### Adverse Client Inputs Cannot Solely Disqualify Bidders if Contradicted by Valid Performance Certificates and Tender Terms

The Respondent No. 1 (NISG), acting as Project Management Consultant for the Ministry of External Affairs regarding the "Sri Lanka Unique Digital Identity" project, invited bids for a Master System Integrator.

Out of six bidders, the Petitioner was the sole entity excluded at the "Pre-Qualification" stage without provided reasons.

The Petitioner claimed its bid was compliant with all criteria.

The Respondent justified the exclusion based on "adverse inputs" received during a discretionary due diligence check from one of the Petitioner’s clients, despite the Petitioner providing valid experience certificates from the same client.

The Respondent refused to disclose these reasons to the Petitioner, citing confidentiality under Clause 29.1 of the Instructions to Bidders (ITB) and submitting the adverse material to the Court in a "sealed cover".

The Court applied the "Transparency Principle" of public procurement, which mandates that authorities must adhere strictly to pre-declared processes and avoid subjectivity.

It relied on Rule 173(iv) of the General Financial Rules (GFR), 2017, which requires disclosure of reasons for rejecting a tender.

Regarding the "sealed cover" procedure, the Court followed the precedents of *Madhyam Broadcasting Ltd. v. Union of India* and *Commander Amit Kumar Sharma v. Union of India*, which established that relying on undisclosed material violates Article 21 and the right to a fair hearing.

The Court also applied the standard of judicial review in tender matters as defined in *Tata Cellular v. Union of India*, permitting intervention in cases of arbitrariness or irrationality.

The Court found that the Tender document (Clauses 33.1, 37.1, and 3.1.1) expressly stated that pre-qualification would be determined solely based on the documents submitted by the bidder.

The Respondent’s act of seeking external verification at the pre-qualification stage was deemed contrary to the Tender’s own terms, which reserved such "Due Diligence" for the "Post-Qualification" stage under Clause 3.1.6.

Furthermore, the Court noted a manifest anomaly: the Respondent relied on a secretive adverse input from a client who simultaneously issued satisfactory performance certificates to the Petitioner and continued to engage their services.

The Court rejected the Respondent’s reliance on Clause 29 (Confidentiality), holding that a bidder has a legal right to know the reasons for disqualification to ensure transparency and accountability.

The use of "sealed covers" was condemned as it bypassed judicial scrutiny and deprived the Petitioner of the opportunity to refute false allegations.

It answered all issues in favor of the Petitioner, ruling that secretive inputs cannot override valid experience certificates without a fair hearing.

The Court set aside the Petitioner's disqualification and directed Respondent No. 1 to permit the Petitioner to proceed to the "Second Stage" (Technical Evaluation) alongside the other five qualified bidders.

The writ petition was allowed with no orders as to costs.