The Patna High Court, in a significant judgment, upheld the decision of the District Health Society, Gaya, to reject the technical bid of a contractor in a tender for hospital maintenance services. The judgment reiterates the need for strict compliance with tender conditions and clarifies the court’s limited role in interfering with administrative decisions unless blatant arbitrariness is proven.
Simplified Explanation of the Judgment
In this case, the petitioner, a contractor engaged in public service tenders, challenged the rejection of its technical bid by the District Health Society, Gaya. The bid was submitted in response to a 2018 tender for sanitation, laundry, and power backup services across multiple healthcare institutions in Gaya.
The petitioner’s bid was rejected on three primary grounds:
- Non-submission of a valid labour license,
- Absence of employee history sheets under ESI (Employees’ State Insurance),
- Service tax deposit challans not commensurate with the reported work experience.
The petitioner argued that:
- A labour license was not mandatory at the bidding stage as per a previous judgment (CWJC No. 11952/2019),
- EPF (Employees’ Provident Fund) registration suffices if ESI details are unavailable,
- The tender committee had no authority to scrutinize service tax compliance.
During hearings, it became clear that the petitioner had previously held a labour license, which was not renewed after 2015. The Court distinguished this from first-time applicants and emphasized the duty of experienced contractors to maintain valid licenses. The Court further held that ESI and EPF are separate statutory requirements, and the petitioner failed to demonstrate compliance with either, including the minimum workforce condition.
On the third point, the Court observed that discrepancies between service tax paid and actual work done could not be dismissed lightly, especially when it raised questions about the petitioner’s statutory compliance and integrity.
The Court also noted that:
- The petitioner failed to challenge the work orders issued to the successful bidders,
- Agreements were executed with them before the writ petition was even filed,
- The petitioner appeared to be disrupting the contract post-facto without substantive legal challenge to those contracts.
Referring to earlier judgments, including a Division Bench ruling in Madras Securities Printers Pvt. Ltd. v. State of Bihar [2014 (1) PLJR 227], the Court stated that public interest and continuity of essential services outweigh isolated grievances unless there’s manifest illegality.
Ultimately, the writ was dismissed as the petitioner’s claims lacked legal merit, and no public interest was served by further judicial interference.
Significance or Implication of the Judgment
This decision reinforces that bidders in government tenders must meet all eligibility requirements — procedural and statutory — at the time of bidding. Courts are reluctant to interfere in administrative decisions unless there is compelling evidence of bias, arbitrariness, or mala fide intent.
For the public and government departments, this judgment:
- Validates thorough scrutiny of bidders for public contracts,
- Upholds the importance of statutory compliance like ESI, EPF, and service tax,
- Discourages afterthought litigation designed to disrupt awarded contracts.
Legal Issue(s) Decided and the Court’s Decision
- Was the rejection of the petitioner’s technical bid arbitrary?
- Court’s Decision: No. It was based on valid, documented deficiencies in compliance.
- Is a renewed labour license necessary for repeat tender participants?
- Court’s Decision: Yes. Non-renewal cannot be excused merely because the license was once held.
- Can a contractor rely solely on EPF registration and ignore ESI requirements?
- Court’s Decision: No. Both are distinct and mandatory if required by tender.
- Was the petitioner entitled to relief despite not challenging the final work orders?
- Court’s Decision: No. The petition failed to challenge key administrative actions.
Judgments Referred by Parties
- CWJC No. 11952 of 2019 (relied upon by petitioner)
Judgments Relied Upon or Cited by Court
- M/s Madras Securities Printers Pvt. Ltd. v. State of Bihar, 2014 (1) PLJR 227
Case Title
Raj Informatics Construction v. State Health Society & Others
Case Number
CWJC No. 14241 of 2018
Citation(s)
2020 (1) PLJR 21
Coram and Names of Judges
Hon’ble Mr. Justice Rajeev Ranjan Prasad
Names of Advocates and who they appeared for
- Mr. Aditya Prakash Sahay, Advocate for the Petitioner
- Mr. Kishore Kumar Sinha and Mr. Shashi Shekhar, Advocates for Respondents No. 4 to 6
- Mr. Gyan Prakash, Advocate for Respondent No. 7
- Mr. Siya Ram Sahi, Advocate for Respondent No. 8
Link to Judgment
https://patnahighcourt.gov.in/viewjudgment/MTUjMTQyNDEjMjAxOCMxI04=-vLX4SG–ak1–LRr4=
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