Bid rejection upheld after consortium member's balance sheet showed disqualifying short-term borrowings under eligibility criteria

The HC dismissed a writ petition challenging bid rejection based on failure to meet minimum eligibility criteria. The petitioner consortium member showed Rs. 98.01 crores as short-term borrowings in their balance sheet under current liabilities, which disqualified them under RFQ clause 7.4. The court rejected the petitioner's attempt to reclassify this as long-term borrowing through a chartered accountant certificate, finding no sanctity in such certification against the petitioner's own records. The court found the eligibility criteria neither arbitrary nor unconstitutional, noting the petitioner had agreed to abide by all RFQ terms and conditions.

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Issues Involved:
1. Validity of the Request for Qualification (RFQ) and consequential notice.
2. Compliance with minimum eligibility criteria for financial capability.
3. Challenge to Clause 7.4.1.2 of the RFQ.
4. Transparency and fairness in the decision-making process.

Detailed Analysis:

1. Validity of the Request for Qualification (RFQ) and Consequential Notice:
The petitioner challenged the RFQ issued by the 1st respondent and the consequential notice dated 22.12.2015, which declared another consortium as the eligible applicant. The petitioner's bid was rejected due to non-compliance with the minimum eligibility criteria, specifically the classification of an overdraft facility as "short term borrowing" under Schedule III of the Companies Act, 2013. The petitioner argued that the RFQ clause was arbitrary and unreasonable.

2. Compliance with Minimum Eligibility Criteria for Financial Capability:
The petitioner claimed to meet the minimum eligibility criteria with a net tangible asset of Rs. 580 Crores. However, the 1st respondent rejected the bid, citing that the overdraft facility of Rs. 98.01 Crores should be classified as a "current liability" and "short term borrowing." The petitioner contended that the certification by their Chartered Accountant should classify it as a "long term borrowing." The court found that the petitioner had shown the amount as "short term borrowings" in its balance sheet and failed to provide sufficient evidence to classify it otherwise.

3. Challenge to Clause 7.4.1.2 of the RFQ:
The petitioner argued that Clause 7.4.1.2, which prescribes a Net Tangible Asset of not less than Rs. 580 Crores, was unconstitutional and contrary to the policy prescribed by the Government of India, Planning Commission, and CVC Guidelines. The court found no ambiguity in the clause and upheld its validity, stating that the criteria must be satisfied by either the bidding company or the lead consortium member. The court also noted that the petitioner's attempt to challenge the clause after participating in the bid process was an afterthought and dismissed the challenge.

4. Transparency and Fairness in the Decision-Making Process:
The petitioner alleged a lack of transparency and fairness in the decision-making process, claiming that the entire proceedings favored the 2nd respondent. The court examined the communications between the petitioner and the 1st respondent and found that ample opportunities were given to the petitioner to clarify its financial capability. The court concluded that the decision was made with conscious application of mind and sufficient input from experts, thus rejecting the petitioner's claims of unfairness.

Conclusion:
The court dismissed the writ petition, upholding the validity of Clause 7.4.1.2 of the RFQ and confirming that the petitioner failed to meet the minimum eligibility criteria for financial capability. The court also found no lack of transparency or fairness in the decision-making process by the 1st respondent. Consequently, all connected miscellaneous petitions were also dismissed.

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