Court upholds BSNL's rejection of tender bid due to eligibility criteria non-compliance

The court upheld BSNL's rejection of the petitioner's tender for outsourcing operations, citing that the bid did not meet eligibility criteria independently. The court emphasized limited judicial review of tender conditions and rejected the petitioner's argument to attribute the sole proprietorship's experience to the newly formed company. BSNL's interpretation of tender conditions was deemed fair, and the court dismissed the writ petition, affirming BSNL's decision.

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Issues Involved:
1. Arbitrariness in rejection of tender.
2. Eligibility criteria interpretation.
3. Consideration of sole proprietorship's experience for the newly formed company.
4. Judicial review of tender conditions.
5. Procedural regularity and fairness in tender evaluation.

Issue-Wise Detailed Analysis:

1. Arbitrariness in Rejection of Tender:
The petitioner complained of arbitrariness by BSNL in rejecting its tender for outsourcing operations and maintenance activities of passive infrastructure along with sales and marketing work of non-allocated BSNL tower sites. The petitioner argued that BSNL's narrow interpretation of tender conditions was contrary to Article 14 of the Constitution of India, which mandates fairness and non-arbitrariness in state actions.

2. Eligibility Criteria Interpretation:
The petitioner, originally a sole proprietorship (Pratap Technocrats), was incorporated as a private company on 27.11.2015. BSNL's tender required bidders to be Indian registered companies under the Companies Act, 1956, and to have a minimum cumulative turnover of Rs. 100 Crores over three consecutive financial years from operations and maintenance of passive telecom infrastructure. The petitioner argued that the experience and financial credentials of the sole proprietorship should be considered for the newly formed company since the sole proprietorship's business was taken over by the company.

3. Consideration of Sole Proprietorship's Experience for the Newly Formed Company:
The petitioner contended that since the sole proprietorship's proprietor was the major shareholder in the new company, the business experience and income tax particulars of the sole proprietorship should be attributed to the company. The petitioner relied on the object clause of the new company and a chartered accountant's certificate to support this claim. However, BSNL maintained that the bidder alone must fulfill the eligibility criteria, and the petitioner's bid was non-responsive as it did not meet the financial qualification independently.

4. Judicial Review of Tender Conditions:
The court emphasized that judicial review of tender conditions is limited. The court's role is not to interpret the tender document but to review the decision-making process of the executive agency. The court should defer to the executive's interpretation unless there is clear evidence of mala fides, procedural irregularity, or illegality. The court cited precedents, including Michigan Rubber (India) Limited v. State of Karnataka and Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., to reinforce this principle.

5. Procedural Regularity and Fairness in Tender Evaluation:
BSNL's interpretation of the tender conditions was found to be neither arbitrary nor a misinterpretation. The court noted that the tender conditions explicitly required the bidder to have the necessary experience and turnover in its own right, with an exception only for subsidiaries. The court also found that the sole proprietorship continued to function even after the incorporation of the petitioner company, casting doubt on the petitioner's assertion that the sole proprietorship's business was entirely subsumed by the company.

Conclusion:
The court concluded that BSNL's rejection of the petitioner's tender was justified and not arbitrary. The petitioner's bid did not meet the eligibility criteria independently, and the sole proprietorship's experience could not be attributed to the newly formed company. The writ petition was dismissed, and the court upheld BSNL's decision.

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