The Delhi High Court has ruled that Bharat Sanchar Nigam Limited (BSNL) cannot unilaterally cancel an IT company's contract without providing substantial and tangible evidence .

 

The Delhi High Court has ruled in favor of Millennium Automation, a private IT company, ordering Bharat Sanchar Nigam Limited (BSNL) to continue its multi-crore contract with the firm. The contract involves the supply, installation, testing, commissioning, and maintenance of IT hardware and software for BSNL's centralized mobile billing system and probe-based Internet Protocol Data Recovery (IPDR) management solution.

BSNL had previously withdrawn the purchase order, citing allegations of collusion and bad faith by Millennium Automation during the bidding process. However, the High Court found no substantial evidence to support BSNL's claims and set aside the decision to cancel the contract.

This judgment underscores the necessity for public sector entities to provide tangible proof and adhere to due process when making decisions that could impact private parties in contractual agreements. The court's decision reinstates the contract and ensures that Millennium Automation can proceed with the agreed-upon work.

Delhi High Court‘s order to BSNL

Justice Sanjeev Narula of the Delhi High Court delivered a significant judgment in the case involving BSNL and Millennium Automation, emphasizing the need for tangible evidence in serious accusations such as collusion or malpractice. The judge highlighted several key points:

1. Integrity of Tendering Process: While the integrity of public tendering must be upheld, allegations such as "compromised integrity" require robust, concrete evidence rather than mere speculation or perception.

2. Fairness and Accountability: The court criticized BSNL for not adhering to its obligation to act fairly, noting that the cancellation of the purchase order lacked sufficient justification.

3. Arbitrary Action: The court deemed BSNL's actions in rescinding the contract as "unreasonable, arbitrary, and unsustainable," emphasizing that such decisions must be grounded in solid, provable facts.

4. Ruling Outcome: The High Court allowed the petition by Millennium Automation, setting aside BSNL's communication dated August 6, 2024, which canceled the purchase order. The ruling reinstates the contract, allowing Millennium Automation to proceed with its obligations.

This judgment reaffirms the principle that allegations affecting contractual relationships must be backed by substantive evidence, ensuring fairness and accountability in public procurement processes.

What the IT company said

Millennium Automation took legal recourse against BSNL's abrupt decision to cancel their contract, arguing in the Delhi High Court that the withdrawal was unreasonable and imposed significant financial hardship, as they had already invested heavily in procuring supplies for the project.

Key Arguments by Millennium Automation:

1. Significant Investments Made:
   The company emphasized that it had already allocated substantial resources toward acquiring supplies and preparing to execute the project, which made the sudden cancellation particularly damaging.

2. Submission of Required Documentation:
   Millennium Automation pointed out that it had provided BSNL with a comprehensive list of equipment suppliers, along with their security clearances, on August 5, 2024—demonstrating their commitment and readiness to fulfill the contract.

3. Abrupt Cancellation:
   Despite submitting these documents, BSNL cancelled the purchase order on August 6, 2024, just a day later. Millennium Automation contended that this action was arbitrary, lacked adequate reasoning, and undermined the contractual relationship.