Transparency Is Required In Selection Process For PSU's: Calcutta HC While Quashing Alleged Arbitrary Rejection Of Petitioner's Bid

The Calcutta High Court while quashing the alleged arbitrary rejection of the Petitioner's bid observed that transparency is required in the process of selection for the Public Sector Undertakings (PSUs).

In this context, Justice Sabyasachi Bhattacharyya observed, “Hence, there can be no manner of doubt regarding the petitioner individually, albeit as one of the members of a joint venture, having completed the previous work of a value more than 60 per cent of the total advertised value for the present contract. The work was also of a similar nature. Hence, there cannot be any shade of doubt regarding the petitioner having complied with the eligibility condition. The rejection, it is relevant to mention, was on the ground that the technical and financial eligibility criteria and bid capacity were not met and the information furnished by the petitioner was improper…There was no basis for such rejection, as apparent ex facie from the materials furnished by the petitioner. The same was arbitrary and de hors the tender terms”.

Additionally, the Court asserted, “In order to ensure that the best competitor is chosen, the process of selection adopted by a public undertaking is required to be transparent. As such, the impugned rejection cannot be sustained”.

Advocate Jishnu Saha appeared for the petitioner, Advocate Atarup Banerjee appeared for respondents no. 1, 2 and 4 and Advocate Rajshree Kajaria appeared for respondent no. 3.

In this case, it was alleged that the respondents acted malafide and arbitrarily while rejecting the bid of the petitioner due to a technical detail under one of the eligibility criteria. The petitioner alleged that the respondents rejected the bid to avoid a reverse auction.

The Court noted that the petitioner had met the eligibility criteria because the work they had done was similar in nature and had cost not less than 60% of the advertised value of the tender. The fact that the petitioner was only a minor profit holder in previous work was irrelevant. Therefore, the rejection of the petitioner's bid was arbitrary and outside the terms of the tender.

The Court held, “However, what is relevant is not the share of profits of the petitioner in the said Joint Venture but whether the work done by the petitioner as a member of the said Joint Venture measures up to the eligibility criteria of the present contract. As per the eligibility condition in Clause 2, sub-clause (1)(iii) of the present contract, the bidder had to do one similar work costing not less than the amount equal to 60 per cent of advertised value of the tender”.

Therefore, the Court directed respondent no. 2 to conduct the tender process from the reverse auction stage, deeming the petitioner’s bid as successful and selecting the appropriate bidder.

The High Court accordingly, allowed the Petition.

Cause Title: Texmaco Rail and Engineering Limited & Anr v Union of India and Ors

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