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2022 Supreme(Del) 348
IN THE HIGH COURT OF DELHI AT NEW DELHI
Subramonium Prasad, J.
Delhi Electrical Contractor Welfare Association - Appellant
Vs.
Bses Yamuna Power Ltd & Anr. - Respondent
W.P.(C) 9662 of 2022
Decided On : 13-07-2022
For the Appellant :Mr. Jayant Mehta, Senior Advocate with Ms. Rashmi Singh & Mr. Raghav Bhatia, Advocates.
For the Respondents:Mr. Sandeep Sethi, Sr. Advocate, Mr. Meet Malhotra, Sr. Advocate with Mr. Ravi SS Chauhan, Mr. Anupam Varma, Mr. Nikhil Sharma, Mr. Aditya Gupta, Advocates.
Headnote:
Tender - Financial Qualifying Criteria - [Article 226] - [94 of the Constitution of India], [Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216], [Uflex Ltd. v. State of T.N., (2022) 1 SCC 165] - The court examined the challenge to the Notice Inviting Tender (NIT) imposing a more onerous financial qualifying requirement on bidders. The court emphasized the need for judicial restraint in administrative action and the limited scope for interference in tender issuance process to prevent arbitrariness, irrationality, unreasonableness, and favouritism. It highlighted the principles of fairness, non-arbitrariness, and the freedom of contract for the government in setting terms of the tender. The court also emphasized the need for the condition to be free from arbitrariness, discriminatory, or actuated by mala fides. It further noted that judicial review should not be invoked to protect private interest at the cost of public good or to decide contractual disputes.
Fact of the Case:
The Petitioner challenged the Notice Inviting Tender (NIT) imposing a more onerous financial qualifying requirement on bidders, contending that it was arbitrary, irrational, and violative of Article 14 of the Constitution of India. The Respondents justified the condition, stating that it aimed to ensure organizations with the requisite financial wherewithal and technological know-how are chosen to provide better services to consumers.
Finding of the Court:
The court dismissed the petition, emphasizing the need for judicial restraint in administrative action and limited scope for interference in tender issuance process. It held that the condition was not arbitrary, discriminatory, or actuated by mala fides, and was in public interest.
Issues: The issues involved the challenge to the NIT imposing a more onerous financial qualifying requirement on bidders and the justification provided by the Respondents for the condition.
Ratio Decidendi: The court emphasized the need for the condition to be free from arbitrariness, discriminatory, or actuated by mala fides. It highlighted the principles of fairness, non-arbitrariness, and the freedom of contract for the government in setting terms of the tender. The court also noted that judicial review should not be invoked to protect private interest at the cost of public good or to decide contractual disputes.
Final Decision: The petition was dismissed, and the court upheld the NIT imposing the more onerous financial qualifying requirement on bidders, stating that it was not arbitrary, discriminatory, or actuated by mala fides, and was in public interest.
JUDGMENT :
Subramonium Prasad, J.
1. The instant Writ Petition has been filed by the Delhi Electrical Contractor Welfare Association (“Petitioner/Petitioner Association”) under Article 226 of the Constitution of India seeking issuance of a necessary writ, order or direction to quash the Notice Inviting Tender (hereinafter referred to as 'the NIT') dated 11.06.2022 bearing NIT No. CMC/BY/22-23/RS/SVS/AS/17 issued by BSES Yamuna Power Limited (“Respondent No. 1/BYPL”), and the NIT dated 11.06.2022 bearing NIT No. CMC/BR/22-23/RB/CR/DG/1036 issued by BSES Rajdhani Power Limited (“Respondent No. 2/BRPL”) for “award of AMC of Electricity Distribution Network consisting of EHV Grids, 11 KV network, Street light and meter installation” (hereinafter collectively referred to as the 'Impugned NITs').
2. Prior to the NIT, which is the subject matter of challenge, between 2017 to 2021, the Respondent Nos. 1 and 2, issued NITs in various categories. The commercial requirement, under these NITs, was that the bidders must have a minimum average annual turnover ranging from Rs. 2 to 6 Crores in the last three financial years. During this period, members of the Petitioner Association provided services to the Respondents in varying capacities to ensure uninterrupted power supply to consumers by executing various installation schemes and annual maintenance contracts (both routine & specific) of installed assets in Delhi NCR.
3. On 11.06.2022, the Respondents issued the Impugned NITs which imposed a more onerous commercial requirement on bidders by increasing the minimum annual average turnover to Rs. 70 Crores or above in the preceding three financial years, in order for them to participate in the Impugned NITs (“said Condition”).The said Condition imposed by the Respondents in the Impugned NITs reads as under :
“QUALIFYING REQUIREMENTS (QR)
4.2. Financial QR:
(ii) The average annual turnover of the Bidder, in the preceding three (3) financial years (i.e., FY22, FY21 & FY20) should not be less than Rs 70 Crore. The bidder shall submit the Annual Turnover Report of the last 3 FYs duly certified by a Chartered Accountant. The Turnover certificate must have UDIN Number.”
4. As the imposition of the said Condition has rendered all the members of the Petitioner Association ineligible to participate in the Impugned NITs, the Petitioner was constrained to file the instant Writ Petition.
5. Mr. Jayant Mehta, Ld. Senior Counsel appearing for the Petitioner, submitted that the range for the financial qualifying criteria for the tenders issued from 2017 to 2021 was Rs. 2 to 5 Crores. He submitted that now the Respondents, vide the Impugned NITs, have increased the financial qualifying criteria to Rs. 70 Crores, in the preceding three financial years. It is the contention of the Petitioner that this manifold increase is irrational, and arbitrary. Mr. Mehta submits that the Respondents have failed to provide any rational justification for this multi-fold increase in the qualification criterion. In light of this, it has been argued that said Condition is arbitrary, irrational, discriminatory and hence, violative of Article 14 of the Constitution of India.
6. The Ld. Senior Counsel further contends that the revised criterion results in artificially excluding a large number of eligible vendors (i.e., the members of the Petitioner Association) who have provided identical services to the Respondents for over 20 years.
7. Per contra, Mr. Sandeep Sethi, Ld. Senior Counsel appearing for the Respondents, submitted that vide the Impugned NITs the Respondents have consolidated circle-wise contracts for six services viz. a) annual Maintenance Contract for 11 KV sub-station, b)Meter installation and related works, c) Annual Maintenance Contract for Extra High Voltage Grid/Transmission lines, d) DT cleaning and surveillance, e) Telephone operator i.e., 'Telephone operator in AMC', and f) Street lighting maintenance.
5. Mr. Sethi submitted that the NITs previously floated, were base
