Calcutta High Court: To Ensure that Best Competitor is Chosen Tender Process of Selection Adopted by a Public Undertaking Must Be Transparent

Calcutta High Court: To Ensure that Best Competitor is Chosen Tender Process of Selection Adopted by a Public Undertaking Must Be Transparent

The Calcutta High Court by its single judge Justice Sabyasachi Bhattacharya has observed that to ensure that the best competitor is chosen, the process of selection adopted by a public undertaking must be transparent.

In the present case, the petitioners-company- Texmaco Rail and Engineering Limited and another, had amalgamated with Kalindee Rail Nirman (Engineers) Limited and participated in respect of a tender related to Automatic Block Signalling System. At the stage of apprising techno-commercial bids, the bid of the petitioners was rejected on the grounds of technical and financial ineligibility, bid capacity and improper information.

The petitioners immediately alleged that financial bids were opened, and two of the financial bids by competitors were accepted.

It was submitted by the petitioners that the tender agreement had provided for a reverse-auction at the techno-commercial stage, only if there were three successful participants and further to avoid such a reverse auction, and to restrict the tender to ‘chosen competitors’, the respondents- Union of India rejected the petitioners bid on technicalities, in an arbitrary and mala fide manner.

Moreover, it was brought on record by the petitioners that even on the ground of technicalities, their bid was not infirm and could not have been rejected. It was submitted that one of the tender criterions was substantial competition of three categories of works, as stipulated in the tender document, which were similar to the work in terms of value, being floated by the present tender. It was submitted that the petitioners in response to a clause on possessing previous work experience for a value of up to 60% of the present tender, had shown various instances of participation, in similar projects undertaken by ‘Kalindee’ in the Railways sector.

Per contra, the counsel for the respondents submitted, that the tender notice, which contained eligibility conditions of previous work experience being at 60% of the advertised value of the tender, envisaged that such a condition would be fulfilled by the petitioners individually.

Since, the petitioners presented previous experience in fulfilling the aforesaid criterion, involved a joint-venture, the respondents submitted that the petitioners was only a minority stakeholder and controlled 29% as opposed to the stipulated 60%.

Additionally, the successful tenderers/private respondents also submitted that the writ court may not interfere with the lawful exercise of discretion by the Railways/Tender Issuing Authority, since the discretion vests exclusively with the respondents to decide as to the nature of eligibility criteria.

The Judge after examining the nature of the clarification clause in the tender document, held that such a clause was indeed discretionary, and that the respondents could have exercised their own discretion in seeking clarifications from the bidders in a tender process, and that such a process was not and could not be mandated upon them.

However, the Court while dealing with the question of rejections of the tender bid of the petitioners, opined that since no questions of fact had been argued, requiring adjudication, a Writ court may be competent to ascertain whether there was any arbitrariness or mala fides in the rejection of the petitioners bid.

“However, insofar as the rejection of the technical bid of the petitioners is concerned, the same is an arguable question, to be decided on the basis of the materials-on-record. In the present case, since no facts have been argued which require adjudication upon taking detailed evidence, the writ court is competent enough to decide whether there was any patent arbitrariness in such rejection,” the Court added.

On perusal of the documents submitted by the petitioners, the Court was of the deemed view that the value of the previous work undertaken by the petitioners were indeed well above the 60% value which had been stipulated in the present tender, as well as greatly similar in nature to the work being advertised under the disputed tender.

The Court was of the view that the Joint-venture nature of the petitioner’s participation in the previous project would not have any bearing on the work-experience of the petitioner, since the relevant factors when adjudicating on previous work experience would not include the profit-share of the petitioners in the joint venture.

The Court remarked that what was relevant was whether the work done by the petitioners as a member of the said Joint Venture measured up to the eligibility criteria in the tender document.

Therefore, the Court was of the view that there was no basis for such rejection, as was apparent ex facie from the materials furnished by the petitioners. The same was arbitrary and de hors the tender terms, stated the Judge.

Accordingly, the Court set aside the rejection of the petitioners tender on the grounds that such rejection was incorrect as the petitioners were eligible in terms of the tender document.