Case Note & Summary
The Petitioner, Prognosys Medical Systems Ltd., challenged the award of a contract by the Mumbai Municipal Corporation for the supply and installation of four Flat Panel Digital Radiography Systems at KEM Hospital. The Corporation had invited tenders on 25 January 2010, and technical bids were opened on 10 March 2010. Six bids were received, of which four were considered responsive. After scrutiny, a Technical Scrutiny Committee evaluated the bids on 23 August 2010. During the process, the Third Respondent offered a demonstration of its system in South Korea and Turkey, which was approved by the Competent Authority, and a team of officials visited South Korea. Commercial bids were opened on 4 September 2010, and the Third Respondent's bid was the lowest. The matter was placed before the Common Purchase Committee, Technical Screening Committee, and Common Tender Committee on 13 September 2010, all of which recommended the award to the Third Respondent. The Standing Committee approved the recommendation on 7 October 2010, a letter of acceptance was issued on 11 October 2010, and the contract was executed on 19 October 2010. An irrevocable letter of credit for 80% of the contract amount was opened on 2 November 2010. The Petitioner filed the writ petition on 16 November 2010, alleging that the Corporation acted arbitrarily and mala fide by sending a team to South Korea for a demonstration, which was not provided for in the tender conditions, and that the evaluation process was flawed. The Court held that the decision to send a team for demonstration was a legitimate part of the technical evaluation and did not indicate bias. The Court further held that the award of contract to the lowest bidder after due process by multiple committees was not arbitrary or mala fide. The Court dismissed the petition, finding no grounds for interference under Article 226 of the Constitution.
Headnote
A) Tender Law - Judicial Review - Scope of Interference - The court's power to interfere with tender awards is limited to cases of arbitrariness, mala fides, or violation of statutory provisions. The court will not sit in appeal over the decision of the tendering authority. (Paras 1-3) B) Tender Law - Technical Evaluation - Demonstration - The Municipal Corporation's decision to send a team to South Korea for demonstration of the Third Respondent's system was a legitimate step in the technical evaluation process and not indicative of bias. (Paras 1-2) C) Tender Law - Commercial Bid - Lowest Bidder - The contract was awarded to the lowest bidder after due scrutiny by multiple committees and approval by the Standing Committee. The process was transparent and in accordance with tender conditions. (Paras 1-2)
Issue of Consideration
Whether the award of contract by the Municipal Corporation to the Third Respondent was arbitrary, mala fide, or contrary to the tender conditions, warranting interference under Article 226 of the Constitution.
Final Decision
The Court dismissed the writ petition, holding that there was no arbitrariness or mala fides in the tender process and that the award of contract to the lowest bidder after due process was valid.
Law Points
- Tender process
- Judicial review
- Arbitrariness
- Mala fides
- Public interest
