Contract – Complex technical contract – Power of judicial review – Writ petition by the competing bidder challenging the contract awarded to the successful bidder on the ground that it was in breach of conditions, the tender submitted did not meet the technical requirements – Dismissed by the Single Judge of the High Court, however the Division Bench set aside the order – Interference with:
Held: In contracts involving complex technical issues, the Court should exercise restraint in exercising the power of judicial review – Even if a party to the contract is ‘State’ within the meaning of Art. 12 of the Constitution, amenable to the writ jurisdiction of the High Court or the Supreme Court, the Court should not readily interfere in commercial or contractual matters – Court ought to defer to the discretion of the tender inviting authority which is best placed to interpret their terms – Courts to review the decision-making process and examine arbitrariness or mala fides, if any – Neither the State Power Generation Company nor the contractor raised any dispute as regards the eligibility of the successful bidder to bid for the contract – Challenge was addressed by the competing bidder whose bid was much higher than the successful bidder – Primary decision on whether the successful bidder meets the technical requirements of the tender on account of its collaborator being a Chinese company that was not registered had to be determined by the contractor – Contractor has not found that there was any breach – Contractor and the State Power Generation Company found that the agreement with the Chinese company was in the nature of a service agreement and not a “consortium” under the pre-qualification requirements, thus, the registration requirement did not apply – Division Bench ought to have proceeded with circumspection and interfered only when the order sufferred from perversity or error – Interference of the Division Bench in the judgment of the Single Judge not warranted – Furthermore, setting aside the award of the contract would cause insuperable difficulties in the implementation of the contract since the work under the contract has progressed, and both the State Power Generation Company and the contractor, being public entities have invested funds for the realization of the project – Thus, the judgment of the Division Bench set aside and that of the Single Judge restored – Judicial restraint – Constitution of India. [Paras 33-40]
LIST OF CITATIONS AND OTHER REFERENCES
Tata Motors Limited v. Brihan Mumbai Electric Supply & Transport Undertaking (BEST) and Others, 2023 SCC OnLine SC 671; Monte Carlo Limited v. National Thermal Power Corporation Limited, (2016) 15 SCC
272 : [2016] 8 SCR 224 – referred to.
OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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