The Gauhati High Court has ruled that the mere non-disclosure of the use of a Quality and Cost Based Selection (QCBS) method in a tender process is not, by itself, sufficient to allege malafide, favouritism or corruption or to justify canceling a contract already awarded and substantially executed. The Division Bench of Chief Justice Ashutosh Kumar and Justice Arun Dev Choudhury made this finding while dismissing a writ appeal filed by M/s Vertex Construction against a decision upholding a contract award by the Government of Nagaland in relation to road construction works under the Pradhan Mantri Gram Sadak Yojna (PMGSY) scheme. The appellant had challenged the evaluation process on the ground that the QCBS methodology, which combines technical and financial scores to rank bidders, was not disclosed in the Notice Inviting Tender (NIT) or the Standard Bidding Documents (SBD) and alleged that this undisclosed criterion resulted in an unfair advantage to the successful bidder. The challenge was directed at the tendering authority’s alleged failure to upload or notify bidders of the evaluation method, even though QCBS had been decided upon in a pre-bid meeting held well before the issuance of the NIT.
The appellant contended that it was the lowest bidder based solely on financial quotations and that the undisclosed use of QCBS disadvantaged it during evaluation, amounting to a procedural irregularity that vitiated the entire tender process. In response, the respondent authorities, including the State of Nagaland, argued that the decision to adopt QCBS was made well before the tender was issued and at a stage when bidder identities were unknown, undermining any allegation of targeted favouritism. The single judge of the High Court had earlier upheld these points, reasoning that the authority had the right not to accept the lowest bidder and that an evaluation method need not always be contained in the tender documents if it was decided transparently and in advance. The Division Bench upheld this reasoning, noting that while it would have been preferable for the evaluation method to be explicitly disclosed in the tender documents, the absence of such disclosure did not by itself demonstrate malafides or corruption sufficient to set aside the contract. The High Court emphasised that judicial review in matters of tender and procurement is limited, particularly once significant progress has been made on the work and substantial public funds are at stake.
In its ruling, the High Court acknowledged that failing to formally disclose the QCBS method in the NIT/SBD and not notifying bidders was a procedural lapse that could be categorised as an irregularity. However, it held that such irregularity, without evidence of mala fide intent or arbitrary exercise of authority, does not automatically justify cancellation of a contract, especially where doing so would cause disproportionate harm to the public interest. The court highlighted that the project in question was part of a centrally funded scheme with strict timelines, and that canceling the contract at an advanced stage of execution could jeopardise the utilisation of central funds and hinder rural infrastructure development. The court also noted that the appellant had participated in other tenders under the same scheme where QCBS criteria were applied, indicating that no hidden agenda was at play.
While dismissing the writ appeal, the High Court recorded its “disapproval” of the tendering authority’s conduct in not uploading the minutes of the pre-bid meeting or notifying bidders about the evaluation method, and it stressed that future tenders should explicitly disclose evaluation methodologies, including any use of QCBS, in the tender documents themselves. This articulation sought to reinforce the principles of transparency and fair play in procurement processes, even as the court balanced these considerations against the larger public interest in ensuring continuity of ongoing infrastructure projects. The High Court concluded that procedural irregularities that do not rise to the level of mala fides or arbitrary conduct, particularly where a contract has been substantially executed and public funds are implicated, will not alone warrant quashing of the award or setting aside of the contract.
The ruling thus clarifies that undisclosed evaluation criteria, such as QCBS, may constitute a procedural flaw, but absent evidence of improper motive or discrimination, courts will be cautious in disturbing procurement decisions already in advanced stages to avoid disrupting public welfare schemes and causing loss to the State or the public at large.
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