A Notice Inviting Tender (‘NIT’) was floated by North Bihar Power Distribution Company Ltd. (‘North Bihar Discom’) for appointment of ‘Advanced Metering Infrastructure Service Providers’, including design of ‘Advance Metering Infrastructure System’ with supply, installation and commissioning of 112 Lakh ‘Smart Prepaid Meters’ in rural areas of Bihar. The tender is based on the Ministry of Power’s Revamped Distribution Sector Scheme which recognizes the importance of Prepaid Smart Meters to reduce distribution losses, facilitate automatic measurement of energy flows, energy accounting and enabling Time-of-day tariff without human intervention. Rural Electric Corporation (‘REC’) is the nodal agency for implementation of the Smart Metering Program and had framed a Standard Bidding Document (‘SBD’) in terms of which various states have floated tenders inviting bids for installation of Smart Meters.
M/s. Monte Carlo Projects Ltd. (‘Montecarlo’) submitted its bid, amongst other bidders. Montecarlo’s bid, however, was disqualified at the technical stage for not meeting the qualification requirements. M/s. IntelliSmart Infrastructure Pvt. Ltd. (‘IntelliSmart’) was declared as the ‘L1’ bidder.
Montecarlo challenged its disqualification before the Hon’ble High Court of Judicature at Patna (‘High Court’) by way of a writ petition. This challenge was premised on the grounds that the terms and conditions of the NIT were not interpreted properly by North Bihar Discom. Montecarlo had sought to rely on certain clarifications regarding applicability of the terms and conditions of the tender which were provided by REC, the Nodal Agency. By a judgment dated April 20, 2023, the High Court dismissed Montecarlo’s challenge holding that:
- Clarifications by REC are not relevant, and the scope of challenge must be limited to the terms of the NIT;
- Montecarlo was not able to present sufficient cause for interfering with their disqualification; and
- Montecarlo did not meet the criteria under the NIT.
Montecarlo challenged the judgement dated April 20, 2023 before the Hon’ble Supreme Court. Being the L1 bidder, IntelliSmart filed an Application for impleadment on the ground that it is a necessary and proper party to the proceedings. IntelliSmart’s prayer for impleadment was allowed.
During the course of final hearing, North Bihar Discom opposed Montecarlo’s challenge to the High Court’s judgment on various grounds. IntelliSmart too opposed Montecarlo’s challenge on the grounds, inter-alia, that: –
- The owner/ tenderer is best suited to interpret the terms of the tender;
- Judicial interference in infrastructure projects of public importance should not be allowed; and
- Terms and conditions of a tender are not open to judicial scrutiny except when they are found to be arbitrary, mala fide or discriminatory.
After hearing the parties, the Hon’ble Supreme Court was pleased to affirm the judgment of the Hon’ble High Court, which in turn had upheld Montecarlo’s disqualification.
Our Disputes Team Partners – Amar Gupta, Anupam Varma, Sidharth Sethi, and Nikhil Sharma, Principal Associate – Aditya Gupta and Associate – Aditya Vikram Dhingra.