Writ Jurisdiction: Scope of interference in contractual matters involving State instrumentalities – Held: Courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters – The writ courts should not easily interfere in commercial activities just because public sector undertakings or government agencies are involved – No doubt, the bodies which are State within the meaning of Art.12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution – Constitution of India – Arts.32 and 226.
Administrative Law: Contracts involving technical issues – Judicial review – Scope of interference – In contracts involving technical issues, the courts should be even more reluctant because of lack of expertise to adjudicate upon technical issues beyond their domain – Courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder – Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer – Courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable – The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted – If two interpretations are possible then the interpretation of the author must be accepted – The courts will only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity.
Tata Cellular v. Union of India (1994) 6 SCC 651: [1994] 2 Suppl. SCR 122; Raunaq International Ltd. v. I.V.R. Construction Ltd. (1999) 1 SCC 492 :
[1998] 3 Suppl. SCR 421; Air India Limited v. Cochin International Airport Ltd. (2000) 2 SCC 617 : [2000]
1 SCR 505 ; Karnataka SIIDC Ltd. v. Cavalet India Ltd. (2005) 4 SCC 456 : [2005] 2 SCR 1183; Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd. (2005) 6 SCC 138 : [2005] 3 SCR 666 ; B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. (2006) 11 SCC 548 : [2006] 8 Suppl. SCR 11 ; Jagdish Mandal v. State of Orissa (2007) 14 SCC 517 : [2006] 10 Suppl. SCR 606; Michigan Rubber (Inda) Ltd. v. State of Karnataka & Ors. (2012) 8 SCC 216 : [2012] 8 SCR 128; Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd. (2016) 16 SCC 818 : [2016] 3 SCR 551; Montecarlo v. NTPC Ltd. AIR 2016 SC 4946:
[2016] 8 SCR 224 ; Municipal Corporation, Ujjain and Another v. BVG India Ltd. and Others (2018) 5 SCC
462 : [2018] 6 SCR 861; Caretel Infotech Limited v. Hindustan Petroleum Corporation Limited and Others 2019 (6) SCALE 70 – relied on.
Writ Jurisdiction: Contracts entered into between private parties – Held: Are not subject to scrutiny under writ jurisdiction. Party/Parties: Necessary party – Tender – Rejection – Writ petition – Maintainability when all the tenderer are not parties in the petition – In the instant case, the Division Bench of High Court held that writ petition was not maintainable without making all the tenderer parties to the petitions – Held: The Division Bench of the High Court erred in holding that in all cases challenging the decision of the tendering authority, all the eligible tenderers should be made parties – Such a broad proposition could not be laid down as an inflexible rule of law – In the instant case, the petitioner was only challenging the rejection of its technical bid – At this stage, the other tenderers were not necessary parties – The position may be otherwise, if a tenderer challenges a bid awarded to another or challenges the rejection of his bid at a later stage – The writ petition was maintainable even in the absence of other tenderers because till that stage there was no successful tenderer. Contract: Related firms – Whether the petitioner firm and the sister company are “Related Firms”, within the meaning of Clause
1.19 of the Manual of Contracts, 2007 – It is not disputed that all the partners of the petitioner firm are the directors of the sister company and, therefore, there can be no manner of doubt that the petitioner firm and the sister company are related firms having a business relationship – Therefore, adverse remarks made against the sister concern can be used against the petitioner firm.
Contract: Tender of petitioner was rejected inter alia on the ground that adverse remarks were made against sister concern of the petitioner-tenderer in respect of workload return of ‘SS’ Class contractors and non-renewal of its enlistment – Division Bench of High Court held that the adverse remarks recorded against the sister company could not be gone into in the absence of any challenge by the sister company – Held: If the tendering authority is using any adverse material of the sister company against the petitioner firm then the petitioner firm would be entitled to urge that the adverse remarks were not called for or that the adverse remarks were not justified or that the adverse remarks were not to be taken into consideration while considering the tender of the petitioner firm – However, it is noted that in the instant case, the sister company not only did not get its enlistment renewed but also did not care to even represent against the adverse remarks – The eligibility criteria provided in the tender laid down that there should be no adverse remarks in the WLR of the competent engineering authority – Admittedly, there were adverse remarks in Work Load Return (WLR) of the sister company – The sister company having realised that it would not be awarded any contract, neither got its enlistment renewed nor tried to submit the tender – The directors of the sister company tried to get over these insurmountable objections by applying for the tender in the name of the petitioner firm – All the directors of the sister company were partners in the petitioner firm – Therefore, these adverse remarks passed against the sister company could not be ignored.
Contract: Tender – Eligibility criteria – In the instant case, as per the eligibility criteria for MES enlisted contractors, only contractors falling in “SS Class” were eligible to apply – Admittedly, the petitioner firm was not an enlisted contractor and was, therefore, required to meet the eligibility criteria for “other contractors” – As far as “other contractors” were concerned, they were required to meet the same criteria as “SS” MES contractors category and these contractors were specifically told that they could see enlistment criteria in the MES Manual Contracts – The Manual also provided criteria for enlisting of contractors – Therefore, only companies incorporated under the Companies Act, 1956, were eligible to be enlisted as ‘SS’ Class Contractors – Furthermore, Clause 1.5 dealt with the documents to be submitted by the contractor for enlistment in MES – This again would show that only limited companies could be enlisted in ‘SS’ Class – ‘SS’ is the highest class and for that only incorporated companies can apply – Therefore, the petitioner was not eligible to submit the tender.
Administrative Law: Administrative decisions – Contract – Rejection of tender – Whether the appellate orders rejecting tenders were bad since they were without reasons – Held: While rejecting the tender the person or authority inviting the tenders is not required to give reasons even if it be a State within the meaning of Art.12 of the Constitution – These decisions are neither judicial nor quasijudicial – If reasons are to be given at every stage, then the commercial activities of the State would come to a grinding halt – The State must be given sufficient leeway in this regard – Constitution of India – Art.12.
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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