IN THE HIGH COURT OF DELHI
Satish Chandra Sharma, Subramonium Prasad, JJ.
Dohwa Engineering Co. Ltd. - Appellant
Versus
Ministry of Road Transport and Highways - Respondent
W.P.(C) 4336 of 2022 & CM Appl. 12971 of 2022
Decided On : 22-07-2022
Tender Matter - Arbitrariness in State Action - Article 14, Natural Justice - [Tender Matter] - [Article 14, Natural Justice] - [Tender Matter] - The judgment discusses the principles of arbitrariness and natural justice in state actions, emphasizing the requirement for fairness, non-arbitrariness, and adherence to natural justice in administrative decisions. The court highlights the obligation of the state to act reasonably and non-arbitrarily while entering into contracts with the public, and the importance of providing a reasonable chance to be heard and explaining one's stance. The judgment also emphasizes the breach of the principle of audi alteram partem and the prejudice caused to the petitioner due to the respondent's actions. The court ultimately quashes the Impugned Letter and the fresh tender issued by the respondent.
Fact of the Case:
The Petitioner filed a Writ Petition under Article 226 of the Constitution of India seeking the quashing of the letter cancelling the Letter of Award and the annulment of the tender process. The Respondent had cancelled the Letter of Award and annulled the tender process based on a complaint regarding fake CV/signatures of the Petitioner's personnel. The Petitioner argued that the cancellation was arbitrary and violated the principles of natural justice.
Finding of the Court:
The court found that the Respondent's actions were arbitrary and violated the principles of natural justice. It highlighted the obligation of the state to act reasonably and non-arbitrarily in tender matters, emphasizing the importance of providing a reasonable chance to be heard and explaining one's stance. The court also noted the breach of the principle of audi alteram partem and the prejudice caused to the petitioner due to the respondent's actions. As a result, the court quashed the Impugned Letter and the fresh tender issued by the respondent.
Issues: The issues revolved around the arbitrariness of the Respondent's actions, the violation of the principles of natural justice, and the prejudice caused to the Petitioner due to the cancellation of the Letter of Award and the annulment of the tender process.
Ratio Decidendi: The court emphasized the requirement for fairness, non-arbitrariness, and adherence to natural justice in state actions, particularly in tender matters. It highlighted the obligation of the state to act reasonably and non-arbitrarily while entering into contracts with the public, and the importance of providing a reasonable chance to be heard and explaining one's stance. The court also noted the breach of the principle of audi alteram partem and the prejudice caused to the petitioner due to the respondent's actions.
Final Decision: The court quashed both the Impugned Letter dated 28.02.2022, issued by the Respondent cancelling the Letter of Award, and the fresh tender dated 03.03.2022, issued by the Respondent.
JUDGMENT
Subramopium Prasad, J. The instant Writ Petition has been filed by the Petitioners under Article 226 of the Constitution of India with the following prayers:
a) Quashing of the letter/communication dated 28.02.2022 issued by the Ministry of Road Transport and Highway, whereby the Respondent has cancelled the Letter of Award (hereinafter referred to as `the LOA') dated 25.11.2021issued in favour of Petitioner, and has also annulled the entire tender process;
b) Cancellation of the fresh tender dated 03.03.2022, issued by the Respondent, and consequently;
c) Directing the Respondent to execute the `Contract Agreement' in favour of Petitioner pursuant to the award of contract vide LoA dated 25.11.2021.
2. The relevant facts leading to the filing of the instant Writ Petition are as follows:
a. On 20.05.2021, the Respondent floated a Request for Proposal ("RFP") dated 20.05.2021 for `Consultancy Services for Authority's Engineer for Supervision of Civil Construction Work of New 4 Lane Bridge (Parallel to the Existing MG SETU) with its Approaches from KM 0/000 to 14/500 across river Ganga NH-19 at Patna in the state of Bihar on EPC' ("Project"). Vide Clause 2 of the RFP, the Respondent imposed the following condition:
"As such before submitting the proposal the Consultant shall mandatorily register and enlist themselves (the firm and all key personnel), on the MoRTH portal "INFRACON" and furnish registration details along with its RFP. A copy of Infracon Operation Procedure is also enclosed for bidders reference."
b. Further, Clause 3.4 of the RFP stated that the Technical Proposal must provide, inter alia, the following:
"The CVs of following six key personnel in the format as per Appendix-B-6 is to be furnished on INFRACON portal (Team Leader cum Senior Bridge Engineer, Resident Engineer cum Bridge/Structural Engineer, Highway Engineer cum Pavement Specialist, Senior Quality cum Material Expert, Senior Geo-technical Engineer, Senior Contract Specialist.)"
c. On 19.07.2021, the Petitioner No. 1 submitted its bid, after complying with the aforementioned prerequisites.
d. On 03.08.2021, the Respondent sought an undertaking from Petitioner No. 1 to the effect that it would replace its Team Leader, one Sh. Devender Singh, to avoid conflict of interest, as he had previously worked with the present Project's contractor. The said undertaking was furnished by the Petitioner on 05.08.2021.Later, vide an email dated 22.11.2021, the Petitioner replaced the said Team Leader, in order to show its bona fides.
e. Thereafter, on 20.07.2021, the technical proposal was opened, wherein the bid of the Petitioner, along with 3 other bidders, was found to be responsive.
f. Vide an email dated 04.08.2021, the Respondent communicated that a complaint had been received against the Senior Geo-technical engineer of the Petitioner's team. The Petitioner addressed a clarificatory email dated 06.08.2021. These complaints were disposed of vide a Technical Result on 12.11.2021, after being evaluated by the `Evaluation Committee'.
g. On 15.11.2021, financial bids were opened, whereby the Petitioner emerged as the H1 bidder.
h. Thereafter, on 16.11.2021, a complaint was received by TPF Engineering Pvt. Ltd i.e. the H-2 bidder ("Complainant") alleging that the CVs of two personnel of the Petitioner namely, a) the Resident Engineer cum Bridge Engineer-Sh. Lalan Singh, and b)Senior Quality cum Material Expert-Shehzad Khan were fabricated, fake and bore forged signatures ("said Complaint").
i. On 25.11.2021, the Respondent issued the LoA in favour of the Petitioner. As per Clause 7.1 of the RFP, the Petitioner was required to submit a bank guarantee for an amount of 3% of the contract value within 15 days. On the same day, the Petitioner received an email from the Respondent which stated as follows:
"...suitable, such person will not be allowed to participate for 1 year in Ministry/NHAI/NHIDCL projects. The Consulting Firm will be given only one opportunity to re
The main legal point established in the judgment is that the termination of a tender based on reasons unrelated to the business of the petitioner and without a fair opportunity of hearing is violativ....
The cancellation of a tender by an authority after the bidding process is complete is arbitrary unless supported by clear, substantiated justifications, reaffirming the need for transparency and fair....
The tendering authority's decision should not be interfered with unless it is mala fide, arbitrary, or irrational.
The court upheld the principle of judicial restraint in administrative action and emphasized the need for the State to act within the bounds of reasonableness in tender matters.
The court emphasized the need for judicial restraint in interfering with tender processes, especially in matters involving technical issues, and highlighted the limitations of the court's expertise i....
The court upheld the cancellation of a tender based on abnormal pricing, emphasizing the need for administrative fairness and the authority's discretion in tender processes.
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