Case Note & Summary
The petitioner, Ganesh Vishal Infra Engineering Pvt. Ltd., challenged the decision of the respondent no.1, Mormugao Port Trust, rejecting its technical bid in a tender process. The rejection was based on the ground that the petitioner was a shareholder in M/s. Ganesh Benzoplast Limited, which allegedly had outstanding dues to the Port Trust. The petitioner contended that the shares had been transferred in April 2016, well before the bid submission in March 2017, and that the transfer was duly recorded with the Registrar of Companies. The petitioner also argued that the tender committee did not seek any clarification before rejecting the bid, and that the rejection was arbitrary and aimed at favoring the respondent no.2. The court found that the rejection was based on an untenable ground, as the petitioner was no longer a shareholder at the time of the bid. The court also noted that the respondent no.1 had not provided any opportunity to the petitioner to explain the position. Consequently, the court quashed the decision and directed the respondent no.1 to reconsider the petitioner's technical bid in accordance with law.
Headnote
A) Tender Law - Rejection of Technical Bid - Shareholding in Defaulter Company - The rejection of a technical bid on the ground that the petitioner was a shareholder in a company with outstanding dues was held to be arbitrary and unsustainable, especially when the shares had been transferred prior to the bid and no opportunity was given to the petitioner to explain. (Paras 4-6) B) Administrative Law - Principles of Natural Justice - Opportunity of Hearing - The tender committee's failure to seek any clarification from the petitioner before rejecting the bid violated principles of natural justice. (Para 5) C) Contract Law - Tender Process - Arbitrariness - The court held that the decision to reject the bid was arbitrary and directed the respondent no.1 to reconsider the petitioner's technical bid. (Para 6)
Issue of Consideration
Whether the rejection of the petitioner's technical bid by the respondent no.1 on the ground that the petitioner was a shareholder in a defaulter company was arbitrary and unsustainable in law.
Final Decision
The court quashed the decision of the respondent no.1 rejecting the petitioner's technical bid and directed the respondent no.1 to reconsider the petitioner's technical bid in accordance with law.
Law Points
- Tender rejection must be based on clear criteria
- shareholding in a defaulter company does not automatically disqualify a bidder
- principles of natural justice require opportunity of hearing before rejection
- administrative decisions must be reasonable and non-arbitrary
