[Cites 20, Cited by 0]
Gujarat High Court
N R Agarwal Industries Ltd vs Gujarat State Board Of School Texbooks on 5 February, 2026
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 17400 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE L. S. PIRZADA
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Approved for Reporting Yes No
Yes
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N R AGARWAL INDUSTRIES LTD .
Versus
GUJARAT STATE BOARD OF SCHOOL TEXBOOKS & ANR.
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Appearance:
MR M.R.BHATT,LD.SR.ADV WITH MR.MUNJAAL M BHATT(8283) for the
Petitioner(s) No. 1
MR AD OZA(515) for the Respondent(s) No. 1
MR AKSHAY V MATANI(11363) for the Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE L. S. PIRZADA
Date : 05/02/2026
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned Senior Advocate Mr.M.R.Bhatt
with learned advocate Mr.Munjaal M. Bhatt for
the petitioner, learned advocate Mr.A.D.Oza
for the respondent No.1 and learned advocate
Ms.Shweta Bharti with learned advocate
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Mr.Akshay V. Matani for the respondent No.2.
2. Having regard to the controversy in narrow
compass, with the consent of the learned
advocates for the parties, the matter was
taken for hearing and arguments were completed
and thereafter, the matter was adjourned for
orders.
3. Today, when the matter is called out, an
additional affidavit of the respondent No.2-
Government e-Marketplace (GeM) to place on
record the clarification issued by the
Department of Expenditure vide letter dated
22nd January, 2026 is tendered. The same is
ordered to be taken on record.
4. Rule, returnable forthwith. Learned
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advocate Mr.A.D.Oza and learned advocate
Mr.Akshay V. Matani waive service of notice of
rule for and on behalf of the respective
respondents.
5. By this petition under Article 226 of the
Constitution of India, the petitioner has
prayed for the following reliefs:
"a. That this Hon'ble Court may be
pleased to issue a writ of mandamus or
any other writ, order or direction in
the nature of mandamus and be pleased
to quash and set aside the impugned
disqualification communications dated
12.12.2025 [Annexure-F (Colly)];
b. That this Hon'ble Court may be
pleased to issue a writ of mandamus or
any other appropriate writ, order, or
direction directing the Respondent to
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reconsider the technical bid of the
Petitioner in accordance with law and
the tender conditions, after excluding
the illegal and erroneous
interpretation of Clause 29 of the GTC;
bb. That this Hon'ble Court may be
pleased to hold and declare that the
interpretation on the part of
Respondent No.1 with regard to Clause
No.29 is thoroughly misconceived, in
the event the said clause is not read
in consonance with Clause 24;
In the alternative
bbb. This Hon'ble Court may be pleased
to hold and declare that the tender
terms create an anomalous situation by
incorporating only the word "Director"
in Clause 29 and thereby not excluding
"Independent Director" from the said
clause with regard to "one bid per
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bidder".
6. The brief facts of the case are as under:
6.1. The petitioner is a Company registered
under the Companies Act, 1956 and since its
inception in the year 1993, it is engaged in
the business of manufacturing qualify finished
paper products. The respondent No.1-Gujarat
State Board of School Textbooks floated five
tenders on 04.11.2025 on e-portal of
respondent No.2 GeM for procurement of 25,000
Metric Ton of printing Maplitho Paper V3
confirming to IS:1848 (Part-1)(Q2). The
tenders were bifurcated into five parts,
thereby, listing the total required quantity
under each tender as 5000 MT.
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6.2. The petitioner submitted its bids on
25.11.2025 as per the tender conditions.
6.3. The respondent No.1 while relying on
Clause No.29 of the General Terms and
Conditions of GeM by letter dated 08.12.2025
informed the petitioner that during the
litigation, it was found that an Independent
Director of the petitioner-Company namely
Kanhaiyalal Chunnilal Chandak was a common
Director between the petitioner and one
M/s.Sillverton Industries Limited-another
bidder and on that ground, the petitioner was
called upon to provide proper justification
along with relevant documentary evidence to
clarify why the bids of the petitioner should
not be rejected.
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6.4. Similar clarification was also called
from M/s.Sillverton Industries Limited by the
respondent No.1. The petitioner as well as
M/s.Sillverton Industries Limited provided
explanation by letter dated 10.12.2025
whereby, it was clarified that Mr.Kanhaiyalal
Chunnilal Chandak is an Independent Director
and not a Promoter Director. It was also
clarified that the said Mr.Kanhaiyalal Chandak
does not hold any share in either of the
Companies and hence, the the restriction under
Clause No.29 of General terms and Conditions
of the GeM would not be applicable.
6.5. The respondent No.1, however, by letter
dated 12.12.2025 disqualified the petitioner
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on the ground that an Independent Director of
the petitioner was also a Director in another
Company by treating the Director as a Key
Managerial Personnel under the "One Bid Per
Bidder" Clause No.29 of the General Terms and
Conditions of the GeM.
6.6. Thereafter, the respondent No.1 opened
the Price Bid on 15.12.2025 and also scheduled
the Reverse Auction of the five tenders on
18.12.2025. Thereafter, this petition was
filed with the aforesaid prayers.
6.7. This Court passed the following order on
18.12.2025:
"1. Heard learned Senior Advocate Mr.
Manish Bhatt with learned advocate Mr.
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Harsh Pandya with learned advocate Mr.
Munjaal M. Bhatt for the petitioner as
well as learned advocate Mr. A. D. Oza
for the respondent.
2. Learned Senior Advocate Mr. Manish
Bhatt has tendered the draft amendment.
The same is allowed in terms of the
draft. To be carried out forthwith.
3. Issue notice, returnable forthwith.
4. Learned advocate Mr. A. D. Oza
appearing for the respondent no.1
waives service of notice and has
tendered the affidavit-in-reply and the
same is ordered to be taken on record.
5. Learned advocate Ms. Krishna Rawal
waives service of notice for the
respondent no.2 and prays for time to
file reply.
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6. S.O. to 23.12.2025."
6.8. During the pendency of this petition, an
application for amendment was preferred by the
petitioner to incorporate the grounds as well
as the prayers to declare that the
interpretation of Clause No.29 of the General
Terms and Conditions of the GeM made by the
respondent No.1 is misconceived and further to
declare that the tender terms created an
anomalous situation by incorporating only the
word "Director" in Clause No.29 of the General
Terms and Conditions of the GeM by not
excluding "Independent Director" from the said
Clause with regard to "One Bid Per Bidder".
6.9. Clause No.29 of General Terms and
Conditions of the GeM reads as under:
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"29: One Bid per Bidder
A Bidder shall submit only one bid in a
particular bidding process (unless
otherwise allowed in the bid STC / ATC
conditions). In case of a holding
company having more than one
independent manufacturing units or more
than one unit having common business
ownership / management, only one unit
should quote. Similar restrictions
shall apply to closely related sister
companies. Bidder's sister/ Associated/
Allied concern(s) participating or
applying against the same tender, shall
lead to disqualification of Bidders.
Sister / Associated / Allied concern
means a company, society, partnership
firm or proprietorship firm having one
or more common persons as Director /
Partner/ Member/ Owner. A Bidder who
submits more than one bid will cause
all the proposals submitted in the
particular bid to be disqualified. In
relation to the above, a person will
include firm(s) of Proprietorship /
Partnership Firm / Limited Liability
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Partnership / Private Limited / Limited
company / Society registered under
Society's Act / Statutory Bodies / any
other legal entity, as the case may be,
& will be deemed to have submitted
multiple bids in a particular bid if a
person bids in any of the two formats
given below:
i. individual or proprietorship format
and/or
ii. a partnership or association of
persons format and/or
iii. a company format
Whereby,
• A company shall for this purpose
include any artificial person whether
constituted under the Indian laws or of
any other country.
•A person shall be deemed to have bid in
a partnership format or in association
of persons format if he is a partner of
the firm which has submitted the bid or
is a member of any association of
persons which has submitted a bid.
•A person shall be deemed to have bid in
a company format if the person holds:
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i. More than 10% (ten percent) of the
voting share capital of the company
which has submitted a bid, or
ii. Is a director and / or Key
Managerial Personnel of the company
which has submitted a bid, or
iii. Holds more than 10% (ten percent)
of voting share capital in and/or is a
director and / or Key Managerial
Personnel of a holding company of that
company which has submitted the bid.
By making a bid pursuant to the Tender
Documents, the bidder / tenderer shall
be deemed to have declared that the
bidder / tenderer has not made any
other bid or multiple bids as
understood or deemed in terms of this
clause.
All the bids of a bidder who has
submitted multiple bids, as per the
clause, shall be rejected and Bid
Security for all such bids shall be
forfeited, not by way of penalty or
liquidated damages but by way of
reimbursement of the pre-estimated
costs likely to be incurred by the
buyer towards bidding process and in
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the scrutiny & evaluation of bids.
In addition to the above, bidders found
to be in contravention to the said
clause will be liable for
administrative actions."
6.10. The above Clause for "One Bid Per
Bidder" prohibits the bidder from submitting
multiple bids in a particular bidding process
in following cases:
(i) In case of holding company having
more than one independent manufacturing
units or more than one unit having
common business ownership/management,
only one unit should quote.
(ii) Similar restrictions shall apply
to closely related sister companies.
Bidder's sister/ Associated/ Allied
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concern(s) participating or applying
against the same tender shall lead to
cause disqualification of the bidders.
Sister/ Associated/ Allied concerns are
explained to mean a Company, Society,
Partnership Firm or Proprietorship
Firms having one or more common persons
as Director/ Partner/ Member/ Owner.
6.11. Considering the above explanation, as
the Independent Director Mr.Kanhaiyalal
Chandak is common in both the petitioner-
Company and other M/s.Sillverton Industries
Limited, the respondent No.1 has disqualified
the petitioner.
7.1. Learned Senior Advocate Mr. M. R. Bhatt
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appearing for the petitioner submitted that
the "Director" referred in clause No.29 for
"One Bid Per Bidder" cannot be applied in the
case of an Independent Director of a Company.
It was submitted that as per the provisions of
the Companies Act, 2013 (for short 'the Act'),
an Independent Director is defined under
Section 2(47) of the said Act to mean that an
Independent Director referred to in Sub-
section (6) of Section 149 of the Act.
7.2. It was pointed out by referring to
Section 149(6) of the Act that for definition
of the Independent Director in relation to a
Company, means a Director other than Managing
Director or a whole-time Director or a nominee
Director who, in the opinion of the Board, is
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a person of integrity and possesses relevant
expertise and experience and who is or was not
a Promoter of the Company or its holding,
subsidiary or associate Company nor related to
Promoters or Directors in a Company, its
holding, subsidiary or associate Company or
has no pecuniary relationship with the Company
or its associated concerns. It was also
pointed out that Section 149(6) of the Act
further provides the qualifications and
conditions to be appointed as an Independent
Director.
7.3. It was submitted that as per Section 149
of the Act, statutory status is provided to
the Independent Director converting what was
earlier the Regulatory Guideline into the
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Binding Legal Obligation. Reliance was also
placed on the decision in case of Kamalkishor
Shrigopal Taparia Versus India Ener-Gen
Private Limited & Anr. reported in 2025 SCC
Online SC 321 wherein, the Hon'ble Apex Court
quashed the proceedings against the
Independent Director as he was neither
involved in financial operations nor
responsible for issuance of cheque on behalf
of the Company as well as nor having any
control over the affairs of the Company.
7.4. Reliance was also placed on the decision
in case of National Small Industries
Corporation Limited versus Harmeet Singh
Paintal and Anr. reported in (2010) 3 SCC 330
wherein, it is held that vicarious liability
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arises only where clear pleadings established
actual responsibility for business conduct and
no presumption can be drawn against all
Directors more particularly, Independent
Director.
7.5. It was further submitted that the
Independent Director is meant to act as an
external check on management conduct into
safeguard the interest of shareholders and
other stakeholders and he is not involved in
day-to-day business affairs but act as an
Board-level supervisor to ensure that
Governance standards are maintained by the
Company.
7.6. Learned Senior Advocate Mr.M.R.Bhatt also
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refers to Sub-section (4) of Section 149 of
the Act which mandates the appointment of the
Independent Director in all listed Companies
and in prescribed class of unlisted Companies
based on threshold trade, capital turnover and
borrowings.
7.7. It was therefore submitted that equating
Director with an Independent Director to apply
Clause No.29 of the General Terms and
Conditions of the GeM by the respondent No.1
to disqualify the petitioner from technical
bids, is erroneous and such decision is liable
to be quashed and set aside.
7.8. It was further submitted that except
applying Clause No.29 of the General Terms and
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Conditions of the GeM, the respondent No.1 has
not assigned any reason to disqualify the
petitioner.
7.9. Learned Senior Advocate Mr.M.R.Bhatt also
referred to and relied upon the General
Circular No.1 of 2020 dated 2nd March, 2020
issued by the Government of India, Ministry of
Corporate Affairs regarding clarification on
prosecutions filed or internal adjudication
proceedings initiated against Independent
Directors, non-promoters and non-KMP non-
executive directors. Referring to the
paragraph No.3 of the said General Circular,
it was pointed out that Section 149(12) of the
Act starts with an non-obstante clause which
provides that the liability of an independent
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director or a non-executive director not being
promoter or key managerial personnel would be
only in respect of such acts of omission or
commission by the company which had occurred
with his knowledge, attributable through Board
processes and with his consent or connivance
or where he had not acted diligently. It was
therefore submitted that merely because there
is a common Independent Director in the
petitioner Company and the other bidder, both
bidders could not have been disqualified by
invoking Clause No.29 of the General Terms and
Conditions of the GeM.
7.10. Learned Senior Advocate Mr.M.R.Bhatt
therefore, succinctly drawn the distinction
between the Independent Director and other
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regular Director by referring to the
provisions of Sections 2(34) and 2(47) of the
Act to point out that the legislature has
consciously created a differentiated
regulatory and liability framework reflected
in different distinct functional roles. It was
submitted that the ordinary Directors are
subject to full statutory and regulatory
liabilities as they are involved in day-to-day
management and may maintain financial
employment of family relationships with the
Company whereas, the Independent Directors by
contrast, are statutorily required under
Section 149(6) of the Act to remain free from
such relationships, ensuring neutrality and
objectivity of judgment having special
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protection under Section 149(12) of the Act
acknowledging their oversight-centric roles
rather than operational control.
7.11. It was therefore submitted that the
reference to "Director" in Clause No.29 of the
General Terms and Conditions of the GeM cannot
include "Independent Director" and the
Independent Director is required to be
excluded from the scope of the "Director"
mentioned in the said Clause.
7.12. Learned Senior Advocate Mr.M.R.Bhatt
also referred to Clause 2(g) of the General
Terms and Conditions of GeM which provides for
definition of Seller/Service Provider on the
GeM which means any legal entity such as
firm(s) of Proprietorship/ Partnership Firm/
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Limited Liability Partnership/ Private
Limited/ Limited company/ Society registered
under the Society's Act, etc., registered on
the GeM to sell its Good(s)/ Service(s) to
submit that the petitioner-Company is
registered on the GeM and therefore, it is
entitled to participate in the bids flouted by
the respondent No.1.
7.13. It was submitted that Clause 24 of the
General Terms and Conditions of the GeM
provides for Incident Management Policy on the
GeM wherein, the definition of Allied firm/
Sister concern is provided which includes
affiliated firm, sister concern, associate
firm or a related party of a bidder that comes
within the sphere of effective control/
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influence of the Principle Firm. It was
submitted that the said Clause further
provides that the Principal Firm has common
management with Allied firm and its partners
or directors have a majority interest in the
management of the Allied Firms for having a
controlling voice by owning substantial (20%
or more) share in the Allied Firms. It was
therefore submitted that the Independent
Director has no say in the common management
of the petitioner-Company and the other bidder
i.e. M/s.Sillverton Industries Limited as
Independent Director is not part of majority
of the Directors with allied firms and
therefore, petitioner and M/s.Sillverton
Industries Limited cannot be said to be termed
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as allied firm by any stretch of imagination
as Independent Director does not own any share
in the petitioner-Company.
7.14. It was therefore submitted by learned
Senior Advocate Mr.M.R.Bhatt that
disqualification of the petitioner by the
respondent No.1 by invoking Clause No.29 of
the General Terms and Conditions of the GeM is
therefore, liable to be quashed and set aside
and the bids submitted by the petitioner are
required to be considered if found suitable on
other parameters along with the other bidders.
8.1. On the other hand, learned advocate
Mr.A.D.Oza appearing for the respondent No.1
submitted that the respondent No.1 is bound by
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the General Terms and Conditions of the GeM as
the bidder is required to comply with such
terms and conditions. Referring to the
condition No.29 of the General Terms and
Conditions of the GeM, it was pointed out that
it refers only to the Director, which
according to the respondent No.1 also includes
Independent Director and it is of no
consequence whether the Director is an
Independent Director or a Non-Executive
Director or a Managing Director or an
Executive Director because ultimately, the
person is a Director and once there is a
common Director with the two bidders, clause
29 of "One Bid Per One Bidder" is violated.
Therefore, the respondent No.1 has rightly
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disqualified the bids submitted by the
petitioner. In support of his submissions,
reliance was placed on the following averments
made in the affidavit-in-reply filed on behalf
of the respondent No.1:
"9. It is submitted that the documents
were verified and technical evaluation
was carried out. Thereafter, certain
queries were raised by the respondent
Board through GeM portal on 08.12.2025
(produced at page no. 103 to 112). It
is submitted that following three
queries were raised qua the petitioner:
i. While verification of documents,
it is found that Director namely
Kanhaiyalal Chunnilal Chandak (DIN
00013487) is common in entities
viz., N R Agarwal Industries Limited
and Silverton Industries Limited and
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accordingly, both entities will be
disqualified in absence of proper
justification along with documentary
evidence.
ii. Affidavit is not provided
iii. In FY 2024-25, work orders are
provided, however, performance
certificate is not provided.
10. It is submitted that vide letter
dated 12.12.2025, the petitioner
tendered its clarification/explanation
to queries raised by the respondent
Board. It is inter alia sought to be
submitted by the petitioner and
Silverton Industries Limited in
response to query related to common
Director that Mr. Kanhaiyalal Chunnilal
Chandak is an independent Director and
not a promoter Director in both bidder
companies.
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11. It is submitted that since the
clarification of the petitioner
regarding common Director was not found
satisfied, the petitioner was
disqualified in Technical Bid of all
five tenders on 12.12.2025. It is
pertinent to submit that there are
total four bidders including the
petitioner, wherein, common Director
was there. A copy of statement showing
details of common Director and bidder
companies is annexed herewith and
marked as Annexure - I.
12. It is submitted that the Reverse
Auction has already been over qua RA
number: GEM/2025/591652, Whereas the
Reverse Auction qua other four bids
have already started. The copies of RA
documents of all five tenders are
annexed herewith and marked as Annexure
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- II Collectively."
8.2. Referring to the above averments, it was
submitted that there is no misinterpretation
of the Clause No.29 of the General Terms and
Conditions of the GeM made by the respondent
No.1 and the respondent No.1 cannot make any
addition in the said Clause by excluding the
Independent Director from the word "Director"
referred therein.
8.3. It was further submitted that as per
Clause No.29 of the General Terms and
Conditions of the GeM, the bids by the
bidders, being Companies having common
Director, are required to be disqualified. It
was also pointed out that as per the said
Clause, the definition of "person" includes
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the Companies and thus, interpretation which
is sought to be made by the petitioner is
misconceived as the said Clause does not
differentiate between the Directors in the
different categories and therefore, the
clarification given by the petitioner that
Mr.Kanhaiyalal Chunnilal Chandak was neither
the Promoter nor the Shareholder-Director and
was only an Independent Director, is liable to
be rejected as it is not in dispute that said
Mr.Kanhaiyalal Chandak is a common Director in
the two bidder Companies I.e. the petitioner-
Company and M/s.Sillverton Industries Limited
and therefore, the respondent No.1 was
justified in disqualifying both the bidders
under Clause No.29 of the General Terms and
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Conditions of the GeM.
8.4. It was further submitted that in view of
the undisputed fact that Mr.Kanhaiyalal
Chandak is a common Director of the
petitioner-Company and M/s.Sillverton
Industries Limited, it is of no consequence to
the effect that whether the said person is
functioning as Independent Director, having
any interest in the Company, or not. It was
also pointed out that the petitioner has
submitted the clarification given by the
M/s.Sillverton Industries Limited before the
respondent No.1-Board during the ongoing
tender process, which establishes that the
petitioner-Company has all the access and
involvement in M/s.Sillverton Industries
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Limited as there is a common Director in both
the Companies. It was therefore submitted that
the respondent No.1 has rightly disqualified
the petitioner-Company in the technical bids
invoking Clause No.29 of the General Terms and
Conditions of the GeM.
8.5. Reliance was placed on the Clause
No.4(xiii)(m)(iv) and (v) of the General Terms
and Conditions of the GeM which provides that
sellers holding valid Vendor Assessment or
Vendor Assessment Exemption Report /
confirmation or the sellers holding valid BIS
License are exempted from furnishing bid/
security and the real reason for the
disqualification of the petitioner is not to
help the another bidder who stands technically
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qualified, in spite of being granted
relaxation of important requirement contrary
to tender terms and conditions, as alleged by
the petitioner. It was submitted that there is
no substance in the allegation made by the
petitioner on that count.
9.1. Learned advocate Ms.Shweta Bharti
appearing for the respondent No.2 submitted
that the respondent No.2 is a Public
Procurement Portal which is an end-to-end
online market for Central and State Government
Ministries and Government Departments etc.,
for procurement of goods and services and the
portal of the respondent No.2 is owned and
managed by GeM SPV, which is a Section 8(non-
profit) Company Registered under the Companies
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Act, 2013.
9.2. It was therefore submitted that the tender
floated by the respondent No.1 on the GeM
Portal inviting bid for supply of 25,000
Metric Ton Maplitho printing paper is on the
basis of the General Terms and Conditions of
the GeM and interpretation or mis-
interpretation of such terms and conditions
cannot be attributed to the respondent No.2 as
it is a neutral, open and transparent portal
for Government procurement of goods and
services to bring about transparency,
efficiency and accountability in public
procurement. It was pointed out that the
respondent no.2 is not a procuring entity and
does not exercise discretion over the
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initiation of procurement, formulation of
tender conditions, evaluation of bids and/or
disqualification of bids.
9.3. It was submitted that the respondent No.2
only acts as a facilitator, providing a
digital interface for transparent, efficient
and inclusive marketplace.
9.4. It was submitted that as the respondent
No.2 is an intermediary platform wherein,
buyers and sellers are enabled to participate
in a hassle-free tendering process providing
technological infrastructure and workflow
automation necessary for fair and traceable
manner procurement of the goods and services
and therefore, the respondent no.2 has no role
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whatsoever in the disqualification of the
petitioner made by the respondent No.1 as such
decision is exclusively taken by the
respondent No.1 in its capacity as the
procuring entity and in accordance with the
tender conditions.
9.5. It was further submitted that Clause
16(d) and Clause 17(iv) of the General Terms
and Conditions provide that the function of
the respondent No.2 is solely intermediary and
cannot be made a party to any disputes,
arbitration or litigation arising out of or in
connection with the contract between the
parties.
9.6. In support of her submissions, learned
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advocate Ms.Shweta Bharti has placed reliance
upon the following averments made in the
counter affidavit filed on behalf of the
respondent No.2 :
"15. The provided definition of
Intermediary encompasses online-auction
sites and online-market places within
its scope. Respondent No. 2 is an
online marketplace platform with tools
available for auction and is therefore
clearly falls within the scope of the
definition of 'Intermediary' as
provided under the Information
Technology Act, 2000. It is significant
to consider the judgement of this
Hon'ble Court in the case of Cloud
Walker Streaming Technologies Pvt. Ltd.
vs. Union of India & Ors., 2023 SCC
OnLine Del 6720, wherein it was inter
alia, held that the Respondent No. 2 is
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an Intermediary under the provisions of
the Information Technology Act, 2000
and since it has no role in framing the
Tender conditions for the invitations
to offer uploaded on the GeM portal, no
discernible cause of action lies
against the Respondent No. 2.
Therefore, the Respondent No. 2 shall
not be held liable in the present
Petition and should be deleted from the
array of parties.
16. That the procedure of evaluation of
the bids, awarding of the same, issuing
of the Contracts/work orders, are all
sole prerogative of the Buyer
departments, with GeM having no role or
involvement in the same. Therefore, as
far as the matter at hand is concerned,
it is reiterated that, there is no
active role on the part of Respondent
No. 2 as the dispute is primarily
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between the Buyer and the Seller and
that the Respondent No. 2 is not a
necessary party to the dispute as it
merely acts as a platform/portal, which
facilitates the selling and buying of
the products through its portal. It is
further pertinent to note that, the
Answering Respondent is neither a
necessary party nor a proper party and
has been wrongly impleaded as
Respondent and therefore, on this
ground alone, the Answering Respondent
should be removed from the array of
parties.
17. That in light of the foregoing
submissions, it is submitted that the
Answering Respondent has no role to
play in the impugned disqualification
and no cause of action is made out
against Respondent No. 2. The present
Petition is therefore liable to be
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dismissed qua Respondent No. 2."
9.7. Learned advocate Ms.Shweta Bharti for the
respondent No.2 has further tendered the
additional affidavit affirmed on 9th January,
2026 as time was granted to explain the stand
of the respondent No.2 in relation to the term
"director" in clause 29 of the General Terms
and Conditions. Learned advocate Ms.Shweta
Bharti has referred to and relied upon the
following averments made in the said
additional affidavit affirmed on 9th January,
2026 which read as under :
"6. It is submitted that during the
proceeding before this Hon'ble Court on
06.01.2026, Respondent No. 2 was
specifically called upon to clarify
whether an Independent Director falls
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within the ambit of the term "director"
as mentioned in Clause 29 of the GTC.
7. In the aforementioned context, it is
pertinent to submit that Clause 29 of
the GTC specifies that "Bidder's
sister/ Associated/ Allied concern(s)
participating or applying against the
same tender, shall lead to
disqualification of Bidders". It is
submitted that the Clause 29 of the GTC
must necessarily be interpreted in
conjunction with Clause 24 of GTC as
the interpretation of the term "Allied
Concern" under Clause 29 of the GeM GTC
cannot be read in a manner that is
inconsistent with the definition of
"Allied Firm" under Clause 24. The
substantive basis for interpretation
flows from the definition of "Allied
Firms" as provided under Clause 24.
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8. That it is imperative to state that
the definition of "Allied Firms"
contained in Clause 24 of the GTC has
been verbatim adopted from the Manual
for Procurement of Goods issued by the
Department of Expenditure, Ministry of
Finance, Government of India. The
Department of Expenditure is the nodal
Department for overseeing the public
financial management system of the
Central Government and for framing,
issuing and interpreting public
procurement policies applicable across
Ministries and Departments of the
Government..
9. That the Department of Expenditure
plays a central and guiding role in
public procurement by issuing manuals,
policies and clarifications governing
procurement of goods and services and
by overseeing implementation through
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platforms such as the Central Public
Procurement Portal (CPPP), Government
EMarketplace (GeM) etc.
10. That since the core issue raised
before this Hon'ble Court pertains to
the interpretation of the term
"director" in the context of Allied
Firms under the public procurement
framework and particularly whether the
said term would include an Independent
Director, the Answering Respondent
deemed it appropriate and necessary to
seek an authoritative clarification
from the Department of Expenditure. Any
unilateral interpretation by the
Answering Respondent may have
ramifications on the broader public
procurement framework, and therefore,
it is appropriate that such
interpretation emanates from the
Department of Expenditure.
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11. Therefore, the Answering Respondent
has addressed a letter to the
Department of Expenditure seeking
clarification on the interpretation of
the term "director" in the context of
Allied Firms/ Sister Concerns and
specifically whether the said term
would encompass an Independent
Director, in order to appropriately
analyse and clarify the issue.
12. A clarification from the DoE would
further ensure that the provisions of
the GeM GTC remain harmonised with the
procurement framework prescribed by the
DoE and are implemented in a manner
consistent with the well-established
principles governing public
procurement. Thus, the reply of the
Department of Expenditure forms the
primary and determinative basis for
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addressing the issue.
13. In view of the above, it is most
respectfully prayed that this Hon'ble
Court may be pleased to grant time to
the Answering Respondent to place on
record the response as and when the
same is received from the Department of
Expenditure."
10. Thereafter, the respondent No.2 has field
the additional affidavit affirmed on 2nd
February 2026 to place on record a copy of the
clarification given by the Department of
Expenditure of the Government of India vide
letter dated 22nd January, 2026. The said
clarification reads as under :
"I am directed to refer your email dated
08.01.2026 on the subject cited above
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and to say that the term "Independent
Director" does not find mention in the
definition of "Allied Firms" as per
Manual for Procurement of Goods, 2024.
Independent Directors may have
different roles and standing/status as
compared to regular directors. Hence,
DoE has no comments on this issue. For
any further clarity in this regard, GeM
may refer to Ministry of Corporate
Affairs w.r.t definitions of
independent directors, their role etc."
11. Referring to the aforesaid clarification,
it appears that the term Independent Director
does not find mention in the definition of the
"Allied Firms" as per the Manual for
Procurement of Goods, 2024 and Independent
Directors may have different roles and
standing/status as compared to the regular
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director, however, no comments are offered on
the issue with a further direction to the
respondent No.2 to get verification from the
Ministry of Corporate Affairs.
12. Considering the submissions made by the
learned advocates for the parties, the short
question which arises in this petition is
whether Clause No.29 of the General Terms and
Conditions of the GeM would include
Independent Director under the provisions of
the Act or not.
13. It would be therefore germane to refer the
definition of the Director, Independent
Director and the procedure for appointment of
Independent Director as provided under
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Sections 2(34), 2(47), 149(6), 149(12) and 150
of the Act, which read as under :
"Section 2(34): "director" means a
director appointed to the Board of a
company;
Section 2(47):"independent director"
means an independent director referred
to in sub-section (6) of section 149;
Section 149(6): An independent director
in relation to a company, means a
director other than managing director
or a whole-time director or a nominee
director,--
(a) who, in the opinion of the Board,
is a person of integrity and
possesses relevant expertise and
experience;
(b) (i) who is or was not a promoter
of the company or its holding,
subsidiary or associate company;
(ii) who is not related to promoters
or directors in the company, its
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holding, subsidiary or associate
company;
(c) who has or had no pecuniary
relationship, other than
remuneration as such director or
having transaction not exceeding ten
per cent. of his total income or
such amount as may be prescribed,
with the company, its holding,
subsidiary or associate company, or
their promoters, or directors,
during the two immediately preceding
financial years or during the
current financial year;
(d) none of whose relatives--
(i) is holding any security of or
interest in the company, its
holding, subsidiary or associate
company during the two
immediately preceding financial
years or during the current
financial year:
Provided that the relative may
hold security or interest in the
company of face value not
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exceeding fifty lakh rupees or
two per cent. of the paid-up
capital of the company, its
holding, subsidiary or associate
company or such higher sum as may
be prescribed;
(ii) is indebted to the company,
its holding, subsidiary or
associate company or their
promoters, or directors, in
excess of such amount as may be
prescribed during the two
immediately preceding financial
years or during the current
financial year;
(iii) has given a guarantee or
provided any security in
connection with the indebtedness
of any third person to the
company, its holding, subsidiary
or associate company or their
promoters, or directors of such
holding company, for such amount
as may be prescribed during the
two immediately preceding
financial years or during the
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current financial year; or
(iv) has any other pecuniary
transaction or relationship with
the company, or its subsidiary,
or its holding or associate
company amounting to two per
cent. or more of its gross
turnover or total income singly
or in combination with the
transactions referred to in sub-
clause (i), (ii) or (iii);
(e) who, neither himself nor any of
his relatives--
(i) holds or has held the
position of a key managerial
personnel or is or has been
employee of the company or its
holding, subsidiary or associate
company in any of the three
financial years immediately
preceding the financial year in
which he is proposed to be
appointed;
Provided that in case of a
relative who is an employee, the
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restriction under this clause
shall not apply for his
employment during preceding three
financial years.
(ii) is or has been an employee
or proprietor or a partner, in
any of the three financial years
immediately preceding the
financial year in which he is
proposed to be appointed, of--
(A) a firm of auditors or
company secretaries in
practice or cost auditors of
the company or
its holding, subsidiary or
associate company; or
(B) any legal or a consulting
firm that has or had any
transaction with the company,
its holding, subsidiary or
associate company amounting to
ten per cent. or more of the
gross turnover of such firm;
(iii) holds together with his
relatives two per cent. or more of
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the total voting power of the
company; or
(iv) is a Chief Executive or
director, by whatever name called,
of any nonprofit organisation that
receives twenty-five per cent. or
more of its receipts from the
company, any of its promoters,
directors or its holding, subsidiary
or associate company or that holds
two per cent. or more of the total
voting power of the company; or
(f) who possesses such other
qualifications as may be prescribed.
Section 149(12): Notwithstanding
anything contained in this Act,--
(i) an independent director;
(ii) a non-executive director not
being promoter or key managerial
personnel,shall be held liable, only
in respect of such acts of omission
or commission by a company which had
occurred with his knowledge,
attributable through Board
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processes, and with his consent or
connivance or where he had not acted
diligently.
Section 150: Manner of selection of
independent directors and maintenance
of databank of independent directors.--
(1) Subject to the provisions
contained in sub-section (6) of
section 149, an independent director
may be selected from a data bank
containing names, addresses and
qualifications of persons who are
eligible and willing to act as
independent directors, maintained by
any body, institute or association,
as may be notified by the Central
Government, having expertise in
creation and maintenance of such data
bank and put on their website for the
use by the company making the
appointment of such directors:
Provided that responsibility of
exercising due diligence before
selecting a person from the data
bank referred to above, as an
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independent director shall lie with
the company making such appointment.
(2) The appointment of independent
director shall be approved by the
company in general meeting as
provided in sub-section (2) of
section 152 and the explanatory
statement annexed to the notice of
the general meeting called to
consider the said appointment shall
indicate the justification for
choosing the appointee for
appointment as independent director.
(3) The data bank referred to in
sub-section (1), shall create and
maintain data of persons willing to
act as independent director in
accordance with such rules as may be
prescribed.
(4) The Central Government may
prescribe the manner and procedure
of selection of independent
directors who fulfil the
qualifications and requirements
specified under section 149."
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14. On perusal of the above provisions of the
Act as well as considering the fact that as
per the Code for Independent Directors given
in Schedule IV of the Act, the appointment of
the Independent Directors is to be formalised
through an appointment letter which provides
the particulars such as Committees of the
Board to be served by the director appointed,
Expectations of the board from the director
appointed, Term of office, Duties and
liabilities of the Independent Director,
Provisions of insurance for directors and
officers, Code of business ethics to be
followed by such director, Actions that are
prohibited in the company, Remuneration,
periodic fees, reimbursement of expenses etc.,
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to which such Independent Director is
entitled. Further Schedule IV of the Act also
provides for roles and responsibilities of the
Independent Director versus Managing or whole-
time Director.
15. The distinction between Independent
Directors and Managing Directors or whole-time
Directors is the clearest of all director
category differences. Managing directors and
whole-time directors are employees of the
company and they receive salaries, have
employment contracts, report to the board and
are responsible for implementing the board
decisions and running day to day affairs of
the company and therefore, Managing Directors
and whole-time Directors are insiders with
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deep company knowledge and operational
authority.
16. Whereas, on the other hand, Independent
Directors, by definition under Section 149(6)
of the Act can never be managing directors or
whole-time directors as their roles are
exclusive. An Independent Director cannot
simultaneously be part of the management team
being overseen and provide independent
oversight of that team. Managing Directors are
evaluated by the board on their performance
whereas, Independent Directors are the ones
doing that evaluation. This fundamental
structural separation is therefore essential
to corporate governance. The practical
implication also matters for appointment
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decisions because if an independent director
is offered a whole-time director position,
accepting it immediately terminates the
Independent Director status as both the roles
are different and cannot coexists. The
difference between the Directors and the
Independent Directors can be summarized as
under:
Basis Director Independent Director
General member
Special category of
of Board. Is an
Definition director.
employee of the
Not an employee
company
Legal
Section 2(34) Section 149(6)
provision
May be
Management executive, No executive role only
role manages provides oversight
operation
Relationship May have No material pecuniary
with company financial ties relationship
By Board or
By shareholders only.
shareholders and
Appointment Does not report to the
reports to the
board.
board.
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Tenure As per Articles Max 10 years (2 terms)
Retirement
Applicable Not applicable
by rotation
Salary,
Sitting fees +
Remuneration commission,
commission
perks
Code of
Section 166 Schedule IV
conduct
Management &
Objective Governance & oversight
growth
Liability Wider liability Limited liability
17. Similarly, there is also a distinction
between the Independent Director versus Non-
executive Director. A Non-executive director
is simply any director who does not hold an
executive position in the Company, and such
director is not an employee receiving salary
for operational roles but non-executive
director can have other relationship with the
company that independent directors cannot
have. The key distinction is that all the
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independent directors are non-executive
directors, but not all non-executive directors
are independent directors. The non-executive
director might be a nominee of a major
investor, a representative of a lending
institution, a significant shareholder, or
someone with business relationship with the
company whereas, such connections disqualify a
person from being appointed as Independent
Director even if such person is a Non-
executive Director.
18. The Hon'ble Supreme Court in case of
Sunita Palita Versus Panchami Stone Quarry
reported in (2022) SCC Online SC 945 has held
as under :
"41. A Director of a company who was not
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in charge or responsible for the
conduct of the business of the company
at the relevant time, will not be
liable under those provisions. As held
by this Court in, inter alia, S.M.S.
Pharmaceuticals, the liability under
Sections 138/141 of the NI Act arises
from being in charge of and responsible
for the conduct of the business of the
company at the relevant time when the
offence was committed, and not on the
basis of merely holding a designation
or office in a company. It would be a
travesty of justice to drag Directors,
who may not even be connected with the
issuance of a cheque or dishonour
thereof, such as Director (Personnel),
Director (Human Resources Development),
etc. into criminal proceedings under
the NI Act, only because of their
designation.
42. Liability depends on the role one
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plays in the affairs of a company and
not on designation or status alone as
held by this Court in S.M.S.
Pharmaceuticals?. The materials on
record clearly show that these
appellants were independent, non-
executive Directors of the company. As
held by this Court in Pooja Ravinder
Devidasani v. State of Maharashtra a
non-executive Director is not involved
in the day-to-day affairs of the
company or in the running of its
business. Such Director is in no way
responsible for the day-to-day running
of the accused Company. Moreover, when
a complaint is filed against a Director
of the company, who is not the
signatory of the dishonoured cheque,
specific averments have to be made in
the pleadings to substantiate the
contention in the complaint, that such
Director was in charge of and
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responsible for conduct of the business
of the Company or the Company, unless
such Director is the designated
Managing Director or Joint Managing
Director who would obviously be
responsible for the company and/or its
business and affairs."
19. Similarly, the Hon'ble Supreme Court in
case of K.S.Mehta versus Morgan Securities and
Credits Pvt. Ltd. reported in 2025 (0) AIJEL-
SC 74848 while considering the liability of
non-executive director/ independent director
under Section 138 of Negotiable Instruments
Act, 1881 has held as under :
"16. This Court has consistently held
that non-executive and independent
director(s) cannot be held liable under
Section 138 read with Section 141 of the
NI Act unless specific allegations
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demonstrate their direct involvement in
affairs of the company at the relevant
time.
16.1. This Court in National Small
Industries Corpn. Ltd. v. Harmeet Singh
observed:
13. Section 141 is a penal provision
creating vicarious liability, and
which, as per settled law, must be
strictly construed. It is therefore,
not sufficient to make a bald
cursory statement in a complaint
that the Director (arrayed as an
accused) is in charge of and
responsible to the company for the
conduct of the business of the
company without anything more as to
the role of the Director. But the
complaint should spell out as to how
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and in what manner Respondent 1 was
in charge of or was responsible to
the accused Company for the conduct
of its business. This is in
consonance with strict
interpretation of penal statutes,
especially, where such statutes
create vicarious liability.
22. Therefore, this Court has
distinguished the case of persons
who are in charge of and responsible
for the conduct of the business of
the company at the time of the
offence and the persons who are
merely holding the post in a company
and are not in charge of and
responsible for the conduct of the
business of the company. Further, in
order to fasten the vicarious
liability in accordance with Section
141, the averment as to the role of
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the Directors concerned should be
specific. The description should be
clear and there should be some
unambiguous allegations as to how
the Directors concerned were alleged
to be in charge of and were
responsible for the conduct and
affairs of the company.
39. From the above discussion, the
following principles emerge: (i) The
primary responsibility is on the
complainant to make specific
averments as are required under the
law in the complaint so as to make
the accused vicariously liable. For
fastening the criminal liability,
there is no presumption that every
Director knows about the transaction.
(ii) Section 141 does not make all
the Directors liable for the offence.
The criminal liability can be
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fastened only on those who, at the
time of the commission of the
offence, were in charge of and were
responsible for the conduct of the
business of the company. (iii)
Vicarious liability can be inferred
against a company registered or
incorporated under the Companies Act,
1956 only if the requisite
statements, which are required to be
averred in the complaint/petition,
are made so as to make the accused
therein vicariously liable for
offence committed by the company
along with averments in the petition
containing that the accused were in
charge of and responsible for the
business of the company and by virtue
of their position they are liable to
be proceeded with. (iv) Vicarious
liability on the part of a person
must be pleaded and proved and not
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inferred. (v) If the accused is a
Managing Director or a Joint Managing
Director then it is not necessary to
make specific averment in the
complaint and by virtue of their
position they are liable to be
proceeded with. (vi) If the accused
is a Director or an officer of a
company who signed the cheques on
behalf of the company then also it is
not necessary to make specific
averment in the complaint. (vii) The
person sought to be made liable
should be in charge of and
responsible for the conduct of the
business of the company at the
relevant time. This has to be averred
as a fact as there is no deemed
liability of a Director in such
cases."
16.2. In N. K. Wahi v. Shekhar Singh &
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Ors., (2007) 9 SCC 481 this Court in
Para 8 observed:
"To launch a prosecution, against
the alleged Directors there must be
a specific allegation in the
complaint as to the part played by
them in the transaction. There
should be clear and unambiguous
allegation as to how the Directors
are in-charge and responsible for
the conduct of the business of the
company. The description should be
clear. It is true that precise words
from the provisions of the Act need
not be reproduced and the court can
always come to a conclusion in facts
of each case. But still, in the
absence of any averment or specific
evidence the net result would be
that complaint would not be
entertainable."
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16.3. In S.M.S. Pharmaceuticals Ltd. v.
Neeta Bhalla & Anr., (2005) 8 SCC 89,
this Court laid down that mere
designation as a director is not
sufficient; specific role and
responsibility must be established in
the complaint.
16.4. In Pooja Ravinder Devidasani v.
State of Maharashtra & Anr., (2014) 16
SCC 1, this Court while taking into
consideration that a non-executive
director plays a governance role, they
are not involved in the daily operations
or financial management of the company,
held that to attract liability under
Section 141 of the NI Act, the accused
must have been actively in charge of the
company's business at the relevant time.
Mere directorship does not create
automatic liability under the Act. The
law has consistently held that only
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those who are responsible for the day-
to-day conduct of business can be held
accountable.
16.5 In Ashok Shewakramani & Ors. v.
State of Andhra Pradesh & Anr., (2023) 8
SCC 473, this Court held:
"8. After having considered the
submissions, we are of the view that
there is non-compliance on the part
of the second Respondent with the
requirements of Sub-section (1) of
Section 141 of the NI Act. We may
note here that we are dealing with
the Appellants who have been alleged
to be the Directors of the Accused
No. 1 company. We are not dealing
with the cases of a Managing
Director or a whole- time Director.
The Appellants Have not signed the
cheques. In the facts of these three
cases, the cheques have been signed
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by the Managing Director and not by
any of the Appellants." 16.6. In
Hitesh Verma v. M/s Health Care At
Home India Pvt. Ltd. & Ors., Crl.
Appeal No. 462 of 2025, this Court
held:
"4. As the appellant is not a
signatory to the cheque, he is
not liable under Section 138 of
the 1881 Act. "As it is only the
signatory to the cheque who is
liable under Section 138, unless
the case is brought within the
four corners of Section 141 of the
1881 Act, no other person can be
held liable...."
5. There are twin requirements
under sub-Section (1) of Section
141 of the 1881 Act. In the
complaint, it must be alleged
that the person, who is sought to
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be held liable by virtue of
vicarious liability, at the time
when the offence was committed,
was in charge of, and was
responsible to the company for
the conduct of the business of
the company. A Director who is in
charge of the company and a
Director who was responsible to
the company for the conduct of
the business, are two different
aspects. The requirement of law
is that both the ingredients of
sub-Section (1) of Section 141 of
the 1881 Act must be incorporated
in the complaint. Admittedly,
there is no assertion in the
complaints that the appellant, at
the time of the commission of the
offence, was in charge of the
business of the company.
Therefore, on a plain reading of
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the complaints, the appellant
cannot be prosecuted with the aid
of sub-Section (1) of Section 141
of the 1881 Act."
17. Upon perusal of the record and
submissions of the parties, it is
evident that the Appellant(s) neither
issued nor signed the dishonoured
cheques, nor had any role in their
execution. There is no material on
record to suggest that they were
responsible for the issuance of the
cheques in question. Their involvement
in the company's affairs was purely
non-executive, confined to governance
oversight, and did not extend to
financial decision- making or
operational management."
20. The Hon'ble Delhi High Court in case of
Bhardwaj Thuiruvenkata Venkatavraghavan Versus
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Ashok Arora reported in 2017 SCC OnLine Del
7416 while considering the liability of
Independent Director under the provisions of
the Negotiable Instruments Act, 1881 has held
as under :
"13. As has been noted above, the
Petitioner was appointed as an
independent non executive nominee
director in 2009 and he subsequently
resigned from the company in the year
2015. In terms of Section 149(12) of
the Companies Act, 2013 he shall be
held liable, only in respect of such
acts of omission or commission by the
company which had occurred with his
knowledge or consent or connivance or
where he had not acted diligently
attributable through Board processes.
Thus specific averments are required to
be made in the complaint to show that
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offence was committed with the
Knowledge/consent/connivance of the
Petitioner."
21. In view of the above conspectus of law and
the provisions of the Act, the Independent
Director stands on a different foot than the
Director whether he is a regular Executive
Director, Non-executive Director, Managing
Director or Whole-time Director of the Company
as provided under the provisions of the Act.
22. Even the General Circular No.1 of 2020
issued by the Ministry of Corporate Affairs
exclude the Independent Director from the
rigors of the prosecution filed or internal
adjudication proceedings initiated against the
Directors of the Company as under:
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"3. Section 149(12) is a non obstante
clause which provides that the
liability of an independent director
(ID) or a non-executive director (NED)
not being promoter or key managerial
personnel would be only in respect of
such acts of omission or commission by
a company which had occurred with his
knowledge, attributable through Board
processes, and with his consent or
connivance or where he had not acted
diligently. In view of the express
provisions of section 149(12), IDs and
NEDs (non-promoter and non-KMF), should
not be arrayed in any criminal or civil
proceedings under the Act, unless the
above mentioned criteria is met.
Typically, apart from IDs, non-promoter
and non-KMP, NEDs, would exist in the
following cases;
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a) Directors nominated by the
Government on the public sector
undertakings;
b) Directors nominated by Public
Sector Financial Institutions,
Financial Institutions or Banks
having participation in equity of a
company, or otherwise;
c) Directors appointed in pursuance
to any statutory or regulatory
requirement such as directors
appointed by the NCLT."
23. Considering the general terms and
condition No.29 of the GeM, it only stipulates
for regulating the one bid per bidder to
prevent multiple bids in name of related
parties, sister/associated/allied concerns who
may be Company, Society, Partnership Firm or
Proprietary Firm having one or more common
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persons as Director, Partners, Member or
Owner. Therefore, only because the word
"director" is mentioned in Clause No.29 of the
General Terms and Conditions of the GeM, it
does not mean that it also includes
"Independent Director" who has a different
role to play in the Board of Directors of the
Company.
24. Clause No.29 of the General Terms and
Conditions of the GeM further refers to the
formats of bid to be submitted by individual
proprietorship, partnership or a company and
the format of the Company only refers to if a
person shall be deemed to have bid in a
company format if that person holds more than
10% of the voting share capital of the Company
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which has submitted a bid or a director of
and/or co-managerial personnel of the Company
which has submitted a bid or holds more than
10% of voting share capital in and/or is a
director and/or is Key Managerial Personnel of
a holding Company of that Company which has
submitted the bid which means that the
director is equated with a key managerial
person either of the Company or a holding
Company or the Company which has submitted the
bid. Therefore, Independent Director is not
intended to be covered within the scope of the
"Director" referred in Clause No.29 of the
General Arms and Conditions of the GeM.
25. Similarly, the Clause No.24 of the General
Terms and Conditions of the GeM which is
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referred to by the respondent No.2 in its
affidavit regarding incident management policy
also refers to the definition of allied firms
which includes affiliates, affiliated firms,
sister concern, associated firm or related
party of a bidder wherein, one of the persons,
which includes within its sphere of effective
control/influence of the principle firm
wherein, the principle firm refers to the
common management or its partners, its
directors having majority interest in the
management of the allied firms.
26. Therefore, from the definition of the
Allied Firm also the Independent Director
cannot be considered as a part of the common
management or having majority interest in the
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management of such companies.
27. Therefore, We are of the view that the
reliance placed by the respondent No.1 on the
Cluase No.29 of the General Terms and
Conditions of the GeM to reject the bid of the
petitioner, only because Mr.Kanhaiyalal
Chandak is an Independent Director in two
companies, cannot be sustained as "Director"
referred in clause 29 of the General terms and
conditions of GeM shall exclude "Independent
Director" of the company.
28. In view of the foregoing reasons, the
petition succeeds and is accordingly allowed.
The impugned action of the respondent No.1 in
rejecting the five bids of the petitioner-
Company on the ground of technical
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disqualification by invoking the Clause No.29
of the General Terms and Conditions of the GeM
is hereby, quashed and set aside. The
respondent No.1 is directed to consider the
bids of the petitioner-Company along with the
other bidders in accordance with the General
Terms and Conditions of the GeM as well as the
condition of the tender document. Rule is made
absolute to the aforesaid extent. No orders as
to cost.
(BHARGAV D. KARIA, J)
(L. S. PIRZADA, J)
PALAK
