Delhi High Court allowed the writ petition filed and dismissed the order passed by the Container Corporation of India Ltd.

Title: Loadstar Equipment Ltd. Vs Container Corporation of India Ltd.

Decision: 04.07.23

W.P.(C) 5040/2023 & CM APPL. 19721/2023




Delhi High Court allowed the writ petition filed and dismissed the order passed by the Container Corporation of India Ltd, disqualifying the petitioner from participating in the bidding of tender bearing reference no. CON/AREA1/TECH/FORKLIFT-20/2023, which was floated by Respondent No. 1 on their website vide NIT dated 08.02.2023.

Facts of the Case

The Respondent No. 1 invited applications on the government portal for bids from Original Equipment Manufacturers (OEMs)/authorized dealers through a two packet online open tendering system, at an estimated total cost of Rs. 38,11,40,000/-, for the design, manufacture, supply, and commissioning of 20 forklifts with a capacity of 35 tonnes at a specified terminal. This is the background to the current petition.

Respondent No.1/CONCOR subsequently issued a corrigendum in respect of the part of the NIT document which lays down qualification criterion for bidders. Accordingly, Clause 2.1(b) under Section II “General Instructions to Bidders” was added to the NIT document.

Upon examination of the bid documents in the technical stage, Respondent No.1 issued communications to the bidding parties on 23.03.2023 and again on 24.03.2023, calling upon them to submit additional documents to rectify discrepancies found in the documents, latest by 29.03.2023. and The Petitioner submitted their reply to the aforesaid communication and submitted documents to the Respondent vide emails dated 28.03.2023 and 29.03.2023

On a perusal of the documents submitted by the Petitioner, the Tender Evaluation Committee of Respondent No.1 found the Petitioner to be technically not qualified and rejected the bid of the Petitioner vide impugned communication dated 18.04.2023. The Petitioner thereafter addressed an email to the CMD of Respondent No. 1, stating that no reasons had been assigned for their disqualification, and requested the intervention of CMD of Respondent No. 1 to permit the Petitioner to give further clarifications. However, there was no response to this communication.

Being aggrieved by the decision of the Respondent No.1 dated 18.04.2023, disqualifying the Petitioner from the tender process, the Petitioner has filed the instant petition on 19.04.2023, challenging the impugned communication.

Analysis and Decision of the court

In accordance with Clause 2.1, a qualified bidder must have submitted at least one purchase order for a comparable good to at least one government department, CPSC, SPSC, public limited company, etc. during the previous three years and on or before the last day of the financial year immediately preceding the one for which the bid is being submitted. Additionally, it states that a bidder and an authorised dealer cannot submit separate bids for the same product or item in the same tender.

According to Clause 2.1, the manufacturer or an authorised dealer must demonstrate that they have successfully delivered or completed one purchase order in order to be taken into consideration for the tender. According to the certificate provided by APL Apollo Steel Pipes, M/s Excellent Engineering & Allied Service Private Limited provided the device produced by the petitioner.

The justification offered by Respondent No. 1 was that M/s Excellent Engineering & Allied Service Private Limited was the beneficiary of the certificate issued by APL Apollo Steel Pipes. This justification is inadmissible since the proof demonstrates that M/s Excellent Engineering & Allied Service Private Limited worked with Apollo Steel Pipes to complete the machine the petitioner built.

It is undeniably well established that judicial review of administrative acts, including those involving tenders, is severely constrained. However, judicial review may be used to stop arbitrary, unreasonable, and illogical behaviour.

The fundamental requirement of Article 14 of the Indian Constitution is now well established and has been upheld numerous times by the Apex Court. Non-arbitrariness in substance and essence is the lifeblood of fair play, and State actions are subject to judicial review to the extent that the State must act lawfully for a discernible reason and not arbitrarily. The Court must intervene in order to exercise its authority under Article 226 of the Indian Constitution if the State or an instrumentality of the State fails to behave reasonably or fairly in the awarding of contracts. Vice Chairman & Managing Director, City and Industrial Development Corporation of Maharashtra Ltd. and Others v. Shishir Realty Private Limited and Others, 2021 SCC OnLine SC 1141 a case decided by the Supreme Court, where it was held that “Fairness and the good faith standard ingrained in the contracts entered into by public authorities mandates such public authorities to conduct themselves in a non-arbitrary manner during the performance of their contractual obligations” and “The constitutional guarantee against arbitrariness as provided under Article 14, demands the State to act in a fair and reasonable manner unless public interest demands otherwise. However, the degree of compromise of any private legitimate interest must correspond proportionately to the public interest, so claimed”

Arbitrariness is the antithesis of Article 14 of the Indian Constitution, and the State must operate in a fair and reasonable manner, as has been well-established and stated by the Apex Court. As previously stated, the bidder who is a manufacturer only needed to demonstrate that it has experience supplying at least one single purchase order of government departments, CPSEs, SPSEs, Public Listed Companies, ICD, DCT, MMLP, Ports, CFS, CTOs for similar item during the previous three financial years and current financial year last day of month prior to the one in which tender is invited.

A thorough study of Clauses 2.1, 5.4, and Annexures 10 and 11 of the NIT reveals that the maker must merely demonstrate that it has provided a machine that has been installed satisfactorily. In a similar vein, Annexure-14 stipulates that the maker must also provide the certificate.

Since the Petitioner has demonstrated that it satisfies the qualifying requirements, their bid shouldn’t have been turned down.

The Respondent No. 1 was instructed to open the Petitioner’s financial bid during the hearing, and it turned out that the Petitioner was the lowest bidder.

 Given the foregoing, the writ petition and any pending applications, if any, are approved. It is mandated that the Respondents go forward in line with the law.

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Written By – Shreyanshu Gupta

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