Case Note & Summary
The dispute arose from a tender floated by Respondent for operation and maintenance of a gas-based power plant. The tender used a Quality and Cost Based System (QCBS) with 70% weight to technical evaluation and 30% to financial evaluation. Multiple bids were submitted, including from Steag Energy Services (India) Pvt. Ltd. (appellant) and O&M Solutions Pvt. Ltd. (writ petitioner). After evaluation, the appellant scored higher in technical evaluation and was declared the successful bidder. GPPC issued a Letter of Award (LOA) to the appellant on 09.06.2025, and the contract was formally executed on 01.07.2025, with the appellant mobilizing manpower and commencing work. The writ petitioner challenged the tender evaluation process in the High Court, alleging arbitrariness and violation of Article 14 of the Constitution. The High Court directed re-evaluation by consultant Fichtner, which resulted in a reduction of the appellant's technical score from 10 to 8 marks for one parameter, creating a tie with the writ petitioner. Based on this, the High Court proceeded to evaluate the bids afresh. The core legal issue was whether the High Court's interference in the tender award process was justified, particularly after contract execution. The appellant argued that judicial review should be limited and that the contract had already been executed, creating vested rights. The writ petitioner contended that the evaluation was flawed and arbitrary. The Supreme Court analyzed the scope of judicial review in tender matters, emphasizing that courts should not re-evaluate technical scores or substitute their judgment for that of the tender authority unless arbitrariness, mala fides, or procedural unfairness is shown. The court noted that the tender terms were binding, the appellant had accepted the LOA and executed the contract, and no pre-bid objections were raised by the writ petitioner. The court held that the High Court erred in interfering with the tender award process, as no arbitrariness or violation of Article 14 was established. The contract awarded to the appellant was upheld, and the appeals were allowed, setting aside the High Court's order.
Headnote
A) Administrative Law - Judicial Review in Tender Matters - Scope of Judicial Review - Constitution of India, Article 14 - The High Court exceeded its jurisdiction by re-evaluating technical scores and interfering with the tender award process after contract execution. Judicial review is limited to examining arbitrariness, mala fides, or procedural unfairness, not merits of evaluation. The court should not act as an appellate authority over technical assessments made by the tender authority. Held that the High Court's interference was unwarranted as no arbitrariness or violation of Article 14 was established. (Paras 2-17) B) Contract Law - Tender and Bid Evaluation - Binding Nature of Tender Terms - Indian Contract Act, 1872 - The tender document's evaluation methodology under clause 20.2, using Quality and Cost Based System (QCBS) with 70% weight to technical score and 30% to financial score, was binding. The appellant was declared successful bidder after proper evaluation, and the contract was executed on 01.07.2025. The court emphasized that parties are bound by tender terms they accepted without raising pre-bid objections. Held that the tender process was conducted as per stipulated terms. (Paras 3-11) C) Civil Procedure - Interim Orders and Contract Execution - Balance of Convenience - Code of Civil Procedure, 1908 - The High Court, while hearing the writ petition, directed re-evaluation by consultant Fichtner but did not stay the contract execution. The appellant had mobilized manpower and commenced work after LOA issuance on 09.06.2025. The court considered that setting aside the contract would cause irreparable harm and disrupt power plant operations. Held that contract execution created rights that should not be lightly interfered with. (Paras 12-17)
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Issue of Consideration: Whether the High Court erred in interfering with the tender award process and directing re-evaluation, and whether the contract awarded to the appellant should be set aside.
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Final Decision
The Supreme Court allowed the appeals, set aside the High Court's order, and upheld the contract awarded to the appellant.
