Priya Gour
Published on: 12th August, 2022 at 17:53 IST
The Delhi High Court upheld a policy decision of the Defence Research and Development Organisation (DRDO) which intended to not permit entities with pending criminal investigations from participating in its tender processes.
The division bench of Chief Justice Satish Chandra Sharma and Justice Subramaniam Prasad held the condition as fair which required the bidders to submit an undertaking of no ongoing enquiry against them. It is essential to maintain the integrity of projects which deal with matters of national importance, security and that are of immense public importance.[Trident Infosol Pvt Ltd V Union of India & Ors.]
About the Case
A petition was moved to the court by Trident Infosol Private Limited for seeking permission that allowed it to bid for 2021 tenders of DRDO’s Electronics and Radar Development Establishment and Naval Physical and Oceanographic Laboratory. The company had a pending Enforcement Case Information Report [ECIR]. A clause of the DRDO Procurement Manual, 2020 was also challenged in the petition. It rejected the Technical Evaluation Committee of the Electronics and Radar Development Establishment due to a pending ECIR.
The bench held that the court in general matters does not intervene in the eligibility conditions fixed by the government, in matters pertaining to tenders, especially in matters of national security.
“While the State’s instrumentalities ought to act fairly entering contracts with private parties, this cannot impinge upon the right of the Government in setting the terms of the tender. Hence, this Court ought only to intervene if the condition is arbitrary, discriminatory, mala fide or actuated by bias,” the bench noted.
The present condition challenged is “not arbitrary, discriminatory, mala fide or actuated by bias”, with respect to the work done by DRDO.
The petitioner submitted that it was due to a 2017 merger with Alligator Designs Pvt. Ltd. (ADPL) whose directors have been under criminal investigation since 2013. And so, the ECIR was on the basis of ADPL crime proceeds.
Trident Infosol had informed in a clarificatory letter to DRDO it was only on account of amalgamation with ADPL and there is no such allegation in Trident.
However, the ED proceedings would continue to prejudice the company in the long run as well. A reference was made of the High Court’s decision in ‘M/s Good Year Security Services (Regd) v. Union of India & Ors.’, it was submitted that an entity cannot be debarred to take part in a tender process for an indefinite time period.
Centre’s counsel defended that such condition becomes vital in public interest. Also, Trident Infosol is sister concern of ADPL and that the proceeds of crime to the tune of Rs 2,36,25,000 received by ADPL had been transferred to the Trident.
“This condition is imperative to maintain the integrity of such projects which deal with matters of national importance, security and are of immense public nature.”
Thus, the court was of the view that the managerial personnel, nature of work and functioning of Trident Infosol is no different from that of ADPL. Trident has made benefits from proceeds of crime.
“Hence, the Petitioner cannot claim that it has been unfairly excluded the Petitioner from participating in the bid.”
The tenders are for procurement of instruments which are necessary for the security of the country. The scope of judicial review under the tender jurisdiction is limited and hence the court finds the condition essential.
Thus, the court held such conditional exclusion as fair and dismissed the petition.