Non-Disclosure Of Quality & Cost Based Selection Criteria In Tender By Itself Not Enough To Allege Malafides: Gauhati High Court

The Gauhati High Court has held that mere non-disclosure of use of Quality and Cost Based Selection (QCBS) method in selection of tender would not by itself give rise to allegations of malafides, favouritism or corruption by parties.

Such ground cannot be raised, particularly where the decision to adopt such QCBS method was taken well before issuance of tender and at a stage when the identity of bidders was unknown.

A Division Bench comprising Chief Justice Ashutosh Kumar and Justice Arun Dev Choudhury observed that the project/work in question was under a Centrally funded Scheme i.e., Pradhan Mantri Gram Sadak Yojna which, if not executed within the time-line, would lead to lapsing of the Central fund, thereby saddling the State with the responsibility of completing the unfinished task.

It further noted that Supreme Court had cautioned in many cases that semi-completed or substantially progressed contracts should not be interfered with, even if some irregularities are found, unless malafide or fraud are established. It said,

“Considering the fact that the decision to adopt QCBS system was taken several months before the issuance of the NIT/SBD when it was not known as to who all will be the bidders, the appellant cannot raise grounds of malafides; or favouritism; or corruption. The appellant had also participated in the tender for other works under the PMGSY where QCBS system had been adopted and had failed to bag that contract. Though, there cannot be any presumption of a particular mode of evaluation but in the present case, we find that the allegation raised by the appellant is only on principle.”

“While we cannot approve undisclosed deviation from the tender terms but we do reckon that disproportionate relief is required to be avoided. Setting aside the contract at this stage would cause irreversible harm to the public interest, far outweighing the procedural grievance of the appellant,” the Court further stated.

The above ruling was made in an appeal by M/s Vertex Construction, which had participated in the tender process issued by the Government of Nagaland.

The Nagaland Government had issued a Notice Inviting Tender (NIT) along with Standard Bidding Document (SBD) for Pradhan Mantri Gram Sadak Yojna (PMGSY) Scheme, inviting tenders for eligible Class-I Contractors for 5(five) different construction works under PMGSY-III Batch-I (2024-25). The appellant and the respondent No.4 along with other bidders applied.

The appellant and the respondent No.4 crossed the technical responsiveness threshold and their financial bids were opened.

The grievance raised was that the tendering authority had adopted the QCBS method for evaluation, though the same was not disclosed in the Notice Inviting Tender or the Standard Bidding Documents. The appellant contended that it had lost out despite being the L-1 bidder and alleged that the evaluation was conducted on undisclosed criteria.

Against this the appellant approached the single judge, which had held that authority has a right not to accept the L-1 bidder and even to prefer a bid other than the L-1 if there exists good and sufficient reason but such a decision must be fair and transparent. The single judge had said that the evaluation conditions/ criteria, weightage and other parameters was decided by the Tender Committee 14 months prior to the issuance of the NIT.

Therefore, mere non-uploading of the minutes of the said meeting and not notifying the appellant and others would not vitiate the entire tender process, more so, when the appellant had not participated in the pre-bid meeting and that there was "no hidden agenda of the State and no hidden evaluation system". Against this Vertex approached the division bench.

Upholding the single judge's order the division bench held that in the present case the procuring authority had issued the NIT for selection of contractors for various work-orders under the PMGSY scheme in several phases and it was decided in the pre-bid meeting that QCBS criteria would be applicable for evaluation in all the tenders under the different packages of PMGSY.

"True it is that it would have been more fairer if such disclosure were made in the NIT/SBD or it would have been declared upfront before the evaluation and all the bidders would have been notified regarding such evaluation method; but not doing so, in our estimation, falls in the realm of procedural illegality, which does not automatically warrant setting aside of the contract. Needless to state that judicial review in tender matters is limited, particularly after the commencement of the work. The Supreme Court in many cases has cautioned that the Court ought not to act as an appellate authority over the administrative decisions and that even if some procedural aberration is found, the Court must weigh the larger public interest before granting relief".

The Court said that the appropriate course to be adopted would be to decline interference with single judge's order; it however recorded its "disapproval" with the tendering authority's conduct in not uploading the minutes of the meeting on its website or notifying the bidders and issuing prospective corrective directions.

“​​We say so, particularly for the reason that substantial progress of the work has been done and the work is to be completed by March, 2026 and in setting aside the allotment of work to respondent No.4, there would be an imminent risk of loss of central funding, which decision would override public interest,” the Court added.

Therefore, while declining to interfere with the award of the contract, the High Court dismissed the writ appeal, with the observation that the tendering authority ought to be more careful and they must ensure that future tenders clearly disclose the evaluation methodology, including any proposal to adopt QCBS method.

Case Title: M/s Vertex Construction v. The State of Nagaland & Ors.

Case No.: Writ Appeal No. 183 of 2025

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