Case Note & Summary
The Petitioner, Alankit Assignments Limited, a company engaged in the business of Registrar and Share Transfer Agent (RTA), filed a Writ Petition under Article 226 of the Constitution of India challenging the Request for Proposal (RFP) dated 30th August 2023 issued by Respondent No. 2, Life Insurance Corporation of India (LIC), for appointment of RTA for a period of five years. The Petitioner specifically challenged the condition in the RFP requiring the bidder to have a minimum net worth of Rs. 300 crores, arguing that this condition was arbitrary, discriminatory, and aimed at excluding the Petitioner and other similarly situated bidders. The Petitioner contended that the condition was not based on any rational criteria and that LIC had previously appointed RTAs with lower net worth. LIC defended the condition as a commercial decision based on the need to ensure financial stability and capability to handle large volumes of work. The court, after hearing both sides, held that the scope of judicial review in tender matters is limited and that the court cannot interfere with commercial decisions unless they are arbitrary, discriminatory, or mala fide. The court found that the net worth requirement of Rs. 300 crores was not arbitrary and applied uniformly to all bidders. The court also noted that the Petitioner had not challenged the RFP at the time of issuance but only after being unable to meet the condition. The court dismissed the petition, upholding the RFP condition.
Headnote
A) Constitutional Law - Article 226 - Judicial Review of Tender Conditions - Scope of interference - The court can interfere with tender conditions only if they are arbitrary, discriminatory, mala fide, or against public interest. The court cannot substitute its own view for that of the tenderer in commercial matters. (Paras 6-8) B) Constitutional Law - Article 14 - Level Playing Field - Net Worth Requirement - Prescribing a minimum net worth of Rs. 300 crores in an RFP for appointment of RTA is a commercial decision of LIC and not arbitrary. The condition applies uniformly to all bidders and does not violate Article 14. (Paras 9-12) C) Contract Law - Tender - Conditions of Eligibility - The tenderer has the right to prescribe eligibility conditions based on its commercial prudence. The court will not interfere unless the condition is so unreasonable that no reasonable person would impose it. (Paras 6-8)
Issue of Consideration
Whether the condition in the Request for Proposal (RFP) issued by LIC prescribing a minimum net worth of Rs. 300 crores for appointment of Registrar and Share Transfer Agent is arbitrary, discriminatory, and violative of Article 14 of the Constitution of India.
Final Decision
The court dismissed the Writ Petition, upholding the RFP condition of minimum net worth of Rs. 300 crores.
Law Points
- Article 226 of the Constitution of India
- Article 14 of the Constitution of India
- Judicial review of commercial decisions
- Tender conditions
- Level playing field
- Net worth requirement
