Facts of the Case

The petitioner, P. Shyam Raju, Proprietor of Skilderz Developers, participated in a tender floated by Kerala Minerals and Metals Limited (KMML). As per the tender notification, one of the mandatory pre-qualification conditions required the bidder to furnish a solvency certificate/bank guarantee for ₹1.8 Crores.

The petitioner inadvertently submitted a solvency certificate for only ₹1.5 Crores instead of the prescribed ₹1.8 Crores. Consequently, his bid was rejected at the pre-qualification stage. Thereafter, the petitioner offered an additional solvency certificate for the balance amount of ₹0.3 Crores and requested the authorities to consider his bid.

Issues Involved

  1. Whether a bidder can rectify the deficiency in a mandatory eligibility condition after submission of the tender.
  2. Whether the High Court can direct the tendering authority to accept a bid despite non-compliance with an essential tender condition.
  3. Whether rejection of the petitioner's bid was arbitrary or illegal under Article 226 of the Constitution of India.

Petitioner’s Arguments

  • The petitioner contended that the shortfall in the solvency certificate occurred due to an inadvertent mistake.
  • He subsequently produced a fresh solvency certificate covering the balance amount and requested that his bid be considered.
  • It was further argued that the petitioner had already executed works for KMML and the respondents were well aware of his financial capacity, solvency, and capability to perform the contract.
  • Therefore, rejection of the bid merely because of the initial deficiency was unjustified.

Respondent’s Arguments

  • The respondents relied upon Clause 4.3 of the Tender Notice, which expressly required every bidder to furnish a solvency certificate for a minimum amount of ₹1.8 Crores issued by a scheduled bank in the prescribed format.
  • Since the petitioner failed to satisfy this mandatory eligibility condition before the deadline, his bid was rightly rejected.
  • The respondents also pointed out that another bidder's tender had likewise been rejected for the same deficiency, demonstrating that the tender conditions were uniformly applied without discrimination.

Court Order / Findings

The Kerala High Court dismissed the writ petition and held that:

  • The requirement of furnishing a ₹1.8 Crore solvency certificate was a mandatory eligibility condition.
  • The petitioner admittedly failed to comply with this essential requirement before submission of the tender.
  • Courts exercising jurisdiction under Article 226 ordinarily do not interfere with tender conditions or direct acceptance of bids where mandatory eligibility criteria have not been fulfilled.
  • There was no allegation or evidence of mala fides, arbitrariness, or discriminatory treatment in the tender process.
  • The fact that another bidder was also rejected for the identical reason established fair and uniform implementation of the tender conditions.
  • Consequently, no writ of mandamus could be issued directing acceptance of the petitioner's bid, and the writ petition was dismissed.

Important Clarification

  • Mandatory eligibility conditions prescribed in tender documents must be strictly complied with before the submission deadline.
  • A bidder cannot ordinarily cure a fundamental eligibility defect after submission of the bid.
  • Judicial review in tender matters is limited and does not extend to relaxing mandatory tender conditions unless arbitrariness, mala fides, or violation of law is established.
  • Equal treatment of all bidders is an important consideration while examining challenges to tender decisions.

Section Involved

  • Article 226 of the Constitution of India
  • Clause 4.3 of the Tender Notice (Mandatory Solvency Certificate Requirement)

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785566800_2510compressed.pdf  

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