The Calcutta High Court has stated that transparency is essential in the selection process of a public undertaking to ensure the selection of the most competent participant.
Justice Sabyasachi Bhattacharya, presiding over a single-judge bench, overturned the rejection of the tender submitted by Texmaco Rail & Engineering Ltd., ruling that the rejection by the Railway authorities was both arbitrary and malicious.
Brief Facts:
The petitioner company, after merging with Kalindee Rail Nirman (Engineers) Limited, took part in a tender process for the Automatic Block Signalling System. However, during the evaluation of techno-commercial bids, the petitioners' bid was rejected due to reasons cited as 'technical and financial ineligibility, bid capacity, and improper information.'
The petitioners alleged that right after the rejection of their bid, the financial bids were opened, and two bids from their competitors were accepted.
Contentions of the Petitioner:
The petitioners argued that the tender agreement stipulated a reverse auction at the techno-commercial stage only if there were three successful participants. They claimed that the respondents, in order to avoid such a reverse auction and limit the tender to pre-selected competitors, unjustly rejected the petitioners' bid on technical grounds, in an arbitrary and malicious manner.
Furthermore, the petitioners contended that even from a technical standpoint, their bid was valid and should not have been rejected. They asserted that one of the tender criteria required substantial competition in three categories of works, similar to the work described in the tender document. The petitioners demonstrated their participation in similar projects undertaken by 'Kalindee,' a company with which they had merged.
Contentions of the Respondent:
In contrast, the respondents' counsel argued that the tender notice specified that the condition of previous work experience being at 60% of the tender value would be fulfilled individually by the petitioner. They asserted that the petitioners' previous experience, which involved a joint venture, did not meet this criterion as the petitioner had only a minority stake of 29%, falling short of the stipulated 60% control.
Observations of the Court:
Upon reviewing the arguments presented by both parties, the Court examined the nature of the clarification clause within the tender document. It determined that the inclusion of such a clause provided discretionary power to the respondents, allowing them to exercise their own judgment in seeking clarifications from the bidders during the tender process. The Court emphasized that this process was not mandatory and could not be imposed on the respondents.
Nevertheless, in relation to the matter of rejecting the petitioners' tender bid, the Court expressed the view that as there were no factual inquiries necessitating adjudication, a Writ court could examine whether there existed any arbitrary or malevolent motive behind the rejection of the petitioners' bid.
After reviewing the documents provided by the petitioners, the Court determined that the value of the petitioner's previous work exceeded the stipulated 60% value mentioned in the current tender. Moreover, the Court recognized that the nature of the previous work closely aligned with the work described in the disputed tender.
The Court clarified that the joint-venture aspect of the petitioner's involvement in the previous project did not impact their work experience. The Court stated that the petitioner's profit share in the joint venture was not a relevant factor when assessing previous work experience.
Instead, the Court emphasized that the crucial factor was whether the work performed by the petitioner as a member of the joint venture met the eligibility criteria outlined in the tender document.
The decision of the Court:
The Calcutta High Court allowed the petition by setting aside the impugned rejections of the petitioner’s technical bids.
Case Title: Texmaco Rail and Engineering Limited & anr v Union of India and ors
Coram: Hon’ble Justice Sabyasachi Bhattacharyya
Case no: WPA No. 15369 of 2023
Advocate for the Petitioner: Mr. Jishnu Saha,
Advocate for the Respondent: - Mr. Atarup Banerjee
Read Judgment @LatestLaws.com
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