Legal Reference Library

In awarding tenders, the technical experience of a subsidiary company can be taken into account and the parent company cannot be ousted only because it has no experience on its own, the Supreme Court  said while upholding the award of a Metro rail project to a Chinese government company. In this judgment, Consortium of Titagarh Firema Adler SPA vs Nagpur Metro Rail Corporation, the contract for 69 passenger cars and training of personnel was awarded to the Chinese company, though its bid was only marginally lower than that of the consortium.  Therefore, it moved the Bombay High Court where the writ petition was dismissed. The Supreme Court held that there is no bar, whatsoever, express or implied, in the tender document to treat the parent company along with its 100% wholly owned subsidiaries as one entity. Therefore, the scope of judicial review should be limited in adjudging the decision taken by R 1 in the best interest of the project, and thereby, the public. the conce...

The Supreme Court with ‘immense pain’ has asked the high courts to keep in mind the established doctrine of restraint, while issuing writ of mandamus in tender/bidding matters. The court also observed that a writ court cannot sit in appeal over the financial consultant’s assessment. The bench comprising Justice Dipak Mishra and Justice Shiva Kirti Singh made this observation in an appeal (TANGEDCO vs. CSEPDI–Trishe Consortium) against a high court order which, on a writ petition filed by a bidder, directed the owners to consider representations submitted by the bidder and to take certain aspects into consideration. The bench observed: “If the courts would exercise power of judicial review in such a manner, it is most likely to cause confusion and also bring jeopardy in public interest. An aggrieved party can approach the court at the appropriate stage, not when the bids are being considered.” The court added that once the price bid was opened, a bidder could not have submitted represen...

In Seth Industrial Corporation Vs. State, the hon'ble Rajasthan High Court while referring to earlier decisions of the Hon'ble Supreme Court reiterated that the scope of judicial review in award of contracts has been defined by the Hon’ble Supreme court in various decisions on which the reliance has been placed by the petitioner as well as the respondents. The ultimate conclusion of the decisions of the Hon’ble Supreme Court is this that the High Court can interfere in the contractual matters when the action of the tendering authority is found to be malicious, discriminatory or the process adopted or decision made is so arbitrary and irrational that the court can say, the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached. It has also been held that where the public interest is affected, the court can also interfere in the contractual matters. In Tata Cellular vs. Union of India, 1994, after examining the en...

One of the possible reasons for this extremely low ranking given to our country is the failure of all parties concerned in strictly adhering to the terms of documents such as the NIT and the GTC, the Bench observed. The Supreme Court in Central Coalfields Limited & Anr vs. SLL – SML (Joint Venture Consortium) & Ors. has held that, decision taken by the employer about essentiality of a term of the Notice Inviting Tender should be respected and lawfulness of that can be questioned on very limited grounds. The Bench comprising of Justices Madan B. Lokur and R.K. Agrawal set aside a Judgment by Jharkhand High Court wherein it had set aside the rejection of the bid of SLL-SML by Central Coalfields Limited. In this case, the bid given by JVC was cancelled as the bank guarantee submitted was not in the format given in the NIT read with the GTC. The Court observed: “whether a term of the NIT is essential or not is a decision taken by the employer which should be respected. Even if the ...

The authorities can deviate from the conditions for sale by tender if the terms are not essential parts of the offer. In such cases, strict literal compliance is not required, the Supreme Court has stated in its judgment in Om Prakash vs Ramesh Chand. Setting aside the judgment of the Himachal Pradesh High Court, the apex court stated that conditions in advertisement inviting bids could be classified into two categories - those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary to the main object to be achieved. Note: Unfortunately this judgment leaves it open to speculation as to which part of the condition is essential and which is not. The judgment relied upon by the Hon'ble court in this matter wasPoddar Steel Corporation vs Ganesh Engineering Works where the court opined that minor technicalities can be ignore. In that matter a cheque for earnest money was paid through Union Bank while the tender stipulated State Ba...

Government Contracts/Tenders — Enlistment/Blacklisting of Contractors : Blacklisting has to be preceded by a show-cause notice. Such an order is stigmatic in nature and debars such a person from participating in government tenders which means precluding him from the award of government contracts. Hence, there is necessity of giving an opportunity to such a person by serving a proper show-cause notice thereby giving him opportunity to meet the allegations which were in the mind of the authority contemplating blacklisting of such a person. However, once the showcause notice is given and opportunity to reply to the show-cause notice is afforded, it is not necessary to give an oral hearing. Garkha Security Services v. Govt. (NCT of Delhi) (2014) 9 SCC 105

The Supreme Court has quashed the Delhi High Court order and upheld the cancellation of the tender by South Delhi Municipal Corporation for civil works stating that the corporation, "being the custodian of public finance, took its decision objectively with bona fide intention to serve the best interest of the public in general. It has not committed any wrong in cancelling its earlier tender notice and ordering e-tender afresh." Two contractors bid the lowest in the first tender, but it was cancelled for "administrative reasons" and to fetch better price. The high court ruled that the cancellation was illegal and arbitrary. The Supreme Court stated that the corporation has the power to do so and there was no favouritism. CIVIL APPEAL NO.8314 OF 2015 (Arising out of S.L.P. (C) NO. 23038 of 2013) SOUTH DELHI MUNICIPAL CORPORATION vs  RAVINDER KUMAR & ANR. 7 October, 2015