Delhi High Court Reiterates Limited Scope of Judicial Review in Tender Evaluation Matters
Lahoti Advocates represented the Petitioner, Paharpur Cooling Towers Limited, before the Delhi High Court in a writ petition concerning the techno-commercial evaluation of a public sector tender for specialised cooling tower works.
The Delhi High Court, by judgment dated 23 April 2026 in Paharpur Cooling Towers Limited v. Union of India & Ors., W.P.(C) 12270/2024, considered important questions relating to judicial review of tender evaluation, reliance on past experience after complete corporate restructuring, access to proprietary technology, treatment of abnormally low bids, and the relevance of advanced execution of public contracts.
The writ petition arose out of a tender floated by Indian Oil Corporation Limited for execution of the EPCC Package for Cooling Tower Works for the Poly Butadiene Rubber Plant Project at Panipat Refinery and Petrochemical Complex. The Petitioner challenged the techno-commercial evaluation summary dated 06.08.2024 and the bid evaluation summary dated 08.08.2024, by which Respondent No. 4 was declared technically qualified and L1.
The Petitioner contended that Respondent No. 4 had undergone a fundamental change in its corporate structure and was no longer part of the erstwhile Hamon Group. It was argued that Respondent No. 4 could not rely upon past experience allegedly gained through proprietary technology, intellectual property and technical know-how of the Hamon Group, particularly after such assets were stated to have been acquired by another entity. The Petitioner also raised concerns regarding the abnormally low financial bid submitted by Respondent No. 4.
The High Court, however, declined to interfere with the tender process. The Court held that Clause 12.5 of the tender document required demonstration of past execution of similar works of specified value, but did not expressly require continued ownership of intellectual property, access to proprietary technology, technical collaboration, or continuity of shareholding. The Court further held that a company’s past experience, credentials and performance are attributes of the corporate entity itself and do not stand extinguished merely because of a change in shareholding, unless the tender expressly provides otherwise.
On the question of technical capability, the Court held that the assessment of a bidder’s expertise lies primarily within the domain of the tendering authority and its technical consultant. In exercise of judicial review, the Court would not substitute its own technical assessment unless the decision was shown to be perverse, arbitrary, mala fide or contrary to the tender conditions.
The Court also considered the allegation that the successful bidder had submitted an abnormally low bid. It held that a bid lower than the estimated cost is not automatically liable to rejection. The Court observed that what is relevant is whether the bid is so unrealistic or unworkable as to raise a legitimate doubt regarding the bidder’s ability to execute the contract, and such assessment ordinarily lies with the procuring authority.
Another important aspect considered by the Court was the advanced stage of execution. It was noted that approximately 80% of the work had already been completed which was seriously contradicted by the Petitioner. While the Court clarified that this factor was not determinative of the legality of the initial decision, it held that interference at such an advanced stage of a public infrastructure project would be impracticable and contrary to public interest.
Key Takeaways
This judgment is a significant addition to tender jurisprudence for the following reasons:
1. Tender conditions remain the starting point:
Courts will ordinarily not read additional eligibility requirements into a tender, particularly in relation to technology ownership, intellectual property or continuity of management, unless such conditions are expressly stipulated.
2. Corporate experience survives change in shareholding:
Past experience of a company may continue to be relied upon by the same corporate entity despite change in ownership or shareholding, unless the tender document provides otherwise.
3. Technical evaluation receives judicial deference:
In specialised infrastructure and engineering tenders, courts are slow to interfere with the technical assessment of the procuring authority and expert consultants.
4. Abnormally low bids require scrutiny, not automatic rejection:
A low bid may justify examination by the procuring authority, but it does not automatically vitiate the tender process unless the tender mandates rejection or the decision is shown to be arbitrary.
5. Delay can affect relief in tender disputes:
Where a substantial portion of the work has already been executed, courts may be reluctant to interfere, particularly where public infrastructure projects are involved.
Comment
The judgment underscores the high threshold for interference in public procurement matters. It also highlights the importance of carefully drafted eligibility clauses. Where procuring entities intend to insist upon continuing technical collaboration, ownership of proprietary technology, or uninterrupted access to specific intellectual property, such conditions must be expressly incorporated into the tender document.
At the same time, the case raises an important policy question: in highly specialised technical contracts, should past execution experience alone be sufficient, or should procuring entities be required to evaluate whether the bidder continues to possess the technical foundation on which such experience was originally built? The judgment leaves this question largely to the discretion of the tendering authority, which may be examined by the Supreme Court if challenged.
Appearance:
The Petitioner was represented by Mr. Sandeep Sethi, Senior Advocate, with Mr. Divyakant Lahoti, Mr. Kartik Lahoti, Ms. Vindhya Mehra, Ms. Praveena Bist, Ms. Shubheksha Dwivedi and Ms. Akanksha Soni, Advocates.