Calcutta High Court Reaffirms Discretion Of Tendering Authority And Restricted Judicial Interference Upon Tender Qualifications

A Single Bench of the Calcutta High Court presided by Justice Shampa Sarkar dismissed a writ petition filed by a bidder challenging its rejection in the technical evaluation round by the tendering authority Damodar Valley Corporation ('DVC').

The subject tender dated 6.03.2024 was for empanelment of transportation agencies for evacuation of 40 LMT ash from ash ponds at DVC's Mejia Thermal Power Station when the petitioner was rejected owing to poor performance at DVC's Raghunathpur Thermal Power Station ('RTPS') wherein the petitioner had failed to perform their commitments and blamed a number of external factors.

As a result, DVC rescinded the work order, terminated the contract, and issued a suspension notice, thereby barring the petitioner from participating in any of DVC's tenders.

The petitioner filed two Writ Petitions contesting DVC's actions when a Coordinate Bench had overturned DVC's decision on grounds of violation of natural justice and ruled that the petitioner should not be precluded from participating in any future DVC bids.

However, DVC's act of encashing bank guarantees as a penalty for a shortfall in work execution remained unchallenged. As a result, the petitioner was able to participate in subsequent tenders of DVC.

With respect to the subject tender, DVC, however, had received internal feedback of poor performance of the bidder at RTPS around June 2024 and as a result thereof, in view of the recorded poor performance, the petitioner was disqualified.

Proceedings before the High Court

According to the petitioners, after the High Court had set aside the penal actions of DVC, the question of rejecting a technical bid on the ground of poor performance was unfounded, baseless, arbitrary and mala fide. The petitioners were singled out and disqualified, as a backlash to the decision of the High Court.

It was argued by the Advocate for the petitioners that “the State could not play Doctor Jekyll and Mr Hyde” - once DVC had elected not to disqualify the petitioners on grounds of poor performance in an earlier project, in respect of 4 other tenders, the subsequent action was not justified and deserved to be set aside. 

Per Contra, Advocate for DVC, Ms. Vineeta Meharia, argued that the recorded poor performance of the petitioner, appeared from their own Writ and that as per the tender conditions, poor performance was a ground for disqualification of the bidder.

Such a term was essential, reasonable and in the public interest – the matter concerning public utility which requires continuous evacuation of ash produced during continuous electricity generation.

In any event, it was argued that a tendering authority is the best judge as to the suitability of terms of tender so as to get not just the best price but also the best person and a writ Court refrains from interfering with such decision unless it is arbitrary or unreasonable or mala fide, none of which is applicable in the instant situation.

Moreover, it was stated that with the passage of time, although the petitioners had participated in DVC tenders, they were never selected as a successful bidders.

Ultimately, the Court held that the tendering authority is best suited to determine a bidder's capacity, capability, and integrity.

It was stated that all a Writ Court can do is determine whether the rationale provided by the authorities for cancelling the tender during the technical round was justifiable. DVC had the right to choose the best contractor for the best price.

Under such circumstances, DVC was within its right to decide not to accept the petitioners' technical bid on the ground that on an earlier occasion, the petitioner did not perform well, which led to the invocation of a bank guarantee.

Advocate for DVC: Ms. Vineeta Meharia, Barrister & Advocate, Mr. Shounak Mukhopadhyay, Mr. Amit Meharia, Ms. Paramita Banerjee, Ms. Subika Paul, Mr. Sayan Dey and Mr. Tamoghna Chattopadhyay, Advocates (MCO Legals – Meharia & Company).

Advocate for petitioner: Mr. Shubhabrata Dutta, Mr. Shubhojit Seal and Mr. Ajeyo Chowdhury.

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