Tender disqualification based on conditions not explicitly mentioned in tender Notice is arbitrary

Supreme Court overturns tender disqualification, orders re-evaluation

The Supreme Court of India has set aside the decision of the Krishi Utpadan Mandi Parishad to disqualify Kimberley Club Pvt. Ltd.'s technical bid for a tender involving the lease of a banquet hall and terrace lawn for a decade. The apex court found the rejection, which was based on the submission of a solvency certificate not issued by a District Magistrate, to be arbitrary and beyond the stipulated terms of the Notice Inviting Tender (NIT).

The tender, which was contested by multiple bidders, required submission of a 'haisiyat praman patra' or solvency certificate indicating a net worth of at least Rs. 10 crores. Kimberley Club Pvt. Ltd. submitted a valuation certificate from a professional architect and private valuer attached to the Income Tax Department, which evaluated the asset at approximately Rs. 99 crores. However, their bid was rejected by the Mandi Parishad on the grounds that the certificate was not issued by a District Magistrate.

The Supreme Court, led by Justices Surya Kant and Joymalya Bagchi, emphasized that the NIT did not explicitly mandate that the 'haisiyat praman patra' be issued by a District Magistrate. The court highlighted that the terms of the NIT must be clear and unambiguous, and any additional conditions not explicitly stated could not be imposed arbitrarily. The judgment criticized the Mandi Parishad for introducing an implied condition not present in the NIT, which led to the unjust rejection of Kimberley Club's bid.

The court also noted that the Mandi Parishad, a statutory body under the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964, was not directly bound by the government notification that prescribed the issuance of solvency certificates by District Magistrates. Furthermore, the court dismissed new objections raised by the Mandi Parishad regarding potential encumbrances on the asset, as these were not part of the original grounds for rejection.

In its ruling, the Supreme Court ordered the Mandi Parishad to reconsider Kimberley Club's technical bid. It directed that if the club's net worth, as demonstrated in the valuation certificate, meets the NIT's requirements, the Parishad should proceed with negotiations between Kimberley Club and the successful bidder to determine the final award of the contract.

This decision underscores the judiciary's role in ensuring fairness and transparency in tender processes, particularly when public bodies are involved. It reiterates the importance of adhering strictly to the terms of NITs and cautions against arbitrary decision-making that could potentially thwart fair competition.

Bottom Line:

Tender disqualification based on conditions not explicitly mentioned in the notice inviting tender (NIT) is arbitrary and subject to judicial review.

Statutory provision(s): Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964

Kimberley Club Pvt. Ltd. v. Krishi Utpadan Mandi Parishad, (SC) : Law Finder Doc id # 2801983