Isabella Mariam

The High Court of Judicature at Bombay Division Bench of Chief Justice Alok Aradhe and Justice Sandeep V. Marne has dismissed a writ petition challenging the eligibility of a bidder in a public tender process for the allotment of warehouses on lease for thirty years. The court held that the experience and financial credentials of the partners of a partnership firm may be considered for assessing the firm's eligibility under tender requirements. It further directed that "this Court can merely review the decision-making process" and declined to interfere in the allotment decisions of the tendering authority.

Also Read: Supreme Court Restores Criminal Case Under Section 387 IPC | Says Fear Of Death To Extort Money Is Punishable Even Without Actual Delivery

The petitioner challenged the eligibility of Respondent No. 6, a partnership firm, in a tender process initiated by the State of Maharashtra through various departments and officials (Respondent Nos. 1 to 5). The tender, floated on July 24, 2024, invited bids for the lease of 16 warehouses and one Central Store Office located in the Aarey Milk Colony, Mumbai, for a period of thirty years. The eligibility criteria included:

• Annual financial turnover exceeding Rs. 50,00,000/- for each warehouse bid for.

• Net worth exceeding Rs. 50,00,000/- per warehouse.

• Submission of relevant documentation, including income tax returns, GST and professional tax certificates, and chartered accountant-certified financial and net worth statements.

The petitioner, who bid for eight warehouses and the Central Store Office, objected to the allotment of seven of these warehouses to Respondent No.6, citing that the firm was constituted only twenty days before the issuance of the tender notice and thus incapable of satisfying eligibility criteria.

The petitioner argued that Respondent No. 6:

• Lacked requisite turnover history as the firm was recently established.

• Failed to submit audited financial documents and net worth certificates in its own name.

• Relied on a net worth certificate of an individual, Mr. Rajiv Darji, who was not a direct partner in the firm.

On these grounds, the petitioner sought cancellation of the warehouse allotment to Respondent No.6 and reconsideration of his own bids.

Counsel for Respondent Nos. 1 to 5 submitted that the tendering authority had verified the eligibility of all bidders in accordance with the tender terms. It was contended that financial documents and credentials of partners could legally be considered in evaluating the eligibility of a partnership firm.

Citing legal precedents, the respondents relied on judgments including New Horizons Ltd. v. Union of India, Trio Stoney Mart v. Jamal Ahmed and Ors., and IMS Bhatia Transport Contractor v. Union of India, to argue that it is legally permissible to evaluate the financial and experiential qualifications of partners when assessing the eligibility of a partnership firm.

Respondent No. 6 also argued that the petitioner had participated in the bidding process without objection and failed to raise eligibility concerns at the bid opening stage, thus waiving his right to object at a later stage. It was further submitted that the financial documents submitted collectively reflected net worth well above the required Rs. 5 crores for 10 warehouses.

The tender document also contained a preference clause favouring bidders who submitted proposals for the maximum number of warehouses. Respondent No. 6 had bid for 10 warehouses, while the petitioner bid for eight plus the Central Store Office. Respondent No. 6 was eventually allotted 10 warehouses (seven in dispute), while the petitioner was allotted one warehouse and the Central Store Office.

The Court stated in clear terms: "As on the date of submission of the bids, Respondent No.6 had a valid existence in law and it was a legal entity capable of participating in the tender process."

Addressing the petitioner's objection to the recent formation of Respondent No. 6, the Court stated that the eligibility conditions could be satisfied through the financial history and credentials of the partners of the firm. Referring to the Supreme Court’s judgement in New Horizons Limited, the Division Bench observed:

"For satisfaction of eligibility criteria by a partnership firm, the experience, as well as financial documents of individual partner can also be taken into consideration."

The Court extensively quoted from New Horizons Limited, reiterating:

"It could not be the purport of the requirement about experience that the experience of the company which has merged into the reorganised company cannot be taken into consideration because the tender has not been submitted in its name and has been submitted in the name of the reorganised company which does not have experience in its name."

Similarly, the Court adopted the reasoning of the Gauhati High Court in Trio Stoney Mart, stating: "Having regard to the settled legal position, a financial soundness certificate of any one of the partners comprising the partnership, to our mind, would fulfil the requirement."

In reference to the use of a net worth certificate of Mr. Rajiv Darji, who was not a named partner but a director in a partner company, the Court held: "We cannot sit in appeal over such discretion exercised by the tendering authority. It must also be borne in mind that the object behind prescribing the condition of net worth is to ensure that bidders who are financially incapable of executing the work are excluded from the tendering process."

The Court further reiterated the settled principle from Tata Cellular v. Union of India and Silppi Constructions Contractors v. Union of India: "The court does not sit as a court of appeal but merely reviews the manner in which the decision was made."

"The courts must give 'fair play in the joints' to the government and public sector undertakings in matters of contract."

The Court concluded: "Following the law enunciated by the Apex Court in New Horizons Limited the past experience and financial credentials of partners of Respondent No.6-Firm are required to be considered as experience and financial credentials of the partnership firm as well."

"In our view, tendering authority has rightly taken into consideration the financial documents relied upon by Respondent No.6 in respect of its partners."

Also Read: Gauhati HC Upholds 20 Year Sentence Under Section 4(2) POCSO Act | Finds Victim’s Testimony And Medical Evidence Credible Despite Minor Inconsistencies

"This Court can merely review the decision-making process. We cannot sit in appeal over such discretion exercised by the tendering authority."

"After considering the overall conspectus of the case, we are unable to interfere in the impugned decision of the tendering authority in accepting the bids of Respondent No.6 in respect of the seven warehouses. Petitioner himself has been successful in securing allotment of one warehouse and Central Store Office in the same tendering process. Since we are unable to trace any element of perversity, irrationality or arbitrariness in the impugned tender process implemented by Respondent Nos.1 to 5, there is no warrant for interference in the decision of Respondent Nos.1 to 5. The petition must fail. It is accordingly dismissed without any order as to costs."

Advocates Representing the Parties:

For the Petitioner: Mr. Aseem Naphade with Ms. Chaitra Rao, Ms. Meera Parmar and Mr. Jatin Sheth

For the Respondents: Mr. Kevic Setalwad, Senior Advocate with Mr. Mohit P. Jadhav, Additional Government Pleader and Mr. Amar Mishra, AGP Mr. Rahul Gaikwad with Mr. Nitin Jagtap and Mr. Dewang Mhatre i/b Mr. Pavan Patil

Case Title: Nitin Laxmidas Dama v. State of Maharashtra & Ors.

Neutral Citation: 2025: BHC-OS:8973-DB

Case Number: WP-4761-2024-FC

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

[Read/Download order]