Facts of the Case

This case is about tender law and statutory judicial-preview requirements for government procurement in Andhra Pradesh, not GST. A batch of eight writ petitions was filed by unsuccessful or aggrieved bidders (including M/s. Sri Lakshmi Venkateswara Enterprises and Light House Promotions) challenging a Request for Proposal (RFP) issued by AP MARKFED and its subsidiary, MARKUP Private Limited (a company incorporated by the cooperative federation to run its consumer/marketing division), for selection of millers/processors to supply commodities such as ragi, bajra, jowar, jaggery, groundnut chikki and multi-grain atta for the YSR Sampoorna Poshana nutrition scheme. The petitioners challenged the cancellation of an earlier RFP dated 17.09.2022 and the issuance of a fresh RFP (Tender ID 553376 dated 14.10.2022) with changed eligibility criteria, alleging arbitrariness and violation of transparency norms; GST is referenced only once, in passing, as one of several “variable” cost components bidders had to price into their quotes.

Issues Involved

  1. Whether MARKUP Private Limited, though a private company, had the authority to issue the impugned tender given its administrative and financial control by the State.
  2. Whether the changed eligibility criteria in the fresh RFP were arbitrary, discriminatory or mala fide.
  3. Whether the tender process required prior judicial preview under the Andhra Pradesh Infrastructure (Transparency through Judicial Preview) Act, 2019.

Petitioner's Arguments

  • The cancellation of the earlier RFP and issuance of a fresh RFP with changed eligibility criteria (limiting bidders to established millers/processors) was arbitrary, illegal, and designed to favour a particular class of bidders.
  • The process was not referred for statutory judicial preview as required for infrastructure-related procurement under the AP Transparency Act, 2019.

Respondent's Arguments

  • MARKFED and MARKUP contended that the Government and its instrumentalities have a free hand in setting tender terms, and courts should exercise judicial restraint in commercial/tender matters absent arbitrariness, mala fide, bias or irrationality, relying on Tata Cellular v. Union of India and related Supreme Court precedent.
  • The change in eligibility criteria was a legitimate exercise of administrative discretion, not a tailor-made condition to favour any bidder.

Court Order / Findings

  • Justice Cheekati Manavendranath Roy held that MARKUP Private Limited, though a private company, functions under the pervasive administrative, financial and functional control of the State of Andhra Pradesh (its Board comprising government officers, day-to-day operations supervised by MARKFED, and subject to Auditor General oversight) and could validly issue the tender.
  • However, the Court found that the bidding process fell within the scope of the Andhra Pradesh Infrastructure (Transparency through Judicial Preview) Act, 2019, and had not been referred for the mandatory judicial preview under Section 3 read with Section 7 of that Act before tenders were invited.
  • For this non-compliance, all the writ petitions were allowed and the impugned tender notification dated 14.10.2022 was set aside, with no order as to costs.

Important Clarification

The GST reference in this judgment is a single, incidental mention of GST as a variable cost item bidders had to quote — the ruling has no bearing on any GST rate, credit, or compliance question. Government agencies and their special-purpose entities in Andhra Pradesh should note the key holding: infrastructure-related tenders must be referred for statutory judicial preview under the 2019 Transparency Act before invitation, failing which the tender itself is liable to be set aside regardless of the underlying eligibility-criteria dispute.

Sections Involved

  • Andhra Pradesh Infrastructure (Transparency through Judicial Preview) Act, 2019 — Sections 3 and 7 (mandatory judicial preview before inviting tenders).
  • Article 226 of the Constitution of India.
  • General Financial Rules and Central Vigilance Commission guidelines on tender transparency.

Decision – In Favour of

In favour of the Petitioners (the challenging bidders) — the tender notification was set aside for non-compliance with the statutory judicial-preview requirement; this is a tender-transparency ruling, not a GST determination.

Case Details

Court: High Court of Andhra Pradesh at Amaravati
Case Nos.: W.P. Nos. 34789, 34847, 34985, 35096, 35225, 35769, 37021 and 37760 of 2022 (batch)
Coram: Justice Cheekati Manavendranath Roy
Date of Order: 03.05.2023

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