In a significant verdict upholding transparency and fairness in public procurement, the Delhi High Court on April 22 quashed a ₹56 crore catering contract awarded by the Indian Railway Catering and Tourism Corporation (IRCTC) to RK Associates and Hoteliers Pvt. Ltd.

The Court held that the bidder failed to disclose a pending criminal case, thereby violating essential conditions of the tender meant to safeguard anti-corruption principles.

A division bench comprising Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela found that IRCTC acted in breach of its own tender norms by awarding the contract despite the bidder’s non-disclosure of material facts.

“The process by which respondent No.2 (RK Associates) has been issued the Letter of Award is vitiated... Such a failure is undoubtedly not in conformity with the principle of fairness in public tenders,” the Court stated.

The ruling came in response to a plea by MS Deepak and Co., a rival bidder who had submitted a lower bid of ₹41 crore. The firm challenged the April 17, 2024 Letter of Award (LoA) issued to RK Associates, arguing that the latter had concealed a pending criminal case registered in 2015. The case, which named several railway officials and private licensees including RK Associates, is being investigated under the Prevention of Corruption Act and the Prevention of Money Laundering Act (PMLA).

Although proceedings in the case were stayed by the Supreme Court, the petitioner contended that RK Associates was still obligated to disclose the pendency of the case under Sections 2(g) and 3 of the Integrity Pact.

Upholding this contention, the High Court categorically rejected IRCTC’s argument that only transgressions from the past three years needed disclosure. “The bidder is under a mandate to disclose all such transgressions irrespective of the period when they are said to have occurred,” the Court held, clarifying that the timeline mentioned in Section 5 could not be read into Section 3.

The Court emphasized that the non-disclosure deprived IRCTC of the opportunity to evaluate the credibility of RK Associates:
“Had the criminal antecedents relating to the period prior to the past three years been disclosed as mandated… IRCTC would have been in a position to assess whether the reliability and credibility of RK Associates was compromised,” it observed.

Stressing the importance of integrity in public tenders, the Court remarked, “Every possible step needs to be taken to remove any chances of transgression which may impinge on anti-corruption approach.”

The bench also referred to the Calcutta High Court’s judgment in Damodar Valley Corporation v. BLA Projects, which affirmed that disclosure of prior transgressions—even beyond a three-year window—is essential when the bidder’s credibility is at stake.

However, the Court declined to accept the petitioner’s allegation that IRCTC acted illegally by allowing RK Associates to rectify a procedural lapse related to witness signatures on the Integrity Pact after opening the financial bids. It held that the pact, signed by the authorised signatory, was otherwise compliant and that the witness signature requirement was premature at that stage.

Consequently, the Court quashed the Letter of Award issued in April 2024 to RK Associates and directed IRCTC to restart the tender process and complete it within three months. To avoid disruption of services, the Court allowed RK Associates to continue operations until a new contract is awarded.

The petitioners were represented by Senior Advocate Kirti Uppal, assisted by Advocates Himanshu Pathak, Riya Gulati, Amit Singh, and Archisha Satyarthi.

IRCTC was represented by Solicitor General Tushar Mehta along with Advocates Saurav Agrawal, Anshuman Chowdhury, and Aarya Bhat.

RK Associates was represented by Senior Advocates Sandeep Sethi and Jayant Mehta, with a legal team comprising Advocates Jasmeet Singh, Gautam Khazanchi, Mahinder Singh Hura, Saif Ali, Pushpendra S. Bhadoriya, Vijay Sharma, Riya Kumar, Rajat Sinha, Pranav Menon, Vaibhav Dubey, and Saurav.