Choosing To Waive Inspection For All Tender-Applicants Not Malafide Or Arbitrary, Not Subject To Writ Jurisdiction: Allahabad High Court

The Allahabad High Court has recently held that the 'Sal' Purchase Committee choosing to waive inspection for all applicants during the tender process cannot be said to be mala fide or arbitrary. It was held that such waiver was not amenable to challenge under the writ jurisdiction.

Clause 6(g) of the tender document provides that “The technical bids will be evaluated on the basis of scrutiny of submitted documents and physical inspection of the stock of the bidders.” However, Clause 6(h) provided that physical inspection shall be carried out only of those vendors whose technical bids are in order.

The bench comprising of Justice Shekhar B. Saraf and Justice Manjive Shukla held that the mandatory inspection under 6(g) of the e-bid document was validly waived under clause 6(h) of the aforesaid document. Having waived said requirement for all applicants, the Court held that the discretionary power so wielded was reasonable and not contrary to public interest.

Factual Background

Pursuant to an e-bid document issued by the Sal Sleeper Purchase Committee, Petitioner applied for supply of sal wood sleeper and edgings for construction of Pontoon bridges in the Maha Kumbh Mela, 2025.

Financial bids during the process were open only to those who succeeded in the technical bid. The contract was granted to 5 bidders at the rate of Rs.1,58,000/- per cubic meter as opposed to the petitioner's bid of Rs. 2,26,900/- per cubic meter. The petitioner was placed at L-10 in the bidding process. Aggrieved, the approached this Court seeking quashing of the entire tender process.

Petitioner contended that as per clause 5(d) and 5(e) of the e-bid document, the bidder must have at least 1000 cubic meters of Sal wood/Sal sleepers/Sal edgings. In the case of a consortium, it must have 51% of said quantity, which was not the case. Accordingly, the lead member of the winning consortium was not qualified for the tender. It was further contended that mandatory physical stock inspection under 6(g) was not carried out by the authorities despite petitioner representing twice on said issue.

Per contra, Respondents argued that the lack of 51% quantity by relying on subsequent developments post issuance of show cause notice. They further submitted that petitioner had not come before the Court with clean hands as it only had a licensed capacity of 500 cubic meters.

It was further submitted that the Committee could waive the ancillary requirement of physical inspection under clause 6(g) of the e-bid document. Since it was waived for all applicants, it could not be said to be arbitrary.

High Court Verdict

The Court observed that the Purchase Committee did not cancel the physical inspection requirements for specific applicants. It was held that no case could be made out regarding arbitrary or mala fide action on the State's part.

The Court observed the respondents' submissions that State authorities had written to the petitioner, along with all respondents, to bring their rates down to Rs. 1,58,000/-. All the respondents who complied were ultimately awarded the tender.

The Court relied on the decisions of the Apex Court in Directorate of Education v. Educomp Datamatics Ltd. and Tata Cellular v. Union of India wherein it was held that a second possible, or even preferable view would not be sufficient. State action ought to have been arbitrary, discriminatory or biased.

Further, the Court relied on Central Coalfields Ltd. v. SLL- SML (Joint Venture Consortium) followed in Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., where the Supreme Court held that the decision making powers of an employer in accepting or rejecting the bid is to be interfered with only if mala fide, or favoring someone.

In Silppi Constructions Contractors v. Union of India and Tata Motors Ltd. v. Brihan Mumbai Electric Supply & Transport Undertaking (BEST)., the Supreme Court observed that judicial must be exercised with a lot of restraint in contractual or commercial matters.

The Court held that factual disputes as to quantity of Sal wood/Sal sleepers/Sal edgings could not be resolved in writ jurisdiction, along with the uniform waiving of physical inspection under 6(g) for all applicants being non-arbitrary and not mala fide.

“Upon a conjoint reading of said two clauses, we are of the view that there was discretion with the Sal Purchase Committee to carry out inspection which they chose not to do for any of the applicants. The fact that they did not carry out inspection for any of the applicants removes any claim that may be made by the petitioner with regard to any arbitrary or mala fide action on behalf of the respondents.”

Accordingly, the Court held that a writ court is not required to find faults with the State authorities but only examine the decision-making process, leaving room for interpretation of contract by them.

The writ petition was dismissed.

Case Title: Dynamic Infracon Pvt. Ltd. V. State Of Uttar Pradesh And Others [WRIT- C NO. 22963 OF 2024]

Counsel for Petitioners: Shashi Nandan, Senior Advocate assisted by Udayan Nandan, Advocate

Counsel for Respondents: Manish Goyal, Additional Advocate General assisted by Ms. Akanksha Sharma, Standing Counsel for the State and Navin Sinha, Senior Advocate assisted by Nikhil Agarwal, Manmohan Singh and R.P. Singh, Advocates

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