Govt E-Marketplace Portal Is Need Of The Hour, In Best Interest Of Buyers & Sellers: Allahabad High Court

The Allahabad High Court has observed that the Government e Marketplace Portal for procuring goods and services is a “need of the hour”. The Court noted that the mechanism followed by the portal and the steps taken by the Government to procure all goods and services through this portal is in the best interest of buyers and sellers.

The bench comprising of Justice Mahesh Chandra Tripathi and Justice Prashant Kumar observed

“It is a technology-driven platform to facilitate procurement of goods and services of various government departments. Introduction of such portal was actually a need of the hour. This platform does the comparison process and automatically choose by using an auto-run method to find the 'L-1'. This portal further eliminates any interference in placing the order and processing the payment.”

Further, the Court observed that

“The platform actually sends digital notifications to all the registered vendors and to the buyers who intends to buy any goods or services. It also ensures a cashless time-bound payment directly to the bank. This also increases the competition, whereby, the government are able to procure the goods and services at a very competitive rate. The steps taken by the government to all the goods and services procured through this portal is in the best interest to both buyers and sellers.”

It may be noted that the Government e-Marketplace (GeM) is the National Public Procurement Portal for the procurement of goods and services for Central and State Government Organisations.

The Court further held that a bidder cannot challenge tender conditions unless they have been introduced arbitrarily or with a malafide intent. It was observed that the Government is free to set any tender conditions. The Court also observed that

“The petitioner has no vested right to get the agreement extended by one year.”

Factual Background

Petitioner is in the business of supplying trained security guards. Life Insurance Corporation (LIC) floated a tender for 'Supply of Security Personnels' in which the petitioner was a successful bidder. Consequently, an agreement was executed to supply security guards to respondents for a period of seven years, from 2007 to 2015. Thereafter, the work was allotted to another company from 2015 to 2022. The tender was extended by one year.

In May 2022, respondents published a tender in various newspapers and also uploaded it on the GeM (Government e Marketplace) Portal as it is mandatory for the State to put all government tenders on the GeM portal. During the pendency of the tender proceedings, an agreement was executed between the petitioner and respondents on 31.08.2022 for providing security guards for one year.

In June, 2023, before the period of agreement would come to an end, respondents published a fresh e-tender inviting companies to provide security guards. It was mandatory for the bidders to be empanelled with the DGR and only those empanelled bidders could have applied for the tender. Petitioner alleged that due to new conditions being imposed, it was unable to participate in the tender.

Counsel for the petitioner contended that no proper advertisement for the tender was made. It was argued that the GeM portal is not the right place to call for tender. A new tender condition regarding empanelment with DGR was arbitrary and illegal. It was also contended that the tender of the petitioner was deemed to have been extended under the terms of the agreement, accordingly a new tender could not have been floated. Lastly, it was argued that the petitioner had invested huge money in anticipation of the renewal of the tender, and if it is not renewed petitioner will suffer irreparable loss.

Defending the new tender, counsel for the respondent argued that the petitioner had no vested right for renewal of tender. The Clause relied upon by the petitioner required mutual consent and there was no consent on behalf of the respondents to extend the tender of the petitioner. It was argued that GeM portal was introduced to eliminate corruption and human errors in the tender process. Amongst other things, inviting tender on the GeM portal has the mandatory condition of being empanelled with DGR as it has been prescribed in the guidelines issued by the Ministry of Finance and the Government of India.

It was further argued that conditions of the bid can only be challenged if they are changed with a malafide intent. In the absence thereof, the ineligible bidder cannot challenge tender conditions.

High Court Verdict

The Court observed that the GeM portal was launched by the Commerce & Industry Minister with technical support of National e-Governance Division (Ministry of Electronics and Information Technology) for procuring goods and services. The Portal was launched to offer transparency in the tendering process.

“The procurement through GeM eliminates human interface in vendor registration, order placement and payment processing, reducing down the chances of any corruption and human error to a great extent.”

The Court further observed

“GeM can encourage more vendors, including small and medium enterprises to participate in government procurement processes, leading to increased competition and better value for money for the government. The main objective of the GeM portal is to make it simpler for government organizations to locate suppliers of services and products that satisfy their demands for quantity, quality, provenance, and time. Now all the government tenders are uploaded in the GeM portal and petitioner is well aware of this system.”

The Court held that the petitioner had knowledge of the tender is proved by the fact that the same has been challenged in the writ petition. Tender cannot be challenged on grounds that it was not published in newspapers or was not advertised properly.

The Court observed that an additional condition was imposed in the bid calling only those bidders who were empanelled with the DGR was imposed based on Circular issued on 11^th April 2023 by the Ministry of Finance, Department of Financial Services. Thus, it could not be said that the condition was arbitrarily imposed to incapacitate the petitioner from participating in the bid.

Further, the Court held that petitioner cannot ask for renewal of tender as a matter of right. The clause relied upon by the petitioner specifically stated that it could be renewed by mutual consent. Since there was no consent on behalf of the respondents, the agreement was not renewed.

“In the instant case, there was no consent given by the respondent or the respondent had ever shown any interest in renewing the same and in the absence of any such inclination, it is not open for the petitioner to ask for the renewal as a matter of right. Any investment made by the petitioner during the agreement period was only for the agreement period and cannot be said that since the petitioner has invested a huge amount, the tender should be extended in his favour.”

Relying on the decision of the Supreme Court in Global Energy Ltd. And another v. Adani Exports Ltd. And others, Directorate of Education and others v. Educomp Datamatics Ltd. And others and Michigan Rubber (India) Limited v. State of Karnataka and others, Justice Kumar, speaking for the bench, held that the Government is at liberty to impose any bid condition and no bidder can challenge the same.

“In view of the aforesaid judgements, it is not open for the petitioner to challenge the bid condition and especially, in the light of the judgement by the Hon'ble Supreme Court, no bidder has a right to challenge the bid condition and it is open for the Government to impose any kind of conditions in the bid. The Court cannot interfere on the bid conditions unless the same is arbitrary or has been introduced mala fidely. In this case, the tender condition introduced in the tender was in sync with the guidelines laid down by the Government of India.”

Praising the advent of the GeM Portal and noting the fact that the tender had already been issued to a third party, the Court dismissed the writ petition.

Case Title: Bombay Intelligence Security (I) Ltd. vs. Union Of India And 2 Others 2023 LiveLaw (AB) 481 [WRIT - C No. - 24559 of 2023]

Citation: 2023 LiveLaw (AB) 481

Click Here To Read/Download Order