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2018 Supreme(Del) 885
IN THE HIGH COURT OF DELHI AT NEW DELHI
S. RAVINDRA BHAT, A.K. CHAWLA, JJ.
P.P. Buildwell Private Limited (Consortium) – Petitioner
Versus
Delhi Metro Rail Corporation and Others – Respondents
W.P. (C) No. 10623 of 2017, C.M. Application Nos. 43509-43511 of 2017
Decided On : 31-01-2018
For the Petitioners: Mr. Dayan Krishnan, Mr. Gautam Narayan, Mr. R.A. Iyer, Ms. Aakshi Lodha, Ms. Mahamaya Chatterjee, Mr. Sanjeevi.
For the Respondents: Mr. Sudhir Nandrajog, Mr. Sanjay Kumar, Mr. Rajiv Bansal, Mr. Naveen Kumar Raheja.
The judgment establishes the principle that the rejection of a bid based on essential conditions of a tender is justified, and the authority inviting the tender may reject the bid if the essential conditions are not met.
Headnote:
TENDER - Property Development at Dwarka Sector-21 MRTS Station of Line-3 and Airport Xpress Line - Companies Act, 1956/2013, RFP, Clause 3.5.4 - The judgment discusses the rejection of a bid by the Delhi Metro Rail Corporation based on the minimum financial eligibility criteria. The court analyzes the interpretation of the eligibility criteria for a consortium and the calculation of net worth and average annual turnover. It concludes that the rejection of the bid was justified as the petitioner did not meet the required criteria.
Fact of the Case:
The Petitioner Consortium's bid for a tender was rejected by the Delhi Metro Rail Corporation based on the minimum financial eligibility criteria. The Petitioner contested the rejection, claiming that its bid was substantially higher than others and that the rejection was done for extraneous considerations.
Finding of the Court:
The court found that the rejection of the bid was justified as the petitioner did not meet the required criteria for net worth and average annual turnover. The court also dismissed the petitioner's argument that the rejection would result in the Metro losing a substantial sum of money.
Issues: The main issue was whether the rejection of the bid by the Delhi Metro Rail Corporation was justified based on the minimum financial eligibility criteria.
Ratio Decidendi: The court held that the rejection of the bid was justified as the petitioner did not meet the required criteria for net worth and average annual turnover. The court also emphasized that the Metro was not obligated to accept the highest bid.
Final Decision: The writ petition was dismissed by the court, without any order as to costs.
S. RAVINDRA BHAT, J.
1. The Petitioner Consortium, in writ proceedings impugns an order dated 15.11.2017 and a consequential letter dated 16.11.2017, (hereafter referred to as the “impugned orders”) issued by the first respondent i.e. the Delhi Metro Rail Corporation (“the Metro”) rejecting its technical bid in respect of its tender for "Property Development at Dwarka Sector-21 MRTS Station of Line-3 and Airport Xpress Line" (hereafter “the subject tender” or “NIT”). By the impugned orders, the Metro rejected the Petitioner Consortium's bid on the ground that it does not meet the minimum financial eligibility criteria of turnover qualification in net worth requirement in terms of Clause 3.5.4 of Section 3 of the Request for Proposal (“RFP” hereafter). The bid rejection was communicated to the Petitioner Consortium on 15.11.2017; later the letter of 16.11.2017 furnished the reasons.
2. On 28.8.2017 the Metro issued the RFP, in respect of the subject tender "Property Development at Dwarka Sector-21 MRTS Station of Line-3 and Airport Xpress Line." The tender was to be submitted latest by 9.10.2017 at 3 p.m. Relevant clauses of the RFP are extracted below:
“3.5 ELIGIBILITY CRITERIA
The Bidder shall meet the following minimum Eligibility Criteria (the “Eligibility Criteria”):
3.5.1 A Bidder must be a sole proprietorship firm or a partnership firm or a body corporate incorporated and registered in India under the Companies Act, 1956/2013, duly registered under the law applicable to such company, either individually or in Joint Venture or a Consortium under an existing agreement and further subject to compliance with applicable laws, policies and guidelines of the Government of India. In case the Selected Bidder is a Consortium, such Consortium shall be required to incorporate a company under Companies Act, 2013 which shall be a special purpose company (“SPG”) within 30 days of issuance of the LOA and the SPC shall enter in to Lease Agreement with DMRC for implementation of the Project. The members of Consortium shall be required to maintain 100% of the equity of the SPC throughout the subsistence of the Lease Agreement. In case company is not incorporated within 30days of issuance of LOA, then the LOA will stand cancelled and the amount deposited by the selected bidders (i.e. tender security. Security Deposit, Upfront amount etc.) shall be forfeited.
In case selected bidder is other than a consortium, special purpose company (SPC), may be formed within 30 days of issuance of the LOA under intimation to RFP Bid Document: Dwarka Sector-21 MRTS Station (CPD-37R) DMRC and the SPC shall enter into Lease Agreement with DMRC for implementation of the project. The bidder shall be required to maintain 100% of equity of the SPC throughout the subsistence of the Lease Agreement.
3.5.2 A Bidder should have a minimum net worth of Rs. 29,00,00,000/- (Rupees Twenty Nine Crores only) during last audited financial year (2016-2017).
In Case of JV-Net worth will be based on the percentage participation of each Member.
Example: Let Member-1 has percentage participation = M and Member-2 has = N. Let the Net worth of Member-1 is A and that of Member-2 is B, then the Net worth of JV will be =AM+BN/100.
3.5.3 The minimum average annual turnover of, a Bidder should be Rs. 29,00,00,000/-
(Rupees Twenty Nine Crores Only) for the preceding three financial years as per the audited balance sheets of the Bidders starting from the financial year 2014-2015.The average annual turnover of JV will be based on percentage participation of each member.
Example: Let Member-1 has percentage participation = M and Member - 2 has = N Let the average annual turnover of Member-1 is 'A' and that of Member-2 is 'B' then the average annual turnover of JV will be =AM+BN/100.
Notes:
Financial data for latest last three audited financial years has to be submitted by the tenderer in
