Past performance in unrelated projects may justify technical disqualification if relevant to bidder suitability.

The Petitioner (Bhilai Engineering Corp.) challenged a letter dated 18.04.2024 and an internal advisory dated 17.09.2022 issued by the Respondent (SAIL) which led to the Petitioner’s technical disqualification from a global tender for a "Stamp Charged Coke Oven Battery" project at the IISCO Steel Plant.

The disqualification was based on an internal "adverse report" regarding the Petitioner’s unsatisfactory performance as an EPC contractor in a separate Sinter Plant project at Bokaro Steel Limited (BSL).

Following a previous High Court direction in W.P.(C) 4044/2024, SAIL provided the Petitioner a hearing and issued a detailed speaking order rejecting their representation, noting that the BSL project remained stalled due to factors attributable to the Petitioner.

During the pendency of this writ, the contract was awarded to a third-party consortium, which had already completed 25% of the work.

1. Whether the Respondent was justified in rejecting the Petitioner’s technical bid based on an inter-departmental advisory regarding poor performance in a different project.

2. Whether the disqualification and the internal advisory amounted to permanent or illegal blacklisting without following due process.

3. Whether it is appropriate to set aside the award of the contract after significant work has been completed by a successful bidder who is not a party to the suit.

Article 226 of the Constitution of India regarding the scope of judicial review in contractual matters, emphasizing that courts should only interfere if there is a gross violation of public interest or arbitrary exercise of power.

Clause 9.3 of the Purchase Contract Procedure (PCP) and Clause 13 of Section-A of the Tender, which empowers the employer to consider the "capability and past performance" of bidders in other projects during evaluation.

Principles of natural justice and proportionality, distinguishing between internal performance assessments and external debarment, while noting the standards for "drastic remedies" established in Banshidhar Construction Pvt. Ltd. v. Bharat Coking Coal Ltd. and Blue Dreamz Advertising Pvt. Ltd. v. Kolkata Municipal Corporation.

The court reasoned that SAIL, as a public sector undertaking, is entitled to assess a bidder’s suitability based on past performance.

It rejected the argument that the BSL project was "unrelated," noting that even though the technologies (Top Charged vs. Stamp Charged) differ, the Petitioner’s failure as a lead EPC contractor at BSL was a valid technical concern.

The court found no violation of natural justice because the Petitioner was granted a representation and oral hearing following the previous court order.

On the charge of "blacklisting," the court observed that the advisory was an internal communication and did not prevent the Petitioner from securing other contracts (notably, the Petitioner had secured works worth ₹1,500 crores after the advisory was issued), thus it did not constitute an indefinite debarment.

Furthermore, the court highlighted that 25% of the vital project—essential for steel production—was already finished, and equity favored the Respondent as the successful bidder was not impleaded.

The court held that judicial interference was unwarranted given the public interest in the timely completion of the steel plant and the fact that the Petitioner was provided a fair hearing.

While dismissing the challenge, the court directed that the Respondent remains bound by its statement to reconsider the internal advisory if the Petitioner submits a representation demonstrating improved performance in the future.