Tender Dispute in Transport Contract: Supreme Court Reinstates Appellant’s Contract Award

This case revolves around a tender dispute involving M/s Galaxy Transport Agencies, Contractors, Traders, Transports and Suppliers (the appellant) and M/s New J.K. Roadways, Fleet Owners and Transport Contractors (the respondent). The dispute arose from a tender process for the supply of commercial vehicles for transporting troops and equipment for the financial year 2020-2021. After the tendering process, the appellant was awarded the contract, but the respondent contested the decision, claiming that the appellant did not meet the necessary eligibility criteria. The case ultimately reached the Supreme Court, which had to decide whether the High Court’s decision to quash the contract was correct.

Background of the Case

The Inspector General of Police, Kashmir Zone, invited tenders for the supply of commercial vehicles through an e-tendering process. The tenders were for vehicles to transport troops and equipment for the year 2020-2021. Four companies submitted bids, including the appellant and the respondent. After a review of the technical bids, the tendering committee found that the respondent did not meet the technical qualifications, while the appellant was deemed eligible. The appellant’s financial bid was the lowest, and on March 30, 2020, the contract was awarded to the appellant.

However, the respondent filed a writ petition in the High Court, challenging the appellant’s eligibility. The petitioner argued that the appellant’s technical bid was flawed, particularly in terms of its vehicle ownership and work experience. The High Court’s single judge found that the appellant had met the eligibility criteria, but the respondent continued to challenge the decision in a letter patent appeal before the Division Bench.

High Court’s Judgment

The Division Bench of the High Court ruled that the appellant had been wrongly awarded the contract. The court found that the eligibility conditions set out in the tender document had not been properly interpreted. Specifically, the Division Bench held that the appellant’s bid was incomplete, as it did not submit details of both Heavy Motor Vehicles (HMV) and Light Motor Vehicles (LMV), contrary to the tender requirement. Additionally, the court found that the appellant lacked the required five years of work experience with contracts worth at least Rs. 2 crores, leading to the quashing of the contract awarded to the appellant.

Supreme Court’s Review

The Supreme Court had to decide whether the Division Bench’s judgment was correct. The appellant’s primary arguments were:

• Interpretation of Tender Conditions: The appellant argued that the tender document clearly stated that bidders were required to provide either HMV or LMV details, not necessarily both. The appellant’s bid met the condition as it submitted details for HMVs, which was sufficient according to the wording of the tender notice.
• Work Experience Requirement: The appellant contended that it met the work experience requirement based on the tendering authority’s assessment and that the Division Bench’s assessment was incorrect.
• Judicial Review of Tender Conditions: The appellant also argued that the tendering authority, being the best judge of the requirements, should have its interpretation of the conditions upheld. Judicial review, according to the appellant, should be limited to instances of arbitrariness or mala fide intentions, neither of which applied in this case.

Respondent’s Arguments

The respondent raised the following points in opposition:

• Failure to Meet Tender Conditions: The respondent argued that the appellant had failed to meet essential eligibility criteria, particularly regarding the submission of the correct number of vehicles and the work experience requirement. They emphasized that the appellant’s bid only included details for HMVs, and this was not in compliance with the tender notice which required both HMV and LMV vehicles.
• Incorrect Work Experience: The respondent contended that the appellant’s work experience certificates were inadequate, and that the appellant did not meet the minimum requirement for experience, as it could not prove five years of relevant experience.

Supreme Court’s Analysis

The Supreme Court examined several key issues in the case:

• Interpretation of Tender Documents: The Court emphasized that the authority responsible for issuing the tender document is the best judge of its requirements and how the conditions should be interpreted. The Court referred to earlier judgments, including Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd. and Bharat Coking Coal Ltd. v. AMR Dev Prabha, where it was held that courts should defer to the tendering authority’s interpretation unless it is perverse or irrational. The Court concluded that the Division Bench’s interpretation of the tender conditions was flawed, as it contradicted the plain reading of the tender document.
• Work Experience: The Court also found that the evaluation of work experience was a matter for the tendering authority, which had deemed the appellant eligible. The Court noted that the Tender Opening Committee had reviewed the documents and determined that the appellant met the experience requirements. The Court held that the Division Bench erred in re-evaluating the work experience requirement.
• Judicial Review in Tender Matters: The Court reiterated that judicial review in matters of tenders is limited to ensuring that there is no arbitrariness, irrationality, or violation of fundamental rights. The Court emphasized that courts should not interfere with the tendering process unless there is a clear case of unfair treatment or bias.

Supreme Court’s Judgment

The Supreme Court set aside the Division Bench’s judgment, reinstating the contract awarded to the appellant. The Court held:

“The Division Bench’s judgment is set aside, and the learned Single Judge’s judgment is restored. The appellant’s contract award stands, and the interpretation of the tender conditions by the tendering authority is upheld.”

The Court further stated that:

“The tendering authority is the best judge of its own requirements. Judicial review in these cases should be limited to instances of irrationality, arbitrariness, or mala fide actions. The appellant’s bid met the necessary conditions, and the contract award was valid.”

Conclusion

The Supreme Court’s decision reinforces the principle that tendering authorities have the discretion to interpret their own tender conditions. Judicial review in such cases is meant to check for arbitrariness or unfairness but should not interfere with the authority’s decision unless there are exceptional circumstances. The ruling highlights the importance of respecting the tender process and the expertise of the authority issuing the tender, ensuring that the integrity of public procurement processes is maintained.

Petitioner Name: M/S Galaxy Transport Agencies, Contractors, Traders, Transport and Suppliers.
Respondent Name: M/S New J.K. Roadways, Fleet Owners and Transport Contractors.
Judgment By: Justice R.F. Nariman, Justice Navin Sinha, Justice K.M. Joseph.
Place Of Incident: India.
Judgment Date: 18-12-2020.

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