Almost Every Tender Being Challenged In Writ Proceedings Almost As A Matter Of Routine, Says SC [Read Judgment]

The bench comprising Justice SA Bobde and Justice Sanjay Kishan Kaul observed that it affects the efficacy of commercial activities of the public sectors, which may be in competition with the private sector.

"Normally parties would be governed by their contracts and the tender terms, and really no writ would be maintainable under Article 226 of the Constitution of India. In view of Government and Public Sector Enterprises venturing into economic activities, this Court found it appropriate to build in certain checks and balances of fairness in procedure. It is this approach which has given rise to scrutiny of tenders in writ proceedings under Article 226 of the Constitution of India. It, however, appears that the window has been opened too wide as almost every small or big tender is now sought to be challenged in writ proceedings almost as a matter of routine. This in turn, affects the efficacy of commercial activities of the public sectors, which may be in competition with the private sector. This could hardly have been the objective in mind. "

The court further observed that unnecessary, close scrutiny of minute details of the tender contracts by the writ courts, contrary to the view of the tendering authority, makes awarding of contracts by Government and Public Sectors a cumbersome exercise, with long drawn out litigation at the threshold. "The private sector is competing often in the same field. Promptness and efficiency levels in private contracts, thus, often tend to make the tenders of the public sector a non-competitive exercise. This works to a great disadvantage to the Government and the Public Sector.", the Court added.

Referring to some earlier judgments, the bench highlighted some principles to be followed while adjudicating a writ petition against tender contracts.

Interference is permissible only if the decision making process is arbitrary or irrational to an extent that no responsible authority, acting reasonably and in accordance with law, could have reached such a decision.

Constitutional Courts are expected to exercise restraint in interfering with the administrative decision and ought not to substitute their view for that of the administrative authority. Mere disagreement with the decision making process would not suffice.

Author of the document is the best person to understand and appreciate its requirements. It is possible that the author of the tender may give an interpretation that is not acceptable to the Constitutional Court, but that itself would not be a reason for interfering with the interpretation given.

The court further observed:

"We have considered it appropriate to, once again, emphasise the aforesaid aspects, especially in the context of endeavours of courts to give their own interpretation to contracts, more specifically tender terms, at the behest of a third party competing for the tender, rather than what is propounded by the party framing the tender. The object cannot be that in every contract, where some parties would lose out, they should get the opportunity to somehow pick holes, to disqualify the successful parties, on grounds on which even the party floating the tender finds no merit"

The bench was considering an appeal against the High Court order in a writ petition concerning an issue related to an e-public tender floated by Hindustan Petroleum Corporation Limited for setting up call centres for receiving, recording and replying to information enquiries and complaints from LPG customers of IOC/HPC/BPC.

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