Facts of the Case

Sunshine International Agritech, represented by its Managing Director, filed a writ petition under Article 226 of the Constitution of India seeking a Writ of Mandamus directing the respondents to permit it to participate in the tender dated 27.10.2022 for the supply and delivery of school bags to school children in Tamil Nadu for the year 2023–2024 under Tender Ref. RC.No.9350/PUR-II-2-2022 and to consider its representation dated 07.10.2022.

The petitioner claimed that it was a certified and duly registered vendor under the procurement framework referred to in the Department of Expenditure, Ministry of Finance, Government of India Office Memorandum No.6/18/2019-PPD dated 23.07.2020. It also relied upon the public procurement framework dated 08.02.2021 concerning participation in procurement and registration requirements relating to vendors from countries sharing a land border with India.

The third respondent had issued the tender notification for supply and delivery of school bags to school children in Tamil Nadu for 2023–2024. The petitioner submitted a representation dated 07.10.2022 relating to supply of school bags and other educational or student-use items and requested permission concerning imported international-brand products. It had also paid the tender document cost and bid processing fee and claimed compliance with the relevant undertaking requirements.

However, by communication dated 25.10.2022, the third respondent rejected the petitioner’s request. The petitioner thereafter approached the High Court seeking permission to participate in the tender and consideration of its representation.

Issues Involved

The principal issues before the Court were:

  1. Whether the petitioner, being an importer of goods from a foreign entity, could claim a right to participate in the State tender on the basis of Central Government public procurement memoranda and its claimed registration with the competent authority.
  2. Whether the tender authority was justified in insisting that the relevant manufacturing unit satisfy local statutory and regulatory requirements, including requirements concerning the Factories Act, standards, pollution-control consent, Provident Fund registration, Employees’ State Insurance registration and laboratory accreditation.
  3. Whether the tender process was governed by the Tamil Nadu Transparency in Tenders Act, 1998 and the Tamil Nadu Transparency in Tenders Rules, 2000.
  4. Whether the writ petition was maintainable when the petitioner had an appellate remedy under Section 11 of the Tamil Nadu Transparency in Tenders Act, 1998.
  5. Whether the Court could direct the petitioner’s participation after the deadline for submission of bids had expired and the bids had already been opened for technical evaluation.
  6. Whether the prayer for consideration of the representation survived when the representation had already been rejected by the tender authority.

Petitioner’s Arguments

The petitioner contended that it was registered with the competent authority in accordance with the procurement policy and Office Memorandum No.6/18/2019-PPD dated 23.07.2020 issued by the Department of Expenditure, Ministry of Finance, Government of India.

It relied upon the Government of India procurement memorandum dated 08.02.2021 and argued that a bidder could procure raw materials, components and sub-assemblies from vendors situated in countries sharing a land border with India. According to the procurement framework relied upon, where finished goods were procured directly or indirectly from such vendors, registration with the competent authority was required.

The petitioner asserted that it was a registered contractor and was therefore eligible to procure goods and services from countries sharing a land border with India. It maintained that its registration and compliance with the Central procurement framework supported its eligibility.

The petitioner further stated that it had paid the prescribed tender document cost and bid processing fee and had complied with the undertaking requirements. It also claimed to have a unit in Theni.

The petitioner sought permission to participate in the tender and, during the proceedings, also requested return of Rs.30,00,000 allegedly paid by way of Demand Draft because its application had not been considered for participation.

Respondents’ Arguments

The respondents contended that the writ petition was not maintainable because all eligible bidders were entitled to submit bids and no special permission was required to participate in the tender.

They submitted that the annual tender for supply and delivery of school bags was conducted strictly under the Tamil Nadu Transparency in Tenders Act, 1998 and the Tamil Nadu Transparency in Tenders Rules, 2000.

The respondents pointed out that the petitioner itself had represented that it was an importer of goods from a foreign company in the People’s Republic of China. According to the tender authority, the relevant manufacturing unit connected with the supplies was required to satisfy prescribed conditions, including:

  • coverage under the Factories Act, 1948;
  • applicable industrial standards requirements;
  • compliance with local pollution laws;
  • necessary consent from the State Pollution Control Board;
  • Provident Fund registration;
  • Employees’ State Insurance registration; and
  • National Accreditation Board for Testing and Calibration Laboratories accreditation.

The respondents argued that an importer of a foreign entity who did not satisfy the stipulated manufacturing-related eligibility requirements could not claim eligibility to participate.

They further contended that the petitioner’s representation had already been considered and rejected by email dated 25.10.2022. If aggrieved, the petitioner was required to invoke the statutory appellate remedy under Section 11 of the Tamil Nadu Transparency in Tenders Act, 1998.

The respondents also emphasized that the last date for submission of bids had expired on 27.10.2022 at 2:00 p.m., and bids had been opened at 2:30 p.m. for technical evaluation. Therefore, no further bid could be accepted after completion of that stage.

Court Order / Findings

The Madras High Court dismissed the writ petition and recorded the following material findings:

First, the prayer seeking permission to participate in the tender dated 27.10.2022 was rejected because the tender had already been conducted on 27.10.2022.

Second, the prayer seeking consideration of the petitioner’s representation dated 07.10.2022 had become infructuous because the third respondent had already rejected the petitioner’s claim on 25.10.2022.

Third, the Court noted the tender condition expressly providing that the tender procedure was governed by the Tamil Nadu Transparency in Tenders Act, 1998 and the Tamil Nadu Transparency in Tenders Rules, 2000, as amended from time to time. In the event of conflict between the tender terms and the State Act or Rules, the Act and Rules were to prevail.

Fourth, the Court observed that the procedures were to be followed under the Tamil Nadu Transparency in Tenders Act, 1998 and the Tamil Nadu Transparency in Tenders Rules, 2000, and stated in the context of the case that there could not be any Central Act to be followed by the authorities for consideration of bids.

Fifth, although the petitioner claimed to have a unit in Theni, it had not proved before the Court that the unit possessed all the facilities and statutory requirements prescribed by the tendering Corporation.

Sixth, the Court noted that the petitioner’s own principal case was that it was an importer obtaining materials from a foreign company, whereas the factory was required to fall within the prescribed tender conditions.

Seventh, the Court held that a manufacturer or supplier who did not possess the requirements stipulated by the State Government would not be eligible to participate in the tender process.

Eighth, the Court recorded the respondents’ position that the policy requiring factories and manufacturing units in India was taken for the benefit of Indian citizens and that there was no other intention behind formulation of such conditions.

Ninth, the Court observed that tenders were invited every year and that, if eligible, the petitioner could participate in future tenders.

Accordingly, the writ petition was dismissed with no order as to costs.

Important Clarification

This judgment does not lay down an unrestricted proposition that every importer or every supplier dealing with foreign goods is automatically barred from all public tenders.

The decision turned on the specific tender conditions, the governing State tender framework, the petitioner’s inability to establish compliance with the prescribed manufacturing and statutory requirements, the fact that its representation had already been rejected, and the further fact that the tender deadline had expired and bids had already been opened.

A particularly important distinction arises from the Government of India memorandum relied upon by the petitioner. The Court recorded that procurement of raw materials, components and sub-assemblies from vendors in countries sharing a land border with India was treated differently from direct or indirect procurement of finished goods, for which registration requirements could arise. However, such registration by itself did not establish compliance with the independent eligibility conditions prescribed in the concerned Tamil Nadu tender.

The judgment also highlights the relevance of the statutory appellate remedy under Section 11 of the Tamil Nadu Transparency in Tenders Act, 1998 where a bidder is aggrieved by a tender-related decision.

Regarding the petitioner’s request for return of Rs.30,00,000 paid by Demand Draft, the Court observed that since the petitioner had not been allowed to participate in the tender, the respondents would consider the request for return of that amount in the manner known to law.

Sections / Legal Provisions Involved

Article 226 of the Constitution of India — Jurisdiction of the High Court to issue writs, including a Writ of Mandamus.

Section 11 of the Tamil Nadu Transparency in Tenders Act, 1998 — Statutory appellate remedy referred to by the respondents in respect of the impugned tender decision.

Tamil Nadu Transparency in Tenders Act, 1998 — Principal State legislation governing the tender procedure involved in the case.

Tamil Nadu Transparency in Tenders Rules, 2000 — Rules governing the tender process and operating alongside the 1998 Act.

Factories Act, 1948 — Referred to as part of the manufacturing-unit eligibility requirements stated by the tender authority.

The tender requirements also referred to industrial standards, local pollution laws, State Pollution Control Board consent, Provident Fund registration, Employees’ State Insurance registration and NABL accreditation.

Link to Download the Order https://mytaxexpert.co.in/uploads/1783320578_1058compressed.pdf 

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.