Cannot Interference With Tender Bid Conditions Unless It Is Arbitrary Or Introduced In Bad Faith: Allahabad High Court
The Allahabad High Court held that interference with tender bid conditions is not permissible unless the conditions are arbitrary or introduced in bad faith.
The case involved a dispute between a security services provider and the Life Insurance Company (LIC) over the renewal of an agreement to provide security guards.
The Court emphasized that the tender conditions of registration with DRG were in line with the guidelines issued by the Government and did not constitute an arbitrary or unreasonable exercise of power.
“The Court cannot interfere on the bid conditions unless the same is arbitrary or has been introduced mala fidely. In this case, the tender condition introduced in the tender was in sync with the guidelines laid down by the Government of India”, the Bench comprising Justice Mahesh Chandra Tripathi and Justice Prashant Kumar observed.
Senior Advocate Nisheeth Yadav appeared for the Petitioner, Advocate Ashish Mishra for the Second and Third Respondent and Advocate Anand Kumar Yadav appeared for the Fourth Respondent.
The Petitioner, a security services provider, successfully bid on a tender issued by the Respondent (Life Insurance Company/LIC), to provide security guards for seven years from 2007 to 2015. Subsequently, the contract was extended for one year, ending on June 30, 2022. The LIC issued another tender in May 2022, which the Petitioner won.
However, while the tender process was ongoing, the LIC entered into an agreement with the Petitioner on August 31, 2022, to provide security guards for one year. Before the contract expired, the LIC issued a new tender with an additional requirement that bidders must be empanelled with the DGR. This effectively excluded the Petitioner from participating in the tender. Aggrieved, the Petitioner approached the High Court by way of a Writ Petition challenging the new tender conditions arguing that they were arbitrary and illegal.
The Court noted that the Government e-Marketplace (GeM) is an online platform for the procurement of common-use goods and services by various government entities, including ministries, departments, public sector undertakings, and autonomous institutions. It is owned and managed by GeM SPV, a non-profit company registered under the Companies Act, 2013.
Furthermore, the Court emphasized that GeM eliminates human involvement in vendor registration, order placement, and payment processing, reducing the likelihood of corruption and human error. GeM's primary goal is to make it easier for government organizations to find suppliers of goods and services that meet their requirements for quantity, quality, origin, and timeliness.
“GeM can encourage more vendors, including small and medium enterprises to participate in government procurement processes, leading to increased competition and better value for money for the government. The main objective of the GeM portal is to make it simpler for government organizations to locate suppliers of services and products that satisfy their demands for quantity, quality, provenance, and time”, the Bench added.
The Court dismissed the Petitioner’s contentions that the tender was not properly, as they were aware of the tender and are challenging it in court. The Petitioner had full knowledge of the tender and is not being denied an opportunity to participate. Therefore, their claim that the tender should be cancelled is not justified.
Additionally, the Bench noted that the Ministry of Finance had issued a directive requiring all public sector undertakings and financial institutions to comply with the guidelines for DGR empanelled ex-servicemen security services. In response to this directive, the respondent included the DGR empanelment requirement in the tender conditions. The Court observed that the condition was not imposed arbitrarily but was a direct result of the Ministry of Finance's instructions. Therefore, the Petitioner's claim that the tender condition was introduced to exclude them is unfounded.
The Court further observed that the Petitioner could not challenge the bid conditions. The agreement's renewal clause required mutual consent, and since the LIC showed no interest, the Petitioner could not demand renewal as a right. The Bench also noted that the Petitioner's reliance on Clause 6 of the agreement was misplaced, as it allowed renewal only with mutual consent, not enforceable by the Petitioner.
Accordingly, the Court dismissed the Petition.
Cause Title: Bombay Intelligence Security (I) Ltd. v Union Of India And 2 Others (2023:AHC:228027-DB)
