Ms Dev Prabha Construction PVT LTD Through Its Authorized Signatory Vikash Kumar Singh vs. The Bharat Coking Coal Limited Through Its Chairman Cum Managing Director

Held

The Court held that the cancellation of the tender by the respondent-BCCL did not suffer from arbitrariness, illegality, unreasonableness, or malafide. The Court found that the power of cancellation of tender was available to the respondents under Clause 35 of the ITB. Since the revocation of the tender process as provided in Clause 34 was not possible, the decision of the tender committee to cancel the tender after due deliberation was upheld. The Court was of the view that the petitioner failed to prove the primary issue that the decision-making process of the respondent authorities suffered from arbitrariness, unreasonableness, or malafide. The Court also found no substance in the petitioner's argument regarding malafide, stating that such allegations require proof and that the cancellation of the tender and potential re-tendering would allow all bidders to be considered under new terms. The Court dismissed the contention regarding the defective bid of Om Sharda Logistics Pvt. Ltd. as not relevant, as the tender was cancelled and not awarded despite alleged procedural aberrations. The Court concluded that even if procedural errors were present, it should not interfere if the action was bonafide and in the public interest. The writ petition was dismissed.

Facts

M/s. Dev Prabha Construction Pvt. Ltd. (the petitioner) filed a writ petition challenging the cancellation of a tender by Bharat Coking Coal Limited (BCCL). The tender was for the transportation of coal. The petitioner was declared the L1 bidder after a reverse auction process. Subsequently, the petitioner offered further rebates. However, BCCL, through the General Manager (C.M.C.), cancelled the tender on June 17, 2020, citing technical reasons. The petitioner sought quashing of the cancellation order, award of the tender, or revocation of the tender process. The petitioner argued that the cancellation was arbitrary and that a rival bidder, Om Sharda Logistics Pvt. Ltd., had a defective bid. BCCL contended that Om Sharda Logistics Pvt. Ltd. was the actual L1 bidder based on its price bid, as it did not participate in the reverse auction, and that the petitioner's suo moto rebates were only acceptable from the L1 bidder. BCCL also stated that the tender was cancelled after deliberations by the tender committee, and that a fresh tender might be floated due to changes in the scope of work.

Key Issues

1. Whether the cancellation of the tender by the respondent-BCCL, citing technical reasons, was arbitrary, unreasonable, or malafide, thereby violating the terms of the Instructions to Bidders (ITB), specifically Clause 34 and Clause 35, and Article 14 of the Constitution of India? Petitioner's arguments: The petitioner contended that having been declared the L1 bidder after a transparent process, it was entitled to the award of the contract. They argued that if there were technical errors in the reverse bidding process, BCCL should have resorted to revocation of the tender process as per Clause 34 of the ITB, rather than outright cancellation. The petitioner also alleged that the bid of Om Sharda Logistics Pvt. Ltd. was defective due to an incorrect GST rate quotation and should have been rejected, and that BCCL illegally included it in the reverse auction. The petitioner further argued that the cancellation order was malafide and smacks of nepotism. Respondents' arguments: BCCL argued that Om Sharda Logistics Pvt. Ltd. was the L1 bidder because it quoted a lower price in its price bid than the petitioner's price bid, and it did not participate in the reverse auction. BCCL maintained that suo moto rebates are only acceptable from the L1 bidder. They asserted that the tender cancellation was a decision of the tender committee after due deliberation, as revocation under Clause 34 was not possible, and that the action was taken in public interest. BCCL also stated that allegations of malafide were not sufficiently proven.