Bombay High Court: Tendering Authority’s actions are arbitrary in GST matters

Case Title: M/s. H.P.Ghumare versus The state of Maharashtra, The Principal Secretary, The District Collector and The Resident Deputy Collector.

Case No: Writ Petition No.12103 of 2023

Decided on: 6th March,2024

Quorum: Judge SMT. Vibha Kankawadi and Judge S.G.Chapalgaonkar.

Facts of the case:

Respondent 4 invited petitioners and the other two lowest bidders to negotiate the rendering authority. Due to the petition’s delay, the respondent no. 3 passed a decision on November 20, 2023, disqualifying the petitioner even though he was the highest bidder and deemed competent. On July 13, 2023, the district collector respondent number three issued an e-tender notification. The request for bids to provide the district with water tankers. The petitioner provided all necessary paperwork. There were eight bidders that entered this tender. They were all deemed eligible to receive tender notices. During the financial bid opening, L1 was the petitioner’s lowest bidder. Additionally, his proposal was 43% less than the reported estimate of the price in E notification of tender. According to the petitioner, who stated that the tender was GST-exempt, three bidders were called to negotiate in the respondent’s office. However, a different bidder qualified for the bidding procedure even though they did not submit their GST numbers. In his statement, the petitioner acknowledged that his GST registration had been canceled. He was found ineligible on the grounds that he had not complied with Tender Condition No. 11.The petitioner’s learned attorney, Miss Pradnya Talekar, argued that condition no. 11 of the tender was not necessary because services for the task under tender are GST exempt. In the technical review that followed the tender notice on July 13, 2023, the petitioner and the other bidders were found to be qualified.

Petitioner Contentions :

The petitioner contends that he is a reputed contractor and since 2021, has undertaken the work of water supply through tankers under various contracts. Respondent No. 3: District Collector, Beed, had floated an E-Tender notice Dated 12.07.2023, inviting bids for the supply of water tankers in District Beed. As per Schedule, the petitioner submitted his bid along with the requisite documents. All eight bidders participated in the tender process. On technical scrutiny, all eight (8) participants were declared qualified. She relies on the observations of the Supreme Court of India in the case of Poddar Steel Corporation vs Ganesh Engineering Works and others reported in [(1991) 3 SCC 273] to contend that the tendering authority is entitled to give up tender conditions of little or no significance. Considering the nature of the contract and the non-applicability of GST for the work under tender, such a condition was waived. It is well settled that tendering. Authority may deviate from and not insist upon the strict literal compliance of the condition in appropriate cases. The aforesaid aspect has been considered by the Supreme Court of India in the case of C.J. Fernandez vs State of Karnataka reported in (1990) 2 SCC 488, and also in the case of Ramana Dayaram Shetty vs.  International Airport Authority of India reported in (1979) 3 SCC 489.

Respondent Contentions:

Respondent no.3 issued a communicated dated 17/20.11.2023 disqualifying the petitioner from E-Tender process giving reason that false information regarding ‘GST’ number was incorporated in the tender submitted by the petitioner. He submitted representation for execution of the agreement, however, to his surprise, he received a communication/notice dated 25.9.2023 by which 3 (two) lowest bidders including the petitioner were invited for negotiations in the office of Respondent No.3. Petitioner objected to such notice being contrary to the terms of tender as well as the government circulars and rule-book published by the Government. Petitioner has further pointed out that he has successfully supplied the requisite number of the tankers in past and possess best experience. The court quashed the communication, declared the petitioner qualified as the Lowest Bidder (L-1), and allowed participation in the E-Tender process initiated on 13.7.2023. The writ petition was disposed of ruling in favor of the petitioner without costs.

Court Analysis and Judgement:

The court found the actions of the tendering authority arbitrary .The petitioner’s objections regarding GST registration were considered, leading to the decision in the petitioner’s favor. It is therefore, evident that waiver of condition No.11 by the Tendering Authority was based on rationality. Such a waiver is neither a mistake of fact or accidental omission. This appears to be a thoughtful decision to waive unessential tender condition. Learned counsel appearing for the petitioner invited our attention to the similar tenders floated in various other districts, by which the condition regarding GST has been waived by the Tendering Authority. We are therefore, of the considered view that the Tendering Authority/Respondent no.3 has chosen not to insist on condition no.11 since it was of little or no significance or it was classified as non-essential condition of eligibility being ancillary or subsidiary with main object to be achieved by the condition. It is well settled that Tendering Authority may deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases. The judgment was delivered by S.G. Chapalgaonkar and Smt. Vibha Kankanwadi, quashing the communication and subsequent disqualification order. The case is ruled in favor of the petitioner, partially allowing the Writ Petition.

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Judgement Analysis Written by – K.Immey Grace

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