be a sole proprietor firm carrying on the business of freshwater supply through barges. The petitioner was one of the contractors who supplied water to the 1st respondent ONGC. In November 2020, they called for an Open Tender for e-procurement for the supply of water to its offshore facilities, including the Nhava Supply Base. The tender was a two-bid system – a technical bid followed by a commercial bid. The Petitioner was one of the contractors, alongside respondents no.4 and 5 and Royal Traders who happened to be a sole proprietorship of the petitioner’s father. Whilst Respondent no.1 cleared the technical bids of all four bidders, including the Petitioner and his father. At the stage of consideration of commercial bids, the bids of both the Petitioner and his father were not opened because it came to notice that the proprietors of the two firms were, respectively, the son and father. Respondent no.1 reasoned that the two would have access to vital information pertaining to the bid submitted by the other, including the prices quoted by each other and the same would restrict competitiveness or introduce cartelization in the bidding process and thereby violating Section 2 of the Integrity Pact.

The petitioner argued that while they had a relationship of father and son, the circumstances cannot imply any undisclosed agreement or understanding between the two – formal or informal, or amount to any action so as to restrict competitiveness or introduce cartelization in the bidding process.

The High Court of Bombay observed that none of the grounds urged by the petitioner for the support of their grievance is commendable. Firstly, the father and son have the same address as per the letterheads and the same is also present in the MSME certificates. The Court observed that the decision of the Respondent has been supported by some material on record. Even if the State cannot act in a matter of commercial contract in a wholly unreasonable or arbitrary or capricious manner, its administrative decision cannot be put on the pedestal of a quasi-judicial decision.

The court emphasized that as long as the decision is reasonably supported by material on record and there is no case of victimization or colorable exercise, the decision cannot be faulted. The court held that there is no obligation on the bidder to open the commercial bid once he is responsive to the technical bid. In the present case cartelization was not the ground for rejection. It was rather a portability of an undisclosed agreement or understanding, formal or informal, which has the tendency of restricting competitiveness.

The High Court of Bombay concluded by holding, “There is, accordingly, no merit in the petition. The petition is dismissed. No order as to costs.”

Click here to read the judgment.

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