1993 (10) TMI 353 - HC - Indian Laws

Court upholds rejection of tender for printing directories, emphasizing eligibility criteria and public interest

The court dismissed the petitioners' claims challenging the rejection of their tender for a contract to print telephone directories. The court held that ... - Issues Involved:1. Arbitrary and capricious exercise of executive power.2. Eligibility criteria for tender.3. Piercing the corporate veil.4. Public revenue and public interest.Summary:1. Arbitrary and Capricious Exercise of Executive Power:The petitioners, a public limited company and its director, sought a writ of certiorari to quash the award of a contract for printing, binding, and supplying telephone directories to the fourth respondent. They also sought a mandamus directing the respondents to accept their tender. The petitioners alleged that the action of the respondents was arbitrary and capricious, violating Article 14 of the Constitution, as their tender offered a higher royalty and met the eligibility criteria.2. Eligibility Criteria for Tender:The respondents argued that the petitioner's tender was rejected because it did not meet the eligibility condition of having past experience in compiling, printing, and supplying telephone directories for telephone systems with a capacity of more than 50,000 lines. The petitioners contended that their shareholders had the requisite experience, and the authorities should have considered this collective experience. However, the court held that the first petitioner, as a company, must independently satisfy the eligibility criteria and that the experience of its shareholders could not be attributed to the company.3. Piercing the Corporate Veil:The petitioners argued that the authorities should have pierced the corporate veil to recognize the experience of the shareholders. The court, however, held that piercing the corporate veil is generally limited to instances of fraud, improper conduct, or statutory requirements. The court stated, 'Experience of a shareholder cannot be the experience of the company,' and rejected the argument that the first petitioner could claim the collective experience of its shareholders.4. Public Revenue and Public Interest:The petitioners claimed that rejecting their higher bid resulted in a loss of public revenue. The court acknowledged that while revenue is an important consideration, it is not the sole factor. The primary concern was to ensure timely and competent delivery of telephone directories. The court found that the authorities acted correctly by prioritizing eligibility and experience over the amount of royalty offered.The court concluded that the petitioners failed to establish that the rejection of their tender was arbitrary or unreasonable. The petition was dismissed, and the rule was discharged.