Ve Commercial Vehicles LTD. vs. State Of Gujarat

Facts

The petitioner, VE Commercial Vehicles Ltd., filed a writ petition challenging a tender floated by Gujarat State Road Transport Corporation (GSRTC) for the purchase of 1000 bus chassis. Initially, GSRTC floated a tender (GEM/2020/B712747) on July 17, 2020, with technical specifications including 4/6 cylinder engines and a combination of Exhaust Gas Recirculation (EGR) and Selective Catalytic Reduction (SCR) for BSVI emission norms. After a pre-bid meeting where the petitioner and other bidders raised objections, GSRTC cancelled this tender on September 8, 2020. A fresh tender (GEM/2020/B/788564) was floated on September 11, 2020, with revised specifications mandating only 6-cylinder engines and only SCR for emission control. The petitioner made representations against the cancellation and the revised specifications, but the technical bids for the second tender were opened on October 1, 2020, and bids from Ashok Leyland Ltd. and TATA Motors Ltd. were found eligible.

Held

The Court held that the scope of judicial review in tender matters is very limited and that interference is warranted only in cases of unreasonableness, irrationality, arbitrariness, bias, or mala fides. The Court found no illegality, arbitrariness, irrationality, or unreasonableness on the part of the expert body or the corporation in their actions. It was noted that evaluating tenders and awarding contracts are essentially commercial transactions, and the decision must be in the public interest. The Court also addressed the petitioner's contention regarding economic welfare, stating that suitability coupled with public safety is paramount. Given GSRTC's experience, opting for 6-cylinder buses was deemed reasonable and not against public interest. The Court concluded that the decision taken by GSRTC was lawful and not arbitrary, illegal, unreasonable, or irrational, and therefore, no interference was called for. The petition was dismissed.

Key Issues

1. Whether the cancellation of the first tender and the subsequent floating of a revised tender with significantly different technical specifications, thereby excluding the petitioner from participating, constitutes arbitrary or unreasonable action by the respondent (GSRTC)? 2. Whether the Court should interfere with the technical specifications and commercial decisions made by the respondent in a tender process, considering the limited scope of judicial review in contractual matters? The petitioner argued that the cancellation of the first tender was arbitrary and without valid reason, especially as it occurred just before the submission deadline. They contended that the revised technical specifications in the second tender were designed to exclude them, leading to an unfair tender process. The petitioner sought directions to quash the second tender, modify its specifications, or float a fresh tender based on the earlier specifications. The respondent (State of Gujarat and GSRTC) argued that the decision-making process for tenders falls within the realm of contract and commercial transactions, and judicial review is limited to cases of illegality, arbitrariness, irrationality, or mala fides. They contended that the technical specifications were determined by an expert committee based on suitability and public safety, and that the experience of GSRTC showed 6-cylinder buses to be more desirable. They relied on principles of judicial review in tender matters, emphasizing the need for fairness but also the freedom of contract for administrative bodies.