Bombay High Court Upholds MAHAGENCO's Rejection of Blacklisted Bidder Karam Chand Thapar & Bros.
09 April 2025
Company Filings >> Business & Commercial Law
The Bombay High Court recently upheld the decision of the Maharashtra State Power Generation Company Limited (MAHAGENCO) to reject the bid submitted by Karam Chand Thapar & Bros. (Coal Sales) Ltd. (petitioner) for the appointment of a Supervision, Monitoring & Co-ordination (SMC) agency. The rejection was based on the petitioner's prior blacklisting by Bokaro Power Supply Company (P) Ltd. (BPSCPL).
The petitioner, a company involved in the liaisoning, movement, handling, and delivery of raw coal, had challenged MAHAGENCO's rejection of its bid and the subsequent notice for forfeiture of its Earnest Money Deposit (EMD).
Background of the Dispute:
The case stemmed from a tender issued by MAHAGENCO in November 2023 for the SMC agency role. Karam Chand Thapar & Bros. submitted its bid in December 2023, having paid the requisite EMD. However, MAHAGENCO rejected the bid in January 2024, citing the petitioner's blacklisting by BPSCPL in July 2023 for a period of one year.
The e-tender document issued by MAHAGENCO contained a clause (Clause IV) that stipulated that bidders should not have been blacklisted or banned from participation by any Independent Power Producer (IPP) or Government entities, including thermal power generators and coal subsidiaries.
Karam Chand Thapar & Bros. argued that BPSCPL, a joint venture between Steel Authority of India Ltd. (SAIL) and Damodar Valley Corporation (DVC), was neither a "Government entity" nor an "Independent Power Producer" as defined within the context of the tender. The petitioner highlighted that the Ministry of Corporate Affairs classified BPSCPL as a non-Government company.
MAHAGENCO's Defense:
MAHAGENCO countered these arguments by pointing to the petitioner's own assertions in a writ petition filed before the Calcutta High Court against the BPSCPL blacklisting order. In that petition, Karam Chand Thapar & Bros. had explicitly described BPSCPL as a joint venture of two government entities (SAIL and DVC) and even argued that it fell under the definition of "State" under Article 12 of the Constitution of India.
MAHAGENCO further argued that even if BPSCPL were not considered a Government entity, it qualified as an Independent Power Producer under the Maharashtra Electricity Duty Act, 2016.
High Court's Ruling:
The Bombay High Court, after considering the submissions from both sides, sided with MAHAGENCO. The court emphasized Clause IV of the e-tender, which clearly stated the disqualification criteria based on past blacklisting by either IPPs or Government entities.
The court noted the petitioner's own statements in the Calcutta High Court writ petition, where it unequivocally presented BPSCPL as a Government entity. Based on this prior admission, the Bombay High Court held that the petitioner was estopped from arguing otherwise in the current petition.
Furthermore, the court observed that even if BPSCPL was not strictly a Government entity, it likely qualified as an Independent Power Producer under the relevant electricity laws.
Therefore, the High Court concluded that Clause IV of the e-tender was indeed applicable to the petitioner's situation. As the petitioner was admittedly blacklisted by BPSCPL on the date of bid submission, MAHAGENCO's decision to reject the technical bid and forfeit the EMD was deemed justified.
Interim Relief Acknowledged:
However, the High Court acknowledged that the Calcutta High Court had granted an interim stay on the BPSCPL blacklisting order, which was made absolute during the pendency of the writ petition before it. The Bombay High Court clarified that it would be open for the petitioner to disclose the existence of this interim order in any future tenders it participates in, provided the stay remains in effect.
Conclusion:
Ultimately, the Bombay High Court disposed of the writ petition, finding no fault with MAHAGENCO's actions. The ruling underscores the importance of truthful disclosures by bidders regarding their past records and the binding nature of statements made in prior legal proceedings. It also clarifies the broad scope of disqualification clauses in tender documents, encompassing blacklisting by both government entities and independent power producers.