Interlink Foods' Bid Disqualification Affirmed; Judicial Review Confined to Tender Process, Not Merits
In a significant judgment, the Delhi High Court, with Justices Anil Kshetarpal and Amit Mahajan presiding, has dismissed the writ petition filed by Interlink Foods Pvt. Ltd., challenging their disqualification from a tender process initiated by the National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED). The tender was aimed at supplying recipe-based supplementary nutrition food items under the Integrated Child Development Services (ICDS) Scheme in Uttar Pradesh.
The court upheld the contested Clause A1 of the tender, which requires bidders to have ownership of a manufacturing unit within Uttar Pradesh. This clause was previously affirmed by the Supreme Court, emphasizing its validity in ensuring operational stability, regulatory supervision, and continuity of supply under the welfare scheme. The court reiterated that judicial review in tender matters is limited to examining the decision-making process rather than the merits of the tender itself.
Interlink Foods contended that their disqualification was arbitrary and discriminatory, especially in comparison to other bidders who allegedly did not meet the mandatory eligibility criteria. They argued that Clause A1 was applied selectively, disadvantaging them despite their operational compliance through a lease arrangement with a sister concern.
However, the court found that Respondent Nos. 5 and 6, who were declared technically qualified, operate on industrial plots allotted by statutory development authorities under state policies, unlike Interlink Foods' private lease arrangement. This distinction was pivotal in upholding the application of Clause A1, as state-allotted units offer a stable tenure backed by public law obligations, which is crucial for uninterrupted supply in welfare schemes.
The court also addressed Clause A12, which disqualifies bidders with pending disputes. Interlink Foods argued that their arbitration proceedings, resulting in an award in their favor, should not be construed as disqualifying disputes. The court agreed, noting that invoking arbitration should not penalize a bidder, but emphasized that the petitioner's failure to meet the independent eligibility requirement under Clause A1 rendered their bid ineligible.
Allegations of collusion among bidders were deemed outside the scope of judicial review and within the jurisdiction of the Competition Commission of India. The court reserved liberty for Interlink Foods to pursue remedies before the competent authority.
Ultimately, the court declined to invalidate the tender process, affirming that the petitioner's inability to meet essential eligibility conditions precludes judicial interference. The judgment underscores the court's role in ensuring the legality of the tender process without delving into the merits of individual bids.
Bottom line:-
Tender process under Article 226 - Clause requiring ownership of manufacturing unit within the State of Uttar Pradesh upheld as reasonable and in public interest. Clause disqualifying bidders due to disputes, if invoked against arbitral award in favor of bidder, cannot be mechanically applied. Judicial review limited to process and not tender merits.
Statutory provision(s): Article 226 of the Constitution of India, National Food Security Act, 2013, General Financial Rules, 2017.
