M/S Zenith Event And Services And Another vs. The State Of Hp And Others

Held

The Court held that the cancellation of the Rate Contract awarded to the petitioner was not justifiable. On the first issue concerning the EMDs, the Court found that the department's action or inaction in returning or forfeiting the EMDs of other bidders could not influence the Rate Contract awarded to the petitioner, who was the L1 bidder and not found to be non-compliant. The Court stated that the petitioner cannot be made to suffer due to the department's alleged non-compliance with tender conditions concerning other bidders. On the second issue regarding common proprietorship, the Court accepted the petitioner's submission that 'M/s Zenith-Event & Services' is a partnership firm with two partners, while 'M/s A to Z Solutions' is a proprietorship concern of one of the partners. Both entities have separate statutory registrations and account numbers. The Court noted that 'M/s A to Z Solutions' had withdrawn its bid before the technical bid opening, and the respondents failed to point out any tender condition that debarred firms with a common partner/proprietor from participating. The Court quashed the cancellation letter and directed the respondents to proceed based on the original award letter and the executed agreement.

Facts

M/s Zenith-Event & Services (the petitioner) was awarded a Rate Contract for providing cooked diet services at MGMSC Khaneri on April 20, 2023. The respondents, State of Himachal Pradesh and others, cancelled this contract on July 10, 2023, deciding to initiate a fresh tender process. The cancellation was based on a State Level Committee's recommendations following a complaint. The committee noted that Earnest Money Deposits (EMDs) of two bidders who withdrew their bids were returned instead of being forfeited, contrary to tender conditions. It also observed that the petitioner and another bidder, 'M/s A to Z Solutions', were under the same proprietor and had the same authorized signatory. The petitioner filed a writ petition challenging the cancellation of its contract.

Key Issues

1. Whether the cancellation of the Rate Contract awarded to the petitioner is justifiable based on the respondent department's alleged failure to forfeit the EMD of other bidders who withdrew their bids, contrary to tender conditions? 2. Whether the cancellation of the Rate Contract awarded to the petitioner is justifiable on the ground that the petitioner firm and another bidder, 'M/s A to Z Solutions', were under the same proprietor and had the same authorized signatory? Petitioner's Arguments: The petitioner contended that the EMD issue was an internal matter of the department and could not affect the contract awarded to them, especially since they were the L1 bidder and not found non-compliant. Regarding the common proprietor issue, the petitioner argued that they are distinct legal entities with separate registrations, PAN, GST numbers, and other statutory registrations. They also highlighted that 'M/s A to Z Solutions' had withdrawn its bid before the technical bid opening, as recorded in the tender evaluation summary. Respondents' Arguments: The respondents reiterated the reasons cited by the State Level Committee for cancellation: the improper handling of EMDs of withdrawn bidders and the common proprietorship of the petitioner and 'M/s A to Z Solutions'.