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Synopsis

The Supreme Court has said that the Government bodies or instrumentalities are expected to act in absolutely fair, reasonable and transparent manner, particularly in the award of contracts for mega projects as any element of arbitrariness or discrimination may lead to hampering the entire project which would not be in the public interest. 

A bench of Justices Bela M Trivedi and Satish Chandra Sharma said that there cannot be any disagreement to the legal proposition propounded in the catena of decisions of the top court that the court does not sit as a court of appeal in the matter of award of contracts and it merely reviews the manner in which the decision was made; and that the Government and its instrumentalities must have a freedom of entering into the contracts.

However, it is equally well settled that the decision of the government and its instrumentalities must be free from arbitrariness and must not be affected by any bias or actuated by mala fides, court emphasised.

"Government bodies being public authorities are expected to uphold fairness, equality and public interest even while dealing with contractual matters. Right to equality under Article 14 abhors arbitrariness. Public authorities have to ensure that no bias, favouritism or arbitrariness are shown during the bidding process and that the entire bidding process is carried out in absolutely transparent manner," the bench said.

Banshidhar Construction Pvt Ltd questioned rejection of its technical bid by Bharat Coking Coal Limited (BCCL) and acceptance of the bid by another company.

The project was related to “Re-open, salvage, rehabilitate, develop, construct and operate for excavation and extraction of coal from Amalgamated East Bhuggatdih Simlabahal Coal Mine" and delivery thereof to the Authority at Bastacolla Area of BCCL on revenue sharing basis, for a period of 25 years. 

Senior Advocate Ravi Shankar Prasad, appearing for the appellant, vehemently submitted that the reason for rejecting its technical bid was grossly arbitrary and discriminatory in as much as not only the bid of respondent No. 8 was accepted though it was not accompanied by important documents, but it was allowed to subsequently file the said documents to make up the lack of eligibility. 

He further submitted that the appellant had complied with all requirements. 

The counsel said that the appellant’s bid was much more competitive and favourable (Rs 700 crores approx) to the respondent BCCL, and by allotting the tender to the respondent no 8 which even otherwise was ineligible, a commensurate loss was caused to the public through the respondent BCCL. 

Solicitor General Tushar Mehta, senior counsel Anupam Lal Das, and Additional Solicitor General Vikramjit Banerjee, appearing for respondents no 1 to 7 justified the decision of the tender evaluation committee rejecting the technical bid of the appellant.

Senior advocate Balbir Singh, appearing for the successful bidder, said a special-purpose vehicle was created on June 27, 2024. As per the settled legal position, the courts should not use magnifying glasses while scanning the decision-making process of the authorities to make small mistake to appear like a big blunder, he contended.

In the case, the bench noted that the successful bidder had not submitted the scanned copies of its audited annual reports for the last three financial years, at the time of submitting/uploading the bid documents, before the last date fixed i.e December 01, 2023 and the same were submitted on April 17, 2024 only when the clarification was sought, after the Technical bids were opened on December 04, 2023.

"The respondent BCCL has miserably failed to justify as to how the Technical bid of the Respondent no 8 was accepted when it had not submitted the requisite important documents related to the qualification criteria as mentioned in Clause 10 of the NIT," the bench said.

After going through the documents, the court found that there was no legal or justifiable ground to reject the technical bid of the appellant.

"Thus, the said action of the Respondent BCCL in rejecting the technical bid of the appellant on absolutely extraneous ground and accepting the technical bid of the Respondent no.8 though submitted in utter noncompliance of the mandatory requirement of Clause 10 of the NIT, and subsequently calling upon the Respondent no 8 to furnish the shortfall of documents after the opening of technical bids of the Bidders, was totally arbitrary and illegal," the bench said.

The court finally set aside the decision of the respondent –BCCL on May 06, 2024 rejecting the technical bid of the appellant and further declaring Respondent no 8 as successful bidder.

"Any action/ process undertaken or agreement entered into pursuant to the said decision also stand set aside. It shall be open for the Respondent – BCCL to initiate fresh tender process for the project and to process the same in question in accordance with law," the bench said.

The court allowed the appeal against the Jharkhand High Court's order which dismissed the writ petition by the appellant and upheld the decision of the technical bid committee of BCCL.

Case Title: Banshidhar Construction Pvt Ltd Vs Bharat Coking Coal Limited & Others