Bombay High Court pulls up BEST for terminating electric bus contract, sets aside order

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Mumbai: The Bombay High Court on Tuesday quashed a BEST notice terminating a contract with a private company for 40 electric buses and has pulled up the civic transport and electricity provider for acting “high handedly and arbitrarily”. A bench of acting Chief Justice Naresh Patil and Justice G S Kulkarni was hearing a petition filed by Olectra Greentec, a Hyderabad-based firm, challenging an August 30 notice issued by Brihanmumbai Electric Supply & Transport Undertaking (BEST) terminating its contract to supply 40 electric buses.

According to the petition, in February this year, the company was awarded a contract by BEST to supply 20 air conditioned and 20 non air-conditioned electric buses, and by June, the petitioner had manufactured 24 electric buses. According to counsel Milind Sathe and Karan Bhosale, appearing for the company, BEST terminated the tender claiming that there had been a change in the policy regarding ownership of the buses. BEST had issued the tender under an incentive scheme of the Union government’s Department of Heavy Industries (DHI).

However, the Union government then informed BEST about its decision to have the buses under joint ownership of the concerned state transport authority (in this case BEST) and the company which was awarded the tender. The petitioner, by its letter dated 31 May 2018, confirmed its acceptance on jointly owning the electric buses. The bench noted that despite this letter issued by the company, and another communication sent to BEST stating that 24 buses were ready to be delivered, the BEST did not bother to respond or clarify its stand and instead went ahead and terminated the contract.

“We are also certain that the conspicuous silence of the BEST in reverting to the petitioner either way on the petitioners acceptance of the conditions required by the DHI was not superficial. It appears, and quite possibly, hectic activities were going on for issuance of a new tender for award of the same contract,” the court noted. It added that fresh tenders were issued on August 31, a day after the contract awarded to the petitioner was terminated.

The court, in its judgement passed Tuesday, said the BEST’s decision terminating the contract was “ex-facie arbitrary and illegal”. “Can it be so simple for a statutory authority to float a tender at public cost, complete the tender process, award the contract with conditions that the contract would be immediately acted upon and then, for reasons which are not attributable to the contractor, terminate the contract?” the order said.

“To our mind, the actions, conduct and the approach of the BEST leaves no manner of doubt that the BEST not only acted high handedly and arbitrarily in taking the impugned decision, but also attempted to abuse the process of law,” the judgement said. “The basic requirement expected of a statutory body, when it acts in a contractual sphere, is that the statutory body should adhere to principles of fairness, transparency, non-arbitrariness, non-discrimination being the basic tenets of the Article 14 of the Constitution,” the court said in its order.