Hualu Engineering & Technology Co. LTD. vs. Union Of INDIA & Ors.

Held

The Court held that while public authorities should ordinarily provide reasons for cancelling tenders at an advanced stage, the flexibility in policy and decision-making of executive authorities should not be lightly undermined in judicial review. The Court acknowledged that a textual interpretation of paragraph 3(b) of the 'Make in India' policy might favor the petitioner. However, it considered other circumstances, including dynamic changes in public agency requirements and the goods tendered for. The respondents' decision to exclude certain items, procure others, and retender with modifications to the original tender's scope and schedule was deemed not arbitrary. The Court found that the changes in the volume of the tender and pricing naturally would have been different. Therefore, the decision to cancel the tender dated October 25, 2016, and retender with modifications could not be characterized as arbitrary. The writ petition was dismissed.

Facts

The petitioner, Hualu Engineering & Technology Co. Ltd., filed a writ petition challenging the cancellation of a global competitive tender issued by Indian Oil Corporation Ltd. (IOCL) on October 25, 2016, for its BS-VI Project. Engineers India Limited (EIL) was the Project Management Consultant (PMC). After prequalification, technical evaluation, and price bid opening, IOCL decided to retender on July 15, 2017, and subsequently cancelled the original tender process. The petitioner argued that the cancellation, citing a policy to permit indigenous manufacturers within a price range, was arbitrary and mala fide, especially the removal of four items. They contended this was contrary to Central Vigilance Commission (CVC) directives and the 'Make in India' policy.

Key Issues

1. Whether the cancellation of the tender, which had reached an advanced stage, was arbitrary and contrary to the Central Government's 'Make in India' policy, specifically paragraph 3(b) concerning purchase preference for local suppliers. Petitioner's arguments: The petitioner contended that the cancellation was arbitrary and mala fide, particularly the exclusion of four items and the subsequent retendering. They argued that the stated rationale of the 'Make in India' policy was misapplied, as the policy, as per paragraph 3(b), should have led to awarding the contract to local suppliers under specific conditions, not outright cancellation. They relied on the Central Government's order dated July 15, 2017, regarding purchase preference. Respondents' arguments: The respondents argued that the tender conditions reserved the right to cancel the process at any stage, and the petitioner's rights had not crystallized. They presented minutes of a meeting held on July 5, 2017, which indicated decisions to exclude certain items, include others, and retender due to project schedule considerations, the introduction of GST, and the 'Make in India' policy objectives. They also highlighted that the original tender was global, and a shift to domestic bidding was considered.