Bombay High Court Pronounces Judgment on Writ Petition Challenging Disqualification of Consortium's Financial Bid in Municipal Water Supply Tender; Court Examines Scope of Judicial Review Under Article 226 of Constitution of India.

Writ Petition under Article 226 of the Constitution of India challenging the decision of the Standing Committee of Mira Bhayander Municipal Corporation to disqualify the Petitioners' financial bid and declare Respondent Nos.2 and 3 as preferred bidder for a Design, Build, Finance, Operate and Transfer (DBFOT) water supply project.

Quashing of the decision and letter of intent, direction to consider the Petitioners' bid, or alternatively, re-conduct of the entire bid process.

The Petitioners alleged that despite their technical qualification, they were arbitrarily disqualified from financial evaluation without valid reasons.

The decision of the Standing Committee dated 25 May 2011, which declared the Petitioners' bid ineligible and declared RK Consortium as preferred bidder.

Whether the disqualification of Petitioners' bid was arbitrary and violative of the RFP conditions? Whether the writ court should interfere in tender matters involving disputed questions of fact? Whether the reasons given by the Standing Committee for rejecting the financial bid were sustainable in law?

Petitioners argued that their bid qualified technical requirements and thus should have been considered for financial evaluation as per RFP clauses 27.2.e, 27.2.f, 27.3, 27.4, and 27.5. Petitioners contended that the disqualification was arbitrary, mala fide, and based on vague reasons not supported by the RFP. Respondent No. 1 argued that the Petitioners' financial bid was considered and found unacceptable because it sought entire capital cost upfront (Rs. 1150 crores) contrary to the BOT model, quoted zero internal rate of return which lacked credibility, and quoted an unsubstantiated operation and maintenance cost of Rs. 30 per KL without composition, leaving scope for ambiguity. Respondent No. 1 also argued that the petition involved disputed questions of fact and was not maintainable in writ jurisdiction. Respondent No. 1 asserted that the Petitioners' bid was designed to manipulate the marking system under the RFP and therefore rightly rejected.

...... However, during the meeting of contractor with the consultant in the financial statement of M/s. Welspun Infrastructure Ltd. As the capital fund of Rs. 1150 crore funds was asked from the Municipal Corporation in the beginning year as their inclination is towards usual (EPC) contract system and as stated in the tender the bidder was asked for 84 months instead of 34 years when it was 30 years for completing commissioning and transferring the scheme/project. Similarly, M/s. Welspun Infrastructure Ltd. In the meeting held with the Advisor/consultant had shown the demand of water supply in the financial structure and had shown the capacity of supplying water 60% less. As the said capacity is being contrary to the Standards of Government of India and the target mentioned in the tender by the Mira Bhayander Municipal Corporation and as the overall financial calculation is not as per the rules and financial criteria of the tender, the same was not considered. The advisor and the Committee in their report had suggested that for the said reason and for the financial evaluation the tender of M/s. Welspun Infrastructure Ltd. Should be declared as not eligible..... it is stated that the Petitioners have erroneously assumed that their financial bid was not considered. It is asserted that the Petitioners' financial bid was duly considered and was found totally unacceptable, by the Corporation.

The Petitioners filed a Writ Petition under Article 226 of the Constitution of India challenging the disqualification. Respondent No.1 filed a reply affidavit. The matter was heard on 4 May 2012 and judgment was pronounced on 11 June 2012.

• Constitution of India: Article 226
• Companies Act, 1956: