#tender Archives - Prime Legal

12 Mar

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.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.

Judgement Analysis Written by – K.Immey Grace

Click here to view the judgement

28 Sep

Delhi High Court Upholds Cancellation of School Security Tenders: Key Takeaways and Compensation Rights

Prime Legal

Blog #delhi, #delhicourt, #delhihighcourt, #tender

Case Title: M/S Bombay Intelligence Security India Ltd. v. Government of NCT of Delhi & Ors.

Date of Decision: 27th September, 2023

Case Number: W.P.(C) 12314/2023

Coram: Hon’ble the Chief Justice and Hon’ble Mr. Justice Sanjeev Narula

Introduction

This case involves a dispute between three security services companies (Petitioners) and the Government of NCT of Delhi (GNCTD) regarding the cancellation of tenders issued by the Directorate of Education (DoE) for the deployment of security personnel in government schools in Delhi. The Petitioners had won these tenders, but the DoE annulled the process, leading to the cancellation of the contracts. The Petitioners challenged this decision in the High Court of Delhi.

Factual Background

DoE issued tenders for security services in government schools in Delhi.
Petitioners emerged as successful bidders in the tender process.
Previous legal challenges were raised against the initial tenders, but the DoE decided to reissue new tenders.

Petitioners submitted bids and were awarded contracts.
Deployment was scheduled to start on 10th August 2023.
The DoE halted the process and later canceled the tenders on the grounds that certain bidders had provided false information regarding their qualifications.

Legal Issues

The key legal issues in this case are:

Whether the cancellation of the tender process by DoE was justified.
Whether the Petitioners are entitled to compensation for the losses incurred due to the cancellation.

Contentions of the Parties

Petitioners argued that DoE’s decision to cancel the tenders was arbitrary and lacked justification.
DoE contended that the cancellation was necessary due to misleading information provided by certain bidders, which compromised the integrity of the process.

Observation and Analysis

The court’s analysis focuses on the integrity of the tendering process, emphasizing that transparency, fairness, and competitiveness are fundamental values of any tendering process. It highlights the fact that some bidders had provided misleading information, leading to the inclusion of unqualified participants in the competition. The court finds that this compromised the integrity of the entire procedure and justifies the DoE’s decision to cancel the tenders. It also noted that the Petitioners’ claim for compensation should be pursued through civil proceedings.

Decision of the Court

The High Court upheld the DoE’s decision to cancel the tenders, finding it justified given the compromised integrity of the process. The Court disposed of the petition, allowing the Petitioners to seek compensation through civil proceedings.

Written by – Ananya Chaudhary

Click here to view judgment

5 Sep

Delhi High Court’s Verdict on Tender Process and Bidder Selection Methodology

Prime Legal

Blog #delhi, #delhicourt, #delhihighcourt, #tender

Case Title: Batra Medicos and Others v. Union of India and Others

Date of Decision: 18 August, 2023

Case Number: W.P. (C) 5077/2023 & CM APPL. 19793/2023, CM APPL. 30180/2023

Coram: Hon’ble Chief Justice Satish Chandra Sharma & Hon’ble Mr. Justice Sanjeev Narula

Introduction

The case of Batra Medicos and Others v. Union of India and Others was heard in the High Court of Delhi at New Delhi before Justices Satish Chandra Sharma and Sanjeev Narula. The petitioners, Batra Medicos and others, challenged the decision of the respondents, Union of India and others, to award contracts for empanelment as Authorized Local Chemists (ALCs) under the Central Government Health Scheme (CGHS). The core issue revolved around the rejection of the financial bids of the highest (H1) and second highest (H2) discount bidders due to concerns of predatory pricing, and the subsequent award of contracts to the next highest (H3 and others) bidders.

Factual Information

The petitioners contested that the rejection of H1 and H2 bidders’ financial bids was unjustified. The respondents defended their actions, asserting the need to prevent predatory pricing and to ensure the financial capability of bidders to fulfill the contractual obligations. The court’s analysis centered on whether the respondents’ actions were consistent with the tender process, fairness, and public interest.

Key Legal Issue

Whether the actions of the Respondents, who awarded contracts to bidders other than the highest bidder, were consistent with the tender conditions outlined in Clause 7.2 of the Scope of Work?

Whether the methodology adopted by the respondents in evaluating bids and awarding contracts was reasonable and unbiased?

Core Arguments

The central arguments presented by the petitioners revolved around the alleged breach of Clause 7.2 of the Scope of Work, which outlined the selection process for bidders. The petitioners contended that the respondents deviated from the standard practice by awarding contracts to bidders offering lower discounts than the highest bidder (H1). They argued that this deviation violated the principles of transparency, fairness, and objectivity in tender evaluation. Additionally, the petitioners challenged the respondents’ decision to reject the bids of H1 and H2 bidders on the grounds of predatory pricing. They claimed that this rejection was unreasonable and arbitrary.

Court’s Observation and Analysis

The court analyzed the tender process and the relevant clauses in the Scope of Work, focusing on Clause 7.2 and the concept of predatory pricing. The court noted that the respondents’ actions aligned with the core principle of fair competition and the need to prevent predatory pricing. The court rejected the petitioners’ argument that they could have secured contracts if Clause 7.2 had been followed strictly, emphasizing that the bid process involves competitive dynamics and the speculative scenario presented by the petitioners lacked legal foundation. The court held that the petitioners failed to demonstrate arbitrary or irrational decision-making.

Decision of the Court

In conclusion, the court found no substantial grounds to grant the remedies sought by the petitioners and held that the decision of the respondents to award contracts to certain bidders was reasonable, consistent with relevant guidelines, and did not violate the principles of fairness and transparency. The court upheld the methodology adopted by the respondents in evaluating bids and awarding contracts to the next highest bidders (H3 and others). It recognized the discretionary nature of tendering processes and the need for limited judicial interference.

Conclusion

The judgment underscores the importance of evaluating bids comprehensively and ensuring fair competition while also respecting the autonomy of administrative decision-makers. It dealt with the balance between fair competition, financial capacity, and regulatory compliance in the context of tender processes. The court’s analysis focused on the reasonableness of the Respondents’ actions, their adherence to the tender conditions, and the broader public interest. The decision emphasized the importance of proper evaluation of bids, transparency, and adherence to guidelines.

Written by – Ananya Chaudhary

Click here to view judgment

6 Jul

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

Prime Legal

Blog # Writ Petition, #delhihighcourt, #disqualification, #HighCourt, #highcourtdelhi, #tender, #writ, #writpetition, Blog, Prime Legal

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

Decision: 04.07.23

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

CORAM: HON’BLE THE CHIEF JUSTICE MR. SATISH CHANDRA SHARMA

HON’BLE MR. JUSTICE SUBRAMONIUM PRASAD

Introduction

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.

Written By – Shreyanshu Gupta

Click to view the judgement