In CWP-11136-2022-PUNJ HC- P&H HC upholds decision of non-allotment of tender relating to supply of gypsum for agriculture use where petitioner constituted Joint Venture in order to bypass eligibility criterion Justices Ravi Shanker Jha & Arun Palli [25-05-2022]

Read Order: Sharma Constructions Joint Venture v. Punjab Agro Industries Corporation Ltd. and Another

LE Correspondent

Chandigarh, May 30, 2022: While dealing with a petition filed by the petitioner, Sharma Constructions Joint Venture, against the non-acceptance of its tender bid by the respondent-authorities in relation to the e-tender floated for the supply of gypsum for agriculture use, the Punjab and Haryana High Court has found no irregularity in the impugned decision as the petitioner failed to fulfill the eligibility condition constituted in the NIT which clearly required the tenderer to either be a proprietorship concern, a partnership firm or an incorporated company and own its entity. 

The Bench of Chief Justice Ravi Shanker Jha and Justice Arun Palli observed that Joint Venture was constituted after issuance of the NIT on 12.04.2022 only for the purposes of applying for the tender in response to the NIT, as the constituent members of the Joint Venture were not eligible to apply and obtain the contract. 

Also, noticed was the fact that there was no clause in the Joint Venture Agreement indicating as to who would be managing the Joint Venture and rather on the contrary, in spite of constituting the so-called Joint Venture, the constituents/ proprietors intended to continue to manage their own separate firms.

The petitioner filed this petition being aggrieved by an order vide which the petitioner was declared technically non-compliant qua e-tender floated by the first respondent for supply of gypsum for agriculture use.

It was the case of the petitioner’s counsel that the respondent- authorities floated the e-tender by changing the relevant eligibility clause only to favour the private respondent, who was allotted the tender. It was further submitted that though the petitioner constituted a Joint Venture and applied for allotment of tender, its claim as a Joint Venture was rejected by the authorities, without taking into consideration the documents relating to creation of Joint Venture. 

He further submitted that the petitioner filed a representation against the rejection of its technical bid, which was also rejected by the authorities. Further, the authorities changed the eligibility condition by prescribing a condition of having one year experience for supplying gypsum to Government/semi Government organizations. It was the counsel’s case that this condition was incorporated to favour the private respondent, hence the e-tender floated by the respondent authorities and allotment of the tender to the private respondent deserved to be quashed. 

Regarding the argument of the petitioner’s counsel governing the introduction of one-year experience to favour the private respondent, the Court while rejecting this argument, opined that the eligibility condition was in fact general in nature and the condition requiring one year experience, ex-facie, could be fulfilled by any person or entity in the trade. Also, the Court noted that there was no allegation or assertion or specific details mentioned in the petition to indicate that the condition was tailor-made, incorporated to favour the private respondent alone. 

As far as the petitioner’s claim for being eligible as a Joint Venture was concerned, the Court noted that the authorities examined the documents filed by the petitioner as well as the individual requirement of a Joint Venture as contained in the tender document. And, from a perusal of such examination, the Court observed that though the petitioner filed the documents to indicate the person who would be authorized to deal with the authorities, however, the certified copy of the resolution of the Joint Venture to authorize a person was not filed.

Similarly, it was noticed that the copies of the Income Tax Permanent Account Number (PAN) as well as GST registration number of the Joint Venture were also not filed, but these were filed in the name of individuals constituting the Joint Venture. The documents required by the authorities to indicate that the petitioner would be functioning as a Joint Venture were missing. 

Also, from a perusal of the Joint Venture Agreement, the Court observed that there was no clause indicating as to who would be managing the Joint Venture, rather, on the contrary, the document indicated that in spite of constituting the so called Joint Venture, the constituents/ proprietors would continue to manage their own separate firms. 

At this point, the counsel for the petitioner fairly submitted that the said Joint Venture was constituted after issuance of the NIT only for the purposes of applying for the tender in response to the NIT, as admittedly the constituent members of the Joint Venture were not eligible to apply and obtain the contract.

Pertinently, the Court noted, from a perusal of the eligibility condition contained in the NIT that the tenderer should be either a proprietorship concern, a partnership firm or an incorporated company and own its entity.

In these circumstances, it became evident to the Court that the attempt of the petitioner to obtain the contract by entering into a Joint Venture agreement with another individual was only to overcome the disqualification suffered under the relevant clauses of the agreement.

Also, the Court noted that the expert committee of the authorities examined the representation of the petitioner in detail and found the petitioner to be ineligible. 

As regards the contention of the petitioner that the tender was floated only to favour the private respondent, the Court opined that ultimately two tenders were shortlisted and as the rates of the private respondent were found to be lowest, therefore, tender was allotted to it.