In a significant judgment of M/s. Balaji Surgical, Through its Proprietor, Prasanna Sudam Shinkar v/s State of Maharashtra, Through the Government Pleader, Bombay High Court, Fort, Mumbai & Others, a writ petition challenging the disqualification of a bidder from a public tender process has been allowed by the Court, with the petitioner being declared as the rightful L1 bidder. The case highlights issues of fairness, transparency, and the arbitrary conduct of public authorities in the tendering process, with important implications for the governance of public contracts.
Case Overview and Background:
The petitioner, a company, had participated in a tender process issued by the Malegaon Municipal Corporation (Respondent No. 2) for the supply of medicines, materials, and medical equipment for hospitals and clinics. Initially, the conditions of the tender did not require the submission of a "No Conviction Certificate." However, just one day before the deadline for bid submissions, a corrigendum was issued by Respondent No. 2 introducing this requirement. Notably, this corrigendum was neither communicated to the petitioner nor published publicly.
The petitioner, after learning of the corrigendum, requested an extension to submit the certificate and subsequently complied by submitting the required certificate within the granted extension. Despite this, the petitioner was disqualified on the grounds that the certificate was issued after the original deadline of April 21, 2023.
Petitioner's Argument:
The petitioner argued that the introduction of the "No Conviction Certificate" requirement through a corrigendum, issued late at night and without proper notice, was both unfair and arbitrary. The petitioner contended that such a substantive condition should not have been inserted so close to the submission deadline, and it was unreasonable to disqualify them when they had submitted the certificate within the extended time frame.
Furthermore, the petitioner pointed out that the rates offered in their bid were significantly lower than those of the successful bidder, Respondent No. 4, and thus, allowing Respondent No. 4 to continue the contract would result in unnecessary financial loss to the public exchequer. The petitioner believed that Respondent No. 2’s actions were designed to favor Respondent No. 4, pointing to the extended delay in considering the petitioner’s bid and the fact that the financial bid was opened only after court orders.
Court's Reasoning and Judgment:
The Court found the actions of Respondent No. 2 to be arbitrary, unreasonable, and biased, ruling that the petitioner should not have been disqualified. Key aspects that influenced the Court's decision include:
Arbitrary Introduction of a Requirement: The original tender did not include a requirement for a "No Conviction Certificate," and the requirement was only added through a corrigendum issued on the eve of the submission deadline. This was viewed as a procedural irregularity that violated principles of fairness and transparency.
The Petitioner’s Compliance: Despite the late notice of the corrigendum, the petitioner complied with the new condition by submitting the certificate within the extended deadline. The Court found it unreasonable to disqualify the petitioner based on the date of the certificate, especially since the petitioner had never been convicted in relation to the required certificate.
Public Interest and Financial Implications: The Court also considered the financial aspect of the case. The rates quoted by the petitioner were significantly lower than those of Respondent No. 4, and allowing Respondent No. 4 to continue the contract would cause a loss to the public exchequer. The Court observed that no prejudice would be caused to Respondent No. 4 by halting further work orders.
Judicial Review in Tender Matters: While the scope of judicial review in tender matters is typically limited, the Court emphasized that judicial intervention is warranted in cases where there is clear arbitrariness, unfairness, or malafide intent. The Court cited previous judgments where it had intervened in cases of irrational decision-making, particularly when the conduct of public authorities harms public interest.
Conclusion:
In conclusion, the Court ruled in favor of the petitioner, ordering that no further work orders be granted to Respondent No. 4 under the current contract, and directed Respondent No. 2 to consider the petitioner as the L1 bidder. This case serves as a reminder of the importance of transparency, fairness, and adherence to proper procedures in public procurement processes. It also underscores the role of the judiciary in ensuring that public contracts are awarded in a manner that is not only legally compliant but also in the best interest of the public.
By ruling in favor of the petitioner, the Court has reinforced the principle that when public authorities act arbitrarily or with bias, such actions can and should be corrected through judicial review to prevent harm to public trust and the public purse.
