Mukand Engineers Limited vs. Rashtriyalspat Nigam Limited

Held

The Court held that there was no dispute regarding the sequence of events. The request for price reduction due to GST was made before bid opening, and the petitioner participated in subsequent reviews by the IEM and the tax consultant. The Court found that Clauses 28 and 29 of the tender conditions were not flouted. Clause 28 permits consideration of unsolicited price offers if the bidder becomes L-1, and the price reduction in this case was solicited by the 1st respondent. Clause 29 pertains to price revisions based on technical discussions or specification changes, which was not the case here. The Court also found no evidence of mala fides in the decision-making process. The tax consultant's opinion indicated that the 2nd respondent did not include discounts unrelated to GST, and no adverse comments were made regarding the quantum of reduction. The Court reiterated that its role is limited to examining the decision-making process for aberrations or mala fides, not to delve into technical aspects of pricing. Evaluating tenders and awarding contracts are commercial functions where judicial interference should be minimal. The petitioner's participation in the process disentitled them from questioning it later. Therefore, the Court found no reason to interfere with the 1st respondent's process, especially at the stage of tender acceptance, as quashing proceedings would have adverse financial implications and no public interest was shown to be affected. The Writ Petition was dismissed.

Facts

The petitioner, a consortium, participated in a tender floated by the 1st respondent (Visakhapatnam Steel Plant) on February 4, 2017, for setting up a Rebar Mill. Following the introduction of GST on July 1, 2017, the 1st respondent requested qualified tenderers to offer price reductions on August 31, 2018. The petitioner and the 2nd respondent submitted their reduced bids on September 11, 2018. Upon opening the bids on September 12, 2018, the 2nd respondent emerged as the lowest tenderer due to a price reduction of Rs. 1,94,85,00,000/-. The matter was referred to an Independent External Monitor (IEM) and subsequently to a tax consultant, M/s. Lakshmikumaran and Sridharan Attorneys, who provided an opinion on December 13, 2018. The petitioner challenged the 1st respondent's proposed acceptance of the 2nd respondent's bid, alleging illegality and arbitrariness.

Key Issues

1. Whether the 1st respondent's action in proposing to accept the 2nd respondent's offer, based on a significant price reduction attributed to GST, is illegal and arbitrary, violating Clauses 28 and 29 of the Notice Inviting Tender? - Petitioner's argument: The price reduction of Rs. 1,94,85,00,000/- is exorbitantly high and cannot solely be attributed to GST. This reduction violates Clauses 28 and 29 of the tender conditions, as it was an unsolicited price offer designed to unfairly secure the contract. The 1st respondent's acceptance is unfair. - Revenue/State's argument: The decision-making process was transparent and fair. The price reduction request was made to all parties, and submissions were voluntary. The IEM and a reputed tax consultant reviewed the matter, finding the reduction valid and not including additional discounts unrelated to GST. The Court should only examine the decision-making process for mala fides, as per ICOMM Tele Ltd., Hyderabad v Southern Power Distribution Company of A.P., Ltd., Tirupati, Chittoor District and others. 2. Whether the decision-making process adopted by the 1st respondent is affected by mala fides or other infirmities? - Petitioner's argument: Implicit in the argument regarding the exorbitant reduction and violation of tender clauses. - Revenue/State's argument: The process was transparent, involving IEM and tax consultant review. No mala fides were demonstrated, and the evidence required to prove mala fides is high, as per E.P. Royappa v State of Tamilnadu and Others.