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Renesco India Pvt. Ltd. Vs. Eastern Coalfields Limited and Ors. - (High Court of Calcutta) (12 Jul 2018)

Right to refuse lowest or any other tender is always available to Government and public authorities



In the facts of present case, a Notice Inviting Tender ('NIT') dated 6th June, 2016 was issued by Eastern Coalfields Limited ('ECL') for supplying and laying of Tarfelt, removal of old Tarfelt and grading for water proofing treatment for three years in respect of staff quarters of ECL. The Appellant/writ petitioner submitted its bid. Its technical bid was rejected by the Tender Committee. The Appellant challenged the tender process claiming that, its technical bid was wrongfully rejected by the ECL Authorities. Being satisfied that a prima facie case had been made out the learned Single Judge passed an interim order dated 13th January, 2017 restraining ECL from proceeding any further with the subject tender until disposal of the writ application. Direction was given for exchange of affidavits. The said interim order was carried in appeal before the Division Bench. The appeal was dismissed by a judgment and order dated 30th June, 2017.

Subsequently, ECL filed an application before the learned Single Judge praying for leave to issue a fresh tender in supersession of the tender notice impugned in the writ petition. By a judgment and order dated 3rd November, 2017 the learned Single Judge allowed the said application permitting the ECL Authorities to cancel the tender impugned in the writ petition and to proceed with fresh tender. The writ Petitioner was granted liberty to participate in the fresh tender process. Being aggrieved by the said order, the writ petitioner has filed present appeal.

Two questions arise for consideration. Firstly, whether or not the rejection of the appellant's bid by the ECL Authorities is sustainable. Secondly, whether or not the learned Single Judge was justified in permitting the ECL Authorities to cancel/withdraw their earlier tender and float a new tender.

It is not in dispute that, the Appellant's financial bid was the lowest. Financially speaking, the Appellant was L1. However, the Appellant's offer was found to be technically not acceptable since the 'provenness criterion' was not satisfied by the Appellant. It is recorded in the letter dated 24th December, 2016 communicating the rejection of the Appellant's offer that even after two opportunities having been allowed to the Appellant to submit confirmatory documents, the same was not done. Hence, the ability/eligibility of the Appellant was not proven.

The provenness criterion cannot be dispensed with in so far as the Appellant is concerned. Even assuming for the sake of argument that the Appellant was required to supply Tarfelt being the specific product of STP Limited, the tender work envisaged not only supply of Tarfelt but also job work. Repairing and damp proofing treatment works were also involved. For this kind of work, experience and other credentials of a contractor are of vital importance. The tender work was not the kind of work contemplated by Clause 10(vii) of the Technical Section of the NIT. The proposed contract was not for mere supply of a particular product specified by the employer/principal. Hence, the Appellant's submission that the provenness criterion did not apply to it is unacceptable. The letter specifically mentioned that the appellant's bid was being rejected as its offer was technically not acceptable 'as well as not proven as per conditions of NIT'. In our view, the decision of the ECL Authorities does not suffer from the vice of arbitrariness.

Regarding the second question, present Court is of opinion that, the learned Single Judge did not commit any error by permitting the ECL Authorities to withdraw their earlier tender and proceed afresh by issuing a fresh tender. The decision of the ECL Authorities to undertake a fresh tender process cannot be faulted as arbitrary. The learned Judge specifically granted liberty to the Appellant/writ petitioner to participate in the fresh tender process but the appellant chose not to do so. The Appellant could have participated without prejudice to its rights and contentions. Not having participated in the tender process, the Appellant cannot be permitted to make any grievance in respect of the fresh tender.

No concluded contract came into existence between the appellant and the ECL Authorities. The appellant's bid was not accepted. The Appellant's financial bid might have been the lowest but from an overall point of view it cannot be said that the appellant was declared as L1. It is well settled that so long as the bid has not been accepted, the highest or lowest bidder as the case may be, acquires no vested right to have the tender concluded in his favour. In case of a tender, there is no obligation on the part of the person issuing the tender notice to accept any of the tenders or even the lowest/highest tender as the case may be. In the context of a tender floated by the State, it derives its power to enter into a contract from Article 298 of the Constitution of India and has the right to decide whether to enter into a contract with a person or not subject only to the requirement of reasonableness under Article 14 of the Constitution.

While exercising power of judicial review in the matter such contracts, the primary concern of the Court is not to see whether the decision of the authority is correct or not but to see whether there is any glaring infirmity in the decision making process or whether the decision making process is vitiated by mala fides, unreasonableness or arbitrariness. The Writ Court does not sit as an Appellate Court over the decision of an authority while exercising power of judicial review but merely reviews the manner in which the decision was made. The Court does not have the expertise to correct an administrative decision. If review of an administrative decision is permitted, it will amount to substituting its own decision, without the necessary expertise, which itself may be fallible. The Government must have freedom of contract. The right to refuse the lowest or any other tender is always available to the Government and public authorities.

No case that, the ECL Authority's decision to withdraw its earlier tender and proceed afresh was mala fide or actuated by malice has been made out by the Appellant. Mere bald allegations will not suffice. Allegations of malice and mala fide are of a serious nature and must be established by cogent material. The Appellant had not been able to do so. Decision of the Respondent authorities is not unreasonable. Hence, the learned Single Judge correctly permitted the ECL Authorities to implement their decision to cancel the earlier tender process and issue fresh tender notice. Appeal dismissed.


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