2006 Supreme(Gau) 459

IN THE HIGH COURT OF GAUHATI
B. SUDERSHAN REDDY AND BROJENDRA PRASAD KATAKEY, JJ.
Educomp Solutions Ltd. and Ors. – Appellant
Vs.
State of Assam and Ors. – Respondent
WP(C) No. 1496 of 2006 and W.A. No. 102 of 2006
Decided On: 17.05.2006

The procedure adopted by the decision makers is vitiated by the application of hidden criteria, lack of transparency and accountability. Procedural impropriety is writ large on the face of the record.

Headnote:

AMTRON - NIT - TENDER - TECHNICAL BID - COMMERCIAL BID - EVALUATION - HIDDEN CRITERIA - TRANSPARENCY - ACCOUNTABILITY - LOWEST BID - JUDICIAL REVIEW - CONTRACT AWARD - PUBLIC INTEREST - ADMINISTRATIVE DECISION - LEGALITY - RATIONALITY - PROCEDURAL IMPROPRIETY - JUDICIAL INTERFERENCE - WRIT PETITION - WRIT APPEAL - DISMISSAL.

Fact of the Case:

AMTRON issued a NIT inviting bids for execution of contractual work in the 4th Phase of Rajiv Gandhi Computer Literacy Programme (RGCLP) in three hundred schools in the State of Assam. The tender notice required interested tenders to submit their bids in two parts, i.e. (a)Technical Bid, and (b) Commercial Bid, in separate sealed envelopes for the supply of hardware, software, courseware and connected accessories and provision of computer education service in government high schools on B0T (Build Own Operate and Transfer) basis. The last date and time of submission of tender was fixed on 19.12.2005 at 2 PM and the date and time for opening of technical bid was fixed at 3 PM on the same day. It was further indicated in the notice that the date and time for opening of commercial bid would be intimated separately to such of those bidders who qualify in the technical bid. The petitioners and respondent No. 4 were present in a pre-bid meeting held on 14.12.2005 in which the petitioners claim to have requested the authorities to clarify/notify as to the criteria on the basis of which the evaluation of the bids would be done, since no such criterion was mentioned in the tender documents. The technical bids submitted by the petitioners as well as the 4th respondent were opened on 19.12.2005 in the presence of the representatives of the concerned parties. Both the bids were found technically valid and eligible and accordingly parties were informed to the effect that the commercial bids submitted would be opened on 31.12.2005 and they were accordingly requested to be present so as to participate in the process. The commercial bids submitted by the bidders were accordingly opened by the 2nd respondent in the presence of the representatives of bidders and it had emerged that the price quoted by the petitioners consortium was substantially lower than that of the price quoted by the 4th respondent. The petitioners had quoted an amount of Rs. 9.07 lakh per school as against the amount of Rs. 14.15 lakh per school quoted by the 4th respondent. The petitioners contend that the authorities have acted in an absolutely arbitrary, unfair, illegal and discriminatory manner in issuing the Letter of Intent in favour of the 4th respondent by rejecting the bid submitted by the petitioners' consortium despite the same being technically valid and lowest bid. The authorities have applied certain hidden/undisclosed criteria in evaluating the bids in a most surreptitious manner so as to award the contract to the 4th respondent for extraneous consideration by giving a complete go-bye to the principles of fairness, transparency and accountability in the matter of awarding contract.

Finding of the Court:

The court held that the procedure adopted by the decision makers is vitiated by the application of hidden criteria, lack of transparency and accountability. Procedural impropriety is writ large on the face of the record. The court also held that the decision making process in issuing the Letter of Intent (LOI) dated 21.2.2006 and award of contract in favour of the 4th respondent is vitiated and the same is accordingly set aside. It shall be open to the respondent Nos. 2 and 3 to take an appropriate decision in the matter in accordance with law and in the light of the observations made in this order.

Issues: 1. Whether the selection process was vitiated by lack of transparency and accountability? 2. Whether there was any undisclosed/hidden criteria? 3. Whether the lowest bid is a valid criteria to be taken into consideration or not?

Ratio Decidendi: 1. The court held that the procedure adopted by the decision makers is vitiated by the application of hidden criteria, lack of transparency and accountability. Procedural impropriety is writ large on the face of the record. 2. The court held that the decision making process lacks transparency and accountability and suffers from procedural impropriety and applying the principles referred to herein above we are obliged to interfere and set aside the decision of the respondent Nos. 2 and 3 in awarding the contract to the 4th respondent. 3. The court held that it is true that in Raunaq International (supra), Air India, Ltd. (supra) and Master Marine Services (P.) Ltd. v. Matcalfe Hodgkihson (P.) Ltd. and Anr. AIR 2005 SC 2299 the Supreme Court held that price need not always be the sole criterion for awarding of contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. That, at the same time the courts may have to bear in mind that the State and its agencies do not have unlimited financial resources at their command, therefore, they altogether cannot ignore the lowest bid offers though it itself may not be the sole criterion for awarding the contract.

Final Decision: The writ petition is accordingly allowed without any Order as to costs. No further orders are required to be passed in the writ appeal which arises out of an interlocutory Order passed by the learned Single Judge and the same shall stand disposed of in terms of the Order made in the writ petition.