Case Note & Summary
Bombay High Court addressed a writ petition filed by Universal Cables Ltd., the L-2 bidder, challenging CIDCO's decision to declare BNC Power Projects Ltd., the L-1 bidder, as technically qualified for a tender concerning conversion of overhead power cables to underground system in Kharghar Node, Navi Mumbai. The dispute arose from Notice Inviting Bids dated 3 November 2021 with estimated cost Rs 50,77,79,970.04; bids were due by 3 December 2021. Petitioners, BNC and KEI Industries submitted bids. BNC executed Manufacturer Authorization Form with Sterlite Power Transmission Ltd., which collaborated with Taihan Cables and Solutions Company Ltd., a Korean company, under Clause 6H of NIB. CIDCO opened technical bids on 6 December 2021 and found all three bidders qualified. Petitioners later wrote to CIDCO on 14 December 2021 alleging deficiencies in BNC's bid. Tender Committee met and held BNC eligible. Upon financial bid opening, BNC was L-1 and petitioners L-2. Petitioners sought disqualification of BNC and award of contract to themselves as L-2. Court by order dated 12 December 2022 recorded CIDCO's statement that work order shall not be issued until next date, and this was continued. Legal issues raised included whether BNC met mandatory eligibility and technical qualifying requirements under NIB clauses 6 and 7; whether CIDCO's decision was arbitrary, unreasonable or violative of natural justice; whether CIDCO abdicated its function by relying on MSETCL recommendations; and whether reasons not in tender committee minutes could be supplemented by affidavit. Petitioners argued that deviation from material terms is impermissible and relied on Poddar Steel, Rashmi Metaliks, Bakshi Security, Central Coalfields, Tata Cellular, Siemens, Uflex, and Mohinder Singh Gill. They alleged CIDCO deliberately ignored deficiencies. CIDCO and BNC countered that CIDCO as tendering authority is best judge, that BNC meets all essential terms, that MSETCL would supervise work and its recommendation was properly considered, and that BNC's bid was 7.75% lower than estimated while petitioners' bid was 4.5% higher, saving over Rs 6 crore. BNC argued awarding contracts is commercial function and court should not interfere. The available judgment text ends during recording of submissions by senior advocate for BNC; therefore the court's final analysis, reasoning and operative directions are not included in the excerpt. The reserved date was 3 March 2023 and pronouncement date 10 March 2023, but the final holding is not provided.
Headnote
A) Administrative Law - Tender Judicial Review - Limited Scope of Interference - Constitution of India, 1950, Article 226 - Petitioners challenged eligibility decision alleging violation of mandatory terms; CIDCO and BNC argued commercial function; Court heard detailed submissions and referred to Poddar Steel, Rashmi Metaliks, Bakshi Security, Central Coalfields, Tata Cellular, Siemens, Uflex; final holding not included in provided text (Paras 5-7).
B) Public Procurement - Mandatory Eligibility Conditions - Compliance with NIB Clauses 6 and 7 - Notice Inviting Bids (NIB) Clauses 6 and 7 - Petitioners contended BNC did not meet material and essential terms including manufacturer authorization with Sterlite Power/Taihan; respondents justified compliance; final holding not included (Paras 2-3, 5-7).
C) Administrative Law - Reasons for Administrative Decision - Supplementing Reasons by Affidavit - Constitution of India, 1950, Article 226; Mohinder Singh Gill v. Chief Election Commissioner, (1978) 1 SCC 405 - Petitioners argued reasons absent in tender committee minutes cannot be supplemented by affidavit; CIDCO filed additional affidavit with justifications; final holding not included (Paras 5-6).
D) Administrative Law - Delegation/Abdication of Function - Reliance on Technical Expert Recommendation - Constitution of India, 1950, Article 226 - Petitioners alleged CIDCO abdicated eligibility determination to MSETCL; CIDCO contended MSETCL was technical supervisor and member of technical committee; final holding not included (Paras 5-6).
Issue of Consideration
Whether CIDCO's decision declaring Respondent No.8 (BNC Power Projects Ltd.) as technically qualified despite alleged non-compliance with mandatory tender conditions is arbitrary, illegal or violative of Article 14; whether the tender committee minutes can be supplemented by affidavit; and whether CIDCO abdicated its function by relying on MSETCL recommendations.
Law Points
- Tendering authority's decision is subject to limited judicial review
- deviation from mandatory tender conditions is impermissible
- non-essential deviations may be allowed
- reasons for decision cannot be supplemented by affidavit
- public authority must act fairly
- reasonably and transparently
Case Details
2023 LawText (BOM) (03) 100
Writ Petition No. 1995 of 2022
S. V. Gangapurwala, Sandeep V. Marne
Mayur Khandeparkar, Bhushan Deshmukh, Shiraj Salelkar, Anuja Abhyankar, Raksha Thakkar, Prachi Vasudeo, Milind V. More, G. S. Hegde, P. M. Bhansali, Ashok T. Gade, Riya John, Sharan Jagtiani, Muthhar Khan, Suraj Dessai Almedia, Hrishikesh More, Sharmad Paikane, Prashant Kulkarni
Universal Cables Ltd. and Mr. Paresh Panchal
State of Maharashtra, City and Industrial Development Corporation (CIDCO) of Maharashtra Limited, The Chairman & Managing Director CIDCO Limited, The Chief Engineer (NM), The Superintending Engineer (Elect-NM), Maharashtra State Electricity Transmission Company Limited, Chief Engineer (Contracts And Monitoring), Maharashtra State Electricity Transmission Company Ltd., BNC Power Projects Limited
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Nature of Litigation
Writ petition challenging administrative decision in a tender process
Remedy Sought
Petitioners seek disqualification of Respondent No.8 (BNC Power Projects Limited) and rejection of its bid, and presumably award of contract to petitioners
Filing Reason
Petitioners, being L-2, allege that L-1 bidder BNC did not meet mandatory eligibility and technical qualifying requirements under NIB, and CIDCO arbitrarily held it eligible
Previous Decisions
CIDCO declared all three bidders technically qualified on 6 December 2021; Tender Committee held BNC eligible and upon financial bid opening, BNC became L-1 and petitioners L-2. No prior court decision except interim order dated 12 December 2022 staying work order.
Issues
Whether BNC Power Projects Ltd. met the mandatory eligibility and technical qualifying requirements under the Notice Inviting Bids (NIB)
Whether CIDCO's decision to declare BNC technically qualified was arbitrary, unreasonable or violative of Article 14
Whether reasons not found in tender committee minutes can be supplemented by affidavit in reply
Whether CIDCO abdicated its function by relying on MSETCL recommendations
Submissions/Arguments
Petitioners argued that respondent no.8-BNC does not fulfill material and essential terms of tender and could not have been held technically qualified by CIDCO.
Petitioners contended that though deviation from non-essential/non-material terms could be acceptable, deviation from material and essential terms is impermissible, relying on Poddar Steel, Rashmi Metaliks, Bakshi Security, Central Coalfields.
Petitioners argued that CIDCO being public authority must act fairly, reasonably and transparently and ought to have scrutinized veracity and validity of documents, relying on Tata Cellular, Siemens, Uflex.
Petitioners submitted that reasons for rejection of objections not found in tender committee minutes cannot be supplemented by affidavit, relying on Mohinder Singh Gill.
Petitioners contended that CIDCO abdicated its functions and delegated power of determining eligibility to MSETCL, and that recommendation of MSETCL was faulty.
CIDCO argued that it is fully satisfied about BNC's eligibility, which meets all essential terms and conditions of NIB, and that CIDCO as tendering authority is the best judge.
CIDCO submitted that MSETCL would ultimately take over installation and supervise work, so its recommendation was properly considered, and that Chief Engineer of MSETCL was a member of technical committee.
CIDCO placed on record International Standard IEC 62067 and contended that even if two interpretations are possible, CIDCO's interpretation should prevail.
BNC argued that it fully complied with all essential and mandatory conditions of NIB and that awarding contracts is commercial function, court should be loath to interfere.
Judgment Excerpts
Upon being declared L-2 in the tender process, Petitioners seek disqualification of rival bidder declared L-1 (Respondent No. 8).
The estimated cost provided in the NIB was Rs.50,77,79,970.04.
This Court, by its order dated 12th December 2022, recorded the statement of the learned counsel for CIDCO that the work order shall not be issued till the next date.
Procedural History
CIDCO published Notice Inviting Bids on 3 November 2021 for conversion of overhead power cables to underground cable system in Kharghar Node, Navi Mumbai. Last date for submission of bids was 3 December 2021. Petitioners submitted online bid on 3 December 2021; BNC and KEI Industries also submitted bids. CIDCO opened technical bids on 6 December 2021 and found all three bidders technically qualified. Petitioners addressed letter dated 14 December 2021 to CIDCO pointing out deficiencies in BNC's bid. Tender Committee met and recorded minutes holding BNC eligible. Upon opening financial bids, BNC was L-1 and petitioners L-2. Petitioners filed writ petition challenging CIDCO's decision. Court by order dated 12 December 2022 recorded CIDCO's statement that work order shall not be issued till next date; statement continued from time to time.
Acts & Sections
- Companies Act, 1956:
- Companies Act, 2013:
