The Delhi High Court has held that the court cannot interfere with the matter of tender issued by the Steel Authority of India (SAIL).
Kalinga Commercial Corporation Ltd, the petitioner challenged the action of the Steel Authority of India (Respondent/SAIL) in rejecting the Petitioner’s bid in respect of a tender. The Respondent floated the Impugned Tender on 02.07.2022 for the engagement of Mine Developer-cum-Operator (MDO) for the Development & Operation of Mines at Taldih along with the installation of a 10 Mtpa Loading facility at Barsua Valley.
It was stated that the Petitioner submitted its techno-commercial bid instead of the Impugned Tender on 12.09.2022. On 19.02.2023, the Respondent informed the Petitioner that it was in the process of evaluating offers for the Tender and provided its observations on the offer made by the Petitioner. The Petitioner replied to the said e-mail confirming and accepting the observations made by the Respondent and withdrew the deviations from the bid document submitted by it along with the Tender documents.
The Respondent requested the Petitioner to submit clarification/confirmation/lacking documents for two aspects. It was stated that the Petitioner clarified the position regarding the queries. The Petitioner provided a break up of its Net Worth for the financial year 202122, taking into account Deferred Tax Liability in addition to Paid-up Share Capital and Surplus.
The Respondent refused to take into consideration the clarification provided by the Petitioner’s Statutory Auditor, the Independent CA Firm as well as the Independent Registered Valuer and chose to reject the Petitioner’s offer stating the same was not suitable for further consideration as per eligibility criteria (Financial).
Mr Rajshekhar Rao, Senior Counsel for the Petitioner, submitted that the action of the Respondent in rejecting the Petitioner’s bid is erroneous, arbitrary and unsustainable in law as it is based on a criterion which is outside the terms of the NIT.
It was viewed by the Court that the authority issuing the tender is the best person to know the requirements of the tender and the clauses contained therein. Courts can interfere with the decisions taken by the authorities issuing the tender only if the decision is arbitrary or perverse or intended to favour someone or is biased against the person whose bid is sought to be rejected.
A two-judge bench comprising Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad observed that the purpose of calculating net worth should be primarily left with the tender issuing authority and the evaluating committee and the Court cannot dictate how the net worth should be calculated unless the decision is contrary to law.
While dismissing the petition, the Court further held that “it cannot be said that the action of the Respondent in not considering deferred tax liability as a part of net worth and rejecting the bid of the Petitioner for not meeting the qualification criteria is so arbitrary that it would warrant interference by this Court under Article 226 of the Constitution of India.”
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