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ALLAHABAD HIGH COURT
Amreshwar Pratap Sahi, Attau Rahman Masoodi, JJ.
Rba Consortium & Anr. - Appellant
Versus
State of U.P. & Ors. - Respondent
Writ Petition No. (Misc. Bench) - 8501 of 2015
Decided On : 23-12-2015
The Lucknow Metro Rail Corporation (LMRC) invited tenders for the design, manufacture, supply, testing, commissioning, and training of 80 standard gauge cars, electrical multiple units (EMUs), including train control, signaling, and telecommunication systems for the N-S Corridor of the Lucknow Metro Rail Project. The petitioner, a consortium of companies, submitted a tender and was found to be the lowest bidder. However, the LMRC disqualified the petitioner on the ground that it had failed to disclose its debarment by other commercial entities in the past, which was a mandatory requirement under the tender conditions. The petitioner challenged the LMRC's decision by filing a writ petition, alleging that the disqualification was unfair and that the LMRC had negotiated with the third respondent, another consortium of companies, to award the contract at a lower bid price. The court held that the petitioner's non-disclosure of its debarment constituted a fraudulent practice under the tender conditions and that the LMRC was justified in disqualifying the petitioner. The court also held that the LMRC's negotiations with the third respondent were not improper and that the petitioner had not established any corrupt or fraudulent practices on the part of the third respondent.
Fact of the Case:
The petitioner, a consortium of companies, submitted a tender for the design, manufacture, supply, testing, commissioning, and training of 80 standard gauge cars, electrical multiple units (EMUs), including train control, signaling, and telecommunication systems for the N-S Corridor of the Lucknow Metro Rail Project. The petitioner was found to be the lowest bidder, but the LMRC disqualified the petitioner on the ground that it had failed to disclose its debarment by other commercial entities in the past, which was a mandatory requirement under the tender conditions. The petitioner challenged the LMRC's decision by filing a writ petition, alleging that the disqualification was unfair and that the LMRC had negotiated with the third respondent, another consortium of companies, to award the contract at a lower bid price.
Finding of the Court:
The court held that the petitioner's non-disclosure of its debarment constituted a fraudulent practice under the tender conditions and that the LMRC was justified in disqualifying the petitioner. The court also held that the LMRC's negotiations with the third respondent were not improper and that the petitioner had not established any corrupt or fraudulent practices on the part of the third respondent.
Issues: 1. Whether the petitioner's non-disclosure of its debarment constituted a fraudulent practice under the tender conditions? 2. Whether the LMRC was justified in disqualifying the petitioner? 3. Whether the LMRC's negotiations with the third respondent were improper? 4. Whether the petitioner had established any corrupt or fraudulent practices on the part of the third respondent?
Ratio Decidendi: 1. The court held that the petitioner's non-disclosure of its debarment constituted a fraudulent practice under the tender conditions because it was a mandatory requirement under the tender conditions and the petitioner had deliberately concealed this information. 2. The court held that the LMRC was justified in disqualifying the petitioner because the petitioner had violated the tender conditions and the LMRC was entitled to reject the petitioner's tender. 3. The court held that the LMRC's negotiations with the third respondent were not improper because the LMRC was entitled to negotiate with the third respondent after disqualifying the petitioner. 4. The court held that the petitioner had not established any corrupt or fraudulent practices on the part of the third respondent because the petitioner had not provided any evidence to support these allegations.
Final Decision: The court dismissed the petitioner's writ petition.
(Attau Rahman Masoodi, J.)
1. A manifestation of man's eternal quest to conquer space, time and distance is about to be historically witnessed and achieved with the launching of the Lucknow Metrol Rail Project in the capital city of the State of Uttar Pradesh, which moment has been supplemented with the flutter and excitement of this legal battle between two commercial giants, vying against each other, to bag the prestigious contract of commissioning the project to be executed by the Lucknow Metro Rail Corporation. On the project becoming functional, the vision of reducing and eliminating traffic jams as well as environmental pollution is likely to be fulfilled if not entirely, at least upto the aspirations of the people in their endeavour to preserve the culturally rich heritage city of Lucknow.
2. The petitioner alleges an unfair treatment meted out to it by the 'Corporation to non suit its tender midway in spite of its lowest bid having been found to be technically and financially sound, on a ground that is unsupportable on any legal principles, and simultaneously complains of award of contract to the third respondent's consortium by deliberately avoiding to investigate the disqualification of the said respondent and negotiating the contract by extending the facility of lowering its bid to match it with that of the petitioner. In short, the entire decision making process to eliminate the petitioner and award the contract to the third respondent is alleged as an unfair deal that reflects a questionable and unlawful stand taken by the Corporation.
3. The Corporation has defended its action to have treated the participants fairly, and in its affidavits has pointed out a default in the petitioner's tender about non-disclosure of its debarment in other commercial transactions that squarely attracted the fatal disqualification clause under the terms of tender. This discovery of a relevant fact, that was concealed by the petitioner, authorised the Corporation to terminate all negotiations with the petitioner without anything further.
4. The petitioner contests this position primarily on the ground that such disclosure was not essential and, therefore, irrelevant which was suitably explained prior to the impugned action, but even otherwise, if the same did require consideration then any adverse decision ought to have been preceded followed by a conscious determination on a consideration of the version of the petitioner. This having not been done, the decision making process is in violation of principles of natural justice that attracts infringement of the rights of fair treatment guaranteed under Article 14 of the Constitution of India. Coupled with this, no genuine effort was made by the Corporation to embark upon any enquiry to find out any concealment of relevant information about the alleged disqualification of the third respondent, either before eliminating the petitioner or preceding the award of contract, which came to be finalised by comfortably suiting the conditions as desired by the third respondent in undue haste.
5. The third respondent has defended the award of contract in its favour by contending that it does not suffer from any disqualification of non-disclosure and it does not suffer from any such disqualification in fact, about which baseless allegations have been made that remain unsubstantiated. The decision taken is just and no terms of the tender have been violated. The petitioner has not laid any foundation to establish the authenticity of the allegations made and has attempted for a fishing and roving enquiry to create a mountain out of a molehill.
6. We have been very ably assisted by Sri Jaideep Narain Mathur, Senior Advocate alongwith Sri Dhruv Mathur, Advocate for the petitioners, Sri Vijay Bahadur Singh, learned Advocate General for the State of U.P. alongwith his team of State counsel, Sri P.S. Patwalia, learned Senior Counsel and Addl. Solicitor General of India alongwith Sri Kumar Ayush for t
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