Case Note & Summary
Background: The writ petition was filed by Janadhar Sevabhavi Sanstha, Latur, a public charitable trust engaged in solid waste management and welfare of rag pickers, against the State of Maharashtra and Latur City Municipal Corporation. The trust claimed to employ around 750 people and had an existing agreement dated 12.09.2017 for collection and disposal of waste, extended up to 12.09.2024. The dispute arose when the Corporation floated a fresh tender notice for collection, transportation and processing of municipal solid waste. Facts: Respondent No.2 floated Tender Notice No.1/2023-24 on 07.02.2024. A pre-bid meeting was held on 15.02.2024, where the petitioner and other bidders raised objections regarding eligibility criteria, turnover, past experience, net worth, solvency certificate and bank guarantee. Some objections were accepted, while others including the petitioner's were not. The original bid submission deadline was 02:00 p.m. on 28.02.2024. After the deadline, it was realized that only one bid had been received; the respondent then issued a corrigendum at about 6:04 p.m. extending the deadline to 06.03.2024, with bid opening on 07.03.2024. The petitioner alleged that this extension was arbitrary and that the bank guarantee of Rs.4 Crores was unjustified because the tender amount or work price was not fixed. Legal Issues: Whether the extension of bid submission after expiry and after single bid violated Government Resolution dated 27.09.2018 Rule 4.3, which mandates rejection of single tender and fresh invitation; whether the bank guarantee condition was arbitrary; and whether the High Court should interfere in tender matters under judicial review. Arguments: The petitioner contended that the GR required rejection of single tender and fresh tendering without opening the second envelope; it relied on Supreme Court decisions that rules of the game cannot be changed after the process starts. The respondents argued that courts should not interfere in tender matters; the extension was due to only one bid, upcoming election code of conduct and garbage issue; and the bank guarantee was fixed at Rs.4 Crores because the tender price was not fixed and financial capacity was needed. Court's Analysis: The Court noted undisputed facts and declined to examine eligibility criteria, leaving that to the tendering authority. It found that the extension after deadline when only one bid was received was contrary to the GR dated 27.09.2018, which was applicable and required rejection without opening Envelope No.1 and fresh tendering. No documentary proof was produced for the decision to extend. The Court also found the bank guarantee condition arbitrary because the tender amount was not fixed and there was no justification for Rs.4 Crores. It acknowledged the Supreme Court's limited judicial review in tender matters but held that on these facts, the arbitrary extension and unjustified bank guarantee warranted interference. The available excerpt ends before the final operative order, but the Court indicated that interference was required.
Headnote
A) Tender Law - Single Bid Procedure - Government Resolution dated 27.09.2018, Public Works Department, Rule 4.3 - Single Tender/Bid requires rejection of all tenders without opening second envelope and fresh invitation; no changes in draft tender while re-inviting - The respondents extended bid deadline after only one bid was received without following this mandatory procedure; the Court held such extension arbitrary and contrary to the Government Resolution (Paras 5,8,9).
B) Tender Law - Judicial Review - Scope of Interference - Not mentioned - Courts ordinarily should not interfere in tender matters as evaluation and award are commercial functions; interference only if action arbitrary, discriminatory, mala fide or policy has no nexus with object - On facts, the arbitrary extension and unjustified bank guarantee warranted interference despite limited review (Paras 6,9).
C) Tender Law - Bank Guarantee Condition - Arbitrariness - Not mentioned - The tender amount/work price was not fixed; bank guarantee initially 20% of tender amount then fixed at Rs.4 Crores without any basis - The Court found this showed arbitrariness and flawed approach in the E-tender process (Para 9).
D) Tender Law - Eligibility Criteria - Non-interference - Not mentioned - The Court declined to examine the petitioner's challenge to eligibility criteria, holding the authority inviting tender has to decide eligibility and restricting to rag picker societies would not be in the interest of the Municipal Corporation (Para 7).
Issue of Consideration
Whether the tender process for collection, transportation and processing of municipal solid waste was vitiated by arbitrary extension of bid submission deadline after expiry and after only one bid was received, contrary to Government Resolution dated 27.09.2018 Rule 4.3; whether the bank guarantee condition of Rs.4 Crores without fixed tender amount was arbitrary; and whether the High Court should interfere in tender matters under judicial review.
Final Decision
The Court found the extension of bid submission after single bid was arbitrary and contrary to Government Resolution dated 27.09.2018 Rule 4.3, and the bank guarantee of Rs.4 Crores was unjustified. It held that interference was required; however, the final operative order is not contained in the available excerpt.
Law Points
- Courts ordinarily should not interfere in tender matters
- evaluation of tenders and awarding contracts are essential commercial functions
- principles of equity and natural justice stay at a distance
- if decision relating to award of contract is bona fide and in public interest
- Courts will not interfere
- interference permissible if action arbitrary or discriminatory or policy has no nexus with object or mala fide
- single bid must be rejected and fresh tenders invited under Government Resolution dated 27.09.2018 Rule 4.3
- one cannot change rules of game once started
- tender inviting authority must fix price/work amount
- bank guarantee must be justified and based on fixed tender amount.
Case Details
2024 LawText (BOM) (04) 13
Writ Petition No.2717 of 2024
Smt. Vibha Kankanwadi, S. G. Chapalgaonkar
D. P. Palodkar, A. B. Girase, S. P. Urgunde
Janadhar Sevabhavi Sanstha, Latur, through its President Sanjay Digambar Kamble
The State of Maharashtra, Through Department of Urban Development, Mantralaya, Mumbai-32; Latur City Municipal Corporation, Latur, Through its Administrator; The Municipal Commissioner @ Administrator, Latur City Municipal Corporation, Latur
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Nature of Litigation
Writ petition challenging tender notice for selection of operator for collection, transportation and processing of municipal solid waste in Latur City Municipal Corporation.
Remedy Sought
Petitioner sought quashing of Tender Notice No.1-2023/2024 dated 28.02.2024 and direction to issue fresh tender after complying with Central and State Government norms.
Filing Reason
Petitioner challenged alleged arbitrary tender conditions, illegal extension of bid deadline after single bid, and unjustified bank guarantee requirement of Rs.4 Crores without fixed tender amount.
Previous Decisions
Petitioner had earlier filed Writ Petition No.13723 of 2023 regarding pending bills with respondent No.2, which was disposed of on 01.09.2023. Petitioner had an agreement dated 12.09.2017 for five years extended up to 12.09.2024.
Issues
Whether the extension of bid submission deadline after expiry and after only one bid was received violated Government Resolution dated 27.09.2018 Rule 4.3 requiring rejection of single tender and fresh invitation.
Whether the bank guarantee condition of Rs.4 Crores was arbitrary and unjustified when the tender amount or work price was not fixed.
Whether the High Court should interfere in tender matters under judicial review given the limited scope recognized by Supreme Court precedents.
Whether the eligibility criteria fixed by the tendering authority could be interfered with.
Submissions/Arguments
Petitioner argued that it was a registered trust engaged in solid waste management and rag picker welfare, had existing agreement till 12.09.2024, and the tender extension after single bid was illegal; Government Resolution dated 27.09.2018 required rejection of single tender and fresh invitation; reliance placed on Vice Chairman and Managing Director, CIDCO v. Shishir Realty and Monarch Infrastructure to show arbitrary changes vitiate tender.
Respondents argued that petitioner society failed to perform duty, many notices and complaints were issued; tender conditions requiring experienced contractors were justified due to city population of 5 lakhs and 150 tons daily garbage; bank guarantee of Rs.4 Crores fixed because tender price not fixed; extension due to only one bid, upcoming election code of conduct and garbage issue; courts should not interfere in tender matters relying on Tata Motors, N. G. Projects and Galaxy Transport Agencies.
Ratio Decidendi
Where only one bid is received, Government Resolution dated 27.09.2018 Rule 4.3 requires rejection of all tenders without opening the second envelope and fresh invitation; no changes in draft tender while re-inviting. Extension of bid submission after deadline when single bid received is arbitrary. Tender conditions such as bank guarantee must be justified and based on fixed tender amount; an unsubstantiated bank guarantee of Rs.4 Crores when tender price is not fixed shows arbitrariness. Courts ordinarily do not interfere in tender matters, but interference is warranted if action is arbitrary, discriminatory, mala fide or policy has no nexus with object.
Judgment Excerpts
Single Tender / Bid means, only one bid is received during the tendering process or only one bidder is technically qualified after opening of bid Envelope No.1. In such cases, all the tenders shall be rejected without opening their 2nd Envelope and fresh tenders shall be invited immediately. However, no changes in the draft of the tender paper shall be made while going for re-invitation of tenders.
after all one cannot change the rules of the game, once it is started.
the Court ordinarily should not interfere in the matters relating to tender or contract. Initiating fresh tender process may consume lot of time and also lose the public exchequer to the tune of crores of rupees. While invoking the power of judicial review in matters as to tenders or award of contracts, certain special features should be borne in mind that evaluation of tenders and awarding contracts are essential commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in the public interest, Courts will not interfere by exercising power of judicial review even if the procedural aberration or error in assessment or prejudice to a tenderer, is made out.
Initially, the bank guarantee was kept at 20% of the tender amount when in fact the tender amount is not fixed. Then after negotiations in the Pre Bid meeting when it was pointed out, it is said that it was then fixed at Rs.4 Crores instead of 20% of the tender amount. In the affidavit-in- reply there is absolutely no justification as to on what basis the said amount of Rs.4 Crores was arrived at.
Procedural History
Petitioner and respondent No.3 had an agreement dated 12.09.2017 for five years for collection and disposal of solid waste, extended up to 12.09.2024. Respondent No.2 floated Tender Notice No.1/2023-24 on 07.02.2024. Pre-bid meeting held on 15.02.2024; petitioner participated and raised objections. Original bid submission deadline was 28.02.2024 at 2:00 p.m. Only one bid was received by deadline; respondent issued first corrigendum at about 6:04 p.m. on 28.02.2024 extending bid submission to 06.03.2024 at 2:00 p.m. and bid opening to 07.03.2024 at 3:00 p.m. Petitioner filed present writ petition; Rule issued returnable forthwith; heard finally by consent; judgment reserved on 19.03.2024 and pronounced on 02.04.2024.
Acts & Sections
- Government Resolution dated 27.09.2018, Public Works Department: Rule 4.3
- Government Resolution dated 26.10.2006:
