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IN THE HIGH COURT OF DELHI
Vipin Sanghi, Jasmeet Singh, JJ.
MDC Pharmaceuticals Limited - Appellant
Versus
Union of India - Respondent
W.P.(C) 7620 of 2021 and CM Appl. Nos. 23847 of 2021 & 24944 of 2021
Decided On : 16-02-2022
The rejection of a tender based on hyper-technical grounds, without due consideration of compliance with ESI contributions, is arbitrary and subject to judicial review.
Headnote:(A) Tender Law - Employees' State Insurance Act, 1948 - Article 226 of Constitution of India - Bid rejection - Petitioner’s rejection based on differing names in ESIC challans deemed arbitrary - No outstanding ESI dues confirmed - Court requires tender authorities to apply mind and avoid hyper-technical disqualifications. (Paras 22, 33, 42)
(B) Administrative actions - Courts review the legality, rationality, and procedural propriety - A fair assessment must prioritize public interest and economic benefit. (Paras 46, 47)
(C) Writ Jurisdiction - Issued to declare rejection invalid and direct consideration of petitioner's bid as technically eligible, allowing for fair opportunity in tenders. (Paras 48, 49)
Facts of the case:
The petitioner contested the rejection of its bid by ESIC for not meeting eligibility criteria regarding ESI dues, claiming had submitted sufficient clarification for the alleged discrepancies. (Paras 1, 11, 48)
Findings of Court:
Rejection deemed irrational and arbitrary; the application of mind was lacking in deciding eligibility, thus the petitioner’s bid is to be reconsidered. (Paras 44, 43)
Issues: Whether the rejection based on technicalities is justified without proper evaluation of compliance to ESI regulations. (Paras 38, 40)
Ratio Decidendi: The court underscored that minor irregularities should not prejudice the tender process and emphasized the need for a rational assessment that serves public interest. (Paras 42, 46)
Result: Petition allowed; ESIC directed to reconsider the petitioner’s bid.
JUDGMENT
1. The present petition has been filed by the petitioner seeking substantially the following prayers:
"i. To issue a writ of in the nature of certiorari or any other writ or direction for declaring the e-mail dated 06.07.2021 issued by respondent No. 4, whereby the bid of the petitioner company has been summarily rejected with a malafide intention to award the tender to a company of their choosing as illegal, arbitrary, unconstitutional, null and void-ab-initio and is liable to be quashed and set aside;
ii. And a writ in the nature of mandamus or any other appropriate writ, order or direction thereby directing the respondents to consider the financial bid of the petitioner on merits to match the lowest bid as would be made by the successful bidder in the tender under consideration;
iii. Or in alternative pass any Writ Petition Under Article 226 Of Constitution Of India For The Issuance Of Writ Of Mandamus Or Any Other Appropriate Writ, Order Or Direction thereby directing the Respondent to desist from opening the financial bids of other contenders and/or to desist from awarding the tenders under consideration to any of the bidders, during the pendency of the instant writ petition;"
2. The case set up by the petitioner is that the petitioner M/s MDC Pharmaceutical Limited (hereinafter called either "MDC" or "petitioner") is a company registered under the Companies Act, 1956 having its registered office at 213, First Floor, Industrial Area Phase I, Chandigarh-160002.
3. MDC was conceived of in the year 1994, and was incorporated originally as a private limited company which was duly registered as M/s MDC Pharmaceuticals Private Limited under the provisions of Companies Act, 1956 with the office of the Registrar of Companies, Punjab, Himachal Pradesh and Chandigarh vide Registration No. 53-14820 of 1994 on 14.07.1994. The petitioner was doing business in pharma industry, and was getting medicines manufactured from other pharma manufacturing units within the state of Himachal Pradesh. The petitioner continued selling/marketing its products, which were manufactured by other units, till the year 1999.
4. In the year 1999, the petitioner company acquired a manufacturing facility on rent, and started manufacturing its own products w.e.f. 14.02.2000, obliterating its need to outsource. Subsequently, Petitioner company purchased land at village Gullarwala, Post Office and Tehsil Baddi, District Solan, H.P. to set up its manufacturing facility.
5. On 12.08.2005, the petitioner company acquired the adjoining land also, and obtained necessary permission under Section 118 of the Himachal Pradesh Tenancy & Land Reforms Act, 1972, and started a manufacturing facility for its pharma products on 02.04.2006.
6. On 13.03.2018, the petitioner company converted from a private limited company into a public limited company, and consequently, changed its name from MDC Pharmaceutical Private Limited to MDC Pharmaceuticals Limited with the approval of Registrar of Companies, Chandigarh. A certificate dated 13.03.2018 was issued by the ROC, Chandigarh to that effect, with the approval of the Central Government, accorded vide SRN G79087573 dated 13.03.2018.
7. Although, vide letter dated 27.01.2020, the petitioner company has been granted the necessary permission for change in the revenue record from MDC Pharmaceuticals Private Ltd. to MDC Pharmaceuticals Ltd., however, an unjustified condition of payment of stamp duty and registration fee was thrust on the petitioner company. Therefore, the petitioner company filed a writ petition, being CWP No. 2611/2021 before the Himachal Pradesh High Court at Shimla, to challenge the aforesaid condition of payment in stamp duty and registration fee. The said writ petition was allowed by the Shimla High Court 24.04.2021. However, since compliance was not effected in respect of the court's order, the petitioner disclosed that it was in the process of filing a contempt petition.
8. The respond
