High Court nixes Rs 150 crore tender for excise holograms for Tasmac bottles

The Madras High Court set aside a Rs 150 crore tender awarded by the Excise Department during the AIADMK rule for the production and supply of polyester-based hologram excise labels meant to be stuck on bottles sold by Tasmac.

The facts and circumstances of the case, when viewed holistically, warranted interference with the tendering process in public interest, the first bench comprising Chief Justice Sanjib Banerjee and Justice Senthilkumar Ramamoorthy said. “The technical specifications were not framed in conformity with the government’s mandate and eventually this resulted in the participation of only two eligible bidders, whose nexus cannot be disregarded.”

Allowing the firm that bagged the tender to continue for four months, the bench directed the government to either float a fresh tender with technical specifications that are generic so as to ensure that there was wider participation or, if the State is of the view that these technical specifications are at the heart of the tender, opt for a single-source procurement, albeit by adhering strictly to the requirements of the Tenders Act.

As per the case, the technical specifications and tender conditions for stickers to be pasted across the caps liquor bottles sold by Tasmac were tailor-made to a patented technology, of which just two entities are licensees. The tender process was a charade for a single vendor contract to be awarded to one of them, the petitioners alleged. The firms that missed the race also contended that the two firms that were deemed eligible to bid were related parties and there was substantial connection between them. Though the scope of judicial review in matters relating to tenders is limited, evidence is sufficient to conclude that the tender specifications were not generic and had not been prepared in accordance with the mandate of the Tender Specification

Committee, said Justice Senthilkumar Ramamoorthy who penned the judgement.

“Consequently, there were only two eligible bidders and there is sufficient evidence that such bidders have a strong nexus. In our view, the nexus between the only two eligible bidders, undoubtedly, undermines the tendering process.

“Indeed, keeping in mind the fact that the price bid was restricted to the two eligible bidders, it raises questions as to the integrity and reliability of the price bid. When the State is the procuring entity, such questions assume considerable significance and cannot be disregarded in judicial review,” the bench added.