Case Note & Summary
The case involves a tender floated by Hindustan Petroleum Corporation Limited (HPCL) for setting up call centres. Caretel Infotech Ltd. participated and was declared L-1. A show cause notice was issued to Caretel on 5.12.2017 regarding another tender, but no blacklisting order existed at the time of bid submission on 19.12.2017. Caretel submitted a declaration that it was not blacklisted, as per the format. After the contract was awarded, the Ministry of Agriculture blacklisted Caretel on 22.2.2018. Respondent No.3, the L-2 bidder, challenged the award, arguing that Caretel failed to disclose the show cause notice and submitted a false declaration. The High Court allowed the writ petition, cancelling the contract. The Supreme Court reversed, holding that the declaration only required disclosure of actual blacklisting, not a show cause notice. The court also found that the ISO certificate was valid and that the High Court erred in doubting compliance with business continuity requirements. The appeal was allowed, and the contract was upheld.
Headnote
A) Tender Law - Blacklisting Clause - Interpretation of Declaration - Clause 20 of Tender - The court interpreted clause 20 of the tender, which required bidders to declare they were not blacklisted as on the due date. The format only required disclosure if the bidder had been banned or blacklisted, not if a show cause notice had been issued. The court held that a show cause notice does not constitute blacklisting, and the appellant's declaration was truthful as no blacklisting order existed on the bid submission date. (Paras 13-15) B) Tender Law - Non-Disclosure of Show Cause Notice - Materiality - The court examined whether non-disclosure of a show cause notice amounted to a violation of the undertaking. It held that the undertaking required truthful information, and since the show cause notice did not result in blacklisting at the time of bid, there was no false information. The court distinguished between a show cause notice and a final blacklisting order. (Paras 13-15) C) Tender Law - ISO Certification - Validity - The court addressed the High Court's doubt on the ISO certificate submitted by the appellant. It noted that respondent No.1 (HPCL) had accepted the certificate and found it valid, and the High Court erred in substituting its own view without proper evidence. The court held that the certificate was valid and the appellant complied with clause 10(g). (Paras 10, 16-17) D) Tender Law - Business Continuity - Compliance - The court considered the High Court's finding on non-compliance with clause 8 regarding business continuity. It held that the appellant had submitted a transition plan and the High Court's doubt was not justified, especially since respondent No.1 had accepted the bid. (Paras 10, 16-17)
Issue of Consideration
Whether the appellant's non-disclosure of a show cause notice issued prior to bid submission, but before any blacklisting order, violated the tender's declaration clause and justified cancellation of the contract.
Final Decision
The Supreme Court allowed the appeal, set aside the High Court order, and upheld the contract awarded to the appellant. The court held that the appellant's declaration was truthful and there was no violation of tender clauses.
Law Points
- Interpretation of tender clauses
- Blacklisting
- Show cause notice
- Declaration
- Non-disclosure
- Contractual obligations
- ISO certification
- Business continuity
