Calcutta High Court Declines Plea Challenging Tender Awarded By IRCTC Alleging Allottee's Non-Disclosure Of Involvement In 'Rail Neer Scam'

The Calcutta High Court has declined a plea challenging a tender allotted by the Indian Railway Catering & Tourism Corporation (IRCTC). The plea challenged the allotment process on the ground that the allottee/successful bidder had been accused in the 'Rail Neer scam', and was being investigated by the Central Bureau of Investigation (CBI) for the same. 

A single bench of Justice Shampa Sarkar held:

"The petitioner has not been able to satisfy that the action of the authority suffers from arbitrariness, perversity or favouritism. The court should not normally interfere with the policy of the tendering authority. If the petitioners or the court think that charges of corruption prior to three years should be a relevant factor in the decision making process, such opinion cannot be a reason for exercise of power of judicial review. When technically qualified and experienced people have formulated the terms and conditions of the tender, the court should not interfere because the court feels that a more stringent interpretation of the terms would be wiser, more logical or fair."

The petitioner submitted that Section 7 of the Integrity Pact was violated as the bidder did not disclose such transgression before the railway authorities/IRCTC, which impinged on the anti-corruption principle.

It was stated that the non-disclosure of the past criminal case was a transgression of the integrity pact and such transgression directly affects the credibility of the bidder, who was involved in the scam of procurement and supply of packaged drinking water to the passengers, other than RAIL NEER.

The bid of such a participant should have been rejected and the bidder should have been debarred from participating in the tender, not only because of the nondisclosure but also because the continuation of such a bidder in the entire bidding process would be a transgression and violation of the mandatory conditions of the Notice Inviting Tender (NIT), the petitioner said. 

It was argued that the credibility of the bidder includes past performance, experience, and honesty. Supply of food to the passengers, and at the stations, demands a high standard of integrity. The norms and specifications of the food and water to be served were to be strictly adhered to, it was said.

It was stated that the public element involved would require the highest form of reliability. A bidder who was facing a criminal case should not have been selected, especially when such a fact was brought to the notice of the IRCTC by a letter dated June 26, 2024.

Solicitor General of India Tushar Mehta appearing for the respondent IRCTC argued that the letter of award was granted on April 4, 2024, and the petitioner filed the objection after more than two months, being an afterthought.

It was submitted that Section 2(g) of the Integrity Pact talks about the disclosure of any transgression with other companies that impinges on the anti-corruption principle. Section 2(g) read with Section 5(1) indicates that the bidder had to disclose that no transgression had occurred in the past 3 years with any other company in the country or with any other public sector enterprise in India.

According to the SG, a combined reading of Section 2(g) and Section 5(1) does not require disclosure of cases/corruption charges relating to a period beyond three years from the initiation of the tendering process. It was stated that in this case, FIR was registered in 2015 which was nine years prior to the initiation of the tendering process. 

Referring to Rule 151 of the General Financial Rules, 2017, it was submitted that a bidder can be debarred only when he is convicted of an offence either under the Prevention of Corruption Act, 1988 or the Indian Penal Code. It was stated that Rule 151(iii) provided that the procuring entity may debar a bidder or any of its successors from participating in any procurement process undertaken by it, for a period not exceeding two years, if it determines that the bidder has breached the code of integrity. Thus, the question of cancellation of the LOA or debarring the respondent no. 2 would not arise. 

It is stated that IRCTC being a Government of India enterprise was aware of the pending criminal case of 2015 and the disclosure with regard to any transgression was restricted to the previous three years from the date of participation in the tendering process. Any other transgression or any case relating to corruption beyond three years was not required to be disclosed.

It was stated that the tender had already been awarded. All through the bidding process the petitioner did not raise any objection. The contract was awarded on April 4, 2024, and an unsuccessful tenderer challenged the award of tender after two months by writing a letter to the General Manager, IRCTC on June 26, 2024, pointing out the alleged transgressions by respondent no.2.

It was argued that the authority is yet to respond to such a letter and the authority is at liberty to intimate the reasons why the bid of respondent no.2 was found to be eligible.

Accordingly, the court upon relying on various Apex Court precedents, argued that the petitioner had not been able to make out a case in their favour and that the plea was beyond the scope of judicial review. Accordingly, the Court dismissed the plea.

Citation: 2024 LiveLaw (Cal) 157

Case: M/s. Araha Hospitality Private Limited vs. Indian Railway Catering and Tourism Corporation Limited and others

Case No: WPA 16635 of 2024

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