Case Note & Summary
The dispute arose from a tender process for the construction of 'Maurya Towers' in Patna, where the Patna Regional Development Authority (appellants) invited bids. Among three bids, Rashtriya Pariyojana Nirman Nigam (first respondent) was the lowest, but the Tender Committee decided not to award the contract to it because the first respondent had been blacklisted for five years by the Water Resources Department, Government of Bihar, under an order dated 26.9.1991. The contract was awarded to M/s Walia Builders, the second lowest bidder, after negotiation at the first respondent's rates. The first respondent challenged both the tender decision and the blacklisting order in the Patna High Court through two writ petitions, C.W.J.C. No.3964 of 1995 and C.W.J.C. No.4064 of 1995. The challenge to the blacklisting order was rejected by a Single Judge on grounds of delay, while the challenge to the tender decision was allowed on the ground that no show cause notice had been issued before excluding the first respondent. On appeal, the Division Bench set aside the blacklisting order, holding that it was not communicated to the first respondent because the appellants had allegedly not traversed the denial of receipt. The Division Bench consequently directed re-examination of the tender award. The Supreme Court found the High Court's reasoning defective. It held that the appellants had clearly pleaded that the blacklisting order was communicated; therefore, there was no non-traverse. The Court invoked the proviso to Order VIII Rule 5(1) of the Code of Civil Procedure, 1908, stating that the High Court should have required proof of receipt or non-receipt rather than relying on alleged admission. The Supreme Court emphasized that the Tender Committee's decision to exclude the blacklisted first respondent was based on relevant factors, namely the existing blacklisting order and the performance record, and was not arbitrary. It also held that no show cause notice was necessary because the appellants were merely taking note of an existing order, not imposing a fresh disqualification. The Court rejected the first respondent's contentions that the blacklisting was not in force due to subsequent contracts or that an autonomous body could not consider a state department's blacklisting. Accordingly, the Supreme Court allowed the appeals, set aside the impugned Division Bench judgment, and dismissed the writ petitions with costs.
Headnote
A) Administrative Law - Judicial Review of Tender Decisions - Scope of Interference - General Principles - The Tender Committee considered the existing blacklisting order by the Water Resources Department as a relevant factor in awarding the contract. The Supreme Court held that the Committee rightly took into account the blacklisting and the performance record; decision was not arbitrary or unreasonable as it considered relevant factors. (Paras Not mentioned) B) Natural Justice - Show Cause Notice - Requirement when relying on existing blacklisting order - No show cause notice was required before the Tender Committee decided on 30.5.1995 not to award the contract to the first respondent because the appellants merely took note of an existing order; they were not sitting in judgment over the blacklisting order or issuing a fresh blacklisting. (Paras Not mentioned) C) Civil Procedure - Pleadings and Non-traverse - Order VIII Rule 5(1) proviso - High Court erred in treating the appellants' clear pleading that the blacklisting order was communicated as a non-traverse of the first respondent's denial of receipt. The proviso enables the court to require proof of any fact otherwise than by admission; the High Court should not have set aside the blacklisting order after four years solely on alleged non-traverse. (Paras Not mentioned) D) Administrative Law - Blacklisting by One Department - Relevance to Autonomous Body - The appellants, an autonomous body, could legitimately take into account the first respondent's blacklisting by the Water Resources Department, State of Bihar; prior contracts awarded to first respondent after blacklisting did not undermine the order, as the relevant department was not informed of the blacklisting, and one contract predated the order. (Paras Not mentioned)
Issue of Consideration
Whether the High Court erred in setting aside the blacklisting order and the tender committee's decision due to alleged non-communication and lack of show cause notice; whether the tender committee's decision was arbitrary or unreasonable.
Final Decision
The appeals were allowed. The impugned judgment and order of the Patna High Court were set aside. Writ Petitions C.W.J.C. Nos.3964 and 4064 of 1995 filed in the Patna High Court were dismissed with costs.
Law Points
- Blacklisting order by one government department is a relevant consideration for an autonomous body's tender evaluation
- tender committee need not issue show cause notice when relying on an existing blacklisting order
- High Court cannot set aside blacklisting order after four years based on alleged non-traverse when communication is pleaded
- proviso to Order VIII Rule 5(1) CPC enables court to require proof
- judicial review of tender decisions limited to arbitrariness
