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Kalinga Commercial Corporation Ltd. vs. Steel Authority of India - (High Court of Delhi) (02 Jun 2023)

Courts can interfere with the decisions taken by the authorities issuing the tender, only if, the decision is arbitrary or perverse



The Petitioner has filed the instant writ petition aggrieved by the action of the Steel Authority of India (Respondent/SAIL) in rejecting the Petitioner's bid in respect of a tender by way of Impugned Letter.

The short question which arises for the consideration of present Court is whether the action of the Respondent in rejecting the bid of the Petitioner on the ground that, Net Worth of the Petitioner is not in compliance with the eligibility criteria (financial) is correct or not and whether it warrants interference by present Court while exercising its jurisdiction under Article 226 of the Constitution of India.

The law relating to interference by Courts in matters of tender is well settled. The authority issuing the tender is the best person to know the requirements of the tender and the clauses contained therein. Courts can interfere with the decisions taken by the authorities issuing the tender only if the decision is arbitrary or perverse or intended to favour someone or is biased against the person whose bid is sought to be rejected.

In Silippi Constructions Contractors v. Union of India, the Supreme Court, held that the authority which floats the contract or tender, and has authored the tender documents is the best judge regarding interpretation of the same. Any interference by the Court has to be for the purposes of preventing arbitrariness, irrationality, bias, mala fides or perversity.

The Petitioner has not been able to demonstrate as to how the decision arrived at by the tendering authority in rejecting the bid of the Petitioner as not being compliant of Clause 3.28 and Clause 6.1.2 of the bid document is perverse. The tender issuing authority cannot be asked to wait for an unlimited period awaiting an opinion which is sought to be procured by the tenderer. The tender has been evaluated by experts and this Court is not inclined to sit as an Appellate Authority over the Tender Evaluating Committee which has come to the conclusion that the bid of the Petitioner does not meet with the financial criteria.

The purpose of calculating net worth should be primarily left with the tender issuing authority and the evaluating committee and the Court cannot dictate as to how the net worth should be calculated unless the decision is contrary to law. In the opinion of this Court, it cannot be said that the action of the Respondent in not considering deferred tax liability as a part of net worth and rejecting the bid of the Petitioner for not meeting the qualification criteria is so arbitrary that it would warrant interference by this Court under Article 226 of the Constitution of India. Petition dismissed.


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