High Court of Bombay Dismisses Writ Petition Challenging Lease of Central Store Office, Upholds Application of Preference Clause in Tender Process. Uniform Interpretation of Tender Conditions Upheld: No Distinction Between Warehouses and Office, and No Legal Error in Applying Clause 4(IV) to Grant Preference to Bidder with More Premises.

Writ petition under Article 226 of the Constitution of India challenging the tender process for grant of lease of 16 warehouses and a Central Store Office for 30 years.

The Petitioner sought cancellation of the entire tender process and the decision to allot the Central Store Office to Respondent No.4, among other reliefs.

The Petitioner had submitted a financial bid of Rs.75 per square foot per month for the Central Store Office, identical to Respondent No.4’s bid, but was not preferred due to the application of a preference clause that favored Respondent No.4 who had applied for more warehouses. The Petitioner contended that the preference clause was misapplied and that there was non-application of mind in the tender evaluation process.

Previous decisions not referenced

Whether the preference clause in the tender document applied to the Central Store Office Whether the tendering authority committed non-application of mind in rejecting the Petitioner’s bid Whether the tender process was vitiated by procedural irregularities

Petitioner: The preference clause in the tender notice applied only to warehouses and not to the Central Store Office, so its application to deny the Petitioner the lease was illegal. Petitioner: The scrutiny sheet erroneously showed the Petitioner’s bid as rejected for warehouses for which it had not applied, demonstrating non-application of mind. Petitioner: The reasons for rejection given in the scrutiny sheet (eligibility criteria) differed from those in the affidavit (Clause 4(IV) preference), which, under Mohinder Singh Gill, cannot be supplemented by affidavit. Respondents: The tender document did not distinguish between warehouses and the Central Store Office for the purpose of the preference clause; the authority’s interpretation was final and binding. Respondents: The preference clause was meant to award leases to the fewest entities, and since Respondent No.4 had applied for more premises, it was legitimately preferred. Respondents: The scrutiny sheet errors were minor and did not affect the core decision to apply the preference clause; there was no inconsistency in the reasons.

In tender matters, the interpretation of terms and conditions by the tendering authority is final and binding unless it is arbitrary or capricious, and courts will not substitute their own interpretation. Where a tender document provides a preference clause for bidders applying for more items, and it does not explicitly exclude any category, the clause can be uniformly applied to all premises offered. Minor procedural errors in scrutiny sheets do not vitiate the tender process when the substantive decision is based on a valid application of the preference clause.

Both Petitioner as well as Respondent No.4 quoted the same rate of Rs.75/- per square feet per month for the Central Store Office. On account of quotation of the same rate, the tendering authority was faced with the difficulty of electing the successful bidder. The Tendering Authority took recourse to Clause 4(IV) of the tender document (Para 8) Thus, under Clause 4(IV) of the tender document, preference was required to be given in the selection process to the bidder submitting bids for maximum number of warehouses. (Para 9) In our view, the interpretation of the tendering authority of the terms and conditions of the tender document cannot be said to be either arbitrary or capricious so as to warrant interference by this Court in exercise of writ jurisdiction. (Para 12)

The Petitioner filed the writ petition directly in the High Court challenging the tender process. No prior legal proceedings were mentioned. The matter was heard and reserved on 13 June 2025, and judgment pronounced on 19 June 2025.