Tendering Authority must comply with its own terms and conditions: Delhi High Court 

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The Delhi High Court stated that the tendering authority must comply with its own terms and conditions. 

Background 

Respondent floated an E- Tender, for engagement of freight forwarder for transportation of export project. 

The petitioner participated in the tender. The terms and conditions laid down in clause 2 of the tender document provided certain grounds for disqualification, even for those bidders who may otherwise meet the qualification criteria as laid down in the tender document.

Arguments 

The petitioner contended that in order to win the tender, respondent had deliberately suppressed the said two banning orders, and submitted a false declaration as per clause 2 of the Tender document. Despite the first respondent being made aware of the said suppression and misdeclaration by respondent, the first respondent has still cleared the technical bid of the respondent, declared them as the L1 bidder in contravention to their own tender conditions, and proceeded to award the contract to respondent.

Senior Advocate Rajshekhar Rao, appearing for the respondent, submitted that as far as the contract with the Ministry of Defense is concerned, there was no concluded contract. Hence, there was no question of it being determined. The general practice in executing the contract document involves negotiations – even after the Letter of award has been issued, and only once the negotiations are over, the final contract is executed. Since no contract was executed with the Ministry of Defense, there was no question of any determination.

Decision 

The division bench of the Chief Justice Vipin Sanghi and Justice Jasmeet Singh said that it is well settled that the tendering authority must comply with its own terms and conditions. Once first respondent learnt that respondent was liable to be disqualified under the terms and conditions, it could not have proceeded to award the contract to respondent in an arbitrary and discriminatory manner. The petitioner was found to be technically qualified. The first respondent could have proceeded to award the contract to the petitioner, but it could not have awarded the same to respondent.

The court said that in the light of Subash Projects and Marketing Ltd. and Dwaraka Das, and considering the fact that the contract value is of 125 crores, it is reasonable to expect that respondent would make, at least, 10% as profits. i.e., about 12.50 crores. Had the respondent been clean and disclosed its blacklisting, or the chequered history of its contracts, it would not have had the opportunity to make a gain of 12.50 crores as profit. 

The court stated that the course that commends to it is that respondent should be disgorged of Rs. 12.50 crores and the said amount should partly go to the petitioner, and mainly ploughed back into the society. It, therefore, directed the respondent to deposit in the Court an amount of Rs.12.50 crores within 4 weeks thereof. 

The court viewed that the amount of Rs. 12.5 crores must be ploughed back into society.  

The court directed that the entire amount of Rs. 12.5 crores shall be deposited by respondent with the Registrar General of the Delhi High Court within 2 weeks. The Registrar General will call all the stakeholders and ensure that the smog tower is installed (maybe of a lesser capacity) at a suitable place where it will contribute towards reducing the AQI levels of Delhi. The Registrar shall take steps on a war footing to ensure the installation and operationalization of the smog tower before the advent of winter season as the situation further aggravates during winter months. 

Case title: CJDARCL Logistics ltd. v/s Rites ltd and others

Citation: W.P.(C) 10369/2021 and CM Nos.31899/2021 & 33396/2021

Click here to read the Order/Judgment 

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