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Vaibhavi Enterprise v. Nobel Cera Coat

Civil Appeal · 2021 INSC 657Decided 21 Oct 2021
Civil Appeal No. 6289 of 2021
Justice M.R. Shah · Justice A.S. Bopanna

Background

ONGC invited expressions of interest from parties wanting to source natural gas from two of its gas fields, and three companies, including Nobel Cera Coat, Vaibhavi Enterprise, and Tanish Cherachem, competed for allocation. After one bidder revised its offer to begin taking gas sooner, ONGC invited fresh bids from all three, but Nobel Cera Coat did not submit a new bid and instead challenged the process in the Gujarat High Court. The High Court, without impleading the other two bidders as parties, allowed Nobel Cera Coat to revise its own offer during the hearing and directed ONGC to finalize the contract with Nobel Cera Coat on the revised terms; the other two bidders then appealed to the Supreme Court.

Decision Breakdown

The Supreme Court allowed the appeals and quashed the High Court's order, holding that the High Court's procedure was fundamentally unfair because it allowed one bidder to modify its offer and secure relief without ever giving the competing bidders, who were directly affected, an opportunity to be heard or to similarly improve their own offers. The Court also noted the High Court had given no reasoned discussion on the merits of the dispute. The matter was remitted back to the Gujarat High Court with directions that the appellants be impleaded as parties and that the writ petition be decided afresh, on merits and after hearing all concerned parties, preferably within four weeks, with the Supreme Court expressing no view on the merits itself.

Lesson Learnt

In a government tender or allocation dispute, a court cannot grant relief that benefits one competing bidder while shutting out the other bidders who are directly affected: natural justice requires that all interested parties get a fair hearing before a final decision is made.

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

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