Facts of the Case

NTPC invited online bids through a Notice Inviting Tender (NIT) dated 07.06.2022 for empanelment/rate contract of pathology services for NTPC Seepat Hospital for a period of 24 months. The estimated contract value was Rs.128.17 lakhs (excluding GST).

The petitioner, Renuka Diagnostics, participated in the tender process. Its techno-commercial bid was rejected, and thereafter the contract was awarded to Thyrocare Technologies Ltd.

The petitioner challenged both the rejection of its bid and the award of the contract, contending that Thyrocare did not possess an NABL/NABH accredited laboratory within the State of Chhattisgarh and was not registered under the Chhattisgarh State Upcharyagriha Grih Tatha Rogopachar Sambandhi Sthapanaya Anugyapan Adhiniyam, 2010. It was also alleged that the tender process lacked transparency and that transportation of samples from Chhattisgarh to Navi Mumbai would adversely affect diagnostic services.

Issues Involved

  1. Whether the rejection of the petitioner's techno-commercial bid was arbitrary and contrary to the tender conditions.
  2. Whether the successful bidder was required to possess an NABL/NABH accredited laboratory within the State of Chhattisgarh.
  3. Whether registration under the Chhattisgarh State Upcharyagriha Grih Tatha Rogopachar Sambandhi Sthapanaya Anugyapan Adhiniyam, 2010 was a mandatory eligibility condition.
  4. Whether the High Court should interfere with the tender evaluation and award of contract under Article 226.

Petitioner’s Arguments

  • The petitioner contended that Thyrocare did not have an NABL/NABH accredited laboratory in Chhattisgarh and therefore did not satisfy the technical eligibility conditions.
  • It was argued that the successful bidder was also not registered under the Chhattisgarh Act of 2010.
  • The petitioner alleged that transporting blood samples from Seepat to Navi Mumbai would compromise timely testing and endanger employees' health.
  • It was further argued that the petitioner had submitted NABL registration documents and its rejection was arbitrary and illegal.
  • The petitioner also questioned the transparency of the tender process and claimed that local diagnostic laboratories had been unfairly disadvantaged.

Respondent’s Arguments

  • NTPC submitted that the NIT only required the bidder to possess an NABL/NABH accredited laboratory as on the date of techno-commercial bid opening and nowhere required such laboratory to be situated in Chhattisgarh.
  • The respondents pointed out that the petitioner merely possessed NABL registration and had not obtained the final NABL accreditation required under the tender conditions.
  • It was submitted that Thyrocare possessed a valid NABL/NABH accredited laboratory at Navi Mumbai and therefore fully satisfied the eligibility criteria.
  • The respondents also explained that the pathology reports were consistently delivered within the stipulated time of 24 hours and that the logistics arrangement fully complied with the tender requirements.
  • They denied all allegations of arbitrariness, mala fides and lack of transparency.

Court Order / Findings

The High Court dismissed the writ petition and upheld the award of the contract to Thyrocare Technologies Ltd.

The Court held that:

  • The petitioner admittedly did not possess final NABL accreditation on the date of techno-commercial bid opening and therefore was itself ineligible under the NIT.
  • The tender conditions required only an NABL/NABH accredited laboratory and did not stipulate that such laboratory must be located within the State of Chhattisgarh.
  • Registration under the Chhattisgarh State Act of 2010 was not prescribed as an eligibility condition in the tender document.
  • The Court refused to rewrite the tender conditions by introducing requirements not contained in the NIT.
  • There was no material establishing arbitrariness, mala fides or bias in the decision-making process.

Accordingly, the writ petition was dismissed.

Important Clarification

  • Courts cannot add eligibility conditions to a tender document which the tendering authority itself has not prescribed.
  • A bidder lacking the prescribed technical qualification cannot challenge the selection of another eligible bidder.
  • NABL accreditation and NABL registration are distinct concepts, and mere registration does not satisfy a tender requiring accredited laboratories.
  • Judicial review in tender matters is confined to examining arbitrariness, mala fides, irrationality or violation of statutory provisions and not the commercial wisdom of the tendering authority.
  • The Court reaffirmed that logistical or operational preferences cannot override clear tender conditions unless they render the decision arbitrary or illegal.

Key Supreme Court Principles Reaffirmed

The High Court relied upon the following landmark judgments:

  • Michigan Rubber (India) Ltd. v. State of Karnataka (2012) 8 SCC 216 – Courts should grant substantial latitude to tendering authorities while framing tender conditions.
  • Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd. (2016) 16 SCC 818 – Judicial interference is permissible only when the tender decision is arbitrary or irrational.
  • Tata Cellular v. Union of India (1994) 6 SCC 651 – Tender conditions ordinarily fall within the contractual domain and judicial review is limited to testing arbitrariness, bias, mala fides and Wednesbury reasonableness.

Sections  Involved

  • Article 226 of the Constitution of India – Writ Jurisdiction
  • Principles governing judicial review of Government tenders and public procurement
  • National Accreditation Board for Testing and Calibration Laboratories (NABL) Accreditation Requirements
  • National Accreditation Board for Hospitals & Healthcare Providers (NABH) Accreditation
  • Chhattisgarh State Upcharyagriha Grih Tatha Rogopachar Sambandhi Sthapanaya Anugyapan Adhiniyam, 2010 (Issue Raised)
  • Important Supreme Court Judgments Relied Upon:
    • Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216
    • Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., (2016) 16 SCC 818
    • Tata Cellular v. Union of India, (1994) 6 SCC 651

Link to download the order - https://mytaxexpert.co.in/uploads/1782968832_227compressed.pdf

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