Case Note & Summary
The petitioner, A2Z Maintenance & Engineering Services Limited, filed a writ petition challenging the disqualification of its bid by the Maharashtra State Electricity Distribution Company Limited (respondent no.1) in a tender process for appointment of distribution franchisees for Aurangabad and Nagpur. The respondent had issued a Request for Proposal (RFP) in January 2010. The petitioner purchased the RFP documents, submitted pre-bid queries, and attended a pre-bid meeting. On 7 April 2010, the petitioner submitted its bids for both areas, designating Mr. Lakshmi Narasimhan as the authorized signatory through a power of attorney. However, the power of attorney was not in the format prescribed in the RFP. On 27 April 2010, the respondent sent an email to Mr. Ashish Sahay forwarding a letter disqualifying the petitioner's bid on the ground that the power of attorney was not in the prescribed format. The petitioner contended that the disqualification was arbitrary and violative of natural justice as no prior notice or opportunity was given. The respondent argued that the power of attorney was defective and that the bid was rightly rejected. The court held that the respondent's action was arbitrary and violative of principles of natural justice. The court noted that the respondent did not raise any objection during the bid process and only disqualified the petitioner after the bid opening. The court quashed the impugned communication and directed the respondent to consider the petitioner's bid afresh, after giving an opportunity to cure the defect.
Headnote
A) Administrative Law - Natural Justice - Audi Alteram Partem - Right to be heard before adverse action - The respondent disqualified the petitioner's bid without giving any prior notice or opportunity to explain the alleged deficiency in the power of attorney - Held that such action is violative of principles of natural justice (Paras 10-12). B) Contract Law - Tender Process - Power of Attorney - Requirement of prescribed format - The RFP required a power of attorney in a specific format, but the petitioner submitted a power of attorney in a different format - The respondent did not raise any objection during the bid process and only disqualified after the bid opening - Held that the respondent cannot reject the bid on a technical ground without prior notice (Paras 8-9). C) Constitutional Law - Article 14 - Arbitrariness - State action in contractual matters must be fair, non-arbitrary, and reasonable - The respondent's action of disqualifying the petitioner's bid without any prior communication or opportunity was arbitrary and unreasonable - Held that the impugned communication is quashed (Paras 13-15).
Issue of Consideration
Whether the disqualification of the petitioner's bid by the respondent on the ground of non-submission of a power of attorney in the prescribed format was arbitrary and violative of principles of natural justice.
Final Decision
The court allowed the writ petition, quashed the impugned communication dated 27.4.2010, and directed the respondent to consider the petitioner's bid afresh, after giving an opportunity to cure the defect in the power of attorney.
Law Points
- Natural justice
- Arbitrariness
- Tender law
- Judicial review of contractual matters
- Legitimate expectation
