Supreme Court Sets Aside High Court Order in Chhattisgarh Infrastructure Contract Dispute

The Supreme Court of India delivered an important judgment in Chhattisgarh State Industrial Development Corporation Ltd & Anr. vs. M/s Amar Infrastructure Ltd & Ors.. The Court ruled on a contentious infrastructure contract dispute concerning the upgradation of roads, drainage systems, and water supply in Bilaspur, Chhattisgarh. The case primarily involved allegations of manipulation in the tender process and improper disqualification of a bidder.

Background of the Case

The dispute arose after the Chhattisgarh State Industrial Development Corporation Ltd. (CSIDC) awarded a contract for infrastructure development to M/s. Raipur Construction Pvt. Ltd. under the Modified Industrial Infrastructure Upgradation Scheme (MIIUS) at Sirgitti, Bilaspur. A writ petition was filed before the Chhattisgarh High Court by M/s. Amar Infrastructure Ltd., challenging the awarding of the contract.

The High Court ruled in favor of the petitioner, quashing the contract granted to M/s. Raipur Construction Pvt. Ltd. It also ordered further investigation into alleged document manipulation by CSIDC.

Key Legal Issues Considered

• Whether the selection of the successful bidder followed the prescribed pre-qualification criteria.
• Whether the technical evaluation documents were manipulated to favor a particular bidder.
• Whether the High Court was justified in interfering with the tendering process.
• Whether M/s. Amar Infrastructure Ltd. had standing to challenge the contract despite being disqualified from bidding.

Petitioner’s Arguments (CSIDC and Raipur Construction Pvt. Ltd.)

The appellants contended:

• The selection process was conducted transparently and in accordance with pre-qualification criteria.
• The High Court erred in assuming that manipulation had occurred in the technical evaluation sheet.
• Possession of a Hot Mix Plant was not a mandatory pre-qualification requirement.
• The High Court incorrectly relied on an unsigned document (Annexure P-4) provided by M/s. Amar Infrastructure Ltd.
• The contract had already been executed substantially, with over 50% of the work completed.

Respondents’ Arguments (M/s Amar Infrastructure Ltd.)

The respondents, who challenged the contract, argued:

• The technical evaluation process was flawed and manipulated to ensure that M/s. Raipur Construction Pvt. Ltd. won the bid.
• The requirement for a Hot Mix Plant was essential, and the absence of this equipment should have disqualified M/s. Arcons Infrastructure Pvt. Ltd., which was ranked second (L-2).
• The Cyber Crime Cell’s report indicated that the technical evaluation documents had been altered.
• The contract was awarded unfairly, leading to potential financial irregularities.

Supreme Court’s Observations

The Supreme Court examined the tender documents, the High Court’s findings, and the Cyber Crime Cell’s report. The Court noted:

• The pre-qualification criteria did not list a Hot Mix Plant as a mandatory requirement.
• The High Court relied on Annexure P-4, an unsigned document, which was not an official part of the evaluation process.
• The Cyber Crime Cell’s findings regarding document modification were inconclusive and did not establish deliberate manipulation.
• The work under the contract was already more than 50% complete, and canceling it would cause financial loss and delays.
• M/s. Amar Infrastructure Ltd. was not challenging the selection of the successful bidder (M/s. Raipur Construction Pvt. Ltd.) but instead questioning the qualification of M/s. Arcons Infrastructure Pvt. Ltd. (L-2), indicating a commercial interest rather than public concern.

The Court observed:

“As the hot mix plant was not a mandatory requirement for pre-qualification, the financial bids were rightly opened and considered. There was no manipulation in the mandatory requirements.”

Supreme Court’s Ruling

• The appeal was allowed, and the High Court’s order was set aside.
• The contract awarded to M/s. Raipur Construction Pvt. Ltd. was upheld.
• The Court found no substantial evidence of manipulation in the technical evaluation process.
• Since the work was more than 50% complete, it was in the public interest to allow the project to proceed.

Impact of the Judgment

• Judicial Restraint in Tendering Matters: The ruling reinforced the principle that courts should be cautious in interfering with government contract processes unless clear malfeasance is established.
• Clarity in Pre-Qualification Requirements: The judgment emphasized the importance of defining clear pre-qualification criteria to avoid legal disputes.
• Protection Against Frivolous Litigation: The decision discourages unsuccessful bidders from challenging contracts based on procedural ambiguities rather than substantive grounds.

Key Takeaways

• Tendering authorities must ensure that pre-qualification criteria are unambiguous and transparent.
• Courts will not interfere in contractual matters unless procedural violations or clear evidence of favoritism are demonstrated.
• Ongoing projects that have reached significant completion stages will not be disrupted unless strong legal grounds exist.

Conclusion

The Supreme Court’s ruling in Chhattisgarh State Industrial Development Corporation Ltd. vs. M/s Amar Infrastructure Ltd. reinforces judicial restraint in contractual disputes while ensuring that tendering processes remain fair and transparent. By setting aside the High Court’s order, the Court ensured that ongoing infrastructure development was not disrupted without compelling evidence of wrongdoing.

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Download Judgment: Chhattisgarh State I vs Ms Amar Infrastruct Supreme Court of India Judgment Dated 09-03-2017.pdf

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