The Karnataka High Court recently invalidated a tender awarded by Bharat Heavy Electricals Limited (BHEL) to a company that had a consortium agreement with a Chinese firm, citing a violation of the Union Finance Ministry's order. The ministry, on July 23, 2020, mandated that bidders from countries sharing land borders with India must register with the competent authority to ensure national security interests are protected, particularly from a defence perspective.
The bench, consisting of Chief Justice PB Varale and Justice MGS Kamal, highlighted that BHEL should have ensured full compliance with the office order issued in the interest of national security. The court deemed national security concerns as of greater significance than the public interest arguments put forth by BHEL.
The case was brought to the court by Macawber Beekay Pvt. Ltd., a civil services aspirant, who challenged BHEL's decision to accept the bid of the consortium involving a Chinese entity, BTL EPC Ltd., for setting up an ash handling plant for a thermal power station in Telangana. The appellant argued that BTL EPC Ltd. was not qualified under the Pre-Qualification Requirements (PQRs) in the tender and had entered into a consortium agreement with a Chinese company, making its registration with the competent authority mandatory.
The court rejected the respondents' contention that the consortium agreement was a mere collaboration or tie-up and found that BTL EPC Ltd. lacked technical qualifications in certain aspects and was collaborating with the Chinese company. The bench ruled that BHEL's awarding of the contract to BTL EPC Ltd. solely based on their lower bid amount was not valid, given the non-compliance with the mandatory requirement of registration with the competent authority.
The court directed BHEL to reconsider the bid by Macawber Beekay Pvt. Ltd. and to allow BHEL sufficient time to approach the Supreme Court, the implementation of the verdict was stayed for four weeks.
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