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IN THE HIGH COURT OF DELHI AT NEW DELHI
MANMOHAN, C.J., TUSHAR RAO GEDELA, J.
VRC Construction (India) Private Limited - Petitioner
Versus
National Highway Authority of India - Respondent
W.P.(C) No. 5564 of 2024, CM Appl. No. 22939 of 2024
Decided On : 02-12-2024
(A) Constitution of India, 1950 - Articles 14 and 19(1)(g) - Writ petition challenging annulment of Tender - Petitioner declared L-1 but annulled on grounds of shortfall in bid security - Court held that NHAI acted within its authority to annul the Tender as per RFP guidelines, justifying the annulment due to procedural non-compliance. (Paras 20-30)
(B) Tender Process - Fairness and transparency in public procurement - The authority must act fairly even in commercial transactions, and its actions are subject to judicial review if found excessive or unfair. (Paras 11, 30)
Facts of the case:
The petitioner challenged the annulment of a tender for highway construction after being declared the lowest bidder, citing procedural errors in bid security submission.
Findings of Court:
The annulment was justified as the petitioner failed to upload necessary documents, and the authority acted within its rights under the RFP.
Issues: Whether the annulment of the tender was arbitrary and whether the petitioner was entitled to the contract after being declared L-1.
Ratio Decidendi: The court found that the NHAI had valid reasons for annulment based on procedural compliance and the need to maintain fairness in the tender process.
Result: Petition dismissed.
JUDGMENT :
Tushar Rao Gedela, J.
1. Present writ petition has been filed under Article 226 of the Constitution of India seeking to declare the Annulment Notice dated 14th March, 2024; impugned communication dated 9th April, 2024; Notice Inviting Bid dated 14th March, 2024 as arbitrary and illegal and in violation of Articles 14 and 19(1)(g) of the Constitution of India, 1950. The petitioner further seeks direction to the respondent/National Highway Authority of India (for short ‘NHAI’) to award the Project to the petitioner in terms of Tender for ‘6 – laning with both sides Service Road of Ayodhya Nagar Bypass of Bhopal city section of NH-46 from Design Km 0.000 near Ashram Tiraha to Design Km 16.439 at Ratnagiri Tiraha (Design Length – 16.439 Km) Under NH(O) in the state of Madhya Pradesh on Hybrid Annuity Mode (Tender ID: 2023_NHAI_169732_1’)’.
2. The facts, shorn of unnecessary details and germane to the issue at hand, are as follows:-
(b) The Tender was revised vide Corrigendum VI dated 20th February, 2024, that is, two (2) days before the last date of submission. Vide Corrigendum VI, the respondent/NHAI increased the estimated cost to Rs.1048.65 crores and consequently increased the bid security by Rs.4 lakhs, from Rs.10.45 crores to Rs.10.49 crores and the last date of the bid was extended to 27th February, 2024.
(c) In pursuance of the bid conditions, the petitioner submitted the original Bank Guarantee (for short ‘BG’) of Rs.10.45 crores drawn on 13th February, 2024. In view of the revised bid, the petitioner arranged the additional bank guarantee (for short ‘ABG’) of Rs.4 lakhs for the bid and submitted the same on 22nd February, 2024 with the respondent by Structured Financial Messaging System (for short ‘SFMS’). However, the copy of this ABG of Rs.4 lakhs was not uploaded on the Tender submission portal. The Tender was closed on 27th February, 2024.
(d) The petitioner claims that on 4th March, 2024, the respondent/NHAI declared it ineligible on account of the bank guarantee being short by Rs.4 lakhs and the disqualified bidders were asked to submit objections within three (3) days. It is claimed that the same error was also found with the bid of one Apco Infratech Private Ltd., another bidder.
(e) It is claimed that on 5th March, 2024, the petitioner submitted a clarification that the ABG for Rs.4 lakhs had been transmitted through SFMS gateway but inadvertently, the physical scanned copy was not uploaded on the Tender portal. In support thereof, the copy of the ABG of Rs.4 lakhs dated 22nd February, 2024 was also enclosed.
(f) It is further stated that on 9th March, 2024, the respondent/NHAI accepted the clarification of the petitioner and declared it to be technically eligible. The bid was opened and the petitioner was declared the lowest bidder (L-1) at Rs.861.46 crores i.e., 17.85% below the estimated cost.
(g) It is the case of the petitioner that unilaterally and arbitrarily, the respondent/NHAI annulled the Tender vide notice dated 14th March, 2024 despite it having been declared L-1. Surprisingly, on the same day, the respondent issued another Notice Inviting Bid for the same work.
(h) The petitioner sent a letter dated 15th March, 2024 seeking review of the annulment and to award the Tender to the petitioner. Receiving no response, the petitioner filed a writ petition being W.P.(C) 4838/2024 before this Court, seeking response to the letter dated 15th March, 2024. Vide order dated 3rd April, 2024, this Court directed the respondent to decide the petitioner’s letter within a week. In compliance thereof, the respondent/N
The annulment of a tender by the NHAI was justified due to the petitioner's failure to comply with procedural requirements, affirming the authority's discretion in public procurement.
The procuring entity has the discretion to cancel tenders and re-invite bids without prior communication of reasons; judicial review is limited to assessing arbitrariness or statutory violations in p....
respondent authority has right to refuse the lowest or any other tender bid or bids submitted, provided its decision is neither arbitrary nor unreasonable.
Government decisions related to tenders must adhere to established guidelines, ensuring fairness, justice, and reasonableness.
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