Tendering Authority Cannot Assign Alternative Interpretation To Tender Clause Which Is Unambiguous: Bombay High Court

The Bombay High Court has held that a tender clause granting preference to bidders applying for a higher number of warehouses cannot be extended to the Central Store Office if the tender document draws a clear distinction between the two categories. The Court quashed the lease awarded to one bidder and restored the tender process.

The Division Bench of Chief Justice Alok Aradhe and Justice Sandeep V. Marne was hearing a writ petition filed by Vast Media Network Pvt. Ltd., which challenged the tender process for leasing. The petitioner had applied only for the Central Store Office, while Respondent No. 4 had applied for eight warehouses and the Central Store Office. Although both bidders quoted the same financial bid, the Central Store Office was awarded to Respondent No. 4 based on a preference clause that prioritized bidders applying for more warehouses.

The Court held that preference could not be extended to the Central Store Office. It observed:

“Clause 4(IV) of the Tender Document provided for the grant of preference to the bidder submitting bids in respect of the maximum number of 'warehouses'. If the Tendering Authority intended to apply preference clause 4(IV) even to Central Store Office, it ought to have used the word “premises” rather than using the word “warehouses” in Clause 4(IV).”

The Court noted that there are several clauses in the Tender Document, which clearly indicate that a conscious distinction is made by the Tendering Authority between warehouses and the Central Store Office while implementing the impugned tender process. It rejected the State's argument that no distinction is drawn in the Tender Document between warehouses and Central Store Office, and there is uniform application of the terms and conditions in the Tender Document in respect of warehouses and Central Store Office.

While conceding the settled position of law that interpretation of the tendering authority is final and binding on bidders, the court distinguished this particular case on the basis that it does not involve two possible interpretations of Clause 4(IV).

“Since the tender conditions are clear and unambiguous, in our view, Clause 4(IV) had no application while allotting the Central Store Office premises, which is clearly distinct from the 16 warehouses as per the Tender Document itself,” the court observed.

The Court further remarked that since the lease would be in respect of a long period of 30 years, mere possession of the Central Store Office by Respondent No.4 for about five months would not create any equities in its favour.

Consequently, the court set aside the impugned decision of allotting the Central Store Office to Respondent No.4.

Case Title: Vast Media Network Pvt. Ltd. v. State of Maharashtra & Ors. [Writ Petition (L) No. 36983 of 2024]

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