Supreme Court Upholds Tender Award in N.G. Projects Limited vs Vinod Kumar Jain

The Supreme Court of India, in its judgment dated March 21, 2022, ruled on the case of M/s N.G. Projects Limited vs M/s Vinod Kumar Jain & Others. The case revolved around the cancellation of a tender awarded for the reconstruction of a road in Jharkhand. The Court overturned the High Court’s decision and reinstated the contract in favor of the appellant.

Background of the Case

The Road Construction Department of Jharkhand issued a tender on June 7, 2019, for the reconstruction of the Nagaruntari – Dhurki – Ambakhoriya Road. M/s Vinod Kumar Jain (Respondent No. 1) participated in the tender but was disqualified for non-compliance with the prescribed conditions. The contract was awarded to M/s N.G. Projects Limited, which commenced work on October 22, 2019.

Respondent No. 1 challenged the rejection of its bid before the Jharkhand High Court. The Single Bench set aside the award of the contract, and the Division Bench upheld the decision, directing the State to issue a fresh tender. Aggrieved, M/s N.G. Projects Limited approached the Supreme Court.

Petitioner’s Arguments (M/s N.G. Projects Limited)

The petitioner contended:

The rejection of Respondent No. 1’s bid was valid, as it did not meet the technical evaluation criteria.
Respondent No. 1’s bank guarantee was not in the prescribed format, making it non-responsive.
The contract had already been partially executed, and its cancellation would cause financial loss to the State and delay infrastructure development.
The High Court exceeded its jurisdiction in interfering with the tender process, which falls under the administrative domain of the State.

Respondent’s Arguments (M/s Vinod Kumar Jain & Others)

The respondent countered:

The rejection of its bid was arbitrary and lacked justification.
The evaluation of technical bids was not conducted uniformly, as the successful bidder was granted undue leniency.
The High Court rightly intervened to ensure fairness in the tender process.

Supreme Court’s Observations

The Supreme Court, comprising Justices Hemant Gupta and V. Ramasubramanian, ruled in favor of the petitioner and reinstated the tender award.

On Judicial Review in Tender Matters

The Court reiterated:

“Judicial review of administrative action is limited to preventing arbitrariness and favoritism. Courts should not substitute their decision for that of the competent authority.”

On the Validity of the Tender Process

The Court emphasized:

“The evaluation of bids is a technical matter best left to the tendering authority. Unless there is malafide intent or procedural illegality, courts should not interfere.”

On the Public Interest in Infrastructure Projects

The Court highlighted the importance of timely completion of infrastructure projects:

“Construction of roads is an essential part of development. Delays due to judicial interference increase costs and deprive citizens of critical infrastructure.”

Final Verdict

The Supreme Court ruled:

The appeal is allowed.
The contract awarded to M/s N.G. Projects Limited is reinstated.
The company shall not claim escalation costs for the period during which the matter was pending in court.
The writ petition before the High Court is dismissed.

Implications of the Judgment

This ruling establishes several key legal principles:

Courts should exercise judicial restraint in tender matters.
The tendering authority has the discretion to evaluate bids and determine responsiveness.
Infrastructure projects should not be unnecessarily delayed due to litigation.
Technical disqualifications in tenders must be adhered to, ensuring a transparent and fair bidding process.

Conclusion

The Supreme Court’s ruling in N.G. Projects Limited vs. Vinod Kumar Jain reinforces the principle that courts should not interfere in commercial and technical decisions unless there is clear evidence of arbitrariness. The judgment upholds the sanctity of the tender process and ensures that public infrastructure projects are executed without undue hindrance.

Petitioner Name: M/s N.G. Projects Limited.
Respondent Name: M/s Vinod Kumar Jain & Others.
Judgment By: Justice Hemant Gupta, Justice V. Ramasubramanian.
Place Of Incident: Jharkhand.
Judgment Date: 21-03-2022.

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