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IN THE HIGH COURT OF JUDICATURE AT MADRAS
SANJAY V. GANGAPURWALA, BHARATHA CHAKRAVARTHY, JJ.
Tamil Nadu Generation and Distribution Corporation Ltd (TANGEDCO) & Ors. - Appellants
Versus
EFICAA Ensmart Solutions Private Limited - Respondent
W.A. Nos. 180, 175, 201 to 206 of 2024
Decided On : 31-01-2024
TENDER - E-REVERSE AUCTION - Act 1998, Section 4, 10, 16(m); Rules 2000, Rule 23, 29 - The court upheld the e-reverse auction process in the tender document, ruling that it was not violative of the Act 1998 and the Rules 2000. The court emphasized the authority's discretion in formulating tender terms and criteria, and the objective of transparency and healthy competition in public procurement.
Fact of the Case:
The Ministry of Power launched a scheme and issued guidelines for Smart Metering. The appellants floated a tender for AMI Service Provider for Smart Prepaid Metering and Smart System Metering. The respondents challenged the e-Reverse Bidding clause in the tender document. The Single Judge allowed the writ petitions, prompting the appellants to appeal.
Finding of the Court:
The court held that the Act and Rules did not prohibit the e-reverse auction process, emphasizing the authority's discretion in formulating tender terms and criteria. It cited the objective of transparency and healthy competition in public procurement. The court also noted that the Act and Rules did not specify the form of tender, leaving it to the authority's discretion.
Issues: The main issue was whether the e-reverse auction process in the tender document was violative of the Act 1998 and the Rules 2000.
Ratio Decidendi: The court emphasized the authority's discretion in formulating tender terms and criteria, and the objective of transparency and healthy competition in public procurement. It held that the Act and Rules did not prohibit the e-reverse auction process, and that the authority had the right to prescribe the procedure and criteria for the evaluation of the tender.
Final Decision: The judgment of the Single Judge was set aside, and the writ petitions filed by the respondents were dismissed. The writ appeals were allowed, with no order as to costs.
JUDGMENT :
Sanjay V. Gangapurwala, J.
[Prayer in W.A.No.180 of 2024: Appeal under Clause 15 of the Letters Patent against the order dated 4.1.2024 made in W.P.No.28719 of 2023 by the learned Single Judge. and batch cases.]
All these appeals stem up from the common judgment and order delivered by the learned Single Judge dated 4.1.2024. The appeals are based on similar set of facts and involve common question of law and, as such, to avoid rigmarole, are decided by the common judgment.
2. The Ministry of Power, Government of India, launched Revamped Distribution Sector Scheme (RDSS) and issued the operational guidelines for implementation of Smart Metering as one of its components for States Pan-India. The present appellants, on or about 18.8.2023, floated a tender for appointment of Advanced Metering Infrastructure (AMI) Service Provider for Smart Prepaid Metering and Smart System Metering in the appellant/TANGEDCO on Design, Build, Finance, Own, Operate and Transfer (DBFOOT) basis under RDSS through global open tender.
3. Clause 20.1 of the tender document provided for the third stage – reverse bidding. The electronic reverse option shall be conducted on the Network Interface Card (NIC) portal for further reduction in the L1 price. All the technically qualified bidders shall be invited to participate in the e-Reverse Auction. Bid opening price (L1) as shown in the reverse tender auction during reverse tendering in e-procurement is landed price and shall be treated as inclusive of all applicable taxes. The reverse auction price will become the bid opening price for further auction. The last (latest) successful bid price will be considered as valid price at any point of time during auction. After the auction elapse time, L1 will be determined.
4. The respondents/original writ petitioners challenged the Clause 20.1 of the tender document, i.e., e-Reverse Bidding, by filing writ petitions.
5. The learned Single Judge, under the impugned judgment and order, allowed the writ petitions on the premise that the reverse bidding method is beyond the scope of the Tamil Nadu Transparency in Tenders Act, 1998 (for brevity, “the Act of 1998”) and the Tamil Nadu Transparency in Tenders Rules, 2000 (for brevity, “the Rules of 2000”) and also against the Model Standard Bidding Document issued by the REC Ltd.
6. The appellants, who have floated the tender and are respondents in the writ petitions, have impugned the said judgment in the instant appeals.
7. Dr. Abhishek Manu Singhvi; Mr. P.S. Raman; and, Mr. P. Wilson, learned Senior Counsel, in their usual erudition, canvassed the submissions. The substratum of their submissions is culled out as under :
(a) The respondent in W.A.Nos.175, 203, 204 and 206 of 2024 had not participated in the bidding process and, as such, have no locus standi to challenge the terms of the tender. The respondent in W.A.Nos.180, 201, 202 and 205 of 2024 is technically disqualified and, as such, is not competent to participate in the tender process. Ergo, the respondents cannot assail the tender conditions. To buttress the said submission, reliance is placed on the decisions of the Delhi High Court in the cases of (i) Consortium of M/s.Siemens Aktiengesellschaft and Siements Ltd v. Delhi Metro Rail Corporation Ltd., 2013 SCC OnLine Del 1982, which was affirmed by the Apex Court in the case of Siemens Aktiengesellschaft and Siemens Ltd v. DRMC Ltd., (2014) 11 SCC 288; and (ii) Opaque Infrastructure Pvt. Ltd v. Union of India and another, 2015 SCC OnLine Del 8396.
(b) The Act of 1998 and the Rules of 2000 do not prohibit inviting offers by e-reverse auction. As the Act of 1998 does not prohibit e-reverse auction, it cannot be said that the same is beyond the scope of the Act of 1998 and the Rules of 2000. The Act of 1998 and the Rules of 2000 have to be read harmoniously so as to give effect to it. Section 10(1) of the Act of 1998 permits the evaluation of the tenders in accordance with the procedure and criteria specified
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 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 public procurement is limited; courts refrain from interference unless clear evidence of arbitrariness or bad faith is established.
Judicial review in tender matters is limited; courts should not interfere unless actions are arbitrary, discriminatory, or biased.
The tendering process must adhere strictly to statutory rules, particularly when it comes to valid bidders and quotation limits.
Judicial interference in the matter of tenders and contracts is limited and the court should exercise restraint in interfering with the administrative decision-making process.
The cancellation of a tender by an authority after the bidding process is complete is arbitrary unless supported by clear, substantiated justifications, reaffirming the need for transparency and fair....
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