Bom HC | Can possible case of cartelization be determined only after opening of commercial bid? HC answers

Bombay High Court: The Division Bench of S.C. Gupte and M.S. Karnik, JJ., expressed that for an employer to come to a conclusion of a possible case of cartelization, it is not necessary that the same can happen only after the opening of commercial bids.

Petitioner claimed to be a sole proprietor of a firm carrying on the business of fresh water supply through barges. Petitioner had been one of the contractors supplying water to respondent 1 ONGC.

Respondent 1 invited Indigenous Open Tender for e-procurement for supply of water to its offshore facilities, including the Nhava Supply Base. The said tender was a two bid system – a technical bid followed by a commercial bid.

Along with the petitioner, there were three others who had submitted the bids.

Respondent ONGC had cleared the technical bids of all 4 bidders, including the petitioner and his father at the stage of consideration of commercial bids, the bids of both petitioner and his father were not opened.

Upon evaluation of offers submitted by petitioner and Royal Traders, it came to the notice of Respondent ONGC that the proprietors of two firms were respectively the son and father. Hence considering that the two would have access to vital information pertaining to the bid submitted by the other, the employer concluded that both the bidders have an undisclosed understanding with each other, which would restrict competitiveness thereby offending Section 2 of the Integrity Pact.

Section 2 of the Integrity Pact is as follows:

Commitments of the Bidder/contractor

  1. The Bidder/Contractor will not enter with other Bidders into any undisclosed agreement or understanding, whether formal or informal. This applies in particular to prices, specifications, certifications, subsidiary contracts, submission or non – submission of bids or any other actions to restrict competitiveness or to introduce cartelisation in the bidding process.

Analysis and Decision

High Court stated that the grounds urged by petitioner in support of their challenge to acceptance of bids did not commend the Court.

Though the petitioner and his father had shown as proprietors of different concerns, but they operate from the same premises.

Further, in an earlier contract involving another employer, the petitioner had not only acted both for himself and his father, but had also issued cheques from the same account towards the contracts of himself and his father.

Above being a purely administrative matter, to fault the respondent employer’s decision there must be a case of either perversity in the decision or a colourable exercise on the part of the employer.

Bench expressed that even if the State cannot act in a matter of commercial contract in wholly unreasonable or arbitrary or capricious manner, its administrative decision cannot be put on the pedestal of a quasi-judicial decision.

Court added that as long as the respondent’s decision was reasonably supported by material on record and there was no case of victimization or colourable exercise, the decision could not be faulted.

There is nothing sacrosanct about finding the technical bid of a bidder responsive in a two bid system so as to make it obligatory on the employer to open the commercial bid. The employer may well come upon knowledge of some relevant information, which disqualifies the particular bidder, and in that case may choose not to open his commercial bid. If his disqualification is supported by some material on record, there is nothing further for this Court to inquire.

High Court found no merit in the grounds of challenge urged by the petitioner. [O.K. Marine v. ONGC, 2021 SCC OnLine Bom 799, decided on 8-06-2021]


Advocates before the Court:

Mr. R.D. Soni, i/b. Irvin D’souza, for the Petitioner

Dr. Abhinav Chandrachud, a/w. Mr. Nishit Dhruva, Mr. Prakash Shinde, Ms. Khushbu Chhajed, Mr. Abhishek Bhavsar and Ms. Alisha Shah, i/b. MDP & Partners, for Respondent Nos. 1 and 3.

Mr. Kunal Gaikwad, for Respondent No.4.

Mr. Karl Tamboly, a/w. Mr. Ramiz Shaikh and Mr. Akshay Bafna, i/b. Bafna Law Associates, for Respondent No.5.

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