M/S Karnataka Commercial And Industrial vs. The Bangalore Metro Rail Corporation LTD

Facts

The petitioner, M/s Karnataka Commercial and Industrial Corporation Pvt Ltd, participated in a tender floated by Bangalore Metro Rail Corporation Ltd (BMRCL) for housekeeping services. The tender was initially floated on March 23, 2020, with a bid submission deadline of May 6, 2020, which was subsequently rescheduled. Bids were opened on November 5, 2020. Out of five bids, two were eliminated during technical evaluation, leaving three qualified. Financial bids were opened, but BMRCL took no further action. The petitioner submitted multiple representations. Subsequently, BMRCL issued an endorsement dated February 3, 2021, and a tender notification dated February 22, 2021, which the petitioner sought to quash. The petitioner claimed to be the successful bidder based on the original tender notification and rescheduled notification.

Held

The Court held that the respondents acted arbitrarily and pre-determined to deny the contract to the petitioner. The re-computation of the petitioner's bid was not justified, as no errors were pointed out, nor was any clarification sought. The Court found that Clause 6.5 of the ITT did not empower the respondents to rework a bidder's computation beyond correcting arithmetical errors. The respondents' actions were deemed unfair, unreasonable, and discriminatory, violating the principle of equal treatment of tenderers. The Court observed that the respondents focused on demonstrating errors in the petitioner's computation without showing how it depreciated from the bid or if the rates were exorbitant. The Court also noted that the stated reason for discharging the tender – the lapse of validity – was contradicted by the fact that the respondents themselves had extended the validity period. This indicated a non-application of mind. The Court concluded that the respondents' conduct amounted to legal malice and arbitrariness. Consequently, the endorsement dated February 3, 2021, and the tender notification dated February 22, 2021, were quashed. The respondents were directed to reconsider the petitioner's bid within four weeks if it conformed to the tender invitation.

Key Issues

1. Whether the respondents acted arbitrarily and pre-determined to deny the contract to the petitioner by re-computing the petitioner's bid without proper justification or seeking clarification, thereby violating principles of fairness and equality in tender evaluation, as per Article 14 of the Constitution of India? 2. Whether the respondents' action of dissecting and attributing a methodology to the petitioner's bid, beyond mere correction of arithmetical errors, was permissible under Clause 6.5 of the Instructions to Tender (ITT) and established legal principles? Petitioner's arguments: The petitioner contended that the respondents arbitrarily re-computed their bid without pointing out any errors and without seeking clarification, indicating a pre-determined decision to deny the contract. They argued that Clause 6.5 of the ITT did not empower the respondents to rework a bidder's computation. The petitioner relied on the principle that tenderers must be treated equally and fairly, citing observations from the Supreme Court in 2014 (3) SCC 760. They also argued that the respondents' conduct exhibited legal malice and arbitrariness, particularly in the competent authority's actions and the recommendation for letters of displeasure against the Tender Evaluation Committee. Respondents' arguments: The judgment does not explicitly record arguments made by the respondents. However, the court's discussion implies that the respondents' actions were based on alleged erroneous computation of rates and the lapse of the tender's validity period.