Facts of the Case

The petitioner, M/s S. Square Cargo Movers Pvt. Ltd., challenged the rejection of its technical bid submitted pursuant to a Notice Inviting Tender (NIT) issued by South Eastern Coalfields Limited (SECL) for hiring surface miners and allied equipment for coal excavation work.

The petitioner contended that it had sufficient work experience through its Directors, who had earlier been partners in M/s S.S. Cargo Movers and were associated with Godawari Deify SSCM Joint Venture. According to the petitioner, the experience attributable to their partnership share ought to have been considered under Clause 6(viii) of the NIT while evaluating eligibility.

However, the Tender Evaluation Committee concluded that the petitioner failed to satisfy the prescribed work experience criteria and rejected its technical bid. Aggrieved by this decision, the petitioner approached the Chhattisgarh High Court seeking quashing of the technical evaluation and continuation of the tender process by treating it as a qualified bidder.

Issues Involved

  1. Whether the petitioner company fulfilled the prescribed work experience eligibility under Clauses 6 and 7.2 of the Notice Inviting Tender.
  2. Whether the experience of Directors acquired through a partnership firm and joint venture could automatically be treated as the experience of the petitioner company.
  3. Whether the Tender Evaluation Committee acted arbitrarily while rejecting the petitioner's technical bid.
  4. Whether judicial review was warranted in the tender evaluation process.

Petitioner’s Arguments

  • The petitioner argued that its Directors held substantial partnership shares in M/s S.S. Cargo Movers and consequently possessed proportionate experience in the partnership firm and the joint venture.
  • It was submitted that Clause 6(viii) of the NIT expressly permitted consideration of proportionate experience earned by partners in a partnership or joint venture.
  • The petitioner contended that the Tender Committee wrongly ignored the proportionate work experience attributable to its Directors.
  • It relied upon the Supreme Court judgment in New Horizons Ltd. v. Union of India to contend that while evaluating eligibility, the credentials and experience of persons behind the company should also be considered.
  • It was further argued that similar experience certificates had been accepted by SECL in another tender, and therefore rejection in the present tender was arbitrary and discriminatory.

Respondent’s Arguments

  • SECL submitted that the petitioner company itself did not possess the prescribed work experience as required under the tender conditions.
  • It was argued that the experience belonged to a different partnership firm and not to the petitioner company.
  • The respondents emphasized that there had been no merger or takeover of M/s S.S. Cargo Movers by the petitioner company.
  • The Tender Committee had obtained legal opinion and evaluated all relevant documents before arriving at its decision.
  • It was also contended that any alleged mistake in another tender could not create a right in favour of the petitioner since an illegality cannot be perpetuated.
  • The respondents argued that judicial review in contractual and tender matters is confined only to examining the legality of the decision-making process and not the correctness of the decision itself.

Court Order / Findings

The Chhattisgarh High Court dismissed the writ petition and upheld the rejection of the petitioner's technical bid.

The Court observed that:

  • Clause 6(viii) permits proportionate consideration of experience earned as a partner; however, the bidder must also establish that such experience, together with the present resources, machinery, and capability, is available to the bidding entity.
  • The petitioner failed to demonstrate that M/s S.S. Cargo Movers had merged with or transferred its business, resources, machinery, or credentials to the petitioner company.
  • The writ petition did not disclose the present status of the partnership firm or establish that its assets and operational capacity had become part of the petitioner company.
  • Reliance on New Horizons Ltd. was misplaced because that decision also emphasized consideration of the bidder's present equipment, resources, and capacity in addition to past experience.
  • The Tender Committee had carefully examined the documents, obtained legal opinion, and followed the prescribed tender conditions.
  • No arbitrariness, mala fides, irrationality, or illegality was found in the decision-making process.
  • Applying the principles laid down in Tata Cellular v. Union of India and Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium), the Court held that judicial review does not permit interference merely because another view is possible when the tender evaluation process is fair and lawful.
  • Consequently, the writ petition was dismissed.

Important Clarification

  • Experience earned by Directors or partners in another entity cannot automatically become the experience of a newly incorporated company.
  • In tender matters, authorities are entitled to assess not only historical work experience but also the bidder's present resources, machinery, operational capacity, and overall credentials.
  • Courts ordinarily do not interfere with tender evaluations unless the decision-making process is arbitrary, mala fide, irrational, or contrary to law.
  • A bidder must independently establish compliance with every eligibility condition specified in the tender document.

Sections / Clauses Involved

  • Clauses 6 and 7.2 of the Notice Inviting Tender (NIT)
  • Clause 6(viii) – Technical Evaluation by System (Work Experience Criteria)

Important Case Laws Referred

  • New Horizons Ltd. & Another v. Union of India & Others, (1995) 1 SCC 478
  • Tata Cellular v. Union of India, (1994) 6 SCC 651
  • Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium), (2016) 8 SCC 622

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785395222_2325compressed.pdf

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