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

Facts

The petitioner, M/s Karnataka Commercial and Industrial Corporation Pvt Ltd, challenged an endorsement dated 03.02.2021 and a tender notification dated 22.02.2021 issued by the Bangalore Metro Rail Corporation Ltd (BMRCL). The petitioner had participated in a tender floated by BMRCL on 23.03.2020, with bids opened on 05.11.2020. After technical evaluation, three bidders qualified for financial bids. Despite the petitioner being the L-1 (lowest bidder), no further action was taken by BMRCL. The petitioner submitted multiple representations, which were met with an endorsement on 03.02.2021, leading to the issuance of a new tender notification on 22.02.2021. The petitioner sought to be declared the successful bidder and for the contract to be awarded to them, arguing that their bid was unfairly rejected.

Held

The Court held that the respondent authority acted arbitrarily and exhibited pre-determination to deny the contract to the petitioner, violating principles of fairness and equality. It was found that Clause 6.5 of the ITT did not empower the respondents to re-compute a bidder's submission beyond correcting arithmetic errors, which was not the case here. The Court observed that the respondent had attempted to re-compute the amount based on its whims and fancies, treating the petitioner unfairly. The Court also noted that the stated reason for discharging the tender, the lapse of validity, was factually incorrect as the respondent had itself extended the period. The Court found the respondent's conduct to be arbitrary and lacking in reasonableness and non-discrimination. The Court referred to observations of the Apex Court in 2014 (3) SCC 760. The Court concluded that the respondent's actions amounted to legal malice and pre-determination, particularly as the competent authority initially had no quarrel with the Tender Evaluation Committee's conclusions but later acted otherwise. The Court quashed the endorsement dated 03.02.2021 and the tender notification dated 22.02.2021. The respondents were directed to reconsider the petitioner's bid within four weeks.

Key Issues

1. Whether the respondent authority acted arbitrarily and pre-determined to deny the contract to the petitioner, violating principles of fairness and equality in tender evaluation, as per Article 14 of the Constitution of India? 2. Whether the respondent authority exceeded its powers under Clause 6.5 of the Instructions to Tenderers (ITT) by re-computing the petitioner's bid instead of merely correcting arithmetic errors? 3. Whether the respondent's stated reason for discharging the tender, i.e., the lapse of validity period, was factually incorrect given that the respondent itself had extended the period? Petitioner's arguments: The petitioner contended that BMRCL arbitrarily dissected and attributed a methodology to their bid, which was not permissible under Clause 6.5 of the ITT. They argued that BMRCL failed to point out any errors in their calculations or computations and did not engage in any dialogue. The petitioner asserted that they were not treated equally or reasonably, and that the respondent's actions demonstrated pre-determination. They also argued that the reason for discharging the tender (lapse of validity) was false as BMRCL had extended it. The petitioner relied on observations from the Apex Court in 2014 (3) SCC 760. Respondent's arguments: The judgment does not explicitly record arguments made by the respondent. However, it notes that the respondent's actions were centered on alleged erroneous computation of rates by the petitioner.