24 April 2024 Arbitration Law >> Business & Commercial Law   |   Business Laws >> Business & Commercial Law  

A company providing manpower services (the petitioner) has successfully challenged the cancellation of an e-tender in the Himachal Pradesh High Court. The court ruled that the authorities acted arbitrarily and unreasonably in cancelling the tender and directed them to award the work to the petitioner.

Background:

The Department of Agriculture (respondent) had invited bids for hiring a service provider for skilled and unskilled manpower. The petitioner participated in the tender process and emerged as the L-2 bidder after the initial winner (L-1) failed to meet the requirements.

However, instead of awarding the tender to the petitioner, the authorities cancelled the entire process citing "administrative reasons." They further extended the contract of the existing service provider.

Petitioner Challenges Cancellation:

The petitioner argued that the cancellation was arbitrary and violated their right to equality enshrined in Article 14 of the Indian Constitution. They had qualified in both technical and financial evaluations and were entitled to be awarded the tender as the L-2 bidder.

Court's Decision:

The High Court agreed with the petitioner's arguments. The court found that the authorities could not use a clause reserving the right to reject tenders without reason to act arbitrarily. Additionally, the court pointed out that the reason provided for cancellation (administrative reasons) lacked any specific explanation.

The court further highlighted that the decision to continue with the existing service provider without a formal order was also unjustified.

Relief Granted:

In light of these findings, the court:

• Set aside the order canceling the e-tender.
• Directed the authorities to:
• Call the petitioner for negotiations.
• Award the tender work to the petitioner for a period of one year (as per the original tender document).