K’taka HC quashes tender to company with Chinese links, says 'national security paramount'

In a major decision, the Karnataka High Court has ruled that national security is paramount over public interest. The court quashed a tender awarded by the Bharat Heavy Electricals Limited (BHEL) to a private company having links with a Chinese firm and declared the awarding of tender as invalid.

"The mere claim of public interest without following the due procedure of registering with the competent authority can not be pitted against the national interest," stated the bench.

The court refused the argument of BHEL that interference at this stage would cause delay in implementing the project. The bench also did not heed to the argument that the cancellation of tender would result in financial strain on the exchequer of the government and 50 per cent of the work was already completed.   

The BHEL had awarded the tender to a Kolkata-based BTL EPC Ltd, which has a consortium agreement with a Chinese company Fujian Longking Co. Limited in 2022 to set up a Rs 378 crore worth Ash handling plant as a part of establishing a Thermal Power Station in Telangana.  

The division bench headed by Chief Justice Prasanna B. Varale and Justice M.G.S. Kamal gave the order in this regard recently.

The petition was filed by the Macawber Beekay Private Limited, a Noida-based company that challenged the single bench order in 2022. The single bench had quashed the petition challenging the awarding of tender to the company having links with the Chinese firm.

The double bench underlined that it was mandatory for bidders from outside the country sharing borders with India to make registration with competent authority. The order in this regard was issued by the Union Ministry of Finance in national defence and security interest on July 23, 2020.

The bench maintained that BTC EPC Ltd company was not technically qualified for the bid and its consortium with the Chinese firm gave it the qualification for the bidding.    

The counsel for BTC EPC Ltd maintained that it was the only company to participate in the bid and termed its links with the Chinese company as only a tie-up for providing design and engineering, but the bench did not accept the argument.

The bench directed the BHEL to consider the bid of the appellant Noida-based company. The bench had also allowed four weeks for BHEL to make an appeal in the Supreme Court.