Case Note & Summary
The petitioner, M/s. Watergrace Products, a proprietorship firm engaged in solid waste management, challenged certain conditions in a Request for Qualification (RFQ) issued by the Nashik Municipal Corporation for sweeping and cleaning services. The RFQ, bearing No.01/2024-25 dated 11th October 2024, was for a contract worth approximately ₹176 Crores over five years. The petitioner had been performing a similar contract for manual sweeping since 2020, which was extended. The general body of the Corporation resolved on 7th March 2024 to issue the tender as per CVC and State Government guidelines. The impugned conditions were Clause 3.2.2, which required experience of two manual sweeping projects in any one year within the last three years, cumulatively covering at least 3,00,000 households and supplying at least 1200 sweepers, with each project costing more than ₹70 Crores; and Clause 3.4.2, which required a minimum net worth of ₹100 Crores as on 31st March 2024. The petitioner argued that these conditions were contrary to the CVC guidelines and the State Government's Manual for Procurement, which prescribe three years' experience and no specific net worth requirement, and that they were arbitrary and discriminatory, designed to benefit large operators. The Corporation defended the conditions, stating that the contract was long-term and involved public hygiene, with the upcoming Kumbh-Mela in 2027 requiring a financially strong contractor. The court, applying the Wednesbury principle of reasonableness and relying on precedents like Tata Cellular v. Union of India and ICOMM Tele Limited v. Punjab State Water Supply and Sewerage Board, held that the conditions were not arbitrary or discriminatory. The court noted that the CVC guidelines are not mandatory and that the Corporation had discretion to prescribe eligibility criteria. The court found that the net worth requirement was justified given the scale and duration of the contract, and that the experience requirement was not contrary to any binding guideline. The petition was dismissed, and the interim application was disposed of.
Headnote
A) Constitutional Law - Article 226 - Judicial Review of Tender Conditions - Scope - The court can interfere with tender conditions only if they are wholly arbitrary, discriminatory, or actuated by malice; the terms of invitation to tender are not open to judicial scrutiny as they are in the realm of contract. (Paras 15-16) B) Municipal Law - Tender - Eligibility Criteria - Net Worth Requirement - Clause 3.4.2 requiring minimum net worth of ₹100 Crores is not arbitrary; it is justified for a long-term contract of five years involving public hygiene, especially with the upcoming Kumbh-Mela event. (Paras 11, 17-18) C) Municipal Law - Tender - Experience Requirement - Clause 3.2.2 requiring experience of manual sweeping projects covering at least 3,00,000 households and supplying 1200 sweepers is not contrary to CVC guidelines; the guidelines are not mandatory and the Corporation has discretion to prescribe conditions. (Paras 8-9, 17-18) D) Constitutional Law - Article 14 - Reasonableness - The impugned conditions are not discriminatory as they apply uniformly to all bidders and are aimed at ensuring a capable contractor for a large-scale project. (Paras 17-18)
Issue of Consideration
Whether the impugned tender conditions (Clause 3.2.2 and 3.4.2) in the RFQ issued by Nashik Municipal Corporation are arbitrary, discriminatory, and violative of CVC and State Government guidelines.
Final Decision
The petition is dismissed. The impugned conditions (Clause 3.2.2 and 3.4.2) are upheld as not arbitrary or discriminatory. Interim Application No. 1311 of 2025 is disposed of.
Law Points
- Scope of judicial review in tender matters
- Wednesbury principle of reasonableness
- Non-interference with tender conditions unless arbitrary or discriminatory
- State's discretion to prescribe eligibility criteria
