Dhanlaxmi Electricals PVT. LTD. vs. The State Of Bihar

Held

The Court held that the petitioner's argument regarding Clause 2.9 of the Instructions to Bidders was not applicable to the non-mention of capitalization of losses. The Court found that the capitalization of losses, specifically no load loss and load loss of transformers, is directly related to the quality and technical make of the transformer and has a bearing on its price. The petitioner's failure to mention these losses, and instead quoting zero, was a significant omission. The Court found that the authority rightly added the capitalized guaranteed losses of the power transformers, as mentioned in the petitioner's techno-commercial bid, to their price bid. This adjustment resulted in the petitioner's bid being re-evaluated as L3, making the rejection of their bid and the subsequent award of work to Respondent No. 6 (who was L1) justifiable. The Court found no reason to interfere with the decision of the respondents.

Facts

The petitioner, Dhanlaxmi Electricals Pvt. Ltd., participated in a tender (NIT No.16/PR/SBPDCL/2020) issued by South Bihar Power Distribution Company Limited (SBPDCL) for construction of GIS substations and associated lines. The tender was a two-bid system (techno-commercial and financial). The petitioner was declared L1 (lowest bidder) after the price bid opening. However, SBPDCL subsequently declared the petitioner as L3 and rejected their bid via a letter dated 28.08.2020. The petitioner alleged that SBPDCL arbitrarily added amounts to their financial bid to disqualify them, favoring another bidder (Respondent No. 6). The petitioner sought to quash the L3 declaration and the subsequent award of work to Respondent No. 6, seeking a direction to award the work to them. The subsequent actions challenged included a Board Resolution dated 02.09.2020 and an offer letter dated 07.09.2020.

Key Issues

1. Whether the declaration of the petitioner as L3 and rejection of its bid by SBPDCL, despite being initially declared L1, was arbitrary and illegal, particularly concerning the capitalization of losses and GST calculations in the financial bid, contrary to Clause 2.9 of the Instructions to Bidders? Petitioner's Arguments: The petitioner argued that SBPDCL acted arbitrarily and unreasonably by assuming certain losses and GST discrepancies in their financial bid without issuing a show cause notice or seeking an explanation. They contended that Clause 2.9 of the Instructions to Bidders allowed for items left blank to be deemed included in other items, and their undertaking should have been considered. They further argued that awarding the work to Respondent No. 6 at a higher price was a waste of public exchequer and demonstrated mala fide intentions. Revenue/State's Arguments: SBPDCL argued that the petitioner failed to mention capitalization losses (no load loss and load loss) in their price bid, which is essential for evaluating the quality and price of transformers. They stated that the petitioner had quoted zero loss for these parameters, which is impossible and indicative of a fraudulent attempt to lower the bid. SBPDCL claimed that they correctly added the capitalized losses from the techno-commercial bid to the petitioner's price bid, resulting in the L3 status, and that the subsequent award to Respondent No. 6 (L1) was justified. They also raised a preliminary objection regarding the non-joinder of the successful bidder (Respondent No. 6) as a party.