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HIGH COURT OF JUDICATURE AT MADRAS
KRISHNAN RAMASAMY, J.
EFICAA Ensmart Solutions Private Limited, Hyderabad - Appellant
Versus
Tamil Nadu Generation & Distribution Corporation Limited (TANGEDCO), Chennai & Anr. - Respondents
W.P. Nos. 28719, 29263, 29264, 28778, 28779, 28780, 29257 & 29260 of 2023 & W.M.P. Nos. 28868, 28877, 28878, 28379, 28381, 28873, 28383, 28288 of 2023
Decided On : 04-01-2024
Reverse Bidding - Procurement Tender - Act Section 2(cc), Section 2(i), Section 10(1), Section 10(3), Rule 23 - The court held that the introduction of reverse bidding in the tender was contrary to the provisions of the Model Standard Bidding Document issued by RAC Limited and the Act and Rules made thereunder. The court also emphasized that the lowest tender mentioned in Section 10(3) is only the L1, who was determined under the Rule 23 and not otherwise. The court concluded that the decision-making process of the respondent with regard to the introduction of reverse bidding mechanism was illegal, irrational, arbitrary, and procedurally improper, and therefore, the impugned tender notification was quashed.
Fact of the Case:
The respondents had floated a tender for setting up the Advance Meeting Infrastructure Service Providers (AMISP) for smart prepaid metering and smart system metering. The petitioners challenged the reverse bidding concept contained in the tender documents, claiming it was contrary to the provisions of the Act and Rules and the Model Standard Bidding Document issued by the RAC Limited.
Finding of the Court:
The court found that the introduction of reverse bidding in the tender was contrary to the provisions of the Model Standard Bidding Document issued by RAC Limited and the Act and Rules made thereunder. The court also held that the decision-making process of the respondent with regard to the introduction of reverse bidding mechanism was illegal, irrational, arbitrary, and procedurally improper.
Issues: The central issue was whether the reverse bidding as contained in Clause 20.1 of the instructions to the bidders is contrary to the provisions of the Act and Rules made thereunder and whether the court can interfere.
Ratio Decidendi: The court emphasized that the lowest tender mentioned in Section 10(3) is only the L1, who was determined under the Rule 23 and not otherwise. The court concluded that the decision-making process of the respondent with regard to the introduction of reverse bidding mechanism was illegal, irrational, arbitrary, and procedurally improper.
Final Decision: The court quashed the impugned tender notification, and the writ petitions were allowed.
JUDGMENT
(Prayer: Writ Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorari, to call for the records pertaining to the impugned RFP/Tender Reference No./Specification No.CE/IT and RAPDRP-15/2023-24 dated 18.08.2023 issued by the respondents and quash the same.)
1. These writ petitions have been filed challenging the impugned RFP/Tender Reference No./Specification No.CE/IT and RAPDRP- 15/2023-24 dated 18.08.2023 issued by the respondents.
2. The brief facts of the case are as follows:
2.1 The respondent had floated a tender for setting up the Advance Meeting Infrastructure Service Providers (AMISP) for smart prepaid metering and smart system metering on DB foot basis and Revamped Distribution Sector Scheme. The Ministry of Power had launched Revamped Distribution Sector Scheme on 23.07.2011 with smart metering as one of its components. Thus, it had directed all the States across India to set up AMISP, Smart Metering System. Initially, a pilot project, in T-Nagar for around 1,00,000 (one lakh) smart metres, had been took place between the year 2020 and 2021. Thereafter, in the year 2021, the respondent had floated a tender for AMISP system in certain parts of Chennai city, which was subsequently called off. Thereafter, on 06.06.2023 another tender, for almost the same quantity as present tender, was floated. However, the same was also called off.
2.2 The present tender via RFP/15 to 18 was published on 18.08.2023 with the original date for opening of technical bids as 20.09.2023 and subsequently, it was extended up to 13.10.2023. Under these circumstances, the challenges have been made against the reverse bidding concept, which was contained in Clause 20.1 of the Tender Documents since according to the petitioner, the reverse bidding is not permissible and the same is contrary to the provisions of the Tamil Nadu Transparency In Tenders Act, 1998 (hereinafter called as “the Act”) and the Tamil Nadu Transparency In Tenders Rules, 2000 (hereinafter called as “the Rules”). Further, the said reverse bidding concept is also against the Model Standard Bidding Document issued by the RAC Limited, which does not contain any provision for reverse bidding. Hence, the present writ petitions.
3. In the present case, Mr.Vijay Narayan, Mr.P.R.Raman, Mr.Jayanth Muthraj and Mr.Srinath Sridevan, all the learned Senior counsel are appearing on behalf of the petitioners and all of their initial submissions are as follows:
3.1 The process of reverse bidding as contained in Clause 20.1 of the instructions to the bidders is contrary to the provisions of the Act and Rules made thereunder and the same is expressly prohibited by the said Act and Rules. Further, in this regard, they had made the following submissions:
a) Clause 20.1 of the tender document talks about the reverse bidding. The reverse auction was set forth in the third stage, which occurs after the financial bidding is opened and L1 is determined. In the said reverse auction, all the technically and financially qualified bidders, including the highest bidder, are allowed to further lowest their price by increment of a sum of Rs.10 crore for a limited period. According to the learned Senior counsel, such a process is clearly hit by Section 10(3) of the Act read with Rules 23 and 29 of the Rules.
b) Once the Respondents have opened the bid and determined L1 in the 2 nd stage itself, thereafter allowing the other bidders to further reduce their prices would clearly be contrary to Rule 23 which prohibits any further change, alteration or amendment of the prices after the opening of the tender. The only exception to Rule 23 is when the lowest tenderer has quoted higher than the market rate. Only as per section 10(3) of the Act, the procuring authority is permitted to negotiate with the Lowest Bidder alone for a reduced price. However the procedure contemplated in the impugned
AI
The authority has discretion in formulating tender terms and criteria, and the e-reverse auction process is not violative of the Act 1998 and the Rules 2000.
Judicial review in public procurement is limited; courts refrain from interference unless clear evidence of arbitrariness or bad faith is established.
Judicial review of tender conditions is limited; courts should not interfere unless actions are arbitrary, discriminatory, or mala fide, ensuring public interest is prioritized.
Judicial review in tender matters is limited to assessing arbitrariness, irrationality, or mala fides; decisions should reflect fair competition and not accommodate late submissions of corrected bids....
Judicial review of tender processes adheres to principles of reasonableness, emphasizing the authority's discretion in evaluating bids and prioritizing public interest over individual complaints.
The court upheld the principle of judicial restraint in administrative action and emphasized the need for the State to act within the bounds of reasonableness in tender matters.
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