Sanchayita Lahkar

The High Court of Maharashtra Division Bench of Chief Justice Alok Aradhe and Justice Sandeep V. Marne has held that the preference clause in the tender document applied exclusively to warehouses and not to the Central Store Office. Consequently, the Court set aside the allotment of the Central Store Office to the bidder selected under the invalid preference clause and directed the tendering authority to renegotiate bids afresh with both contenders to determine allotment based on the higher quoted rate.

The petitioner challenged the tender process initiated by a tender notice dated 24 July 2024, which invited bids for the lease of sixteen warehouses and one Central Store Office for a period of thirty years. The petitioner, an earlier lessee of the Central Store Office, contested the process on the grounds that despite submitting a financial bid identical to another bidder, it was denied allotment due to a preference clause allegedly misapplied by the tendering authority.

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Initially, the petitioner had been granted a five-year lease for the Central Store Office, beginning 1 March 2013 to 28 February 2018. After the term expired, the lease was extended periodically. A tender notice was issued on 13 October 2023 for an 11-month license of the Central Store Office, but it was subsequently withdrawn. Instead, the authority issued a fresh Tender Notice dated 24 July 2024, combining the lease of 16 warehouses and the Central Store Office for 30 years.

The petitioner submitted a bid only for the Central Store Office, while Respondent No.4 submitted bids for the Central Store Office along with eight warehouses. Both parties quoted an identical financial rate of Rs.75/- per square foot per month for the Central Store Office. Citing Clause 4(IV) of the tender, which provides preference to a bidder applying for a greater number of warehouses, the tendering authority awarded the lease of the Central Store Office to Respondent No.4.

The petitioner raised objections asserting that Clause 4(IV) only applies to warehouses and not to the Central Store Office, which was a distinct entity. The petitioner also contended that there was non-application of mind by the tendering authority, as its bid was mistakenly evaluated in relation to warehouses for which it had never applied. Furthermore, the reasoning provided in the official scrutiny sheet differed from that offered later in an affidavit, which the petitioner claimed was impermissible.

In response, the State authorities defended the decision, stating that the tender notice was composite and made no distinction between warehouses and the Central Store Office. It was argued that the preference clause justifiably applied to the entire set of premises offered for lease.

Respondent No.4 also supported this interpretation, arguing that the terms and conditions of the tender were uniformly applicable and did not differentiate between categories of properties. Accordingly, Respondent No.4 was declared the successful bidder and was allotted Warehouse No.16 and the Central Store Office.

Both parties were found technically qualified. The petitioner applied for one premise—the Central Store Office—while Respondent No.4 applied for nine premises, including eight warehouses. In view of identical financial bids, the tendering authority invoked Clause 4(IV) to favour Respondent No.4.

The petitioner relied on various portions of the tender document to assert that a distinction was indeed made between warehouses and the Central Store Office. The opening paragraph, tables, and language used in the tender referred separately to "16 warehouses" and "1 Central Store Office." The petitioner argued that had the tendering authority intended Clause 4(IV) to apply to the Central Store Office, it would have used the term "premises" instead of specifically referring to "warehouses."

The Court examined the submissions and held that "Clause 4(IV) of the Tender Document provided for grant of preference to the bidder submitting bids in respect of maximum number of 'warehouses'." It further noted, "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)."

Referring to the structure of the tender notice, the Court observed, "The opening paragraph of the Tender Notice clearly draws distinction between '16 warehouses' and '1 Central Store Office'." It further stated, "Right to apply for allotment of more than premises was restricted only in respect of '16 warehouses', thereby drawing a conscious distinction."

Stating the importance of accurate interpretation, the Bench stated, "The Tendering Authority has consciously used the word 'warehouses' in Clause 4(IV) instead of using the term 'Premises' therein." It concluded that the application of Clause 4(IV) to the Central Store Office was "clearly erroneous" and "arbitrary, irrational and against the tender conditions."

The Court also addressed the inconsistency in the reasons cited for rejection. It recorded, "The scrutiny sheet reflects that the bid of the Petitioner is rejected by applying the eligibility criteria at Serial No.1 whereas in the Affidavit-in-Reply... condition set out in paragraph 4 (IV)... That this again shows gross non-application of mind."

Referring to the Supreme Court decision in Mohinder Singh Gill & Anr. vs. Chief Election Commissioner, New Delhi & Ors., the Court reiterated that "reasons cannot be supplemented in the form of Affidavit and that validity of the order must be adjudged only on the basis of reasons stipulated in the impugned decision."

On the next steps, the Court held that since both bidders quoted the same rate, "the tendering authority could have entered into renegotiations with both the bidders and ought to have allotted the Central Store Office only to the bidder offering higher rate." Citing public interest, the Bench noted, "The Central Store Office is ultimately the property of the State Government and it is in larger public interest that the said premises fetch higher rent."

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The Court set aside the allotment of the Central Store Office to Respondent No.4 and restored the tender process in respect of that property. It directed that "Respondent Nos.1 to 3 shall invite Petitioner and Respondent No.4 for renegotiations" and that "After holding the renegotiations, Respondent Nos.1 to 3 shall allot lease in respect of Central Store Office to the entity offering higher rate." It further clarified that "Except the Petitioner and Respondent No.4, no other bidder shall be entitled to participate in such renegotiation process."

The Court allowed Respondent No.4 to continue in possession of the Central Store Office until a fresh decision is made. It also directed, "In the event of Respondent Nos.1 to 3 taking decision to allot the lease in respect of Central Store Office in favour of the Petitioner, Respondent No.4 shall forthwith vacate the possession... within two weeks of decision."

Advocates Representing the Parties:

For the Petitioner: Mr. Anil V. Anturkar, Senior Advocate with Mr. Harshvardhan Suryavanshi and Mr. Sandeep Dubey i/b Mr. Piyush Deshpande

For the Respondents: Mr. Kevic Setalwad, Senior Advocate with Ms. P.H. Kantharia, Government Pleader, Ms. Jyoti Chavan, Additional Government Pleader and Ms. Nazia Sheikh, AGP; Mr. Aseem Naphade with Ms. Chaitra Rao, Ms. Meera Parmar and Mr. Jatin Sheth

Case Title: Vast Media Network Pvt. Ltd. v. State of Maharashtra & Ors.

Neutral Citation: 2025: BHC-OS:8972-DB

Case Number: Writ Petition (L) No. 36983 of 2024

Bench: Chief Justice Alok Aradhe and Justice Sandeep V. Marne