Case Note & Summary
The writ petition was filed before the Nagpur Bench of the Bombay High Court challenging an order dated 25.06.2021 passed by the Chandrapur City Municipal Corporation, which invited the first ranked bidder for a second round of negotiation in a tender for door-to-door collection and transportation of segregated solid waste, construction and demolition waste, and silt from drain and nallah cleaning. The petitioners were Swayambhu Transport, a proprietorship firm through its proprietor Namdeo Bhapkar, and the proprietor himself. The respondent was the Corporation through its Commissioner. The tender was floated by the respondent under a Request for Proposal (RFP). The petitioner emerged as the first ranked bidder (H-1). On 07.12.2020, the petitioner communicated to the respondent that the quoted rate was reasonable and consistent with market rates, and expressed willingness to carry out the contract only if awarded at the same rate, thereby clearly declining to participate in any negotiation. The Standing Committee of the Corporation in its meeting held on 11.12.2020 approved the award of work to the petitioner and granted administrative approval. Subsequently, a complaint was made to the State Government, which passed an order on 02.02.2021 staying the Standing Committee's decision and sought clarification from the Corporation. The Corporation clarified that awarding the work to the petitioner would result in a saving of approximately Rs.3.62 Crores and would improve service levels. Considering this, the State Government withdrew the stay on 18.05.2021 and directed the Commissioner to take an appropriate decision considering the interest of the Corporation, quality of service, and transparency in tender processing. Pursuant to this, the respondent passed the impugned order on 25.06.2021 inviting the petitioner for a second round of negotiation. The core legal issues were whether Clause 16.7 of the RFP permitted a second round of negotiation with the H-1 bidder, whether the impugned order violated transparency and was arbitrary, and whether the writ court should interfere with the tender process for violation of express tender conditions. The petitioners contended that the impugned order was arbitrary, perverse, and illegal because the RFP did not permit a second negotiation, and because the Corporation had already acknowledged that awarding the contract to the petitioner would save costs and improve service. The respondent argued that the order was legal and correct, followed the State Government's directive, and aimed to explore further cost savings in the interest of the Corporation. The High Court examined Clause 16.7 of the RFP, which provided that the first ranked bidder shall be selected for negotiation and the second ranked bidder kept in reserve, and that the second ranked bidder may be invited only if the first ranked bidder withdraws or fails to comply with RFP requirements. The court held that the clause permitted only one negotiation with H-1, and the Corporation could invite H-2 only upon withdrawal or non-compliance by H-1. Since the petitioner neither withdrew nor failed to comply, the matter should have proceeded from the stage after the negotiation round. The court stressed that transparency in tender matters is sacred and that adherence to prescribed tender conditions is mandatory; violation of such conditions is a ground for judicial interference. The court relied on Ram and Shyam Company v. State of Haryana, (1985) 3 SCC 267; Silppi Constructions Contractors v. Union of India, 2019 (11) SCALE 592; Ramana Dayaram Shetty v. International Airport Authority of India, AIR 1979 SC 1628; and Tata Cellular v. Union of India, (1994) 6 SCC 651. The court found that the respondent failed to comply with the RFP procedure and thus the impugned decision was arbitrary and not sustainable in law. The petition was partly allowed. The impugned order dated 25.06.2021 was quashed and set aside. The respondent was directed to proceed in the tender matter in accordance with the terms and conditions of the RFP. The remaining prayers were rejected, and there was no order as to costs.
Headnote
A) Tender Law - Negotiation Process - Only One Negotiation with First Ranked Bidder - Constitution of India, 1950, Article 226 and RFP Clause 16.7 - The respondent Corporation invited the petitioner, the first ranked bidder (H-1), for a second round of negotiation even though the petitioner had already declined negotiation on 07.12.2020. The High Court held that Clause 16.7 of the RFP permits only one negotiation with H-1 and allows the second ranked bidder to be invited only if H-1 withdraws or fails to comply with RFP requirements. Since neither condition was met, the second negotiation call was arbitrary and contrary to the express tender terms (Paras 7-9, 11). B) Administrative Law - Transparency in Public Tenders - Prescribed Tender Conditions Must Be Strictly Followed - Constitution of India, 1950, Article 226 - The court emphasized that transparency in tender matters is sacred and that when rules are prescribed in a tender document or RFP, parties must adhere to them; violation provides a ground for judicial interference under Article 226. Relied on Ram and Shyam Company v. State of Haryana, (1985) 3 SCC 267; Silppi Constructions Contractors v. Union of India, 2019 (11) SCALE 592; Ramana Dayaram Shetty v. International Airport Authority of India, AIR 1979 SC 1628; and Tata Cellular v. Union of India, (1994) 6 SCC 651. Held that the impugned decision failed to maintain transparency and was arbitrary (Paras 10-11). C) Writ Jurisdiction - Quashing of Tender Decision - Violation of RFP Procedure Renders Decision Illegal - Constitution of India, 1950, Article 226 - The impugned order dated 25.06.2021 was quashed and set aside because the respondent Corporation did not comply with the procedure prescribed in the RFP after the first ranked bidder declined negotiation. The respondent was directed to proceed in the tender matter in accordance with the terms and conditions of the RFP. The petition was partly allowed; rest prayers rejected; no costs (Para 12).
Issue of Consideration
Whether the respondent Corporation's order dated 25.06.2021 inviting the petitioner, the first ranked bidder (H-1), for a second round of negotiation was permissible under Clause 16.7 of the Request for Proposal (RFP) and whether it violated the principles of transparency and constituted arbitrariness warranting judicial interference.
Final Decision
Petition partly allowed; impugned order dated 25.06.2021 quashed and set aside; respondent directed to proceed in tender matter in accordance with RFP terms and conditions; rest prayers rejected; no costs.
Law Points
- Adherence to tender conditions is mandatory
- transparency in tender process is essential
- RFP clause 16.7 permits only one negotiation with first ranked bidder
- second ranked bidder can be invited only if first ranked bidder withdraws or fails to comply
- violation of tender terms renders decision arbitrary
- writ court can interfere for violation of tender rules
- public authority cannot act contrary to prescribed procedure
- interest of Corporation includes cost saving and quality service only with transparent process
