High Court upholds ruling that SJ Construction's bid disqualifications were unlawful

The High Court has upheld the Civil Court's rulings, which determined that the National Tender Board's decision to disqualify several bids submitted by SJ Construction for government housing projects was unlawful.

The High Court reached this decision on June 15, following the state's appeal of rulings issued against it by the Civil Court in 2022 and 2023. The presiding bench, comprised of Judge Mohamed Shaneez Abdulla, Judge Huzaifa Mohamed, and Judge Abdul Maaniu Hussain, ruled unanimously that there are no legal grounds to overturn the lower court's decision.

This case concerns bids submitted by a joint venture between SJ Trade Private Limited and SJ Construction for the completion of 100 housing units in HDh. Hanimaadhoo, 100 housing units in HDh. Nolhivaranfaru, and the completion of 64 units along with the construction of 36 new units in Th. Vilufushi. The National Tender Board disqualified SJ's bids, citing a failure to meet "Employer's Requirements" and "Financial Resources Requirements." At the time, the Tender Board also decided not to accept the Letter of Credit submitted by the company as a valid financial resource.

Following SJ Construction's appeal to the Independent Review Committee regarding the National Tender Board's decision, the committee ruled that the company's bids were valid and met all necessary requirements. The committee determined that the documentation issued by the Bank of Ceylon remained valid, despite being issued prior to the company's name change. Consequently, the Tender Board was instructed to re-evaluate the bids with SJ Construction included in the process. However, the Tender Board disregarded the committee's ruling and proceeded with the decision to award the projects to another party.

Following its review of the case, the Civil Court ruled that the Tender Board’s actions were in violation of the Public Finance Regulations. The court further determined that since SJ Construction's bids were unlawfully disqualified, the company retains the right to sue for damages incurred as a result of the decision. In its appeal to the High Court, the State argued that the Review Committee's decision contradicted the tender documents. The State further contended that enforcing the lower court's ruling would be challenging, as some of the projects in question have already been awarded to third parties.

The High Court ruled that the National Tender Board does not have the legal authority to overturn decisions made by the Independent Review Committee, which is established under the Public Finance Act and its accompanying regulations. The presiding judges further noted that the prior awarding of a project to another party does not serve as a valid excuse to exempt the state from providing court-ordered remedies. Additionally, the High Court upheld the Civil Court's ruling, determining that the decision affirming the right to seek damages is consistent with the Constitution.

With this ruling, it has been legally established that the decisions of the Independent Review Committee—established under the State Finance Regulations to oversee bidding disputes—are legally binding for the National Tender Board. Consequently, the path is now clear for SJ Construction to seek legal redress and claim compensation for the damages incurred in connection with these projects.