Courts Must Realise Their Limitations, Needless Interference In Commercial Matters Can Cause Havoc: Calcutta High Court

Observing that the State must be given a sufficient leeway in tender processes to ensure that commercial activities of the government do not come to a grinding halt, the Calcutta High Court recently cautioned writ courts from needlessly interfering in commercial matters.

A division bench of Chief Justice Prakash Shrivastava and Justice Rajarshi Bharadwaj said:

“The Courts must realise their limitations and the havoc which needless interference in commercial matters could cause. 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, as long as there are no malafide/arbitrariness etc. Thus, the terms of invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract.”

Emphasising that the State must be given autonomy when it comes to tender processes, the court observed that if reasons are to be given at every stage of the tender procedure then the commercial activities of the State would come to a grinding halt. "The State must be given sufficient leeway in this regard," said the bench.

The court was adjudicating upon an appeal filed against a single judge order wherein it had been held that the appellant Damodar Valley Corporation had unlawfully disqualified the respondent company - BLA Projects Private Limited, from participating in the tender process for the work of lifting coal from collieries in Talcher, Odisha.

The division bench observed that the single judge had erred in asking the Corporation to permit BLA Projects to participate in the tender process.

It also placed reliance on the high court's judgment in Airport Authority of India v. Masti Health and Beauty Private Limited and Ors wherein it was held that the satisfaction as to whether a bidder satisfies the tender conditions rests primarily upon the authority inviting the bids.

“The writ court should refrain itself from imposing its decision over the decision of the employer/principal as to whether or not to accept the bid of a tenderer. The Court does not have the expertise to examine the terms and conditions of the present-day economic activities of the State. Courts should be even more reluctant in interfering with the contracts involving technical issues as there is a requirement of the necessary expertise to adjudicate upon such issues,” the court remarked further.

Accordingly, the impugned Single Judge order was set aside.

Case Title: Damodar Valley Corporation & Ors

Citation: 2023 LiveLaw (Cal) 20

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