Supreme Court Quashes BCCL’s Tender Decision: Arbitrary Rejection of Bid Violates Article 14
The Supreme Court of India, in Banshidhar Construction Pvt. Ltd. v. Bharat Coking Coal Limited & Others, delivered a significant judgment on October 4, 2024, quashing the decision of Bharat Coking Coal Limited (BCCL) that rejected the technical bid of the petitioner while accepting a non-compliant bid from another company. The Court held that the BCCL’s decision was arbitrary, discriminatory, and violative of Article 14 of the Constitution, which guarantees the right to equality.
Background of the Case
The dispute arose when BCCL floated a tender on August 16, 2023, for the reopening, salvage, rehabilitation, and coal extraction from Amalgamated East Bhuggatdih Simlabahal Coal Mine. The tender was to be awarded on a revenue-sharing basis for a 25-year period. The appellant, Banshidhar Construction Pvt. Ltd., participated in the tender process but was later declared technically disqualified on May 6, 2024.
Sequence of Events
- August 16, 2023: BCCL issued the tender notice.
- November 7, 2023: The appellant company passed a Board Resolution authorizing its director, Lalti Devi, to participate in the bid.
- November 14, 2023: The Power of Attorney was notarized.
- November 29, 2023: The appellant submitted its bid, along with all required documents, before the deadline of December 1, 2023.
- December 4, 2023: Technical bids were opened.
- May 6, 2024: The Technical Bid Committee rejected the appellant’s bid for allegedly not complying with Clause 10 of the Notice Inviting Tender (NIT).
- May 7, 2024: The financial bids of the remaining two bidders were opened, and Respondent No. 8 was declared the successful bidder.
Petitioner’s Arguments (Banshidhar Construction Pvt. Ltd.)
The petitioner, represented by Senior Advocate Ravi Shankar Prasad, argued:
- The rejection of the technical bid was arbitrary and discriminatory since another bidder, Respondent No. 8, was allowed to submit missing documents after the deadline.
- The petitioner had complied with all requirements under Clause 10 of the NIT.
- The tender process violated the Public Trust Doctrine since the petitioner’s bid was financially more competitive (offering approximately ₹700 crore in value).
- The decision was not in public interest and caused financial loss to BCCL.
Respondent’s Arguments (BCCL & Others)
BCCL, represented by Solicitor General Tushar Mehta and ASG Vikramjit Banerjee, defended the bid rejection on the following grounds:
- The Power of Attorney was executed on November 7, 2023, but the bid documents were signed on November 13, 2023, before the Power of Attorney was notarized on November 14, 2023.
- The respondent’s Tender Committee had the discretion to seek clarification for minor document shortfalls but could not allow bidders to replace submitted documents.
- The project was of national importance, and courts should limit their intervention in government tenders.
Supreme Court’s Analysis and Judgment
Discriminatory Treatment in the Tender Process
The Supreme Court found that BCCL’s decision to allow Respondent No. 8 to submit missing documents post-deadline while rejecting the petitioner’s bid outright was arbitrary and violative of Article 14. The Court stated:
“There was no justification for accepting the technical bid of Respondent No. 8 when it failed to meet the same mandatory criteria that led to the rejection of the petitioner’s bid.”
Bid Submission Was in Compliance
The Court held that the petitioner’s Power of Attorney was legally valid at the time of submission:
“As per the Power of Attorney Act, 1882, a duly executed document is legally binding even if notarized later. The rejection of the bid on such a ground was baseless.”
Violation of Fair Bidding Principles
The Court reiterated the principle laid down in Tata Cellular v. Union of India (1994) that government contracts must adhere to fairness and transparency:
“Government bodies must act in a fair, transparent, and non-discriminatory manner, especially in tenders of national importance.”
Quashing of the Tender Decision
The Court set aside BCCL’s decision and ruled:
“The entire tender process is vitiated due to arbitrariness. BCCL is directed to conduct a fresh tender process in accordance with the law.”
Key Takeaways from the Judgment
- Government Tender Decisions Must Be Transparent: Authorities cannot apply different rules to different bidders.
- Arbitrary Disqualification Violates Article 14: The Court reaffirmed that all bidders must be treated equally.
- Financial Interests of the Public Matter: The ruling ensures that the most competitive bid is not ignored due to procedural irregularities.
Impact of the Judgment
- Precedent for Future Tender Cases: Strengthens judicial review of government contracts.
- Encourages Fair Competition: Bidders are assured of equal treatment in public contracts.
- Ensures Public Funds Are Used Efficiently: Protects against arbitrary decisions that result in financial losses.
Conclusion
The Supreme Court’s ruling in Banshidhar Construction Pvt. Ltd. v. BCCL is a landmark decision in government contract law. By striking down an arbitrary bid rejection, the Court has reinforced the need for fair and transparent tender processes. The judgment ensures that all bidders are treated equally and prevents public authorities from making arbitrary decisions that compromise financial and public interest.
Petitioner Name: Banshidhar Construction Pvt. Ltd..Respondent Name: Bharat Coking Coal Limited & Others.Judgment By: Justice Bela M. Trivedi, Justice Satish Chandra Sharma.Place Of Incident: Jharkhand, India.Judgment Date: 04-10-2024.
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