Tender Dispute in Telangana: Supreme Court Upholds Selection of Lowest Bidder

The case of M/S N. Ramachandra Reddy vs. The State of Telangana & Ors. involves a legal battle over the award of a road construction tender in Telangana. The Supreme Court, in its judgment dated 28th August 2019, ruled in favor of the appellant, setting aside the Telangana High Court’s decision that had annulled the tender process. The case raised key legal questions about tender conditions, the role of authorities in re-evaluating bids, and judicial review in government contracts.

Background of the Case

The Roads and Buildings Department of Telangana issued a tender notice on 21st April 2018 for the construction of a BT Road from Gujed to Buddaguda in Mahabubabad District. The tender conditions required that bidders must own a Batch Type Hot Mix Plant of capacity 100-120 TPH, located within 100 kilometers of the project site. The two bidders were:

M/S N. Ramachandra Reddy (Appellant) – Quoted Rs. 31,31,69,427.04
Fourth Respondent (Writ Petitioner) – Quoted Rs. 31,51,27,865.82

The appellant, having quoted the lowest price, was awarded the contract. However, the writ petitioner objected, alleging that the appellant’s hot mix plant was more than 100 kilometers away, violating tender conditions. This led to a series of re-evaluations and legal proceedings.

Key Issues in Dispute

Whether the appellant’s hot mix plant was within the prescribed 100-kilometer distance.
Whether the verification reports relied upon by the authorities were valid.
Whether the authorities had the power to re-evaluate the distance measurement.
Whether the High Court’s interference in the tender process was justified.

Arguments by the Petitioner (Fourth Respondent)

The distance requirement was an essential tender condition, and the appellant’s plant was beyond the 100-kilometer limit.
The report of the Superintending Engineer, Warangal, initially found the plant to be 101.50 kilometers away, disqualifying the appellant.
The subsequent report from the Superintending Engineer, Karimnagar, which certified the distance as 98.1 kilometers, was invalid because Karimnagar was not the jurisdictional authority.
The authorities acted beyond their jurisdiction in re-verifying the distance after the initial report.

Arguments by the Appellant (M/S N. Ramachandra Reddy)

The appellant had submitted a valid certificate confirming that its hot mix plant was within 100 kilometers.
The initial report from the Superintending Engineer, Warangal, included an alternative measurement showing the distance as 99.90 kilometers.
To ensure fairness, the authorities requested a re-evaluation from an independent officer, the Superintending Engineer, Karimnagar, whose report confirmed that the plant was within the required distance.
The authorities acted within their powers to verify complaints and ensure compliance with tender conditions.

Supreme Court’s Observations

The Supreme Court ruled that the authorities had the right to verify complaints and seek an independent evaluation. The Court made the following key observations:

1. Authority to Re-evaluate

The Court upheld the decision to obtain a report from the Superintending Engineer, Karimnagar, stating:

“In the absence of any prescribed procedure for verification in the event of a complaint, it was fair for the Chief Engineer to obtain an independent report.”

2. Validity of the Tender Process

The Court rejected the High Court’s ruling that the re-evaluation was unauthorized, stating:

“The Division Bench erred in concluding that calling for a report from an independent authority was beyond jurisdiction.”

3. Judicial Review in Tender Matters

The Court reaffirmed the principle that judicial review is limited in contract matters:

“The scope of judicial review is confined to examining the decision-making process, not the merits of the decision itself.”

Final Verdict

The Supreme Court set aside the High Court’s order that had annulled the tender process.
It upheld the selection of the appellant as the lowest bidder.
The Court reaffirmed that authorities could take independent measures to ensure compliance with tender conditions.

Implications of the Judgment

Authorities have the right to verify complaints and ensure fair competition in tenders.
Courts should not interfere in contract matters unless the decision-making process is arbitrary or illegal.
Independent verification reports can be considered valid in disputes over tender conditions.
The ruling strengthens transparency and fairness in public procurement processes.

Conclusion

The Supreme Court’s ruling in this case reinforces the principle that judicial intervention in tender matters should be limited to procedural fairness rather than substantive decision-making. By upholding the right of authorities to conduct independent verifications, the judgment ensures that tender processes remain transparent and competitive. This case sets an important precedent for future disputes in government contracts and procurement law.

Petitioner Name: M/S N. Ramachandra Reddy.
Respondent Name: The State of Telangana & Ors..
Judgment By: Justice S. Abdul Nazeer, Justice R. Subhash Reddy.
Place Of Incident: Telangana.
Judgment Date: 28-08-2019.

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