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Tender awarded to ineligible bidder, cancelled by Supreme Court, Reversed High Court Division Bench Judgment and upheld order of Single Bench.

December 20, 2017


Tender awarded to ineligible bidder cancelled

The Supreme Court reversed the Judgment passed by Division Bench of High Court and upheld the order passed by single bench and cancelled the tender awarded to ineligible bidder. A Bench of Justice R. F. Nariman and Justice Navin Sinha pronounced the Judgment in the above appeal. The facts of the case are:


A notice inviting tenders (NIT) dated 16th March, 2017 by which the director of the Institute of Nano Science and Technology, Mohali, invited percentage rate composite bids from eligible firms/contractors in a two bid system for construction of the Institute of Nano Science and Technology Campus at Knowledge City, Sector 81, Mohali, consisting of research, academic and administrative buildings together with hostel, residential, amenity and utility buildings. The estimated cost of the said project was Rs.162.18 crores, with earnest money payable being Rs.1.72 crores. The period of completion was stated to be 20 months and the last date for submission of tender was 10th April, 2017.

Pre-bid meetings were conducted in March, 2017 and ultimately Respondent No.1 submitted its tender on 7th April, 2017. 5 out of 16 bidders, who initially came forward, participated in the tender process. Admittedly, a technical evaluation report dated 24th April, 2017 stated that the eligibility criteria contained in Clause 8 of the NIT was not met by Respondent No.1. This was reiterated by two other expert bodies, namely, Tata Consultancy Services and the Building Works Committee of the Institute. Respondent No.2 then addressed a letter to Respondent No.1 informing it about its ineligibility.


In May, 2017, Respondent No.1 filed a Writ Petition which was dismissed by the learned Single Judge stating that "similar work", which requires to be considered under Clause 8 of the NIT, would be work which involves not only construction of administrative blocks, but also several other buildings. Looking at the four projects, the last of which was admittedly kept out of consideration, it was found that none of the work could be said to be "similar" in nature and referring to the fact that three specialists had stated that Respondent No.1 was ineligible, the Court adopted the hands-off posture, considering the limited parameters of judicial review.


However, by the impugned judgment dated 4th August, 2017, the Division Bench of the High Court allowed the appeal of Respondent No.1 and set aside the judgment of the learned Single Judge stating that though there was no malafides in the present case, the judgment of the learned Single Judge was incorrect and that, therefore, Respondent No.1 was clearly eligible. The appeal was then disposed of by directing Respondent No. 2 to consider Respondent No.1's bid, along with other eligible bids, and award the contract after assessing the bids on all permissible criteria.


The Court said that:

"We have already noticed that three expert committees have scrutinized Respondent No.1's tender and found
Respondent No.1 to be ineligible. The impugned judgment of the Division Bench of the High Court expressly states that no malafides are involved in the present case. Equally, while setting aside the judgment of the learned Single Judge, the Division Bench does not state that the three expert committees have arrived at a perverse conclusion. To merely set aside the judgment of the learned Single Judge and then jump to the conclusion that Respondent No.1's tender was clearly eligible, would be directly contrary to the judgments aforestated. Not having found malafides or perversity in the technical expert reports, the principle of judicial restraint kicks in, and any appreciation by the Court itself of technical evaluation, best left to technical experts, would be outside its ken. As a result, we find that the learned Single Judge was correct in his reliance on the three expert committee reports. The Division Bench, in setting aside the aforesaid judgment, has clearly gone outside the bounds of judicial review. We, therefore, set aside the judgment of the Division Bench and restore that of the learned Single Judge."


"Dr. Singhvi, learned senior counsel appearing for the Appellant, has stated that the Appellant is willing to match the offer of Respondent No.1. We record the aforesaid statement and order that the tender awarded to Respondent No.1 dated 20th August, 2017, based upon the Division Bench judgment, must be set aside, and the award of the tender to the Appellant must be restored. We hasten to add that it will be open to Respondent No.2 to accept Dr. Singhvi's offer that the project will be executed at the amount indicated by Respondent No.1."


The court allowed the appeal in the aforesaid terms.




Read the Judgment of Supreme Court dated 14.12.2017



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