Gujarat HC Upholds Bar Keeping GTPL Out Of BharatNet Tender Over Subsidiary’s ISP Licence, Citing Conflict Risk

Gujarat Fibre Grid Network Limited (GFGNL) issued an RFP for selecting a Project Implementing Agency for the Amended BharatNet Program in Gujarat.

The RFP disqualified an ISP/TSP licence holder for the Gujarat Licence Service Area and required bidders and consortium partners to submit an affidavit in Format XX, including declarations concerning majority ownership and corporate relationships with such licence holders.

GTPL challenged these conditions, contending that they lacked a rational basis and prevented it from bidding because its wholly owned subsidiary held an ISP licence for Gujarat.

GTPL had previously participated in BharatNet Phase-II work and had also been a consortium partner in BSNL tenders for other States containing a similar exclusion.

After GFGNL rejected GTPL’s request to amend the conditions, GTPL filed this petition shortly before the extended bid-submission deadline. The deadline was extended during the proceedings.

Under Articles 14 and 19(1)(g), tender conditions must not be arbitrary, discriminatory, irrational or mala fide, though the tendering authority has substantial discretion to frame eligibility criteria.

Article 226 review is ordinarily confined to the legality and fairness of the decision-making process, not substitution of the court’s view for the authority’s commercial or technical judgment; intervention is warranted for arbitrariness, irrationality, procedural impropriety, favouritism or mala fides, and must account for public interest (Tata Cellular v. Union of India; Air India Ltd. v. Cochin International Airport Ltd.).

A classification satisfies Article 14 where it rests on an intelligible differentia having a rational nexus to the object sought to be achieved (Budhan Choudhry v. State of Bihar).

A challenge to tender eligibility conditions accrues when the conditions are published, and delay in procurement matters is assessed in light of the stage and consequences of disrupting the process; representations do not, by themselves, excuse delay (Utkarsh Enterprises v. Union of India).

Acquiescence entails knowing, passive acceptance of the challenged position (Union of India v. N. Murugesan).

The Court found a discernible rationale for the exclusion: the PIA would operate and maintain common network infrastructure while having access to provisioning workflows, network capacity, route and fault information, and restoration processes.

A PIA affiliated with a downstream ISP/TSP could therefore occupy both an infrastructure-control role and a competing service-provider role, creating a risk to neutrality and non-discriminatory access.

The exclusion was limited to the LSA in which the bidder held a licence, and the Court held that this distinction was rationally connected to preventing conflicts of interest; contractual monitoring and penalties did not replace the preventive purpose of the condition.

It found no mala fides, noting that the condition formed part of the wider ABP procurement approach and was not shown to target GTPL.

The Court also held that GTPL knew of the condition, including through its prior BSNL tender participation, and had delayed challenging GFGNL’s rejection of its request despite repeated extensions of the bid deadline; the petition was therefore also barred by delay and acquiescence.

Although GFGNL had incorrectly characterised the condition as mandated by DBN, the Court considered that defect insufficient to invalidate the tender or justify intervention contrary to the larger public interest in timely BharatNet implementation.

It rejected the petition, including on grounds of delay and acquiescence.

The petitioner’s deposit of ₹5 lakh was retained as costs and ordered to be transferred to the High Court Legal Services Authority.

The Court also refused GTPL’s post-judgment request to extend the bid-submission deadline.