2024 (5) TMI 334 - SC - Companies Law

Disqualification from participating in the tender - Scope of the Balance Sheet Prepared under the Companies Act - Importance of explanatory notes to the Balance Sheet - rejection of technical bid on the premise that it has not complied with the necessary pre-requisite qualification in filing the explanatory notes of account being an integral part of the Balance Sheet - HELD THAT - The Balance Sheets can only be understood by going into the factual narrations made in the explanatory notes of accounts. When one speaks about Balance Sheet, it takes along with it the explanatory note. To be noted, all the other bidders have complied with this part, even M/s. BVG India Ltd. was quite conscious of the said compliance as could be seen from one of the communication made by it. Thus, it is held that the reasoning of the High Court, finding fault with disqualification of the technical bid of M/s. BVG India Ltd. cannot be sustained in the eye of law. The only other issue to be considered is with respect to disqualification of M/s. Pashupatinath Distributors Private Limited. All the bidders had been called for a meeting and their queries have been answered by the tendering authority. As rightly pointed out by the learned senior counsel appearing for the respondent No.1, the document concerned would clearly show that even the technical committee was of the view that the request made by M/s. Pashupatinath Distributors Private Limited to dilute Clause 2.2 and 2.3 is not feasible of consideration. While interpreting the terms of a tender, a simple interpretation is to be followed. Thus, both M/s. BVG India Ltd. and M/s. Pashupatinath Distributors Private Limited are disqualified from participating in the tender concluded. In view of the aforesaid conclusion, the ultimate decision of the High Court in remitting matter back for a fresh consideration by the State is upheld while clarifying that the aforesaid two entities cannot be permitted to participate with the existing disqualification as discussed above, unless they are otherwise qualified in the light of the interpretation of the notice inviting tender. Appeal disposed off by way of remand.

Summary

Issues involved: Disqualification of M/s. BVG India Ltd. and M/s. Pashupatinath Distributors Private Limited from participating in a tender process.

Disqualification of M/s. BVG India Ltd.: The High Court held that the disqualification of M/s. BVG India Ltd. was incorrect as there was no mandatory requirement for filing explanatory notes of accounts as part of the Balance Sheet, based on Section 134(7) of the Companies Act. The Court found fault with the High Court's reasoning and concluded that the disqualification of M/s. BVG India Ltd. cannot be sustained in the eye of law.

Disqualification of M/s. Pashupatinath Distributors Private Limited: The technical committee concluded that the request made by M/s. Pashupatinath Distributors Private Limited to dilute certain clauses was not feasible. The Court referred to a previous judgment to support the interpretation that a tender of a sole bidder excludes a consortium. Based on this interpretation and the facts presented, the Court upheld the finding of the High Court regarding the disqualification of M/s. Pashupatinath Distributors Private Limited.

Overall Decision: The Supreme Court upheld the disqualification of both M/s. BVG India Ltd. and M/s. Pashupatinath Distributors Private Limited from participating in the tender process. The Court directed the State to expedite the tender process within three months and clarified that the disqualified entities cannot participate unless they meet the tender conditions. M/s. Pashupatinath Distributors Private Limited was permitted to continue operations until the conclusion of the tender process, as directed by the High Court. The Court's observations were limited to the existing tender conditions, allowing the State to introduce new conditions if necessary. The appeals were disposed of accordingly, and any pending applications were also disposed of.