2012 (8) TMI 1126 - SC - Companies Law

Summary

Issues Involved:
1. Reasonableness and arbitrariness of pre-qualification criteria in the tender.
2. Allegations of exclusion of the Appellant-Company from the tender process.
3. Judicial review of administrative actions in tender processes.

Summary:

Issue 1: Reasonableness and Arbitrariness of Pre-Qualification Criteria
The Appellant-Company challenged the pre-qualification criteria specified in Condition Nos. 2(a) and 2(b) (amended Condition Nos. 4(a) and 4(b)) of Tender No. G-23-07 dated 05.07.2007, arguing that they were "unreasonable, arbitrary, discriminatory and opposed to public interest in general." The Court noted that the KSRTC had issued the tender with specific pre-qualification criteria to ensure the supply of good quality tyres. The criteria were set by the Contract Management Group (CMG) of KSRTC, consisting of high-level officials with technical knowledge, and were aimed at obtaining reliable and quality materials from experienced suppliers. The Court found that the criteria were reasonable and not arbitrary, discriminatory, or mala fide.

Issue 2: Allegations of Exclusion from Tender Process
The Appellant-Company alleged that the pre-qualification criteria were included to exclude them from the tender bidding process with an ulterior motive. The Court reviewed the materials and found that the criteria aimed to ensure safety and quality for the passengers and public interest. The CMG had deliberated on the conditions and revised them to avoid any confusion, showing no intention to exclude any particular company unfairly. The Court concluded that the decision to include these criteria was made in the best interest of KSRTC and the public, and was not intended to exclude the Appellant-Company or any other similarly situated companies.

Issue 3: Judicial Review of Administrative Actions
The Court emphasized the principles governing judicial review of administrative actions in tender processes. Citing various precedents, the Court reiterated that judicial review is limited to checking whether the decision was made lawfully, without arbitrariness, irrationality, bias, or mala fides. The Court should not interfere unless the process adopted or decision made is so arbitrary and irrational that it could not have been reached by any responsible authority acting reasonably. The Court found that KSRTC's actions were reasonable, fair, and in public interest, and thus did not warrant interference.

Conclusion:
The appeal was dismissed, affirming the High Court's judgment that the pre-qualification criteria were not discriminatory or unreasonable. The Court upheld the KSRTC's right to set high standards for tender eligibility to ensure quality and safety in public transportation.