Case Note & Summary
The writ petition arose from a tender floated by the Maharashtra State Road Transport Corporation for reconstruction of a bus stand at Beed. The petitioner, a private contractor, submitted its bid and was declared the lowest (L-1). However, subsequent scrutiny revealed that the petitioner had submitted an agreement dated 10.07.2018 with a third party to demonstrate required experience, but the stamp paper was sold on 13.07.2018, adequate stamp duty was not paid, and the document lacked material particulars, raising a strong suspicion that it was fabricated. The employer disqualified the petitioner and awarded the work to respondent no.4 after negotiations. The petitioner moved the High Court under Article 226 seeking a writ of mandamus to direct issuance of the work order in its favour, contending that once the financial bid was opened and it was found eligible at the technical stage, the employer could not later disqualify it without an opportunity of hearing. The respondents argued that the work was already allotted and the agreement was patently false, justifying disqualification. The court examined the scope of judicial review in tender matters, reiterating that a notice inviting tender is only an invitation to offer and does not confer any vested right until the offer is accepted and approved. It held that compliance with eligibility criteria is essential and filing a false document is a ground for rejection even after initial acceptance. The communication of the lowest offer to the Board for approval did not amount to acceptance. On facts, the court found that the agreement was indeed brought into existence only for the tender, as the stamp paper was purchased after the execution date, making it prima facie fabricated. The court further held that the petitioner's disqualification was proper and not arbitrary, and no opportunity of hearing was required because the petitioner was himself responsible for the misrepresentation. Consequently, the writ petition was dismissed with costs of Rs.25 000 to respondent no.4.
Headnote
A) Tender Law - Invitation to Treat - Notice inviting tender is merely an invitation for bids, not an offer; submission of tender is the offer; no binding contract arises until acceptance and approval - Indian Contract Act, 1872, Sections 2(a), (b), (h) - The court held that the notice inviting tender was an invitation to offer, and the petitioner's bid being the lowest did not create any vested right. The communication recommending his offer to the Board of Directors was not an acceptance, as the tender was subject to further approval. Thus, the petitioner could not compel the employer to issue a work order. (Paras 12, 20)
B) Tender Law - Eligibility Conditions - Compliance with eligibility criteria is a sine qua non; submission of a false or fabricated document renders the bidder ineligible - Not specific act - The petitioner submitted an agreement dated 10.07.2018 to satisfy the experience requirement, but the stamp paper was purchased after the execution date, proper stamp duty was not paid, and the document lacked essential details, indicating it was fabricated for the tender. Therefore, the employer rightly disqualified the petitioner, even after initially treating the bid as eligible due to oversight. (Paras 15, 18)
C) Constitutional Law - Judicial Review in Tender Matters - Under Article 226, the High Court's scope of interference is limited; the court does not sit as an appellate authority over the employer's decision unless it is arbitrary, mala fide, or violates fundamental rights - Constitution of India, 1950, Article 226 - The court, relying on several Supreme Court decisions, refused to interfere in the tender process because the employer's decision to disqualify the petitioner was based on valid reasons and was not perverse or unreasonable. The court emphasized that it cannot scrutinize the decision like a court of appeal. (Paras 13, 20)
D) Tender Law - Rejection of Tender - Employer has the right to reject any or all tenders without assigning reasons; the lowest bidder does not acquire any right to the contract - Not specific act - The tender conditions explicitly allowed the competent authority to reject any tender without reasons. The petitioner could not claim a right to the work order merely because he was L-1, particularly after his disqualification for filing a fake document. The court upheld the rejection as lawful. (Paras 16, 17, 20)
Issue of Consideration
Whether the petitioner, despite being the lowest bidder, was entitled to a direction for issuance of work order after being disqualified for submitting a fabricated agreement, and whether the decision of the employer was arbitrary or unreasonable.
Final Decision
Writ Petition dismissed. The court held that the petitioner had no vested right to the contract and was rightly disqualified for submitting a fabricated agreement to meet the eligibility criteria. The employer's decision was not arbitrary or unreasonable. Costs of Rs.25,000 were imposed on the petitioner, payable to respondent No.4.
Law Points
- Notice inviting tender is invitation to offer not an offer
- Compliance with eligibility conditions is mandatory
- Filing false or fabricated documents disqualifies bidder
- Lowest bidder has no vested right to contract before approval
- Judicial review in tender matters is limited under Article 226
- Employer has right to reject any or all tenders without assigning reasons
Case Details
2019 LawText (BOM) (12) 16
Writ Petition No. 13954 of 2018 with Civil Application No. 3911 of 2019 and Civil Application No. 6319 of 2019
S.V. Gangapurwala, Avinash G. Gharote
Sanket S. Kulkarni (for petitioner), S.B. Yawalkar (Addl. Govt. Pleader for respondent No.1), M.K. Goyanka (for respondents No. 2 & 3), S.G. Chapalgaonkar (for respondent No.4)
Gurudatta Infrastructures (through Sanjay Ashok Rode)
The State of Maharashtra, The Maharashtra State Road Transport Corporation (through Managing Director and Executive Engineer, Aurangabad), and Ashok s/o Bhagwat Ingole
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Nature of Litigation
Writ petition under Article 226 seeking mandamus to direct issuance of work order in a public tender and challenging the allotment of the work to another bidder.
Remedy Sought
Petitioner sought a writ of mandamus directing respondents No.2 and 3 to issue a work order in its favour for the reconstruction of the S.T. bus stand at Beed, as it was the lowest (L-1) bidder.
Filing Reason
Despite being the lowest bidder and initially being treated as eligible, the petitioner was not issued the work order; instead, the work was allotted to respondent no.4 after the petitioner was disqualified on the ground that it had submitted a false and fabricated agreement to meet the experience eligibility criterion.
Previous Decisions
No previous judicial decisions were rendered in this matter; the writ petition was filed shortly after the impugned allotment and was heard for the first time.
Issues
Whether the petitioner had any vested right to obtain the work order solely on the ground that it was the lowest bidder.
Whether the employer was justified in disqualifying the petitioner after the financial bids were opened, on finding that the experience certificate was fabricated.
Whether the scope of judicial review under Article 226 permits interference in the tender award decision of a public authority in the given circumstances.
Submissions/Arguments
Petitioner contended that it was the lowest bidder, its documents were found eligible at the technical evaluation stage, and no further scrutiny or disqualification was permissible after opening of the financial bid. It argued that the agreement dated 10.07.2018 was genuine, no opportunity of hearing was given before disqualification, and the work order should be issued as per the communication dated 24.09.2018.
Respondents argued that the agreement submitted by the petitioner was fabricated: the stamp paper was sold after the execution date, proper stamp duty was not paid, and essential details were missing. The initial acceptance was due to oversight; the Departmental Tender Committee rightly found the document false and disqualified the petitioner. The tender conditions permitted rejection of any tender without reasons, and no binding contract arose merely from being L-1.
Ratio Decidendi
In tender matters, a notice inviting tender is merely an invitation for bids, and the bidder acquires no vested right to the contract until the offer is accepted and approval is granted by the competent authority. Compliance with the eligibility conditions is mandatory. If an employer discovers, even after initial scrutiny, that a bidder has submitted false or fabricated documents to satisfy the eligibility criteria, the employer is justified in disqualifying the bidder, and the High Court under Article 226 will not interfere in the absence of arbitrariness, mala fides, or violation of fundamental rights. The initial communication of the lowest bid to the Board for approval does not constitute acceptance or create any right in the bidder.
Judgment Excerpts
the satisfaction of the eligibility criteria as contained in the tender document, is a sine qua non for the further process to proceed.
Where the offer, is subject to further approval, any communication, intimating the tenderer about acceptance of his offer, would not be considered to create a binding contract, sans the approval.
the agreement dated 10.07.2018 filed by the petitioner to be false, after taking legal opinion, the petitioner was held ineligible
the agreement ... was not only vague, uncertain, but also false and fraudulent
the stamp paper on which it was written, was sold on 13.07.2018, though the value of the work therein was stated to be Rs.14,96,00,190/-, the proper stamp duty was not paid
Procedural History
On 04.07.2018, Maharashtra State Road Transport Corporation published notice inviting e-tenders for reconstruction of a bus stand. Petitioner and five others submitted bids. On 18.09.2018 financial bids were opened online; petitioner emerged as the lowest (L-1) with 11.50% below estimated cost. On 19.09.2018 petitioner deposited additional security. On 24.09.2018 the Executive Engineer communicated to petitioner that his offer was lowest and was being recommended to the Board of Directors. Meanwhile, doubts arose about the agreement filed by petitioner to meet experience requirement; further inquiry revealed that the stamp paper was purchased after the execution date. The Departmental Tender Committee found the document false and disqualified the petitioner. On 04.12.2018 respondent No.4, the second lowest bidder, agreed to perform the work at the petitioner's quoted rate. On 11.12.2018 the work was allotted to respondent No.4. Petitioner filed the writ petition on the same day. Notice was issued on 14.12.2018. By letter dated 10.01.2019, the disqualification was formally communicated to petitioner. After hearing arguments, the High Court reserved judgment on 28.11.2019 and pronounced it on 18.12.2019, dismissing the petition with costs.
Acts & Sections
- Constitution of India, 1950: Article 226
