Objective cartel indicators justify EMD forfeiture, warranting restrained judicial review of procurement decisions.

ONGC issued a Notice Inviting Tender dated 16 May 2025 for an annual rate contract concerning construction of drill sites and other civil works for the Jorhat Asset for three years.

The petitioners submitted bids quoting 16% and deposited an Earnest Money Deposit (EMD) of ₹29,35,000 each.

ONGC rejected their bids on 2 September 2025, alleging violation of Section 2(1)(b) of the Integrity Pact because the bids had been submitted from the same IP address.

ONGC subsequently issued show-cause notices proposing blacklisting.

Although the writ petitions initially challenged both blacklisting and forfeiture of the EMD, the petitioners confined the proceedings to the forfeiture issue.

ONGC relied on several circumstances allegedly indicating cartelisation: the identical IP address, certificates issued by the same Chartered Accountant, identical Appendices BP-1, BP-2, BP-3 and GU, and, in the case of two petitioners, their being brothers.

1. Whether ONGC’s decision to forfeit the petitioners’ EMD on the basis of alleged cartelisation and violation of the Integrity Pact was arbitrary, unreasonable, or unsupported by objective material?

2. Whether the petitioners’ common IP address, common Chartered Accountant, identical bid appendices, and familial relationship were sufficient circumstances to sustain ONGC’s decision-making process?

3. Whether the Court should interfere under Article 226 with ONGC’s contractual and commercial decision to forfeit the EMD?

The Court applied the terms of the tender document and the Integrity Pact, including Section 2(1)(b), which prohibited cartelisation, and Section 4(1)(1), which empowered ONGC to forfeit the EMD; the tender’s techno-commercial evaluation clause also contemplated rejection of bids violating the Integrity Pact.

It relied on the Competition Commission of India’s guidelines identifying warning signals of bid rigging, including bids submitted from the same IP address, common email or office details, common professionals, identical mistakes or documents, and related or commonly controlled bidders.

Under the principles governing judicial review of contractual decisions, particularly Air India Ltd. v. Cochin International Airport Ltd., (2000) 2 SCC 617, judicial review is concerned with the decision-making process rather than appellate re-assessment of the commercial decision.

Silppi Constructions Contractors v. Union of India, (2020) 16 SCC 489 further establishes that courts should exercise restraint in contractual matters and interfere only in cases of gross illegality, perversity, or unreasonableness.

The Court also considered Rajasthan Cylinders & Containers Ltd. v. Union of India, M/s Versha Technotrade Pvt. Ltd. v. State of Assam, and M/s G.H. Khandelwal v. Amravati Municipal Corporation concerning the assessment of bid rigging and cartelisation indicators.

The Court held that the forfeiture decision was based on cumulative and objective circumstances rather than on the petitioners’ familial relationship alone.

The identical IP address, common Chartered Accountant, identical appendices, and, in two cases, the relationship of brotherhood corresponded with the CCI’s recognised warning signals of cartelisation.

The explanation that a common service provider, Shri Durlov Gogoi, had assisted multiple bidders did not adequately displace the inference, particularly because other successful bidders had submitted their bids through different IP addresses.

Likewise, the Court rejected the submission that use of the same Chartered Accountant was merely coincidental, noting that the petitioners’ bid appendices were also identical and that other bidders had used different Chartered Accountants.

The argument that three petitioners could not form a cartel was rejected because ONGC’s allegation concerned 15 of the 30 bidders, while the remaining 12 implicated bidders had not challenged the decision.

Since Section 4(1)(1) of the Integrity Pact authorising EMD forfeiture was not itself challenged, and no gross illegality, perversity, or manifest unreasonableness was established, the Court declined to interfere with ONGC’s commercial decision.

It held that ONGC’s decision-making process was founded on objective materials indicating possible cartelisation and did not warrant interference under Article 226.

All three writ petitions were dismissed, the interim orders were vacated, and no order as to costs was made.

The Court clarified that the judgment was confined to the forfeiture of the EMD and that the petitioners remained at liberty to separately challenge the blacklisting decision, if so advised.