Tender Rejection for Non-Compliance with Essential Conditions : Rejection Upheld

Consortium's Appeal Dismissed by Gauhati High Court; Judicial Review Confined to Arbitrariness or Mala Fides

News Report: In a significant ruling, the Gauhati High Court dismissed the appeal by JARPL-JPW-DMC Consortium against the rejection of its technical bid by the Tender Evaluation Committee of Coal India Limited. The court held that the Consortium failed to comply with essential tender conditions, specifically regarding the submission of local content certificates and adherence to the consortium agreement format. The judgment reinforces the principle that judicial review in tender matters is limited to instances of arbitrariness, mala fides, or perversity, none of which were found in this case.

The case involved a tender issued by Coal India Limited for the removal of overburden and extraction and transportation of coal from Tirap OCP for a period of 10 years. The Consortium's bid was rejected for failing to provide a local content certificate in the name of the Consortium and submitting a consortium agreement that deviated from the prescribed format, thereby potentially limiting liability to individual partners instead of ensuring joint and several liability.

The court emphasized that essential tender conditions cannot be waived or treated as minor deviations. The ruling underscores the importance of strict compliance with tender norms, highlighting that price advantages cannot override non-compliance with essential conditions. The Consortium's argument that the rejection was arbitrary and that judicial review should consider the substantial price difference was rejected, with the court affirming that public interest lies in ensuring the integrity of the tender process.

The judgment, delivered by a division bench comprising Chief Justice Ashutosh Kumar and Justice Arun Dev Choudhury, supports the Tender Evaluation Committee's decision to reject the Consortium's bid and award the contract to the sole qualifying bidder, respondent No.6. The court upheld the lower court's decision, reiterating that tender conditions must be strictly adhered to unless substantial public interest or mala fides is demonstrated.

The ruling serves as a reminder that courts should defer to commercial wisdom in tender matters and avoid interfering lightly, reinforcing established legal precedents that prioritize process integrity over price considerations.

Bottom Line:

Judicial review in tender matters is confined to arbitrariness, mala fides, or perversity. Essential conditions of a tender cannot be relaxed, and compliance with tender norms is mandatory.

Statutory provision(s): Judicial review, Tender conditions compliance, Consortium agreement, Local content certificate, Make in India Policy.

JARPL-JPW-DMC v. Union of India, (Gauhati)(DB) : Law Finder Doc Id # 2780350