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2025 Supreme(Guj) 1833
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
A.S. Supehia, L. S. Pirzada, JJ.
Design Dialogues India Pvt. Ltd.- Petitioner
Versus
State Of Gujarat & Ors. – Respondents
R/Special Civil Application No.7634 of 2025
Decided On : 01-10-2025
A public authority cannot impose penalties beyond the scope of contract terms, particularly after the validity of the tender has expired, as such actions are arbitrary and violate principles of fairness in procurement.
Headnote:(A) Constitution of India - Article 226 - Quashing of communication by the State Project Director imposing a penalty for project non-completion - Work Order issued post-validity of Tender - Court finds directive arbitrary and outside tender terms as no penalty of 3% specified. (Paras 17-34)
(B) Public Procurement - Validity of tender contracts - A work order issued after the expiration of the validity period is unenforceable - Fair play in administrative actions required from public authorities. (Paras 26-30)
(C) Judicial Review - Limits of judicial scrutiny on administrative actions - Actions must not be arbitrary or unreasonable. (Paras 31-33)
Facts of the case:
The petitioner, Design Dialogues India Pvt. Ltd., was directed by the respondents to fulfill tender requirements despite a lapse in the validity period of the bid. The respondents issued a Work Order after this period and later imposed a penalty.
Findings of Court:
The Court ruled that the imposition of the penalty was unjustified due to the absence of any valid signed contract and previous communications from respondents that led to delays.
Issues: 1) Whether the petitioner can raise objections to tender specifications? 2) Can the petitioner be compelled to sign a contract post the validity of the tender? 3) Is the 3% penalty for project non-completion enforceable?
Ratio Decidendi: The Court held that the petitioner could not be compelled to fulfill obligations post-tender validity and the penalty was unjust as the requisite clause was not included.
Result: The impugned communication is quashed.
| Table of Content |
|---|
| 1. petitioner challenges penalty for tender compliance. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. arguments raised regarding validity and penalties. (Para 8 , 9 , 10 , 11 , 12 , 13 , 14) |
| 3. court analyzes relevant facts and claims. (Para 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23) |
| 4. discussion on contract validity and obligations. (Para 24 , 25 , 26 , 27) |
| 5. evaluation of penalty clause and its validity. (Para 28 , 29 , 30) |
| 6. judicial review standards applied. (Para 31 , 32) |
| 7. court's conclusion and order. (Para 33 , 34) |
JUDGMENT :
A.S. SUPEHIA, J.
(1) By way of the present petition, the petitioner-Company prays for the quashing and setting aside of the communication dated 15.04.2025 written by respondent No.4, Additional State Project Director, Samagra Shiksha Gujarat, directing the petitioner to complete the project as per the tender terms, failing which a penalty amounting to 3% of the Bid Value shall be imposed.
BRIEF FACTS:
(2) The petitioner is a registered supplier that participated in a tender process initiated by the respondent authorities under Bid No.GEM/2024/B/4678089 dated 01.03.2024 for the printing and distribution of printed maps and was declared as an L-1 Bidder. The closing date of the bid was extended vide corrigendum dated 29.03.2024. On 22.05.2024, the petitioner was declared as L-1 Bidder in a reverse bidding process, having been found technically and financially eligible.
(3) On 01.06.2024, the petitioner received an email from the respondent authorities requesting the submission of a sample to be evaluated against ten criteria outlined in the Tender Document. On 03.06.2024, the respondents provided the design for the sample. Pursuant to the request of 01.06.2024 and the email of 03.06.2024, the petitioner submitted a sample on 19.06.2024. After this sample was rejected, the petitioner requested the respondents to provide an approved sample meeting their specifications. The respondents provided a sample on 20.07.2024, which the petitioner documented via email on the same date, including photographs of the received sample. In a communication dated 25.07.2024, the petitioner apprised the respondent authorities of a Laboratory Report dated 24.07.2024, emphasizing that the sample submitted on 19.06.2024 (and rejected on 16.07.2024) was, in fact, fully compliant with the bid specifications.
(4) It is the case of the petitioner that the respondents, vide reply dated 02.08.2024, admitted that the sample provided on 20.07.2024 by them did not confirm to the bid specifications but sought to qualify this by stating that it was merely a response to the petitioner’s query and not to be used for any other purpose. The petitioner wrote again on 05.08.2024, requesting acceptance of the material based on the sample submitted on 19.06.2024. The petitioner also offered an 18-month warranty, exceeding the respondents’ 12 months requirement. Subsequently, by a communication dated 04.09.2024, the respondents demanded fresh samples.
(5) It is the case of the petitioner that since it faced a technical challenge relating to direct printing with ink on HDPE sheets, it consulted manufacturers and was advised to seek specialized coating and ink solutions from the providers in the USA. The petitioner contacted such specialists, who agreed to provide a solution at additional cost and with an extended time frame. The petitioner apprised the respondents of this development on 08.09.2024. The bid's validity period, calculated as 180 days from 29.03.2024, expired on 25.09.2024.
(6) After the bid's validity had expired, the respondent authorities issued a Work Order to the petitioner on 06.12.2024. The petitioner responded on 11.12.2024, stating that the Work Order, being issued beyond the validity period, was de hors the tender terms and that a contract could therefore not be signed. On 18.12.2024, the petitioner met with officials of the respondent authorities to highlight the irregularities, delays, and faulty specifications. A detailed repr
