Back
2024 Supreme(HP) 360
IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA
M.S. RAMACHANDRA RAO, C.J., JYOTSNA REWAL DUA, J.
M/s R.K. Company - Petitioner
Versus
State of Himachal Pradesh & Others - Respondents
CWP No.4169 of 2023
Decided on : 24-04-2024
For the Petitioner:Mr. Vinod Thakur, Advocate.
For the Respondents:Mr. Anup Rattan, Advocate General with Mr. Gobind Korla, Additional Advocate General
Public authorities must adhere to fairness and reasonableness in tender processes, ensuring decisions are not made arbitrarily or without just cause as mandated by Article 14 of the Constitution.
Headnote:(A) Constitution of India - Article 14 - Tendering Process - Petitioner, a registered Company, qualified as L-2 in a tender process but was denied the award. The Court found the cancellation of the tender arbitrary due to lack of justification, violating principles of fairness and equality. The respondents could not refuse the tender without reasonable grounds and must follow established norms to avoid arbitrary decisions. (Paras 18-30)
(B) Judicial Review - The Court emphasized that public authorities must avoid arbitrary discretion in tendering processes and adhere to principles of fairness regardless of the nature of contracts. (Para 30)
Facts of the case:
The petitioner participated in a tender process to supply manpower services under a government scheme. Although qualified in both technical and financial bids, the petition was aimed at challenging the cancellation of the tender due to administrative reasons, allegedly based on a policy decision that had not been formalized.
Findings of Court:
The act of cancellation of the tender was deemed arbitrary and unreasonable as no timely alternative policy was established to justify long-term extensions granted to another service provider.
Issues: The fundamental questions addressed included whether the respondents had valid grounds for rejecting the tender and the applicability of Article 14 in ensuring a fair tender process.
Ratio Decidendi: The Court ruled that the cancellation of the tender was unreasonable, reinforcing that public authorities must not act arbitrarily or without just cause in contract matters. The principle of fairness necessitated that the petitioner be awarded the tender based on qualifications.
Result: Writ petition allowed; the impugned order was set aside and respondents directed to award the tender to the petitioner.
| Table of Content |
|---|
| 1. background facts regarding the tender process. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10) |
| 2. petitioner's legal actions after filing. (Para 11 , 12 , 13 , 14) |
| 3. respondents' arguments regarding the tender process. (Para 15 , 16 , 17) |
| 4. court's analysis of arbitrariness in tender process. (Para 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28) |
| 5. principle of judicial review in contract matters. (Para 29 , 30 , 31) |
| 6. final decision and order regarding the writ petition. (Para 32 , 33) |
JUDGMENT :
M.S. Ramachandra Rao, C.J.
The background facts The petitioner is a registered Company and is doing the business of providing watch & ward/security services and manpower supply, expert services, security services, housekeeping, sanitation services, horticulture services etc.
2) The State Project Director, Department of Agriculture (3rd respondent) had invited online proposal for hiring of Service Provider Agency for skill and un-skilled manpower under the Centre & State Sponsored Scheme, i.e. support to State Extension Program for Extension Reforms-ATAMA & Prakritik Kheti Khushhal Yojna, on outsource basis, vide Annexure P-1, Request for Proposal (RFP).
3) The RFP envisaged that the tender should be submitted on or before 22.02.2023 by 11.00 a.m. and that they should be opened on the same day in the presence of bidders and their authorized representatives.
4) The petitioner alongwith five other bidders participated in the tender process.
5) Only four Firms were found to be qualified in the technical bid. The petitioner was one such Company which was found to be qualified in the technical bid.
6) The fin ancial bid was opened on 15.03.2023 and four firms were found to have qualified therein as per Annexure P-2 including the petitioner.
7) One M/s Shimla Cleanways was L-1 and petitioner was L-2. The quotation of M/s Shimla Cleanways was lowest and that of the petitioner was the next lowest one.
8) According to the respondents, M/s Shimla Cleanways was requested to sign the agreement within a week’s time from the issuance of the letter dt.22.3.2023 awarding the work to it and also deposit the performance security of Rs.10,00,000/- but it did not do so within the stipulated time. So the tender was not awarded to M/s Shimla Cleanways.
9) On 8.5.2023, the respondent no.3 got issued Annexure P4 letter cancelling the e-tender dt.1.2.2023 “due to administrative reasons” and granting extension to the existing agency by name M/s Farm Technocrats forum as a stop gap arrangement.
10) Petitioner then filed the Writ Petition seeking quashing of the said order dt.8.5.2023, to direct the respondents to call petitioner for negotiations as it was L-2 in the tender process and award the tender work to it.
Events after filing of the Writ petition
11) This Writ petition was filed on 27.06.2023 and notice was issued in the said Writ petition on 28.06.2023 to respondents no.1 to 3 and the matter was ordered to be listed on 06.07.2023.
12) It was next listed on 28.07.2023, when it was informed to the Court that by the counsel for the respondents that the e-tender document itself was cancelled on the basis of a statement made by the Deputy Chief Minister of Himachal Pradesh in “Vidhan Sabha Session” on 28.03.2023 that “in Jal Shakti Vibhag no outsourcing will be done in future and a Policy will be framed and accordingly employees would be engaged.”
13) The learned Single Judge called for a detailed reply from the respondents.
14) On 17.08.2023, reply was filed by respondents no.1 to 3 reiterating the same stand.
Consideration by the Court
15) It is contended by the respondents that the 3rd respondent is a separate entity and he has neither awarded work to the petitioner nor given any assurance to award the work to the said firm and so, the petitioner was estopped from filing the Writ petition.
16) We find this stand taken by respondents no.1 to 3 untenable because no Principle of Law is cited to show that there is any provision for estopping the petitioner f
