The Punjab and Haryana High Court has set aside the Punjab State Power Supply Corporation Limited's (PSPCL) decision to award a tender for the supply, installation, testing, commissioning, reading, analysis and integration with the billing system of 1,000 power quality Class A electrical meters, along with one year's operation and maintenance. The Division Bench of Justice Deepak Sibal and Justice Lapita Banerji held that PSPCL's decision to award the tender to a respondent-organisation was “most arbitrary and completely irrational”. The Bench also set aside the decision declaring the respondent-organisation the successful bidder, along with all consequential actions and agreements entered into.
Court's Reasoning on Interference in Tender Matters
The Bench asserted that constitutional courts normally do not interfere with decisions taken by an employer or project owner in tender matters. Such interference is permissible only when the decision-making process is mala fide, intended to favour someone, arbitrary or irrational. “It is true that the decision making process of the employer or owner of the project in accepting or rejecting the bid of a tenderer is normally not interfered with by Constitutional Courts... In other words, for interference by a Constitutional Court, the decision making process or the decision itself should be perverse or patently arbitrary and not merely faulty or incorrect or erroneous,” the Bench observed.
Mandatory Requirement of Type Test Reports
Examining the tender conditions, the Bench held that uploading type test reports along with the bidder's e-bid was a mandatory requirement, particularly because the equipment involved was “highly sophisticated electrical equipment”. “We unhesitantly arrive at the conclusion that as per the terms of the `Notice Inviting Tenders’ (NIT), uploading of type test reports, along with the bidder's e-bid, was mandatory and of considerable importance particularly when the equipment in question was a highly sophisticated electrical equipment,” the Bench observed. The judges added that the condition was reasonable because it required the supplier to satisfy the purchaser, through test reports issued by recognised agencies, that the offered equipment met the prescribed technical standards before its bid could even be considered. The Bench also pointed to a NIT clause, which provided that a bid not accompanied by the required test reports was liable to be rejected outright.
Corrigendum Did Not Allow Bypassing Test Reports
The Bench then examined a corrigendum dated April 7, 2025, issued after a prospective bidder suggested during the pre-bid meeting that “in case a bidder had submitted, along with its e-bid, a type test report pertaining to the “standard IEC 61000-4-30 Edition 2015”, such bid should not be rejected only because “such type test report was not in conformity with the latest standards laid down in the year 2021.” The Corrigendum nowhere permitted PSPCL to place the order of the equipment in question without filing of the required test reports or to accept the type test reports with regard to the prescribed technical standards for the first time after the last date fixed for uploading of the e-bid and certainly not to accept such type test reports for the first time after placing of the order of the offered equipment upon the supplier.” The Bench added that the corrigendum could not be stretched to include cases wherein no test report at all was submitted as that would permit placing of a purchase order on an ineligible bidder. It would also be a “wholesale departure” from the mandatory provisions of the NIT.
PSPCL's Action Found Arbitrary
The Bench further added the purchase order dated March 18 was placed on the respondent by PSPCL in the absence of certain test reports. The action on PSPCL’s part, on the face of it, was found to be most arbitrary because PSPCL placed an order for the supply of 1000 highly sophisticated electrical meters “without knowledge of the fact as to whether such meters are compliant with the prescribed technical specifications”. The Bench added: “Such action of PSPCL turns mandatory conditions prescribed in the NIT on its head especially disregarding the mandate in the NIT that such test reports should have been uploaded by respondent along with its e-bid on or before April 17, 2025. In such circumstances, placing of an order could not only result in supplying of sub-standard material to an instrumentality of the State but also spiral into several legal complications”.
Court's Final Observations
The Bench asserted it was only reasonable that PSPCL – as per the NIT – should have first satisfied itself that the technical equipment in question complied with all the prescribed standards before consideration of a bidder’s bid “and not after placing the order wait for the supplier to furnish the required test reports that the equipment in question meets all the required technical standards”. The Bench added it was a clear example where “PSPCL has put the cart in front of horse”. It also completely deviated from the mandatory provisions of the NIT read with the corrigendum, “which applied only in the case of making good the already filed test reports which only did not pertain to the latest amendments of the fixed standards and did not permit filing of fresh test reports for the first time after over a year from the last date to submit bids”. The Bench left it open to PSPCL to initiate a fresh tender process for the project in accordance with law. The petitioner was represented by senior advocate Anand Chhibbar, along with counsel Jivtesh Singh Negi and Utkarsh Khatana.
