The rejection of a bid based on a wide interpretation of tender conditions, leading to exclusion of an otherwise eligible party, is arbitrary and unreasonable.

S. RAVINDRA BHAT, J.

1. Complaining of arbitrariness and violation of Article 14, the petitioner has approached this Court to direct the second respondent (hereafter referred to as “CGHS”) to award a contract pursuant to its Notice Inviting Tenders (“NIT”) for providing security services and also quash the award of tender to the third respondent (hereafter referred to as Jai Prakash). This court had issued notice to parties on the previous date of hearing; CGHS, represented by counsel, has produced its entire original record, including all documents leading to award of contract pursuant to the tender; the successful bidder, i.e. the third respondent is represented by senior counsel. Both respondents state that the petition can be heard without formal affidavits or replies.

The petition was therefore heard, finally on merits.

2. The petitioner is a registered partnership firm providing security and other related services. CGHS, on 25.04.2017, issued the NIT, calling for bids from agencies for providing round-the-clock security services in the CGHS Wellness Centres, hospitals, stores and offices located in Delhi/NCR under the Directorate General of Central Government Health Scheme on contract basis for a period of one year under a two bid system. The petitioner and Jai Prakash furnished their bids. The petitioner alleges that its turnover for the last 3 years was substantially higher than the average annual turnover of Jai Prakash. It is submitted that although the last date prescribed for uploading the bids was 16.05.2017, corrigenda were issued on 04.05.2017 and 12.05.2017. Later, the technical bid opening (i.e. the first part of the tender process) took place. At the time, of the 9 bidders, the tenders of 6 bidders were rejected. The 3 finalists included the petitioner and Jai Prakash. In the second stage i.e. the price bid, all 3 bidders had quoted identical rates i.e. 5% of the total value of administrative charges. As far as the other components were concerned, the CGHS had fixed the prices. In these circumstances, it is contended that the “tie-breaker condition” in Clause (13) of Section 1 of the NIT became applicable and the petitioner on account of its higher turnover was entitled to be declared as L1. The tie-breaker condition inter alia states that in case two bidders had quoted the same administrative charges, the bidder with the highest turnover was to be given preference. It is contended by the petitioner that since its turnover was in the range of over Rs.17 crores annually, the third respondent’s bid could not have been accepted since its turnover was about Rs.8 crore.

3. The grievance articulated in the present proceeding is that despite its entitlement to be declared as L-1 and therefore further entitlement to enter into contract with CGHS, the petitioner’s bid was rejected entirely based upon Jai Prakash’s complaints/e-mail communications dated 02.06.2017 to 08.06.2017, alleging that the petitioner had been blacklisted for 4 years and that in addition a litigation or court case pertaining to the petitioner was pending. The petitioner also submits that CGHS furnished it with the copy of Jai Prakash’s e-mail dated 02.06.2017 under cover of a letter dated 12.06.2017 and required it to furnish its reply. The letter of 12.06.2017 stated that CGHS was informed by Jai Prakash’s Security Agency that it (the petitioner) had been “debarred” (blacklisted) for 4 years by Additional Commissioner (FM), Department of Trade and Taxes, GNCT by order No. F.11(29)/CTT/FMB/Security/07-08 dated 13.07.2010 and there is a court case pending with the firm as one of the litigants.

4. It is stated that the petitioner duly replied to CGHS on 15.06.2017 explaining the circumstances satisfactorily. The petitioner’s reply is as follows:-

“Reference is made to your office letter No. F. No.13-02/2016-17/CGHS/MSD/1502-03 dated 12.06.2