M/S United Enterprise vs. The Guwahati Municipal Corporation And 2 Ors.

Held

The Court held that the Guwahati Municipal Corporation (GMC) was not bound to accept the highest bid. The Court referred to Supreme Court judgments in Trilochan Mishra, State of U.P. vs. Vijay Bahadur Singh, and State of Orissa vs. Harinarayan Jaiswal, which establish that the Government is under no obligation to accept the highest bid and can reject it for good and sufficient reasons, even preferring another tenderer. The Court also cited Meerut Development Authority vs. Assn. of Management Studies, emphasizing that bidders have a right to equality and fair treatment but cannot insist on the acceptance of their bid. The Court found that the petitioner's bid was significantly higher than the estimated value and market price, and Clause 8 of the tender document explicitly allowed the GMC to reject any tender without assigning reasons and did not necessitate accepting the highest bid. Therefore, the Court concluded that the GMC's decision to settle the market with the 2nd highest bidder was not arbitrary or unfair, and the impugned settlement order did not warrant interference. The writ petition was dismissed as devoid of merit.

Facts

The petitioner, M/s United Enterprise, participated in a tender for the settlement of the Guwahati Municipal Corporation's (GMC) Goat Market for the period 2021-2022. The petitioner was the highest bidder, offering Rs. 76,46,400 (inclusive of GST), while the 2nd highest bidder, respondent No. 3, offered Rs. 56,10,150 (inclusive of GST). Despite being the highest bidder, the GMC settled the market with respondent No. 3 for a period of 7 months from September 1, 2021, to March 31, 2022. The petitioner contended that the tender process was delayed due to the Assembly Election Model Code of Conduct and that the settlement with the 2nd highest bidder was arbitrary and deprived the Corporation and Government of revenue. The petitioner sought to quash the settlement order and have the market settled with him.

Key Issues

1. Whether the settlement of the Goat Market with the 2nd highest bidder by the Guwahati Municipal Corporation (GMC), despite the petitioner being the highest bidder, was arbitrary and illegal, violating principles of fair treatment and transparency in tender processes, particularly concerning the provisions of the tender notice and tender document. Petitioner's Arguments: The petitioner argued that the settlement was arbitrary as it disregarded the highest bid and deprived the Corporation of revenue. The petitioner also highlighted that respondent No. 3 did not mention GST separately in her bid document, which he implied was a deficiency. The petitioner relied on the fact that he was the H1 bidder and the settlement order dated 24.08.2021 was bad in law. Revenue/State's Arguments: The GMC contended that the delay in settlement was due to the Model Code of Conduct. They argued that the petitioner's bid of Rs. 64,80,000 (excluding GST) was found to be exorbitant, being almost three times the estimated value of Rs. 22,00,000. The GMC also pointed to Clause 8 of the tender document, which grants the Commissioner the right to accept or reject any tender without assigning reasons and states that the highest tender may not necessarily be accepted. They further submitted that the tender documents did not mandate separate mention of GST, nor was it a pre-condition or mandatory provision.