Chief Justice Alok Aradhe, Justice Sandeep V. Marne, Bombay High Court
Proprietor's Experience After His Entry Into LLP Can Be Reckoned As Experience Of LLP: Bombay High Court
|The Bombay High Court was considering a Petition challenging the decision of the Executive Engineer, National Highway Division (second Respondent), refusing to consider the Petitioner's financial bid in the impugned tender process.
The Bombay High Court observed that the experience of a proprietor after he enters into Limited Liability Partnership can be reckoned as experience of LLP.
The Petitioner had filed the petition challenging the decision of the Executive Engineer, National Highway Division (second Respondent), refusing to consider its financial bid in the impugned tender process
The Division Bench of Chief Justice Alok Aradhe and Justice Sandeep V. Marne said, “Both Respondent Nos.1 to 3 as well as Respondent No.4 have raised doubts about authenticity of Memorandum of Understanding for business transfer relied upon by the Petitioner. In our view, once the principle of reckoning of experience a proprietor after his entry into LLP as experience of LLP is recognized, whether there is actual merger of the business or not becomes irrelevant. In that sense, it was not really necessary for the Petitioner to prove merger of business of the proprietary concern into the LLP. Nonetheless Petitioner has produced document evidencing such merger.
Advocate Yuvraj Narvankar represented the Petitioner while Government Pleader Neha S. Bhide represented the Respondent.
Factual Background
The Respondents issued a Tender Notice for the execution of Road Maintenance Work at an estimated cost of Rs 3,22,63,404. Petitioner submitted its bid in pursuance of the Tender Notice. After completion of technical scrutiny of the bids, the Petitioner’s bid was rejected as ‘non-responsive’ on the ground that it failed to submit a notarised business transfer agreement and other legal documents showing the relationship between the Petitioner and M/s. Nandkumar Constructions. The Petitioner made a representation and submitted the relevant documents.
The Petitioner was informed that its bid was rejected as non-responsive for failure to submit notarised Business Transfer Agreement. The petitioner challenged the rejection letter. Since the decision to disqualify the Petitioner was not recalled, it filed the Petition challenging the communication dated October 4, 2024, as well as seeking disqualification of Respondent 4. By an earlier order, the High Court had ordered that the work order pursuant to the subject tender, if issued, shall not be acted upon.
Reasoning
The Bench noted that the experience of the Proprietor of M/s. Nandkumar Constructions is required to be taken into consideration as the experience of the Petitioner-LLP for the purpose of evaluation of the Petitioner’s technical eligibility. It was explained by the Bench that Section 23 of the Limited Liability Partnership Act, 2008 provides for is governing of rights and duties of partners and rights and duties of LLP by the agreement. “In our view, provisions of Section 23 of the Act would not make inapplicable to a LLP, the principle of reckoning an experience of partner prior to his entry into partnership firm as experience of the firm.”
It was also noticed that the Petitioner had produced a document evidencing such a merger. As per the Bench, the tendering authority had grossly erred in holding the Petitioner's bid as non-responsive. Petitioner had qualified the prescribed eligibility criteria, and accordingly, his financial bid was required to be considered. Reference was made to the judgment of the Apex Court in Ram & Sham Company vs. State of Haryana (1985) where the Apex Court has recognized the principle of rebidding between the two contesting parties to ensure that the tendering authority achieves the best rates.
Considering that both Petitioner and Respondent 4 are willing to renegotiate their financial bids, the Bench ordered that the first three Respondents shall, after opening the financial bid of the Petitioner, invite both the parties for negotiations and award the contract to the party quoting the lowest rates.
The Bench thus partly allowed the appeal, set aside the Order adjudging Petitioner’s bid as non-responsive and held the petitioner to be eligible for the opening of the financial bid.
Cause Title: Nandkumar Infrastructure LLP v. The Superintendent Engineer (Neutral Citation: 2025:BHC-AS:24979-DB)
Appearance
Petitioner: Advocate Yuvraj Narvankar
Respondent: Government Pleader Neha S. Bhide, with Additional GP O.A. Chandurkar, AGP G.R. Raghuwanshi, Advocates Tejas Deshmukh, H.D. Chavan, Dashrath A. Dubey