Non-Participating Party Cannot Challenge Tender Awards: Delhi High Court

The bench held that such a party has no right to voice grievances regarding the tender.

Brief Facts:

Primatel Fibcom Ltd (Petitioner), a company engaged in manufacturing and marketing telecommunication and networking equipment, is one of the only two Indian Original Equipment Manufacturers (OEM) of SDH equipment. IOCL (Respondent) issued the subject tender for an oil pipeline project in Gujarat, Rajasthan, and Haryana. Honeywell Automation India Ltd approached the Petitioner for a quotation, which the Petitioner submitted on April 21, 2023. Honeywell Automation submitted its bid based on this quotation. During the technical bid evaluation, Honeywell requested a Commitment Certificate from the Petitioner, which was issued as per the tender's requirements. Although Honeywell qualified in the technical bid, it was rejected in the financial bid. Thereafter, the Petitioner approached the Delhi High Court and filed a writ petition against the rejection of the bid.

The Petitioner claimed involvement in the tender and argued that if Honeywell had succeeded, the Petitioner would have directly benefited. The Petitioner argued that there was a conflict of interest in the bidding process. It argued that IOCL failed to act on the complaint against this misconduct.

Observations by the High Court:

The High Court referred to the decision of the Supreme Court in NHAI v. Gwalior-Jhansi Expressway Limited where the Supreme Court held that the relief sought by a claimant in tender-related matters must be evaluated based on the fundamental principles of the tender process, especially when the validity of the tender documents is not in question. The Supreme Court held that a claimant's right to challenge or match the bid is contingent upon their participation in the tender process. This participation is essential to ensure transparency, foster competition, and achieve the best value for money. The explicit terms and conditions in the tender documents make it mandatory for interested parties to submit sealed bids, both technical and financial. Therefore, the High Court held that only those who engage in the tender process can raise grievances regarding its conduct or outcome.

The High Court held that the Petitioner did not participate in the tender process. The Petitioner chose to remain outside the process and thus does not possess the requisite locus standing to challenge the tender's award. It held that the fact that the Petitioner issued a Commitment Letter does not transform the Petitioner into a bidder within the tender process. Therefore, it held that a non-participant in the tender process cannot claim any rights or be heard to challenge the tender's outcome.

The High Court held that the Petitioner, not having participated in the tender process, has no standing to challenge the tender's award. Therefore, the petition was dismissed.

Case Title: Primatel Fibcom Ltd Vs Indian Oil Corporation Limited & Ors.

Citation: 2024 LiveLaw (Del) 731

Case Number: W.P.(C) 8220/2024 & CM APPL. 33782/2024

Advocate for the Petitioner: Mr Rohit Gandhi, Mr Hargun Singh, Mr Navdeep Kumar, Ms Akshita Nigam and Ms Nikita Sharma, Advs.

Advocate for the Respondent: Mr Raman Kapur, Sr. Advocate with Mr Amit Meharia, Ms Tannishtha Singh and Mr Sambhav, Advs. for R- 1 Mr Rajeev Virmani, Sr. Advocate with Mr Tushar A. John, Mr Arjun Maheshwari, Advocates for R-2

Date of Judgment: 01st June, 2024

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