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2022 (12) TMI 1486 - HC - Indian LawsRejection of bid with respect to a Request for Proposal (RFP) issued by the Respondent for Development of a Six-Lane Access Controlled Highway - whether the decision taken by the Respondent while rejecting the bid of the Petitioner on the ground that the Net Worth of the Petitioner is less than Rs.42.98 crores is correct or not? - whether it warrants interference by this Court while exercising its jurisdiction under Article 226 of the Constitution of India? HELD THAT - The law regarding interference with the decision taken by the tendering authority has been well settled by the Apex Court. In AFCONS INFRASTRUCTURE LTD. VERSUS NAGPUR METRO RAIL CORPORATION LTD. ANR. 2016 (9) TMI 1292 - SUPREME COURT , the Supreme Court has observed that constitutional courts must defer to the understanding and appreciation of the author of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. In THE SILPPI CONSTRUCTIONS CONTRACTORS VERSUS UNION OF INDIA (UOI) AND ORS 2019 (6) TMI 1449 - SUPREME COURT , the Supreme Court, while discussing the aspect of judicial intervention in matters of contract involving state instrumentalities had held that the authority which floats the contract or tender, and has authored the tender documents is the best judge regarding interpretation of the same. Any interference by the Court has to be for the purposes of preventing arbitrariness, irrationality, bias, mala fides or perversity. A perusal of the reasoning contained in the Final Evaluation Report indicates proper application of mind by the Financial Consultant. It cannot be said that the opinion of the Financial Consultant is so arbitrary that it would warrant interference by this Court under Article 226 of the Constitution of India. The contention of the learned Counsel for the Appellant, that restricting the reserves only to reserves arising out of revenue profit will have a disastrous effect on the Appellant company inasmuch as it cannot apply for the tenders floated by the NHAI and that this will go against the spirit of the orders passed by the NCLT reviving the company, cannot be accepted - In the present tender, the Respondent has fixed a minimum net worth (financial capacity) of Rs.42.98 Crores. It is always open for the Appellant herein to apply for projects floated by the NHAI in which the minimum net worth prescribed is less than Rs.42.98 Crores. The present case deals with a very important infrastructure activity under the Bharatmala Pariyojana which is a prestigious project of the Government of India. The financial capacity of the bidder is an important factor which has to be kept in mind by the tendering authority in order to decide as to whom the tender should be awarded, and therefore, the decision of the tendering authority to restrict the reserves only to reserves arising out of revenue profits cannot be found fault with and the same cannot be held to be so arbitrary and unreasonable that this Court should exercise its jurisdiction under Article 226 of the Constitution of India and interfere in the award of tender. This Court does not find any merit in the petition - Petition dismissed.
Issues Involved:
1. Rejection of the bid based on the Net Worth criteria as per the RFP. 2. Interpretation of "Net Worth" under Clause 2.2.2.9 of the RFP. 3. Consistency in the definition of Net Worth across different tenders. 4. Applicability of the rule of contra proferentum in tender matters. 5. Judicial review of the decision taken by the tendering authority. Issue-wise Detailed Analysis: 1. Rejection of the bid based on the Net Worth criteria as per the RFP: The petitioner challenged the rejection of its bid for a highway development project, arguing that its Net Worth met the criteria specified in the RFP. The Respondent rejected the bid on the grounds that the petitioner did not satisfy the Net Worth criteria defined under Clause 2.2.2 (b) of the RFP, which required a minimum Net Worth of Rs.42.98 crores. 2. Interpretation of "Net Worth" under Clause 2.2.2.9 of the RFP: Clause 2.2.2.9 of the RFP defines Net Worth as the aggregate value of the paid-up share capital and all reserves created out of profits and securities premium account, after deducting accumulated losses, deferred expenditure, and miscellaneous expenditure not written off. The clause explicitly excludes reserves created out of revaluation of assets, write-back of depreciation, and amalgamation. The petitioner argued that its Net Worth turned positive due to the extinguishment of liabilities pursuant to the Resolution Plan approved by the NCLT, which should be considered under the clause. 3. Consistency in the definition of Net Worth across different tenders: The petitioner contended that the definition of Net Worth should be consistent across various tenders issued by the Ministry of Road, Transport and Highways, which have accepted reserves arising out of capital. The petitioner cited examples where the same criteria for calculating Net Worth were applied differently, leading to ambiguity and inconsistency. 4. Applicability of the rule of contra proferentum in tender matters: The petitioner argued that any ambiguity in the tender terms should be interpreted against the author of the document, citing the rule of contra proferentum. The petitioner relied on previous judgments to support this argument, stating that there must be legal certainty in tender conditions to ensure a level playing field for all bidders. 5. Judicial review of the decision taken by the tendering authority: The court examined whether the decision of the Respondent to reject the bid was arbitrary or violative of Article 14 of the Constitution of India. The court noted that the tendering authority is the best judge of its requirements and that judicial interference should be minimal unless the decision-making process is found to be arbitrary, irrational, or biased. The court referred to several judgments emphasizing the need for restraint in judicial review of tender matters and upheld the Respondent's decision. Conclusion: The court dismissed the petition, finding no merit in the petitioner's arguments. The court held that the decision of the Respondent to restrict reserves only to those arising out of revenue profits was neither arbitrary nor unreasonable. The court emphasized that the tendering authority's interpretation of the tender documents should be respected unless there is evidence of mala fide or perversity. The court also clarified that the rule of contra proferentum does not apply to tender matters, as the tendering authority is best positioned to interpret its requirements.
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