The Tainted Tender: A High Court's Stand for Transparency in Public Contracts

This case, heard by the High Court of Judicature at Patna, shines a spotlight on the critical importance of fairness and transparency in government contracting. It involves a dispute over a tender (a formal invitation to bid for a project or service) issued by the Bihar Urban Infrastructure Development Corporation Limited (BUIDCO), a government body responsible for urban development projects. The petitioner, Adam Media and Recreation Private Limited, a company that also bid for the tender, challenged the process, alleging irregularities in how another bidder, M/s Magadh Advertising Bureau (the 7th respondent), was ultimately awarded the contract.

The Heart of the Dispute: A Disqualified Bidder's Reinstatement

At its core, the case is about how a bidder, initially disqualified, was later reinstated and awarded a lucrative contract, seemingly without proper notification or justification to other qualified bidders.

Background of the Tender Process:

BUIDCO had invited bids for a tender, which was a "revenue generating" one, meaning the successful bidder would pay the government for the right to undertake the work, rather than the government paying the bidder. This type of tender is often for services like advertising rights or operating facilities.

The tender process typically involves two main stages:

1. Technical Bid Evaluation: Bidders submit documents proving their technical capability, experience, and adherence to the tender's specifications. Only those who meet these technical requirements proceed to the next stage.
2. Financial Bid Opening: The financial proposals (the actual amounts bidders are willing to pay or charge) of the technically qualified bidders are opened and evaluated.

The Initial Disqualification:

In this case, the Technical Bid Evaluation Committee initially disqualified M/s Magadh Advertising Bureau (the 7th respondent) on May 21, 2024. The reason for their disqualification was a crucial one: they had not submitted a "certified payment certificate of experience," a mandatory document required by the Request for Proposal (RFP) – the document outlining the tender's terms and conditions.

At this stage, only three bidders, including Adam Media and Recreation Private Limited (the petitioner) and an 8th respondent, were initially qualified.

The Mysterious Reinstatement:

However, things took a surprising turn. M/s Magadh Advertising Bureau filed an "objection" to their disqualification. Following this, on June 26, 2024, the Project Director of BUIDCO informed the committee that the hard copy of the certificate in question was "illegible." But, after receiving the complaint, the document was "downloaded again from e-Proc" (the electronic procurement system), and a match was found between the certificate attached with the complaint and the "soft copy" (the electronically uploaded version). Furthermore, BUIDCO claimed that the authenticity of the certificate was verified from the employer (IOCL) and declared genuine.

Based on this, the 7th respondent, M/s Magadh Advertising Bureau, was re-qualified.

The Petitioner's Allegations of Irregularity:

Adam Media and Recreation Private Limited, the petitioner, raised several serious concerns:

1. Lack of Transparency: They argued that the re-qualification of a disqualified bidder was done "behind the back" of the other qualified bidders, who were never informed of this significant development.
2. Inconsistent Information: The petitioner pointed out that even on July 11, 2024, the Government of Bihar's website showed the tender as "PENDING," despite the Letter of Acceptance (LOA) – the official award of the contract – having been issued to the 7th respondent on July 5, 2024, and an agreement signed on July 25, 2024.
3. Suspicious Emails: The petitioner presented emails received as late as July 27, 2024, indicating that the "evaluation cover-2 has been completed and the petitioner has qualified." This directly contradicted the fact that the LOA had already been issued to another party. The petitioner alleged "subterfuge" to "outwit" other qualified bidders and suggested "collusion" between BUIDCO and the 7th respondent.
4. Violation of Tender Rules: The petitioner highlighted Clause 2.13.2 of the RFP, which stated that any "alteration/modification in the Bid or additional information supplied subsequent to the Bid Due Date, unless the same has been expressly sought for by the Authority, shall be disregarded." The petitioner argued that if the documents were illegible initially, BUIDCO should have sought clarification rather than accepting new submissions or re-evaluating existing ones without proper procedure.

BUIDCO's Defense:

BUIDCO and the 7th respondent defended their actions by stating:

• No "new" documents were submitted by the 7th respondent; the documents were already uploaded but the hard copy was illegible.
• The objection filed by the 7th respondent led to a re-verification, which revealed the certificate was indeed present in the uploaded tender.
• The 7th respondent's financial bid was "far above" the petitioner's, implying a financial benefit for BUIDCO.
• The "PENDING" status on the website was normal until the final agreement was executed, as the tender could still go to the next highest bidder if the highest one failed to sign the agreement.
• They claimed that automatic emails were generated at each stage, and an email on June 28, 2024, informed the petitioner of their qualification in Cover-1 (technical bid).

The Court's Analysis and Ruling:

The High Court, led by the Chief Justice, carefully considered the arguments, keeping in mind the Supreme Court's principles on judicial review in commercial matters. These principles generally advise against court interference unless there's clear evidence of "arbitrariness, mala fide, bias or irrationality" that would lead to "loss to the Public Exchequer."

However, the Court found significant "gross and palpable infirmity" in BUIDCO's actions:

1. Unexplained Initial Failure: The Court found it "curious" that the initial evaluation committee failed to notice the certified payment certificate of experience if it was indeed available in the uploaded documents. If the downloaded documents were illegible, BUIDCO should have sought clarification as per the tender rules, not just accepted an "objection" and re-evaluated.
2. Lack of Notification to Other Bidders: The most damning finding was that the re-qualification of a previously disqualified bidder was never communicated to the other three initially qualified bidders. The Court emphasized that a tender process, especially for public works, must be "imbibed with transparency and fairness."
3. Suspicious Email Communications: The Court found the emails received by the petitioner on July 27, 2024, stating their qualification, to be "very suspicious" when juxtaposed with the fact that the LOA had already been issued to the 7th respondent weeks earlier. This undermined BUIDCO's claim of automatic and timely email notifications.
4. Irrelevance of Higher Quote: The Court dismissed BUIDCO's argument that the 7th respondent's higher financial quote justified their re-qualification. It stated that a higher quote is "of no import to sustain the tender proceedings, especially when we have found the proceedings to be arbitrary, irrational and unfair, giving rise to an apprehension of bias." The Court noted that even if a tender is revenue-generating, there's no mandate to accept financial bids that are not up to expectation, and the authority can always re-tender if the process is flawed.

The Verdict:

The High Court concluded that the tender process was "demonstrably tainted." It interfered with the Letter of Acceptance (LOA) granted to the 7th respondent on July 5, 2024, and set it aside.

The Court explicitly stated that it was not making any observations about the 8th respondent's eligibility to be awarded the tender, leaving that decision to BUIDCO. It also granted BUIDCO the liberty to proceed for a "re-tender," allowing all bidders to participate again, unless disqualified on allegations of fraud, concealment, or false statements in the re-tender process.

Why This Case Matters:

This judgment is a strong affirmation of the principles of transparency, fairness, and adherence to established rules in public procurement. It sends a clear message to government bodies that:

• Rules are Paramount: Tender rules, once set, must be strictly followed by all parties, including the tendering authority.
• Transparency is Non-Negotiable: Any significant changes in a bidder's status, especially the re-qualification of a disqualified bidder, must be communicated openly and promptly to all relevant parties.
• Fair Play: Public contracts must be awarded through a process free from arbitrariness, bias, or any hint of collusion.
• Accountability: Courts will intervene if the tender process is found to be "tainted," even if the awarding authority argues a financial benefit. The integrity of the process outweighs a potentially higher bid if that bid was obtained through an unfair method.

In essence, this case serves as a crucial reminder that public trust in government contracting relies heavily on a process that is not only efficient but also impeccably fair and transparent.

Read the full judgement Below;

https://patnahighcourt.gov.in/viewjudgment/MTUjMTEwNjgjMjAyNCMxI04=-JnMN6A--am1--TGkw=