Railways' Rejection Of Techno‑Commercial Bid Upheld As Petitioner Failed To Produce Past Performance Certificate

A single‑judge bench of Justice A. Rajasheker Reddy heard a writ petition challenging the rejection of the petitioner‑company’s techno‑commercial bid in Tender No. CM-C&W-36-12T-BOOT-SC-18-19 and the subsequent opening of rivals’ bids. The petitioner contended that the rejection was arbitrary, discriminatory and violative of Articles 14 and 19(1)(g) of the Constitution and principles of natural justice, and sought annulment of any award to competing tenderers.

The Court dismissed the writ petition and held that the Railways possessed contractual discretion under the tender conditions to accept or reject bids but must exercise that discretion objectively and in conformity with Article 14. The Court noted the tender clause reserving the Railways’ right "to accept a tender in whole or in part or reject any tender or all tenders without assigning reasons," but emphasised that such power did not permit arbitrariness. The Court found that the petitioner failed to produce the mandatory past performance certificate required by Clause 1.3(i)/Annexure XVI and consequently did not satisfy the technical eligibility at Clause 1.1. The Court also found no convincing material to displace the tender committee’s conclusion that respondents 7 and 8 fulfilled technical criteria based on certificates from other OEMs. The Court, in its reasoning, observed: “In the instant case the respondent‑Railways has discretion under the tender conditions to accept or reject any tender but the only requirement in taking a decision either to accept or reject objectively and to sub‑serve the ends of justice. Since there is no proof of the petitioner producing the past performance certificate as required under Clause 1.3 (i) of the tender conditions, the tender of the petitioner could not pass through the technical bid.” The Court therefore declined to substitute its own view for that of the tendering authority and dismissed the petition.

Background: The petitioner, a company engaged in mechanised laundry services, operated an existing 12‑ton laundry and submitted a bid for a 10‑year BOOT contract to set up and operate a 12‑ton mechanised laundry for Secunderabad and Hyderabad stations. The tender adopted a two‑packet system (technical and financial) and prescribed technical eligibility including prior completion or ongoing operation of a similar single service contract of at least 4 T/day and receipt of payments amounting to at least 35% of the annual tender value (Clause 1.1.1). Clauses 1.3(g) and (h) required OEM life/support and service commitment certificates; Clause 1.3(i) required past performance information in Annexure XVI; Clause 1.9 reserved the Railways’ right to reject without assigning reasons.

The petitioner produced life/service certificates from Jensen Asia Pvt. Ltd. asserting equipment life and spare parts/support and contended that the OEM had confirmed exclusivity for the petitioner. The tender committee rejected the petitioner’s technical bid on 19‑11‑2018 and sent the automated e‑mail “Your techno‑commercial bid … has been found technically unsuitable due to following reasons: Comments: Rejected.” Competing bidders (respondents 7 and 8) advanced certificates from other manufacturers (Jiangsu Sea‑Lion and Transferon). The petitioner alleged those certificates were false and that the 9th respondent (Jensen Asia) had not issued such support certificates to rivals.

The Railways countered that the petitioner had not furnished past performance certificates as required by Clause 1.3(i)/Annexure XVI and that the tender committee objectively found respondents 7 and 8 met technical criteria based on acceptable OEM letters. The Railways relied on Clause 1.9 and on established precedents that judicial interference in tender matters is limited to cases of “palpably and demonstrably illegal” or mala fide decisions. The Court examined the tender clauses, the OEM letters produced by the petitioner, the uncontroverted absence of past performance documentation, and precedent including Union of India v. Dinesh Engineering Corporation, and concluded there was no basis to declare the decision arbitrary or to direct reconsideration.

The writ petition was dismissed; miscellaneous petitions stood closed and there was no order as to costs. The Court declined to cancel any allotment or reopen the tender process in favour of the petitioner.

Case No.: Not stated in the judgment Case Title: Writ petition challenging rejection of techno‑commercial bid in Tender No. CM-C&W-36-12T-BOOT-SC-18-19 Appearances: For the Petitioner(s): Sri B. Nalin Kumar (Advocate) For the Respondent(s): Sri C.V. Rajeev Reddy (Standing Counsel, Railways); Sri R. Raghunandan (Senior Counsel for party respondents)