Bar and Bench - Indian Legal news
Delhi HC imposes 1.5 lakh costs on CPWD for arbitrary rejection of bid to build Prime Ministers museum

Delhi HC imposes 1.5 lakh costs on CPWD for arbitrary rejection of bid to build Prime Ministers museum

Aditi Singh

The Delhi High Court has imposed costs of Rs 1.5 lakh on the Central Public Works Department (CPWD) for its unjustified rejection of a bid to construct a Prime Ministers museum in the capital.

While doing so, it has held that although a tendering authority has “substantial leeway” while interpreting the eligibility criteria in a tender, the Court’s interference is “certainly warranted” when such interpretation is manifestly arbitrary or perverse.

However, the nature of relief in such cases would be determined by the “public interest” test, it has added.

The judgment was passed by a Division Bench of Justices S Ravindra Bhat and Prateek Jalan in a writ petition by a Bangalore-based architecture firm, Flying Elephant Studio.

The petition concerned a ‘Notice Inviting Tender’ issued by the Central Public Works Department (CPWD) for a Prime Ministers museum in the premises of Nehru Memorial Museum and Library at Teen Murti Bhawan in New Delhi.

The petitioner’s grievance was directed against the rejection of its bid for the museum by the CPWD.

The bid was rejected on the ground that the previous projects executed by the petitioner did not fall within the categories of buildings enumerated in the definition of ‘Similar Comprehensive Consultancy Work’ contained in the tender notice.

CPWD relied upon the National Building Code of India (NBCI) and Delhi Development Authority’s Building Bye-Laws, 1983, to state that all the works submitted by the petitioner fell in the category of ‘educational buildings’, whereas the tender notice required prior experience in “Museum/Institutional Building/Office Building/Art Gallery/Exhibition Hall/Science Centre”.

The CPWD further asserted that the petitioner failed to participate in the pre-bid meeting and obtain any clarifications with respect to the eligibility requirements.

The petitioner, on the other hand, argued that it fulfilled all the eligibility criteria set out in the ‘Initial Eligibility Criteria’ provided by CPWD in the tender notice.

It was further argued that the applicability of the NBCI and the DDA Bye-Laws was not indicated in the tender documents and the reliance on “such extraneous instruments could not prevail over a common parlance understanding of the terms” used in the tender notice.

It was thus contended that the interpretation placed upon the tender documents by the CPWD was arbitrary and unreasonable, inviting the Court’s interference under Article 226 of the Constitution.

Agreeing with the petitioner, the Court stated that it was “unable to accept the contention” that the eligibility criteria in the tender notice was required to be read in the light of the definitions provided in NBCI and the DDA Bye-Laws.

Turning to the definition of “institutional buildings” in the two documents cited, we find that the NBCI and DDA Bye-Laws confine the classification to medical and correctional institutions, and restrict the definition ordinarily to institutions which provide sleeping accommodation for the occupants. In the context of the work tendered by the NIT, this definition of “institutional buildings” is very apparently inapposite. In the absence of strong evidence to the contrary, we find it difficult to accept that the authorities intended to apply this definition to the NIT.”

The Court stated that the CPWD’s contention revealed “complete non-application of mind”, and that the rejection of the petitioner’s bid was based on “an entirely untenable interpretation”.

The tender documents reveal that the respondents regard the project in question as a prestigious one for the nation, significant for its cultural, academic and historical importance. It is quite alarming that an authority entrusted with such a project should limit the range of choices available to it by resorting to such specious logic.”

It thus concluded that no reasonable authority could have interpreted the tender terms in the manner sought to be done by the CPWD, while holding that the experience certificate submitted by the petitioner satisfied the eligibility criteria.

The Court, however, refused to quash the tender process in light of the substantial outlay of expenditure already borne by the parties pursuant to the award of the tender, and the progress made in the work at the site.

We do not consider it to be in the larger public interest to quash the award of the project and direct further processing of the petitioner’s bid, or to mandate that a de novo exercise be carried out in the present case by calling for fresh tenders.

It nonetheless awarded costs of Rs 1.5 lakh to the petitioner, while allowing it to institute appropriate proceedings for monetary compensation arising out of the loss of opportunity to participate in the tender, or any other relief to which it may be entitled to as per law.

The petitioner was represented by Advocates Swathi Sukumar, Surya Rajappan and Naveen Nagarjuna.

CPWD was represented by Standing Counsel Rajesh Gogna with Advocate Upendra Sai.

Read the judgment: