Court’s Decision
The Supreme Court partly allowed the appeal filed by a coal beneficiation company whose bid was rejected for failure to furnish a Joint Venture (JV) agreement under Clause 5(D) of the Notice Inviting Tender (NIT). The Court held that Clause 5(D) did not expressly mandate submission of a JV agreement and that the appellant’s work execution certificate from the Maharashtra State Mining Corporation (MSMC) sufficiently established its 45% share in the consortium and its past experience. Accordingly, the rejection of the technical bid and the High Court’s affirmation were set aside.
However, the Court remanded the matter back to the High Court to re-examine whether the appellant had the requisite spare washing capacity under Clause 5(B) of the NIT, since that issue was not part of the Tender Committee’s decision and was wrongly raised for the first time before the High Court.
Facts
The Madhya Pradesh Power Generating Company (MPPGCL) floated a tender in May 2024 for beneficiation and transport of run-of-mine (ROM) coal from Western Coalfields Ltd. for the Shree Singaji Thermal Power Project. Three bidders participated, including the appellant and the second respondent.
The appellant’s technical bid was rejected on the ground that it relied on past experience of a consortium, Hind Maha Mineral LLP, but failed to furnish the JV agreement to prove its share in the consortium as per Clause 5(D). Instead, it had furnished a work execution certificate from MSMC certifying its 45% JV share and successful execution of similar work involving over 1.4 crore tonnes of coal.
The appellant challenged the rejection before the Madhya Pradesh High Court, which upheld the disqualification. The High Court also went further to hold that even if the JV agreement had been produced, the appellant’s washery facilities were committed to MSMC and therefore it lacked spare capacity under Clause 5(B). Aggrieved, the appellant approached the Supreme Court.
Issues
- Whether Clause 5(D) of the NIT required mandatory submission of a JV agreement to prove proportionate share in a consortium.
- Whether a work execution certificate from MSMC was sufficient to satisfy the past-experience criteria under Clause 5(D).
- Whether the High Court was justified in disqualifying the appellant under Clause 5(B) regarding spare washery capacity without such issue being considered by the Tender Committee.
- Whether the High Court exceeded its jurisdiction by travelling beyond the reasons assigned for disqualification.
Petitioner’s Arguments
The appellant argued that Clause 5(D) did not mandate submission of the JV agreement itself, and that the work execution certificate issued by MSMC clearly established its 45% share in Hind Maha Mineral LLP and its successful execution of large-scale beneficiation and transport contracts.
It contended that the Tender Committee could have verified the certificate with MSMC if in doubt, instead of rejecting the bid outright. It further submitted that the High Court erred in relying on subsequent written submissions by the second respondent to hold that its washery facilities were unavailable, without giving the appellant an opportunity to respond.
Respondent’s Arguments
MPPGCL argued that submission of the JV agreement was implicit in Clause 5(D), since only such a document could prove proportionate share in a consortium. Clause 8.1 of the NIT and a government circular of 29.11.2023 barred submission of documents after bid submission; therefore, the appellant’s attempt to produce the JV agreement later was impermissible.
The second respondent argued that even if the JV agreement were accepted, the appellant would still be disqualified under Clause 5(B), as its washeries were exclusively committed to MSMC under the JV agreement, leaving no spare capacity to fulfil the present tender.
Analysis of the Law
The Court stressed that tender conditions must be construed strictly and cannot be supplemented with unstated requirements. Clause 5(D) permitted reliance on past experience of a JV proportionate to a bidder’s share, but it did not explicitly require production of the JV agreement. The appellant had complied with the clause by submitting a work execution certificate, which was a recognised document under the NIT.
The Court observed that Clause 8.8 of the NIT expressly allowed the tendering authority to seek clarifications or additional documents to assess eligibility. Instead of exercising this discretion, MPPGCL unfairly rejected the bid.
On Clause 5(B), the Court held that the High Court erred in disqualifying the appellant on a ground not raised by the Tender Committee, especially since it involved disputed facts about washery capacity and commitments to MSMC. Such issues required fresh examination by the High Court.
Precedent Analysis
- Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corp. (2016) 16 SCC 818 – Tender terms must be strictly construed; courts should not read into them requirements not expressly stated. Relied on here to reject the insistence on a JV agreement under Clause 5(D).
- Silppi Constructions Contractors v. Union of India (2019) 15 SCC 795 – Tendering authorities have limited judicial review; however, fairness and transparency are essential. Applied to stress the authority’s duty to seek clarifications instead of arbitrary rejection.
- Central Coalfields Ltd. v. SLL-SML (Joint Venture) (2016) 8 SCC 622 – Past experience of consortiums can be considered proportionately. Referenced to support the appellant’s reliance on JV experience.
- Tata Cellular v. Union of India (1994) 6 SCC 651 – Judicial review in tenders confined to arbitrariness and mala fides. Relied on to justify interference where rejection was arbitrary.
These precedents shaped the Court’s reasoning that unstated requirements cannot disqualify a bidder and that fairness demands clarity and opportunity to clarify.
Court’s Reasoning
The Court reasoned that Clause 5(D) required proof of consortium experience proportionate to share, which was satisfied by the MSMC certificate. It held: “If the tendering authority insisted on the JV agreement alone, it ought to have spelt it out clearly in the NIT. Non-submission of the JV cannot be a ground to disqualify when the clause itself does not mandate it.”
It criticised MPPGCL for failing to exercise discretion under Clause 8.8 to call for clarifications. On Clause 5(B), the Court held that the High Court wrongly travelled beyond the Committee’s reasons and denied the appellant natural justice by disqualifying it without notice.
Accordingly, the rejection under Clause 5(D) was set aside, and the matter was remanded to the High Court to decide the issue of washery capacity under Clause 5(B) after giving both sides an opportunity.
Conclusion
The Supreme Court partly allowed the appeal, setting aside the rejection of the bid for non-submission of the JV agreement and the High Court’s ruling affirming it. The issue of spare washery capacity under Clause 5(B) was remanded to the High Court for fresh determination within two months.
The judgment reinforces that tender authorities must act fairly and that tender terms must be clear, leaving no room for implied disqualifications.
Implications
This ruling strengthens transparency in public procurement, warning authorities against rejecting bids on grounds not expressly stated in tender documents. It reassures bidders that work execution certificates can suffice for proving JV experience unless the NIT unambiguously requires the JV agreement itself.
It also reiterates that High Courts must not enlarge the scope of disputes by travelling beyond the tender authority’s reasons. By remanding the Clause 5(B) issue, the Court protected natural justice while preserving scrutiny of technical eligibility.
FAQs
Q1. Does Clause 5(D) of a tender require submission of the JV agreement?
No, unless expressly stated. The Supreme Court held that if not mandated, a work execution certificate showing JV share is sufficient.
Q2. Why was the High Court’s reliance on Clause 5(B) set aside?
Because the Tender Committee had not disqualified the bidder on that ground, and the appellant was denied an opportunity to contest the allegation.
Q3. What is the key takeaway from this judgment for bidders?
That tender authorities cannot disqualify bids on grounds not expressly set out in the NIT, and fairness requires clarity and opportunity to clarify eligibility.
