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IN THE HIGH COURT OF DELHI
Vipin Sanghi, Jasmeet Singh, JJ.
Apaar Infratech Private Limited - Appellant
Versus
Union of India - Respondent
W.P.(C) 6035 of 2021 and CM No. 19097 of 2021
Decided On : 05-07-2021
Judicial review in tender processes restricts courts from interfering unless the authority's decisions are arbitrary, irrational or harmful to public interest, upholding the right to amend or cancel tender conditions.
Headnote:(A) Tender Cancellation - Judicial Review - Principles laid down in Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517 - A bid does not create a vested right unless the authority acts arbitrarily - Blacklisting by a Public Sector Undertaking is a valid ground for disqualification. (Paras 4, 8, 12)
(B) Tender Process - The authority has the right to amend, cancel or issue fresh terms in the bidding process; such actions should not be arbitrary, whimsical, or mala fide. (Paras 5, 9, 12)
Facts of the case:
The petitioner was the lowest bidder for a tender but was blacklisted by NHPC Ltd., leading to the cancellation of the tender for administrative reasons. The new tender incorporated terms that excluded bidders blacklisted by public corporations, directly affecting the petitioner’s eligibility.
Findings of Court:
The court dismissed the writ petition, ruling that the tender authority's decision to incorporate fresh conditions was not arbitrary and that any changes in terms were within the respondents’ rights.
Issues: The court addressed the legality and fairness of the tender cancellation and the new conditions imposed on the bidding process.
Ratio Decidendi: The court ruled that while bidders do not have a vested right to their bids being accepted, the exercise of cancellation and the introduction of new terms must not be arbitrary or unlawful. Public interest considerations play a crucial role in tendering processes.
Result: Writ petition dismissed; respondents directed not to open the tender for five days.
| Table of Content |
|---|
| 1. details of the tender and parties involved (Para 1 , 2) |
| 2. argument regarding blacklisting and tender eligibility (Para 3 , 7 , 10) |
| 3. court's reasoning on tender cancellation and condition amendments (Para 4 , 5 , 6 , 8 , 12) |
| 4. consideration of pending blacklisting case impacting eligibility (Para 9 , 11) |
| 5. dismissal of petitioner’s request with conditions (Para 13 , 14) |
JUDGMENT
Vipin Sanghi, J. (Oral)--The petitioner has preferred the present writ petition to assail the letter dated 10.06.2021 - whereby the respondents cancelled the earlier tender No.CE (P) RTNL/05/2020-21 dated 23.03.2021. The petitioner was a bidder in respect of the said tender. The petitioner was held to be technically qualified upon technical evaluation; and upon opening of the financial bids, the petitioner emerged as the lowest bidder (L1) on 31.05.2021. The petitioner had tendered for the work in question at Rs.17,64,99,800/-as opposed to next lowest (L2) tenderer, who has quoted at Rs.18,49,41,095/-.
2. On 02.06.2021, respondent No. 2 sought a clarification from the petitioner with regard to blacklisting, if any, of the petitioner. The petitioner declared that it had not been blacklisted by any Government Department. Admittedly, the petitioner has been banned by the National Hydroelectric Power Corporation (NHPC) Ltd. vide letter dated 16.12.2019. The petitioner explained to the respondent that NHPC Ltd. is a corporation/Public Sector Undertaking (PSU), and it does not fall under the definition of Government Department. Therefore, the ban imposed upon the petitioner by the NHPC Ltd. would not disqualify the petitioner qua the said tender. After receipt of the petitioner's response, on 10.06.2021, respondent No. 2 cancelled the tendering process for "administrative reasons/technical issues", and called for a fresh tender on 11.06.2021. The petitioner is aggrieved not only by the cancellation of the aforesaid tender on 10.06.2021, but is also aggrieved by the incorporation of certain fresh terms and conditions in the fresh tender issued on 11.06.2021.
3. The submission of Mr. Singla, learned senior counsel for the petitioner is that since NHPC Ltd. is not a Government body, the ban imposed by the said corporation cannot be a reason to not award the contract to the petitioner despite the petitioner being otherwise technically qualified and the L1 tenderer. He, therefore, assails the cancellation of the tender dated 23.03.2021 as being arbitrary, whimsical and malafide.
4. He places reliance on the decision of the Supreme Court in Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517, and in particular paragraph 22 thereof, which reads as follows:
"22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts
