The Division Bench of Hon’ble Chief Justice Prakash Shrivastava and Justice Rajarshi Bharadwaj of the Calcutta High Court in the case of Damodar Valley Corporation & Ors Vs BLA Projects Private Limited & Anr held that the terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. It was opined that the Courts should not interfere in contracts that deal with technical issues. Further, if there is total arbitrariness or mala fide intention while issuing/granting tender, then instead of interfering in the grant of the tender, the Courts should direct the parties to seek damages rather than injuncting the execution of the contract.
Brief Facts:
The factual matrix of the case was that Appellant No.1 invited tenders for lifting coals from the collieries in Talcher, Odisha and supplying to the thermal plants in RCR mode. A notice inviting tenders was floated and the Writ Petitioner (Respondent no. 1) submitted a bid along with the required documents and a bank guarantee in lieu of an earnest money deposit.
Thereafter, Respondent No.1 and Appellant No. 1 engaged in an Integrity Pact, a set of organizational rules that had certain conditions based on which bid could be cancelled/rejected.
Appellant no. 1 rejected 2 bidders out of 7 bidders including Respondent no.1 on the ground that an FIR and a Charge sheet were made against Respondent No. 1, which was violative of the Integrity Pact. Aggrieved by this, the Writ Petition was filed by Respondent no.1 and the Single Bench of the High Court passed the judgement in the favour of Respondent no. 1
Hence, the present appeal.
Contentions of the Appellant:
It was contended that when the Appellant has a reasonable basis for doubting a bidder's dependability and honesty, Section 3 of the Integrity Pact allowed the Appellant to reject the bid. It was further contended that Respondent No. 1's reliability and credibility have been questioned because he engaged in illegal activity that was punishable under the Indian Penal Code and concealed the fact that a Charge Sheet had been issued against him while taking part in the relevant tender.
Contentions of the Respondent:
It was contended that the Respondent was not given even a single chance to answer the letters. Furthermore, it was contended that the mere pendency of a criminal case cannot act as a bar for participating or succeeding in the tender.
Observation of the Court:
The Hon’ble Court observed that the Courts must be aware of their limitations and the chaos that could result from excessive interference in commercial matters. As long as there is no fraud, arbitrariness, etc., the Authority that floated the contract or tender and wrote the tender documents is the best judge as to how the documents must be construed. It was expounded that the terms of the invitation to tender fall under the category of contracts, hence, they cannot be made subject to judicial review.
It was opined that the Courts should not interfere in contracts that deal with technical issues. Further, if there is total arbitrariness or mala fide intention while issuing/granting tender, then instead of interfering in the grant of the tender, the Courts should direct the parties to seek damages rather than injuncting the execution of the contract.
The Decision of the Court:
Based on the aforementioned considerations, the Calcutta High Court held that if reasons are to be given at every stage of the tender procedure then the commercial activities of the State would come to a grinding halt. The State must be given sufficient leeway in this regard.
Hence, the decision of the Single bench was set aside and accordingly, the appeal was allowed.
Case Title: Damodar Valley Corporation & Ors Vs BLA Projects Private Limited & Anr
Case No: MAT 1932 of 2022 with CAN 1 of 2022
Coram: Hon’ble Mr. Chief Justice Prakash Shrivastava and Hon’ble Ms. Justice Rajarshi Bharadwaj
Advocates for the Appellant: Advs. Mr. Anirban Ray, Mr. Swarajit Dey, Ms. Riddhi Jain
Advocates for the Respondent: Advs. Mr. Jaydip Kar, Mr. Amitesh P. Ray
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