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2025 Supreme(Online)(AP) 14466
HIGH COURT OF ANDHRA PRADESH
Dhiraj Singh Thakur, CJ, Ravi Cheemalapati, J
Vijaya & Company Contractors – Appellant
Versus
V. S. Engineering Private Limited – Respondent
Writ Appeal No: 747 of 2022 | Writ Appeal No: 876 of 2022 | W.P. No.17014 of 2022
For the Appellants/Petitioners: Mr. Y. Srinivasa Murthy, Senior Counsel appearing vice Mr. P. Venkaiah Naidu
For the Respondents: Mr. C.V.R Rudra Prasad (Central Govt. Counsel), Mr. Posani Venkateswarulu, Senior Counsel appearing for Mr. P Vivek
Tender conditions require explicit authorization from a company's board to create liability; failure to meet this condition justifies rejection of the tender.
Headnote:(A) Companies Act, 2013 - Tender Conditions - The rejection of the tender submitted by the petitioner based on non-fulfillment of the verification requirement for authorization under clause 12(e)(iii) was dismissed as the Managing Director could not create liability without proper authorization. (Paras 6, 8, 20)
(B) Judicial Review in Tender Matters - The power of judicial review in administrative actions related to tenders is confined to examining the decision-making process for mala fides, irrationality, unreasonableness, and not merely procedural errors. (Paras 14, 16, 20)
Facts of the case:
The petitioner’s tender was rejected by the Railways due to inadequate authorization, prompting a writ petition that was initially allowed, allowing participation in the bidding process.
Findings of Court:
The High Court held the endorsement from the Board did not conform to the tender requirement, legitimizing the rejection of the tender.
Issues: The main issues revolved around the adequacy of the authorization required for liability and the legality of the tender’s rejection.
Ratio Decidendi: The court emphasized that without explicit authorization to create a liability as required by the bid, the rejection was lawful and not arbitrary.
Result: Writ appeals allowed and the previous judgment set aside.
| Table of Content |
|---|
| 1. judgment overview and facts of the case. (Para 1 , 2) |
| 2. petitioner's claim regarding the bid submission. (Para 3 , 4) |
| 3. arguments for the invalidity of technical bid rejection. (Para 5 , 8 , 9) |
| 4. court's interpretation of bid conditions. (Para 6 , 7 , 10 , 18) |
| 5. legal limits on the managing director's authority. (Para 11 , 12 , 13) |
| 6. judicial review standards in tender matters. (Para 14 , 15 , 16 , 17) |
| 7. court's final ruling to uphold rejection. (Para 21) |
SINGH THAKUR, CJ:
The present writ appeals have been preferred against the judgment and order, dated 04.07.2022, passed in W.P. No.17014 of 2022, whereby the petition filed by the petitioner, V. S. Engineering Private Limited – respondent herein, was allowed, and the bid submitted by it, which was otherwise rejected, was directed to be considered and the petitioner was permitted to participate in the tender process.
Briefly stated, the material facts are as under:
2. A notice inviting tender (NIT) came to be issued by the Department of Railways for supplying and stacking of 50 mm gauge hard and durable machine crushed stone ballast at the depot in Guntur Division and also for loading the same into ED/Hoppers/Traffic ballast wagons by mechanical means. The tender involved submission and evaluation of a technical bid as also the financial bid.
The petitioner Company submitted its tender through the e-tendering process as was required through its Managing Director, who claimed that he had been duly authorized by the Board of Directors to sign all the documents pertaining to the tender. The technical bid of the petitioner Company, however, was rejected on the ground that it “failed to submit valid authorization/GPA backed by Board resolution as per GCC-2020”.
While the technical bid of the petitioner was rejected, Vijaya and Company Contractors, a sole proprietor concern – appellant in W.A. No.747 of 2022 was the only other bidder whose bid was found to be responsive. Aggrieved by the rejection of the tender submitted by the petitioner Company, W.P.No.17014 of 2022 was filed wherein the stand taken was that the rejection of the technical bid of the petitioner was unsustainable in law inasmuch as all the required documents, which were otherwise required to be filed as per the terms and conditions of the tender documents, had been filed and uploaded.
3. The stand of the petitioner Company was that the Board of Directors of the petitioner Company had authorized the Managing Director of the Company namely Mr. A Rajeswara Rao to sign and submit the tender documents. It was also the stand of the petitioner that the authorized signatory - the Managing Director had also undertaken the liability in the event any of the submissions made in the tender documents were found to be false. The stand of the petitioner further was that without verifying the said documents, which were present before the Tender Evaluation Committee, the technical bid was rejected and the action was thus vitiated by malice in law.
4. The learned single Judge, by virtue of the judgment and order impugned, on a perusal of the bid document filed before the said Court, came to a conclusion that resolution of the Board of Directors of the petitioner Company, dated 11.04.2022, had been uploaded along with the bid, which fact was otherwise disputed by the learned Assistant Solicitor General appearing for the Railways. The learned single Judge held that the documents produced before it, were the documents downloaded from the portal of the official respondents, which bid reflects that the resolution, dated 11.04.2022, was uploaded with the bid.
The learned single Judge further held that the second petitioner in the writ petition i.e., Mr. A Rajeswara Rao, being the Managing Director of the petitioner Company, was even otherwise entitled to represent the Company before any authority by operation of law and, therefore, held that the question of filing or non-filing of the said authorization was not relevant. What was
