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Caretel Infotech Ltd. v. Hindustan Petroleum Corporation Limited & Ors.

Civil Appeal · 2019 INSC 490Decided 9 Apr 2019
Civil Appeal No. 3588 of 2019
Justice S.A. Bobde · Justice Sanjay Kishan Kaul

Background

Hindustan Petroleum Corporation Limited (HPCL) floated an e-tender for setting up LPG customer call centres, and Caretel Infotech was declared the lowest bidder (L-1) and awarded the contract. Before the award, Caretel had separately received a show-cause notice (and was later blacklisted) by the Ministry of Agriculture in an unrelated tender, but it had declared itself "not blacklisted" at the time of bidding since no blacklisting order existed yet. A losing rival bidder (L-2) challenged the award in the Bombay High Court, which set aside the award on the ground that Caretel had suppressed the pending show-cause notice and violated its declaration/undertaking.

Decision Breakdown

The Supreme Court held that the High Court had gone beyond its limited power of judicial review over tender conditions and had effectively rewritten the tender terms to disqualify a validly selected bidder. Since no blacklisting order existed on the date the declaration was made, there was no false statement or violation of the undertaking; a mere show-cause notice does not equate to being "blacklisted." The Court emphasized that courts should interpret a tender/contract as it is written, not add implied terms to make it "fairer," especially when doing so only serves to let a disappointed competitor pick holes in the process. The impugned High Court order was set aside and the rival bidder's writ petition was dismissed, with the appeal allowed and the contract award upheld.

Lesson Learnt

A company bidding for a government contract is not required to disclose a mere show-cause notice as if it were an actual blacklisting, only existing, finalized adverse orders need be declared; and courts will not second-guess a tender award just because a rival bidder disagrees with the outcome, so long as the declared terms were honestly complied with.

Official source (sci.gov.in)View Judgment (PDF)

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