2024 (3) TMI 749 - HC - Indian Laws

Disqualification of qualified bidder - disqualified on the ground that false information regarding GST number was incorporated in the Tender submitted by the Petitioner - HELD THAT - It is trite law that Tendering Authority has right to incorporate the conditions of Tender and also seek the compliance from the bidders. Pertinently, in present case condition no.11 mandates that Bidders must furnish GST numbers as well as the details of returns for financial year 2022-2023 certified by the Competent Authority. It is not the case of the Respondents that the petitioner has misrepresented or submitted false documents depicting that he is complaint of the condition no.11. The aforesaid fact was very well before the Tendering Authority since the Petitioner had not submitted the GST returns or the certificate of clearance. However, the Committee of 11 Class-1 officers, on scrutiny of the technical bids, declared the petitioner as qualified. Pertinently, one more bidder, who has not submitted GST returns, is also declared as qualified, although technical evaluation report takes special note of such non-compliance, disqualification was not ordered on that count. The condition no.11 under the tender was waived by the Tendering Authority. Pertinently, there is a reason for such waiver. As can be seen from the notification issued by the Ministry of Finance, Government of India, (Department of Revenue) Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union Territory or Local Authority or Governmental Authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution has been exempted. It is, therefore, evident that waiver of condition no.11 by the Tendering Authority was based on rational. Such waiver is neither a mistake of fact or accidental omission. This appears to be thoughtful decision to waive unessential tender condition - the Tendering Authority/Respondent no.3 has chosen not to insist condition no.11 since it was of little or no significance or it was classified as non-essential condition of eligibility being ancillary or subsidiary with main object to be achieved by the condition. It is well settled that Tendering Authority may deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases. Once it is concluded that there was deliberate/thoughtful waiver of the condition no.11 by the Tendering Authority, by which the petitioner was declared as qualified, although he was not holding GST registration or clearance certificate, it is difficult to justify the subsequent order disqualifying petitioner relying upon the same condition - when the petitioner objected to such an action of respondent no.3 through his representation and later-on by filing present petition, a show cause notice appears to have been issued to him quoting non-compliance of the condition no.11 and, consequently, second impugned order of disqualification of the petitioner has been passed. The Petitioner is qualified and entitled to participate in the further process of E-Tender floated under notice dated 13.7.2023 and entitled to be dealt with as the Lowest Bidder (L-1) - Petition allowed in part.

Summary

Issues involved:
The issues involved in the judgment are the disqualification of the petitioner from the E-Tender process due to non-compliance with GST registration requirements, the alleged arbitrary actions of the Tendering Authority in disqualifying the petitioner, and the waiver of certain tender conditions by the Tendering Authority.

Disqualification due to GST non-compliance:
The petitioner challenged the disqualification from the E-Tender process based on non-compliance with GST requirements. The petitioner argued that the condition regarding GST registration was non-essential as services for the work under the tender were exempted from GST. The petitioner contended that another bidder who did not submit GST returns was still declared qualified. The Respondent justified the disqualification citing the petitioner's failure to submit the GST clearance certificate and cancellation of GST registration. The Court observed that the Tendering Authority had waived the condition no.11 regarding GST compliance, considering it non-essential, based on rational grounds. The Court concluded that the subsequent disqualification of the petitioner based on the same condition was arbitrary and malafide, intending to accommodate other bidders.

Alleged Arbitrary Actions of the Tendering Authority:
The petitioner objected to the actions of the Tendering Authority in inviting negotiations with the three lowest bidders instead of issuing the work order to the lowest bidder (L-1). The petitioner contended that such actions were contrary to the tender conditions. The Court found that the Tendering Authority's decision to call for negotiations instead of issuing the work order to the petitioner, who was the lowest bidder, was arbitrary and malafide. The Court noted that the Tendering Authority's actions seemed intended to accommodate other bidders who were ranked lower.

Waiver of Tender Conditions by the Tendering Authority:
The Court examined the waiver of condition no.11 by the Tendering Authority, which required GST registration and compliance. The Court found that the Authority had deliberately waived this condition, considering it non-essential, based on the nature of the contract and the exemption of services from GST. The Court cited previous judgments to support the Authority's right to deviate from strict compliance with tender conditions in appropriate cases. The Court concluded that since the petitioner was declared qualified despite not meeting the GST requirements initially, the subsequent disqualification based on the same condition was unjustified.

Conclusion:
The High Court of Bombay allowed the Writ Petition partly, quashing the communications that disqualified the petitioner from the E-Tender process. The Court held that the petitioner was qualified and entitled to participate in the further process of the E-Tender as the Lowest Bidder (L-1). The Court deemed the actions of the Tendering Authority as arbitrary and malafide and disposed of the Writ Petition accordingly, without imposing any costs.