Bid rejection upheld as petitioner's net worth fell short of Rs.42.98 crores requirement for highway project

Delhi HC dismissed petitioner's challenge to bid rejection for six-lane highway development project under Bharatmala Pariyojana. Respondent rejected bid as petitioner's net worth was below required Rs.42.98 crores, restricting reserves to revenue profits only. Court held tendering authority's decision was reasonable and showed proper application of mind by financial consultant. Following SC precedents in AFCONS and SILPPI cases, court ruled constitutional courts must defer to tendering authority's interpretation unless there is mala fide or perversity. Given project's importance and financial capacity requirements, rejection was justified and not arbitrary enough to warrant judicial interference under Article 226.

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Issues Involved:
1. Rejection of the bid based on the Net Worth criteria as per the RFP.
2. Interpretation of "Net Worth" under Clause 2.2.2.9 of the RFP.
3. Consistency in the definition of Net Worth across different tenders.
4. Applicability of the rule of contra proferentum in tender matters.
5. Judicial review of the decision taken by the tendering authority.

Issue-wise
Detailed Analysis:

1. Rejection of the bid based on the Net Worth criteria as per the RFP:
The petitioner challenged the rejection of its bid for a highway development project, arguing that its Net Worth met the criteria specified in the RFP. The Respondent rejected the bid on the grounds that the petitioner did not satisfy the Net Worth criteria defined under Clause 2.2.2 (b) of the RFP, which required a minimum Net Worth of Rs.42.98 crores.

2. Interpretation of "Net Worth" under Clause 2.2.2.9 of the RFP:
Clause 2.2.2.9 of the RFP defines Net Worth as the aggregate value of the paid-up share capital and all reserves created out of profits and securities premium account, after deducting accumulated losses, deferred expenditure, and miscellaneous expenditure not written off. The clause explicitly excludes reserves created out of revaluation of assets, write-back of depreciation, and amalgamation. The petitioner argued that its Net Worth turned positive due to the extinguishment of liabilities pursuant to the Resolution Plan approved by the NCLT, which should be considered under the clause.

3. Consistency in the definition of Net Worth across different tenders:
The petitioner contended that the definition of Net Worth should be consistent across various tenders issued by the Ministry of Road, Transport and Highways, which have accepted reserves arising out of capital. The petitioner cited examples where the same criteria for calculating Net Worth were applied differently, leading to ambiguity and inconsistency.

4. Applicability of the rule of contra proferentum in tender matters:
The petitioner argued that any ambiguity in the tender terms should be interpreted against the author of the document, citing the rule of contra proferentum. The petitioner relied on previous judgments to support this argument, stating that there must be legal certainty in tender conditions to ensure a level playing field for all bidders.

5. Judicial review of the decision taken by the tendering authority:
The court examined whether the decision of the Respondent to reject the bid was arbitrary or violative of Article 14 of the Constitution of India. The court noted that the tendering authority is the best judge of its requirements and that judicial interference should be minimal unless the decision-making process is found to be arbitrary, irrational, or biased. The court referred to several judgments emphasizing the need for restraint in judicial review of tender matters and upheld the Respondent's decision.

Conclusion:
The court dismissed the petition, finding no merit in the petitioner's arguments. The court held that the decision of the Respondent to restrict reserves only to those arising out of revenue profits was neither arbitrary nor unreasonable. The court emphasized that the tendering authority's interpretation of the tender documents should be respected unless there is evidence of mala fide or perversity. The court also clarified that the rule of contra proferentum does not apply to tender matters, as the tendering authority is best positioned to interpret its requirements.

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