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2023 (6) TMI 491 - HC - Indian LawsComputation of net worth - inclusion of Deferred Tax Liability - Direct or Indirect Method of Calculation - Rejection of Petitioner s bid in respect of a tender - rejection on the ground that Net Worth of the Petitioner is not in compliance with the eligibility criteria (financial) - jurisdiction under Article 226 of the Constitution of India. HELD THAT - The law relating to interference by Courts in matters of tender is well settled. 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. The law regarding interference by a Court with the actions of a tendering authority in exercise of its jurisdiction under Article 226 of the Constitution of India is well settled. The Apex Court in AFCONS INFRASTRUCTURE LTD. VERSUS NAGPUR METRO RAIL CORPORATION LTD. ANR. 2016 (9) TMI 1292 - SUPREME COURT , has observed that constitutional courts must defer to the understanding and appreciation of the author of the tender documents unless there is malafide or perversity in the understanding or appreciation in application in the terms of the tender. In THE SILPPI CONSTRUCTIONS CONTRACTORS VERSUS UNION OF INDIA AND ANR. ETC. ETC. 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. The Petitioner has not been able to demonstrate as to how the decision arrived at by the tendering authority in rejecting the bid of the Petitioner as not being compliant of Clause 3.28 and Clause 6.1.2 of the bid document is perverse. The tender issuing authority cannot be asked to wait for an unlimited period awaiting an opinion which is sought to be procured by the tenderer. The tender has been evaluated by experts and this Court is not inclined to sit as an Appellate Authority over the Tender Evaluating Committee which has come to the conclusion that the bid of the Petitioner does not meet with the financial criteria. A perusal of Respondent's letter dated 11.03.2023 shows that the net worth of the Petitioner as calculated by the Respondent by referring to audited financial statements of the Petitioner for the FY 2021-22 shows that the net worth of the company is Rs. 393.73 crores. The Respondent vide letter dated 10.04.2023 had sought clarification from the Respondent pertaining to the consideration of deferred tax liability as part of net worth. The Petitioner replied to the same clarifying its stance by relying upon a report of its statutory auditor, a certificate from an independent chartered accountancy firm and a registered valuer in support of its treatment of deferred tax liability in computing net worth. The Petitioner also stated that they have sought an opinion from the ICAI regarding the same - vide the Impugned letter, the Respondent had rejected the bid of the Petitioner. The purpose of calculating net worth should be primarily left with the tender issuing authority and the evaluating committee and the Court cannot dictate as to how the net worth should be calculated unless the decision is contrary to law. In the opinion of this Court, 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. Petition dismissed.
Issues Involved:
1. Rejection of Petitioner's bid by SAIL. 2. Compliance with financial criteria of NIT. 3. Inclusion of Deferred Tax Liability in Net Worth calculation. 4. Judicial interference in tender decisions. Summary: 1. Rejection of Petitioner's bid by SAIL: The Petitioner challenged the rejection of its bid by the Steel Authority of India (SAIL) for a tender related to the development and operation of mines. The bid was rejected via a letter dated 10.05.2023, prompting the Petitioner to file a writ petition. 2. Compliance with financial criteria of NIT: The Petitioner submitted its bid on 12.09.2022, declaring a net worth of Rs. 400.69 crores, supported by a statutory auditor's certificate. However, SAIL identified discrepancies in the net worth calculation, noting a difference between the Petitioner's stated net worth and the audited financial statements. SAIL sought clarifications, which the Petitioner provided, including expert opinions supporting the inclusion of Deferred Tax Liability in the net worth. 3. Inclusion of Deferred Tax Liability in Net Worth calculation: The Petitioner argued that Deferred Tax Liability should be included in the net worth calculation, referencing Clause 3.28 of the NIT and Section 2(57) of the Companies Act, 2013. They also cited Supreme Court judgments and Income Tax provisions to support their stance. However, the Court noted that the balance sheet and net worth calculation are separate exercises and that Deferred Tax Liability should not be included in net worth calculation. 4. Judicial interference in tender decisions: The Court emphasized that judicial intervention in tender matters is limited and should only occur in cases of arbitrariness, bias, or perversity. The Court deferred to the tendering authority's expertise and found no arbitrariness in SAIL's decision to exclude Deferred Tax Liability from the net worth calculation. The Court concluded that the Petitioner failed to demonstrate how SAIL's decision was perverse or arbitrary. Conclusion: The Court dismissed the petition, ruling that SAIL's rejection of the Petitioner's bid was not arbitrary and did not warrant interference under Article 226 of the Constitution of India.
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