Case Note & Summary
The petitioners, Reliance Life Sciences Pvt. Ltd. and its director, participated in a tender issued by the State of Maharashtra for supply of various drugs including Human Anti-Hemophilic Factor VIII. The tender contained condition 2.8 which disallowed tenders from manufacturers or distributors found guilty of malpractice, misconduct, or blacklisted/debarred by the Public Health Department of Maharashtra or any local authority or other state/central government organization in the past three years. The petitioners received a communication dated 4 May 2017 stating that their company was blacklisted for Anti-Hemophilic Factor VIII by State Health Society, Bihar. The petitioners immediately replied on 5 May 2017 forwarding details and a copy of the order, but the respondents did not consider their explanation. The petitioners challenged condition 2.8 as arbitrary and violative of Article 14. The court held that the condition was unreasonable as it did not provide for any notice or opportunity of hearing before disqualification based on blacklisting by another state. The court read down the condition to require that the bidder be given an opportunity to explain before being disqualified. The court directed the respondents to allow the petitioners to participate in the tender process subject to verification of their eligibility, and to consider their explanation regarding the alleged blacklisting by Bihar.
Headnote
A) Constitutional Law - Article 14 - Reasonableness of Tender Conditions - Tender condition 2.8 disqualifying bidders blacklisted by any other state or central government organization without prior notice or opportunity of hearing is arbitrary and violative of Article 14. The court held that such a condition must be read down to require that the bidder be given an opportunity to explain before being disqualified. (Paras 1-5) B) Administrative Law - Natural Justice - Blacklisting - Disqualification based on blacklisting by another state without affording an opportunity of hearing violates principles of natural justice. The court directed that the petitioners be allowed to participate in the tender process subject to verification of their eligibility. (Paras 4-5)
Issue of Consideration
Whether tender condition 2.8, which disqualifies bidders blacklisted by any other state government or central government organization without providing an opportunity of hearing, is arbitrary and violative of Article 14 of the Constitution of India.
Final Decision
The court allowed the writ petition, read down condition 2.8 to require an opportunity of hearing, and directed the respondents to allow the petitioners to participate in the tender process subject to verification of their eligibility and consideration of their explanation regarding the alleged blacklisting by Bihar.
Law Points
- Tender condition must be reasonable and non-arbitrary
- Blacklisting by another state without notice to bidder cannot be used to disqualify without opportunity of hearing
- Principles of natural justice apply to tender disqualification based on past misconduct
