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The interpretation of the contractual terms given by the authority inviting tender should be deferred to unless there are good grounds to interfere with the same : Delhi High Court

Company inviting tenders has the required liberty to reject tenders to their opinion based on contractual requirement not being met. This was held in the judgment passed by a two-bench judge comprising Hon’ble JUSTICES Mr VIPIN SANGHI and MR. JUSTICE JASMEET SINGH, in the matter URSAPHARM INDIA PRIVATE LIMITED V. EMPLOYEES STATE INSURANCE CORPORATION, dealt with an issue where the petitioner filed a petition against the respondent to assail the letter passed by the respondent authority informing the petitioner of the rejection of its Bid in response to E-Tender Enquiry contract for supply of Drugs for use of ESI institutions all over the country.

Petitioner seeks a further direction to the respondents to issue the Letter of Award to the petitioner in terms of the aforesaid E-Tender Enquiry for supply of drugs for use in ESI Institutions in the country. The case of the petitioner is that the petitioner is an Indian Company, and is a subsidiary of the German Company, namely, Ursapharm Germany.

In the year 2018, the respondent issued a Tender Enquiry calling for submission of bids at fixed rates for several Drugs for supply to ESI Institutions across the country.

The petitioner submitted its bid for the Drug Povidone: eye lubricant and the same was accepted by the respondent. The contract in relation to the said Tender Enquiry was for the period 2018-2020. The contract was further extended till 31.08.2021.

The petitioner issued another identical Tender Enquiry, calling for submission of bids for fixing the rates of several Drugs, including „Povidone’, again for supply to ESI Institutions across the country for a period of 2 years. The petitioner again participated in the tender process, and had a legitimate expectation of success in the present Tender process as well.

On 06.07.2021, the petitioner received an E-mail communication from the respondent, informing the petitioner that its bid had been rejected. The petitioner states that no reasons were communicated except that “Annexure TS in the audited report of the principal firm (imported) does not adhere to the terms and conditions in pre-bid Corrigendum”.

Counsel for the respondent, has submitted that the respondents had made clear their stand well in advance, at the pre-bid meeting, by issuing the aforesaid pre-bid corrigendum. The prebid corrigendum had been published on the respondent’s website and all the bidders were obliged to follow up the same. He also submits that they can reject the bid by placing reliance on the turnover clause.

After hearing both the parties The hon’ble Delhi High court dismissed the petition as the holding company of the bidder company may have the requisite turnover, but that does not mean that the holding company is obliged to commit to meet the monetary requirements of the bidder to fulfill its contractual obligations. There is no binding obligation cast on the holding company to do so, and the same cannot be enforced either by the bidder, or the authority inviting the bids. The approach of the respondents in insisting that the bidder itself has met the turnover criteria, therefore, cannot be faulted and there is nothing unreasonable or arbitrary about the same.

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