Bombay High Court: “Tender Authority is the Best Judge of its Requirements; Judicial Interference Limited to Ensuring Fairness and Transparency” – Petition Challenging Tender Rejected

Court’s Decision

The Bombay High Court dismissed the writ petitions filed by Mahendra Realtors & Infrastructure Ltd. and Dev Engineers, challenging their technical disqualification from a tender process. The court upheld the tendering authority’s discretion, stating that it is the best judge of its requirements. Judicial interference is limited to ensuring that the process is fair, reasonable, and transparent. The court found no evidence of bias, procedural impropriety, or violation of legal principles in the tender process.

Facts

1. Tender Details: The Maharashtra Film Stage and Cultural Development Corporation Ltd. issued a tender for repair and upgradation of buildings (studios, hospital building) at Dadasaheb Phalke Chitranagari in Goregaon (East).
2. Tender Process:
   • A pre-bid meeting was held, and eligibility criteria were prescribed in Clause 12 of the tender.
   • Four bidders, including the petitioners, participated in the tender.
   • After scrutiny by the Project Management Consultant (PMC), the Tender Acceptance Committee disqualified the technical bids of the petitioners for non-compliance with eligibility criteria.
3. Petitioners’ Claims:
   • They alleged that the disqualification was arbitrary and lacked transparency.
   • They contended that the tender conditions were designed to favor a particular bidder.
   • They argued that the process violated a government resolution requiring fairness and transparency.
4. Respondents’ Defense:
   • The respondents claimed that the petitioners failed to meet the technical requirements.
   • They argued that the process was conducted transparently and adhered to the tender conditions.
   • They emphasized that judicial review in tender matters is limited to checking procedural fairness.

Issues

1. Were the petitioners wrongly disqualified from the tender process?
2. Were the tender conditions biased or designed to favor a specific bidder?
3. Did the tendering authority follow due process and maintain transparency?

Petitioners’ Arguments

• Procedural Flaws: The petitioners alleged that their bids were rejected without proper communication or an opportunity to clarify the deficiencies.
• Bias in Conditions: They claimed that the eligibility conditions in Clause 12 of the Notice Inviting Tender (NIT) were tailor-made to favor respondent no. 5 (the lowest bidder).
• Transparency Violation: They argued that the tender process violated Clause 4.1 of a government resolution, which mandates transparency and fairness in public tenders.
• Timing of Bid Opening: They also objected to the opening of bids after office hours without prior notice.

Respondents’ Arguments

• Compliance with Tender Conditions: The respondents argued that the petitioners’ technical bids were non-responsive because they failed to meet eligibility criteria such as:
  • Providing incomplete documents (e.g., missing TDS certificates, signed bills, financial solvency proof).
  • Not meeting the experience and quantity requirements outlined in Clause 12 of the tender.
• Limited Scope of Judicial Review: The respondents cited precedents to argue that courts cannot interfere in tender processes unless there is clear evidence of arbitrariness, bias, or malice.
• Fair Process: The respondents asserted that the tender process was fair, reasonable, and conducted in accordance with the prescribed procedures.

Analysis of the Law

The court analyzed the legal principles governing tenders:

1. Tendering Authority’s Discretion: Courts should respect the tendering authority’s expertise and discretion in setting and evaluating tender conditions unless there is evidence of arbitrariness or malice.
2. Judicial Review in Tender Matters:
   • Courts can only examine the fairness, transparency, and reasonableness of the process.
   • They cannot question the technical or commercial decisions made by experts unless these decisions are blatantly unreasonable or illegal.
3. Precedents Cited:
   • Caretel Infotech Ltd. v. HPCL: Tender conditions are within the discretion of the tendering authority.
   • Meerut Development Authority v. AMS: Courts cannot substitute their views for the tendering authority’s judgment.
   • Centre for Public Interest Litigation v. Union of India: Judicial review should be minimal in technical matters.
4. Principle of Non-Interference:
   • The tendering authority, being the author of the tender document, is best placed to interpret its requirements.
   • Courts must ensure that the process is not arbitrary, biased, or procedurally unfair.

Precedent Analysis

The court relied on several cases to support its reasoning:

• Director of Education v. Educomp Datamatics Ltd.: Courts can only interfere if tender conditions are arbitrary, discriminatory, or actuated by malice.
• Shamnit Utsch India Pvt. Ltd. v. WB Transport Infrastructure: Tendering authorities have the right to choose the most competent bidder.
• Siemens Aktiengesellschaft v. DMRC: Judicial review is limited to preventing arbitrariness and favoritism.

Court’s Reasoning

1. Non-Compliance with Eligibility Criteria:
   • The petitioners failed to provide required documents (e.g., signed bills, financial solvency certificates, and TDS certificates).
   • They did not meet the prescribed technical and financial qualifications, including experience and work completion requirements.
2. No Evidence of Bias:
   • Multiple bidders, including respondent no. 5, were technically qualified.
   • The petitioners’ claim that the conditions were designed to favor a specific bidder was unfounded.
3. Transparency and Fairness:
   • The court noted that the tender process was conducted transparently, and the petitioners had access to the decisions taken by the Tender Acceptance Committee.
   • The decision to disqualify the petitioners was based on valid and cogent reasons.
4. Limited Scope of Judicial Review:
   • The court emphasized that it cannot sit in appeal over the decisions of the Tender Acceptance Committee.
   • It found no evidence of illegality, procedural impropriety, or irrationality in the tender process.

Conclusion

The Bombay High Court dismissed the writ petitions, holding that:

• The petitioners failed to demonstrate any procedural unfairness, bias, or illegality in the tender process.
• The tendering authority acted within its discretion and followed a transparent, fair process.
• The court reiterated that it cannot interfere with the technical and commercial decisions of the tendering authority unless there is clear evidence of malice or arbitrariness.

Implications

1. Reinforcement of Tendering Authority’s Autonomy:
   • The judgment reaffirms that tendering authorities have the discretion to set and evaluate tender conditions based on their requirements.
   • Courts will not interfere in technical or commercial decisions unless there is clear evidence of wrongdoing.
2. Limited Judicial Review:
   • The judgment underscores that judicial review in tender matters is confined to ensuring fairness and transparency, not re-evaluating the merits of the tender conditions.
3. Precedential Value:
   • The decision will serve as a precedent in similar cases, emphasizing the limited scope of judicial intervention in tender processes.

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