‘Interpretation Must Be Just and Rational’: Bombay High Court Quashes Arbitrary Bid Rejection, Orders Re-Evaluation
Isabella Mariam
The Division Bench of the Bombay High Court, comprising Chief Justice Alok Aradhe and Justice Bharati Dangre, delivered a significant judgement on March 13, 2025, in a writ petition challenging the rejection of a technical bid submitted by Konkan Railway Corporation Ltd. The court quashed the rejection order issued by the railway authorities and directed them to evaluate the financial bid of the petitioner.
The petitioner, Konkan Railway Corporation Ltd., a public sector undertaking under the Ministry of Railways, contested the rejection of its technical bid for a railway infrastructure project. The Central Railway had issued a Request for Proposal (RFP) for the construction of earthwork, bridges, and other civil works related to the gauge conversion of the Pachora-Jamner railway line, valued at INR 696.23 crores. The tender process followed a two-packet system: Packet-I for the technical bid and Packet-II for the price bid.
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As per the schedule indicated in the RFP, pre-bid meetings for the tender were scheduled for June 26, 2024, and July 8, 2024. The tender document was issued on June 5, 2024, and the deadline for submission was May 5, 2024, at 11:00 AM. The technical bids were to be opened on September 14, 2024. The petitioner, along with other bidders, submitted the bid and deposited an earnest money amount of INR 2 crores. However, the respondent authorities deviated from the originally stipulated timeline and, after five months, rejected the petitioner's bid on January 22, 2025, on the grounds of non-eligibility.
Konkan Railway Corporation Ltd. filed Writ Petition (L) No. 2475 of 2025, seeking reconsideration of its technical bid by affording an opportunity for a hearing and for a speaking order to be passed. Following the court’s direction, the respondent, on January 27, 2025, rejected the technical bid again, citing non-compliance with Clause 2.2.2.1(ii) of the RFP. The rejection was based on the premise that the petitioner had not received 75% of the amount in a qualifying contract, despite having received INR 522.17 crores, which constituted 75% of the present contract value. The authorities instead considered the value of the previously awarded Northern Railway project, amounting to INR 17,500 crores, and concluded that the petitioner had not received 75% of that amount.
The petitioner argued that the rejection was arbitrary, inconsistent with previous decisions where similar bids were accepted, and favored a specific bidder. The present writ petition challenged this rejection.
The court examined the contractual provisions and the interpretation adopted by the railway authorities in rejecting the bid. The bench scrutinized Clause 2.2.2.1(ii) of the RFP and found that the rejection was based on an unreasonable and erroneous interpretation of the term “present contract value.” The bench stated:
“On plain and literal meaning of the expression ‘present contract value,’ it refers to the value of the present tendered project, i.e., INR 696.23 crores. The interpretation put forth by the respondent, equating it with the value of the Northern Railway project, is contrary to the language of Clause 2.2.2.1(ii).”
The court further noted that disqualifying the petitioner, a public sector enterprise with extensive experience in railway infrastructure projects, could have adverse implications on fair competition and public interest. The judgment recorded:
“If the interpretation put forth by the respondent is accepted, the petitioner, which has vast experience in executing large railway projects, would be excluded, while contractors with little or no experience in such projects would be qualified.”
The court also pointed out that the respondent’s interpretation effectively inserted an additional requirement into the tender conditions, which was not present in the contract. The judgment stated:
“The respondent is attempting to introduce the term ‘qualifying contract’ where it does not exist in Clause 2.2.2.1(ii). Such an interpretation is not tenable.”
In addressing the issue of judicial review in contractual matters, the court cited precedents, including Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd. and Silppi Construction Contractors v. Union of India. The court reaffirmed that judicial intervention is warranted when an authority’s interpretation of tender conditions is arbitrary, perverse, or unreasonable. The judgment stated:
“The tender inviting authority is the best judge to interpret the tender documents. However, the court can interfere if the approach is arbitrary, irrational, or malafide.”
The court further clarified that the rejection of the petitioner’s bid was inconsistent with previous tender evaluations by East Coast Railways and Southwestern Railways, which had accepted similar submissions from the petitioner. This inconsistency led the court to conclude that the respondent’s actions lacked fairness and reasonableness.
The respondent contended that as the author of the tender document, it had discretion in defining eligibility criteria and bid evaluation. However, the court held that discretion does not extend to applying arbitrary standards. The judgment recorded:
“The exercise of discretion must be based on a fair and reasonable interpretation of the tender conditions. Any deviation from the standard must be justifiable and applied consistently.”
The Bombay High Court set aside the rejection order dated January 27, 2025, and directed the railway authorities to evaluate the petitioner’s financial bid. The court explicitly instructed the respondent to adhere to the correct interpretation of the RFP terms while considering the bid.
“For the aforementioned reasons, the order dated 27.01.2025 passed by the respondent by which the technical bid submitted by the petitioner has been rejected is quashed and set aside. The respondent is directed to evaluate the financial bid of the petitioner and to proceed accordingly.”
Advocates Representing the Parties
For the Petitioner: Mr. Gautam Ankad, Senior Advocate, assisted by Mr. Chirag Sancheti, Mr. Asif Lampwala, Mr. Joshua D’Souza, and Mr. Mutahhar Khan, instructed by Bulwark Solicitors.
For the Respondent: Mr. Rajshekhar V. Govilkar, Senior Advocate, assisted by Mr. N. R. Bubna and Ms. Shaba N. Khan.
Case Title: Konkan Railway Corporation Ltd. v. Union of India
Neutral Citation: 2025: BHC-OS:4145-DB
Case Number: Writ Petition (L) No. 2694 of 2025
Bench: Chief Justice Alok Aradhe, Justice Bharati Dangre
[Read/Download order]
