Non-Furnishing of Mandatory Affiliate Undertakings Renders Bid Non-Responsive Despite Claims of Substantial Compliance

The Appellant, a private energy company, challenged the rejection of its bid by Respondent No. 1 (KPTCL) for a 150 MW/300 MWh Battery Energy Storage System tender.

The tender documents required technical and financial envelopes, with eligibility based on Net Worth/Assets Under Management.

The Appellant submitted its bid using the financial credentials of two affiliates, Leap India Food and Logistics Pvt. Ltd. and Investors Clinic Infratech Pvt. Ltd., but was declared "non-responsive" on the ETS portal on August 19, 2025.

A learned Single Judge dismissed the Appellant’s writ petition, finding no violation of natural justice and no error in the Tender Evaluation Committee’s (TEC) decision.

The Appellant filed this writ appeal primarily contending that the grounds for rejection were not communicated and that it had substantially complied with the financial requirements.

1. Whether the rejection of the Appellant’s bid as non-responsive for failure to communicate specific reasons at the time of rejection violated the principles of natural justice.

2. Whether the Appellant complied with Clause 37.3 of the RfS regarding the submission of undertakings from affiliates whose financial strength was used for qualification.

Clause 37.3 of the RfS mandates that where a bidder seeks qualification based on the financial capability of its affiliates, it "shall be required to submit Board Resolutions from the respective Affiliate(s), undertaking to contribute the required equity funding and Performance Bank Guarantees".

The clause allows a temporary substitute in the form of a letter from the CEO/MD of the affiliate if the Board Resolution is unavailable, provided the resolution is submitted before signing the final agreement.

Article 226 of the Constitution of India regarding the scope of judicial review in commercial matters.

The Court found that while KPTCL did not send a separate email detailing the reasons for rejection, the status was transparently reflected on the web portal, and the reasons were subsequently clarified in court, thus satisfying procedural fairness.

On the merits of the rejection, the Court analyzed Clause 37.3 and determined that the undertaking is a "vital" and "not an inconsequential document".

The Appellant had relied on the financial strength of Leap India and Investors Clinic but failed to provide undertakings from either.

Instead, it provided an undertaking from PSGG Technologies Pvt. Ltd.—a related entity that was not the named affiliate for financial qualification.

The Court rejected the Appellant's argument that such undertakings could be furnished later, noting that Clause 37.3 clearly requires either a Board Resolution or a CEO undertaking at the time of bidding.

Consequently, the TEC's decision to declare the bid non-responsive was held to be legally sound.

The Court held that the Appellant failed to meet the mandatory requirements of Clause 37.3.

The Writ Appeal was dismissed, and the learned Single Judge's order was upheld.

The Court clarified that observations regarding the Appellant's status (e.g., as a "shell company") were limited to the context of this tender and should not prejudice the Appellant in future bids.