TaxTMI 
TaxTMI 
2026 (7) TMI 1461
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....rinting and Supply of Magnetic Strip and Variable QR code Printed Self-Service Passbook (SSPB) [RFP] issued by Respondent No.1 - Bank of Baroda [BoB]. However, MTL's bid was not evaluated because it did not meet the pre-qualification criteria under point No. 14 of the tender conditions. The said disqualification was reflected on the Government eMarketplace portal [GeM Portal] on 26.05.2026 as under: "Reason for Technical Evaluation Reason Not meeting the eligibility criteria specified in Bid Clause as per details indicated in the comment Comment The bid submitted by the company is not considered for further processing as the company does not meet the requirements stipulated under Prequalification Criteria Point No. 14." 3. Aggrieved by being held ineligible, the appellants had filed the writ petition, inter alia, challenging the aforesaid disqualification [impugned disqualification]. Additionally, the appellants had challenged point No. 14 of the pre-qualification criteria for submission of bids, which formed a part of the RFP [the impugned clause]. In the aforesaid context, the appellants sought interim relief, praying for a stay of the i....
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.... not based on any deficiencies attributed to MTL but to one of the Directors (Sri T. Gautham Pai). The appellants contend that Sri T. Gautham Pai ceased to be a Promoter Director and, therefore, MTL could not be disqualified on the ground that its Promoter Director was a defaulter. 8. The appellants also challenged the impugned clause on the ground that it was arbitrary and exclusionary, and that it had no nexus with the object of the RFP, which was to invite competitive bids from entities engaged in the business of such supplies. It was contended that the impugned clause had the effect of excluding technically competent entities from providing the required supplies if it was found that one of the Promoter Directors or any Director of the entity had defaulted in payment of its dues. It was further contended that such a default did not affect the tenderer's ability to execute the contract. BoB disputes this contention and claims that the impugned clause is relevant and material, as it ensures that the tendering entity is financially sound and creditworthy. It is argued that the financial stress of the promoter would invariably translate into the entities under the control of ....
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....tepparent and step-child shall be treated as a parent and child respectively." 13. BoB had also prduced a copy of the list of Directors furnished by MTL along with its bid, which reflected Sri T. Gautham Pai as the Managing Director of MTL, holding the said office since 29.07.2003. The updated draft red herring prospectus dated 10.11.2025 of one of MTL's group companies, Manipal Payment and Identity Solutions Limited, sets out the profile of the promoters and the promoter group. It reflects Sri T. Gautham Pai and his parents, Sri T. Satish U. Pai and Smt. Sandhya S. Pai, as individual promoters. The corporate promoters of the said company includes MTL. In the said prospectus, Sri T. Gautham Pai is reflected as Executive Chairman and whole-time Director of MTL. 14. Sri T. Gautham Pai was also a Director of M/s. MVP Group International Inc., whose credit facilities have been classified as a Non-Performing Accounts [NPA]. An application under Section 95 of the Insolvency and Bankruptcy Code, 2016 [IBC] has also been filed before the National Company Law Tribunal, Bengaluru against Sri. T. Gautham Pai in relation to the same. The said action is a subject matter of challenge in an....
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.... Gautham Pai could not be considered a Promoter of MTL. 20. Mr. K. Shashikiran Shetty, learned Senior Counsel appearing for BoB, countered the aforesaid submissions. First, he submitted that it was not open for MTL to challenge the impugned clause after having participated in the tender process. Second, he submitted that the impugned clause has a direct nexus with the object of ensuring that the tendering entity is financially stable and has a credible track record. He submitted that the Promoters of a corporate entity in default cannot exploit the corporate structure to conceal their credit status. He submitted that BoB could not be expected to enter into contracts with entities whose promoters had defaulted on their financial obligations. 21. Next, he submitted that the documents accompanying the bid listed Sri T. Gautham Pai as a Promoter, and the list of Directors also listed him as MTL's Managing Director. He submitted that Sri T. Gautham Pai was in control of MTL and, therefore, was clearly its Promoter. He submitted that MTL had filed Form DIR-12 with the RoC, showing a change in the status of Sri T. Gautham Pai from Promoter Director to Professional Director, on the s....
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....nciple was clearly recognised by the Supreme Court in New Horizons Ltd. vs. Union of India (1995) 1 SCC 478. In the aforesaid case, the Supreme Court had considered a situation in which one of the tenderers was not considered on the ground that it lacked the requisite past experience. The tenderer (New Horizons Ltd.) was a company in the nature of a joint venture, and its shareholders had the necessary experience. The High Court did not accept the shareholders' experience as the company's. The High Court held that it was one thing for the shareholders of the company to have experience and quite another for the company to have such experience. However, the Supreme Court did not concur with the said view. The Supreme Court held that the terms and conditions of such documents must be construed from the standpoint of a prudent businessman, and when a businessman enters into a contract, he seeks to assure himself about the credentials of the person who is entrusted with the work, and such credentials must be examined from a commercial point of view, which would not only include the background of the company but also the persons who are in control of the company. We may refer to the ....
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....o a contract whereunder some work is to be performed he seeks to assure himself about the credentials of the person who is to be entrusted with the performance of the work. Such credentials are to be examined from a commercial point of view which means that if the contract is to be entered with a company he will look into the background of the company and the persons who are in control of the same and their capacity to execute the work. He would go not by the name of the company but by the persons behind the company. While keeping in view the past experience he would also take note of the present state of affairs and the equipment and resources at the disposal of the company. The same has to be the approach of the authorities while considering a tender received in response to the advertisement issued on 22-4-1993. This would require that first the terms of the offer must be examined and if they are found satisfactory the next step would be to consider the credentials of the tenderer and his ability to perform the work to be entrusted. For judging the credentials past experience will have to be considered along with the present state of equipment and resources available with the ten....
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....d it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. Based on these principles we will examine the facts of this case since they commend to us as the correct principles." 27. The te....
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....d to its earlier decisions and observed as under: "19. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court in all the aforesaid decisions has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical iss....
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....sis of the said conditions. The Supreme Court in National High Speed Rail Corpn. Ltd. v. Montecarlo Ltd. (2022) 6 SCC 401 held that where the conditions of a tender were within the knowledge of a bidder at the time of participating in the tender process, it is not open to the bidder, having accepted the terms and conditions of the tender with full knowledge thereof and having participated in the process, to thereafter make a grievance in respect of such conditions. The said observation reads as under: "44. ...once the original writ petitioner participated having knowledge of the aforesaid clauses in ITB, thereafter it was not open for the original writ petitioner to challenge the same. ... If the original writ petitioner was aggrieved either it would not have participated and/or ought to have challenged such clauses before participating in the tender process." 32. The second question to be addressed is whether the impugned disqualification is arbitrary and contrary to the impugned clause. The principal controversy concerns whether Sri T. Gautham Pai is a Promoter Director. As noted above, Mr. Raghavan had earnestly contended on behalf of the appellants that Sri T. Gauth....
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....rectly, whether a shareholder, a director, or otherwise. Thus, the key question is whether there is material on record for BoB to conclude that Sri T. Gautham Pai is a Promoter Director of MTL. 36. At this stage, it would also be relevant to note that MTL is a closely held company. MTL was incorporated, inter alia, by Sri T. Gautham Pai, who is also a signatory to MTL's MOA and AOA. The AOA of MTL, furnished along with the bid, also lists Sri T. Gautham Pai as a Promoter. The list of shareholders of MTL as on 07.04.2026, as produced by the appellants, indicates that there are 23 (twenty three) shareholders, and 71.46% of the equity share capital is held by Smt. Sandhya S. Pai on behalf of Tridevita Family Trust. 37. A copy of the trust deed of Tridevita Family Trust - 2017 has also been produced, which indicates that Sri. T. Satish U. Pai, the father of Sri Gautham Pai, is the settlor in the said Trust, and that Smt. Sandhya S. Pai (Sri T. Gautham Pai's mother) and Tridevitha Consultancy Services Private Limited are trustees. The primary beneficiaries of the said Trust are Smt.Sandhya S. Pai - herself one of the trustees - and the two granddaughters of the settlor (Ms. Tr....
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....t is resolved to reappoint Sri T. Gautham Pai as Executive Chairman of the company for a period of three years with effect from 28.05.2026. The nature of his duties as set out in the said resolution is reproduced below: "(A) Nature of Duties (a) Strategic Leadership * Set the overall vision, mission, and long-term strategic direction of the organization * Drive strategic initiatives and organizational transformation * Lead the process of planning for the succession of the CEO and other senior management roles. (b) Board Oversight & Corporate Governance * Chair all Board and shareholder meetings * Facilitate productive Board discussions and decision-making * Recruit, evaluate, and, when necessary, replace board members and senior executives * Ensure the Board fulfills its fiduciary responsibilities * Ensure the company adheres to legal, ethical, and regulatory standards * Oversee risk management frameworks and internal controls * Establish and uphold the Company's culture and values (b) Executive Management * Oversee operations of the Company by ....