State Organizations Must Uphold Transparency and Fairness in Contractual Bid Matters: Patna High Court

In a significant ruling, the Patna High Court today emphasized the importance of fairness, transparency, and adherence to constitutional principles in the decision-making processes of State organizations, especially in contractual matters. The bench, comprising Honourable Mr. Justice P. B. Bajanthri and Honourable Mr. Justice Arun Kumar Jha, overturned the disqualification of a technical bid by BVG India Limited, underscoring the need for State bodies to act in public interest and avoid arbitrariness in tender processes.

The Court's decision came after a detailed scrutiny of the tendering process, where the petitioner, BVG India Limited, challenged the disqualification of their technical bid for not including ‘Notes’ in the Audited Balance Sheet. The bench observed, “State organizations/institutions should follow norms in contractual matters, namely, complying with Article 14 of the Constitution of India, transparency, and fairness in the entire bid process.”

The judgment also brought to light the acceptance of the fourth respondent's bid despite non-fulfillment of the eligibility criteria under the Companies Act, 2013. This raised questions about the discretion exercised by the State Health Society, Bihar, the respondent in the case. The Court directed the Society to revisit and evaluate technical bids afresh, ensuring the process upholds transparency and fairness.

In delivering the judgment, the Court referenced several past decisions, including Reliance Energy Limited vs. Maharashtra State Road Development Corp. Ltd. And Others, highlighting the essential role of judicial review in contractual matters. The Court remarked, “The authority issuing the tender may be required to enforce [essential conditions] rigidly. In other cases, it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases.”

This ruling is expected to have wide-ranging implications on how State organizations handle tender processes, potentially leading to more stringent scrutiny and enhanced transparency in public contracts. The legal community sees this as a reinforcement of the principles of justice and equality enshrined in the Constitution.

Representatives from BVG India Limited expressed their satisfaction with the verdict, stating it as a step towards ensuring fair play in public procurement processes. The State Health Society, Bihar, is yet to comment on the Court’s directives.

The decision underscores the judiciary’s role in upholding the rule of law and ensuring that public bodies act within the bounds of fairness and reasonableness, as envisioned by the Constitution of India.

Date of Decision: 10-11-2023

BVG India Ltd VS The State of Bihar