On 21st September, a bench of Delhi High Court consisting of Justices Vipin Sanghi and Rekha Palli, held that it is the settled legal position that as the invitation to tender is in the realm of a contract, its terms and conditions would normally not be interfered with by the Court. It stated that only in a case where the Court finds the terms and conditions of a tender are wholly arbitrary, mala fide, and against public interest, it would step in.

Facts of the case:

The present writ petition was filed under Article 226 of the Constitution of India assailing the Eligibility and Turnover Criteria prescribed in 24 Notices Inviting Tenders (NITs) issued by the Respondent/Delhi Urban Shelter Improvement Board (DUSIB), GNCTD between 11.02.2021 to 15.02.2021 for operation, management, and maintenance of Jan Suvidha Complexes. Before filing of the present petition, the petitioner sought to raise its grievances regarding the Eligibility and Turnover Criteria in the NITs by filing a representation dated 17.02.2021 with the Respondent. The petitioner‟s challenge to the impugned NITs primarily proceeds on the ground that the Estimated Cost has been wrongly based on the expenditure envisaged for two years, instead of the expenditure for one year.

Contention of the petitioner:

Learned Senior Counsel Mr. Mittal has submitted the following contention:

  1. It was submitted that the participation of all these entities is restricted by the Eligibility and Turnover Criteria, which the petitioner claims is onerous, and it eliminates fair competition and ousts the petitioner and similarly situated NGOs.
  2. Mr. Mittal, had submitted that the qualifying Experience and the Turnover Criteria prescribed by the Respondent as “Eligibility” conditions, which are based on the Total Estimated Cost of the Work mentioned in the NIT is exorbitant and has no rational nexus with the purpose and object of NITs.
  3. It was also submitted that unlike earlier Tenders –when the estimated cost was assessed on annual basis, the impugned NITs compute the estimated cost for the two year period. He submitted that there was no reason for fixation of the estimated cost on the basis of two years.

Arguments on behalf of the respondent:

On the other hand, Mr. Praveen Chauhan opposes the petition on the following ground:

  1. It was urged that no judicial review of the terms of a tender is permissible, unless the terms are found to be arbitrary, discriminatory, or vitiated by mala fides.
  2. Mr. Chauhan also contended that in the present case, the fixation of the Estimated Cost of contract and the Turnover Criteria was just and proper, and based on consideration of all relevant parameters, including the fact that the contractor ought to have the financial capacity to bear the cost for carrying out the work, including payment of wages, bonus etc.
  3. He submited that the service is essential to be maintained and performed from day to day, and it cannot be discontinued even for a day due to shortage of funds.
  4. He, thus, urged that in the present case, the fixation of the cost of contract could not be stated to be in any manner arbitrary, discriminatory, mala fide or actuated by bias. He, therefore, prayed for dismissal of the present writ petition.

Observation and judgement of the court:

The following observation has been made by the hon’ble bench of the court:

  1. All public authorities who invite the public for participation in any Tender or Auction process, have to pass the test of, inter alia, Articles 14 and 19, i.e. the terms and conditions of tender prescribed by such authorities should not be arbitrary, unreasonableness, or actuated by mala fides.
  2. Even if the Estimated Cost of work is computed on the basis of expenditure for a period of two years, the court did not find that the calculation of Estimated Cost would result in inflating the Eligibility and Turnover Criteria unreasonably, or arbitrarily.

Thus, the bench held that merely because the threshold criteria in the tenders in question may be higher than what has been laid down in the past in other tenders, the same cannot give a cause to the petitioners to assail the same, or be a reason for this Court to interfere with the same.

Thus, the petition was dismissed devoid of any merit.

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