Supreme Court overturns High Court order on e-tender bid retrieval: Maharashtra Housing Development Authority vs. Shapoorji Pallonji & Company (2018) INSC 107 (12 February 2018)

Can a bid submitted through an e-tendering portal be considered valid if the bidder failed to complete the process by pressing the “freeze” button? The Supreme Court of India recently addressed this question in a case concerning a major housing development project in Maharashtra. The court’s decision clarifies the responsibilities of bidders and the limitations of e-tendering systems. This judgment, delivered on 12th February 2018, involved a dispute between the Maharashtra Housing Development Authority and Shapoorji Pallonji & Company Private Limited, with the National Informatics Centre (NIC) also playing a key role. The judgment was delivered by a bench of Justices Ranjan Gogoi and R. Banumathi.

Case Background

The Maharashtra Housing Development Authority (MHADA) issued an e-tender notice for a large redevelopment project. Bidders were required to submit their proposals in two stages: technical and financial. The last date for online bid submission was initially set for May 17, 2017, but was extended to July 27, 2017. Shapoorji Pallonji & Company Private Limited (the first respondent) claimed to have uploaded its bids on the portal at 12:16 PM on July 27, 2017. However, they did not receive an acknowledgement of the bid submission.

The first respondent contended that although they had pressed the ‘freeze’ button, they did not receive confirmation of their submission. After correspondence with MHADA, they were directed to the National Informatics Centre (NIC), which managed the e-portal. NIC concluded that the lack of acknowledgement was due to the first respondent’s failure to press the ‘freeze’ button correctly, and that there were no technical issues with the system. Consequently, MHADA did not consider the first respondent’s bid.

Aggrieved by this, the first respondent filed a writ petition before the High Court of Bombay. The High Court directed NIC to access the first respondent’s bid documents, transfer them to MHADA, and have MHADA consider the bid as valid. MHADA then appealed the High Court’s decision to the Supreme Court.

Timeline

Course of Proceedings

The High Court of Bombay directed the National Informatics Centre (NIC) to access the bid documents of Shapoorji Pallonji & Company Private Limited (the first respondent), transfer them to the Maharashtra Housing Development Authority (MHADA), and have MHADA consider the bid as valid. The High Court directed that the technical bid of the first respondent be opened and, if found satisfactory, its financial bid should also be considered. This direction was based on the premise that the bid documents could be retrieved and that the first respondent should not be penalized for a potential technical glitch.

MHADA appealed this decision to the Supreme Court, arguing that the High Court’s order was incorrect and that the bid was invalid due to the first respondent’s failure to properly complete the submission process.

Legal Framework

The case primarily revolved around the interpretation of the e-tendering process and the responsibilities of bidders in such systems. There were no specific sections of any statute that were directly under consideration. However, the general principles of contract law and the specific guidelines of the e-tendering process were relevant. The court also considered the role and responsibilities of the National Informatics Centre (NIC) in maintaining the e-tendering portal.

Arguments

The arguments presented before the Supreme Court focused on the technical aspects of the e-tendering process and the validity of the bid submitted by Shapoorji Pallonji & Company Private Limited.

• Appellant (Maharashtra Housing Development Authority):

  • The appellant argued that the first respondent’s bid was incomplete and invalid because the bidder did not press the “freeze button,” which is a mandatory step in the e-tendering process.

  • The appellant relied on the affidavit of the NIC, which stated that the bid documents could not be retrieved and that there was no technical glitch in the system.

  • The appellant contended that the High Court’s order effectively provided a second opportunity to the first respondent, which is not permissible under the rules of tendering.

• Respondent (Shapoorji Pallonji & Company Private Limited):

  • The first respondent argued that they had uploaded their bid documents and pressed the “freeze” button, but they did not receive an acknowledgement of their submission.

  • The first respondent contended that there was a technical glitch in the system that prevented the acknowledgement from being generated.

  • The first respondent relied on the opinion of their consultant, Mr. Arun Omkarlal Gupta, who stated that the bid documents could be retrieved.

• National Informatics Centre (NIC):

  • NIC stated that the bid uploaded by the first respondent was invalid as the representative(s) of the said respondent did not press the ‘freeze button’ which alone would have completed the bid process.

  • NIC also stated that there was no problem in the server during the relevant time period and as many as 427 bid documents (pertaining to other tenders) were uploaded between 1200 hours to 1300 hours on the said date i.e. 27th July, 2017.

  • NIC further stated that if the first respondent had uploaded the documents at 1216 hours on 27th July, 2017 and it had not received the bid submission acknowledgement it still had 44 minutes to contact the NIC for help which help was not sought.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether the bid document(s) uploaded by the first respondent can be retrieved or is irretrievably lost?
2. Assuming the bid document(s) submitted by the first respondent is retrievable, whether the first respondent would be entitled to a consideration of the bids submitted by it on merits as has been directed by the High Court?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court did not rely on any specific case laws or legal provisions in its judgment. The decision was primarily based on the facts presented and the technical aspects of the e-tendering process. The court relied on the affidavit of the National Informatics Centre (NIC) and the guidelines of the e-tendering system.

Authorities Table

Judgment

The Supreme Court overturned the High Court’s decision, holding that the bid submitted by Shapoorji Pallonji & Company Private Limited was invalid. The court emphasized that the first respondent’s failure to press the “freeze” button was a critical omission in the e-tendering process.

Treatment of Submissions

Treatment of Authorities

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the technical aspects of the e-tendering process and the affidavit of the National Informatics Centre (NIC). The court emphasized the importance of following the prescribed procedures in e-tendering and the finality of the bid submission process. The court also noted that the first respondent did not seek help from NIC despite having sufficient time to do so, which further weakened their case.

Sentiment Analysis of Reasons

Fact:Law Ratio

Logical Reasoning

The court emphasized the importance of following the prescribed procedures in e-tendering and the finality of the bid submission process. The court stated, “That apart, lack of any timely response of the first respondent when the system had failed to generate an acknowledgement of the bid documents in a situation where the first respondent claims to have pressed the ‘freeze button’; the generation of acknowledgements in respect of other bidders and the absence of any glitch in the technology would strongly indicate that the bid submitted by the first respondent was not a valid bid…”. The court also noted, “The opinion rendered in this regard by the consultant of the first respondent Mr. Arun Omkarlal Gupta on which much stress and reliance has been placed by the first respondent could hardly be determinative of the question in a situation where the NIC which had developed the portal had stated before the Court on affidavit that retrieval of the documents even jointly with Maharashtra Housing Development Authority is not feasible or possible.” Further the court stated, “…the directions issued by the High Court in favour of the first respondent virtually confers on the said respondent a second opportunity which cannot be countenanced.”

Key Takeaways

• Bidders in e-tendering processes must strictly adhere to all prescribed steps, including pressing the “freeze” button to complete the submission.
• Failure to complete the submission process correctly can result in the bid being deemed invalid.
• The opinion of a consultant cannot override the technical assessment of the official agency responsible for the e-tendering portal (NIC).
• Courts are hesitant to grant second opportunities to bidders who fail to follow the prescribed procedures.
• Bidders should promptly seek help from the concerned authorities if they encounter issues during e-tendering.

Directions

The Supreme Court did not give any specific directions, other than setting aside the directions given by the High Court of Bombay.

Development of Law

The ratio decidendi of this case is that in e-tendering processes, the onus is on the bidder to ensure that all steps in the process are completed correctly. Failure to do so, such as not pressing the “freeze” button, will result in the bid being deemed invalid. This case clarifies the importance of adhering to the prescribed procedures in e-tendering and the limitations of the system.

Conclusion

The Supreme Court’s decision in this case underscores the importance of adhering to the prescribed procedures in e-tendering processes. The court held that a bid not properly submitted due to the failure of the bidder to press the “freeze” button cannot be considered valid. The court also emphasized that the technical assessment of the National Informatics Centre (NIC) is definitive in such matters. This judgment clarifies the responsibilities of bidders and the limitations of e-tendering systems, providing a clear precedent for future cases.