M/S Shiv Enterprise vs. The State Of Assam And 5 Ors.

Facts

The petitioner, M/s Shiv Enterprise, challenged the cancellation of a Notice Inviting Tender (NIT) dated 07.12.2023, for healthcare kitchen and dietary services at Nalbari Medical College & Hospital. The petitioner was the L1 bidder, quoting Rs. 79.85 per patient per day, inclusive of 5% GST. The Tender & Procurement Committee cancelled the NIT, citing that the quoted rates were too low to meet the prescribed daily diet menu and would compromise patient care. The committee based this decision on a local market survey and assessment of existing supply rates in other medical colleges. The petitioner argued that similar rates were accepted for other medical colleges, including Fakhruddin Ali Ahmed Medical College, Barpeta, and that quality concerns could be addressed through contract clauses and penalties.

Held

The Court held that the decision-making process for cancelling the NIT was flawed and arbitrary, violating Article 14 of the Constitution. The primary reason for the cancellation was the Tender & Procurement Committee's conclusion that the petitioner's rate was not practicable or feasible based on a local market survey. However, when requested, the State respondents could not produce any written report of this local market survey. The Court found this lack of substantiating evidence to be fatal to the cancellation decision. The Court reasoned that if a bidder offers a rate higher than that accepted for a comparable institution (like FAAMC, Barpeta), the quality and quantity concerns can be addressed through stringent contractual conditions, monitoring, and penalty clauses, as provided in the tender conditions themselves. The Court concluded that the cancellation was based on a non-existent report and aimed at re-tendering to achieve higher rates, which was arbitrary. Consequently, the Court directed the respondents to award the contract to the petitioner and set aside the cancellation order.

Key Issues

1. Whether the cancellation of the NIT dated 07.12.2023 for healthcare kitchen and dietary services at Nalbari Medical College & Hospital was arbitrary and violative of Article 14 of the Constitution of India, considering the petitioner was the L1 bidder. Petitioner's Arguments: - The cancellation was unjustified as similar or lower rates were accepted for other medical colleges in Assam, such as Fakhruddin Ali Ahmed Medical College, Barpeta (Rs. 73.50 inclusive of GST). - The respondents could have incorporated stringent quality control clauses and penalties in the agreement instead of cancelling the tender. - The absence of a base rate in the NIT for Nalbari Medical College & Hospital, unlike in some other NITs, further weakened the cancellation decision. - The previous rate of Rs. 141.60 per patient per day for Nalbari Medical College & Hospital was a temporary engagement not based on a tender process. Revenue/State's Arguments: - The Court should not substitute its view for that of the Tender & Procurement Committee, as committees for different colleges are constituted by different persons. - The petitioner's previous supply rate of Rs. 141.60 per patient per day at Nalbari Medical College & Hospital created a reasonable apprehension that the quoted low rate would compromise quality. - The decision of one committee cannot be applied to other institutions, and accepted rates vary across different medical colleges.