A monetary penalty imposed by the RBI for non-compliance with regulatory guidelines does not constitute an adverse advisory or directive under a tender requirement prohibiting such directives.

ORDER :

This Writ Petition is filed under Article 226 of the Constitution of India for the following reliefs:-

"To issue a writ, order or direction preferably a writ in the nature of Mandamus:

a) set aside any Notification of Award/Letter of Intent or signed Contract or any other such documents issued and/or executed between the Respondent No.1 and the Respondent No.2, if any;

b) Declare the process of the Respondent No.2 awarding tender of Implementation of Income Tax Law complaint Tax-exempted Meal Card system to the Respondent No.2 as illegal and arbitrary;

c) Direct the Respondent No.2 to cancel the tender process of Implementation of Income Tax Law Complaint Tax-exempt Meal Card system and issue fresh tenders’"

2. Visakhapatnam Steel Plant, respondent No.1 herein, issued a tender notice, vide NIT No.9800001660 dated 18.11.2020, inviting tenders from the reputed/experienced tenderers to provide requisite services for implantation of Income Tax Law Complaint Tax-exempt Meal Card System (MCS) for its employees. The period of contract is 30 months and the estimated value of the business is Rs.130 crores.

3. In response to the said tender, the petitioner herein as well as respondent No.2 and others submitted their Bids. According to the petitioner, even prior to the finalization of the tenders, the petitioner made a complaint to respondent No.1, stating that respondent No.2 stood disqualified on the ground that the Reserve Bank of India imposed a monetary penalty of Rs.200 lakhs on respondent No.2 under Section 30 of the Payment and Settlement Systems Act, 2007, vide proceedings dated 20.11.2020, which would attract Clause 1.7 of Pre-qualification Requirements read with Questionnaire for evaluation of the tender.

4. In this background, the grievance of the petitioner is that despite the said disqualification suffered by respondent No.2, respondent No.1 herein, in an arbitrary and illegal manner, awarded the subject contract in favour of respondent No.2 with effect from 01.04.2021. After receipt of the notices, respondent Nos.1 and 2 have filed their counter affidavits, denying the averments and allegations made in the affidavit filed in support of the writ petition and a reply affidavit has also been filed by the writ petitioner.

5. Heard Sri Dammalapati Srinivas, learned Senior Counsel, representing Sri Vimal Varma Vasireddy, learned counsel for the petitioner, Sri Ravi Cheemalapati, learned counsel for the respondent No.1 and the learned Senior Counsel Sri D.Prakash Reddy, representing Sri A.S.C.Bose, learned counsel for respondent No.2, apart from perusing the material available on record.

6. Submissions/contentions of Sri D.Srinivas, learned Senior Counsel:

(1) The impugned action which culminated in the award of contract in favour of respondent No.2 by respondent No.1 is highly arbitrary and unreasonable and violative of Articles 14 and 19(1)(g) of the Constitution of India.

(2) Respondent No.1 herein acted in an unfair and unreasonable manner by arbitrary turning a blind eye to the blatant false representations made by respondent No.2 with regard to the qualifying criteria set out in the tender notification.

(3) The pre-qualification criteria/requirement (PQC) appended to the tender notice, which is a part of the tender document, specifically stipulates vide Clause No.1.7 that there should not be adverse advisory/adverse directives/warnings against participant tenders by the Reserve Bank of India or any Government authority during the last five financial years.

(4) Respondent No.1 herein grossly erred in not considering the press release dated 20.11.2020, whereunder the Reserve Bank of India made it clear that monetary penalty of Rs.200 lakhs was imposed on respondent No.2 herein under Section 30 of the Payment and Settlement System, 2007, and as such, respondent No.1 herein ought to have disqualified respondent No.2.

Learned Seni