Calcutta High Court Reaffirms Authority’s Discretion in Tender Rejections for Past Contractual Failures

In a recent ruling, the Hon’ble High Court of Calcutta in the case of M/s. Sharma Transport Agency and another vs. Damodar Valley Corporation and others, W.P.A. 18137 of 2024 dated October 7, 2024, upheld the Damodar Valley Corporation’s (DVC) decision to reject the bid of M/s Sharma Transport Agency and another in a tender related to ash transportation from the Mejia Thermal Power Station (MTPS). The bid was rejected during the technical evaluation phase due to the company’s poor performance in an earlier project at Raghunathpur Thermal Power Station (RTPS).

The tender, issued on March 6, 2024, called for the empanelment of transportation agencies for evacuating 40 lakh metric tonnes of ash from MTPS and disposing it at designated sites. M/s. Sharma Transport Agency contended that they had qualified for technical evaluation in other contracts, and the rejection by DVC was unjustified. They claimed that past performance at a single project should not have resulted in their disqualification from this tender. However, DVC contended that it had the authority to assess the capacity, capability, and integrity of any bidder based on past performance of bidders in other projects. Citing the unsatisfactory work done by M/s Sharma Transport Agency at RTPS, DVC argued that the rejection was valid and in line with the conditions of the tender.

The Hon’ble High Court of Calcutta ruled that the tendering authority is the best judge when it comes to determining the capacity, capability, and integrity of a bidder. They have the right to make their own evaluation based on specific project requirements and past performance. The Court’s review in such cases is limited to assessing whether the reasons given by the authorities for rejecting the bid were justifiable and not arbitrary. The Hon’ble High Court of Calcutta found that DVC had provided adequate reasoning for its decision, supported by documented evidence of poor performance in the RTPS project, which included significant delays and non-performance. As a result, the Hon’ble High Court of Calcutta ruled that there was no merit in the petitioners’ claim of unjust treatment. The writ petition was dismissed, with the Hon’ble High Court of Calcutta holding that DVC acted within its rights in rejecting the bid. The decision was not arbitrary, and the authority had made a valid assessment of the petitioners’ performance before arriving at its conclusion.

This ruling reinforces the principle that tendering authorities are best placed to make technical evaluations, provided they act fairly and transparently.