The Government is the largest litigator in the land, and Writ Petitions account
for a majority of these litigations. Since Writ Petitions can only be preferred
against the State as per Article 12 of the Constitution, Government bodies are
the exclusive bodies against which Writ Petitions can be preferred. This Article
will discuss in what circumstances the writ jurisdiction of the Courts can be
invoked in a government tender, and in what circumstances the Court will
intervene, and when it will not.
Tata Cellular Vs Union Of India :
The Department of Telecommunications, Government of India invited tenders from
Indian companies with a view to license Cellular Mobile Phone Service in the 4 metro cities of India. Who were
short-listed at the first stage were invited for the second stage. 4 of the
companies which were rejected challenged the same by way of Writ Petition in the
Delhi High Court, which came to be rejected. Before the Supreme Court they
alleged that one of the members of the Selection Committee son worked in one of
the companies which had been selected , and therefore there was ďreal likelihood
of biasĒ. The Supreme Court rejected this allegation and said that the said
member was one of the many members of the selection committee, and no allegation
of bias could be attributed due to this. However the Supreme Court directed that
the bid of Tata Cellular be reconsidered in light of the fact that they met all
the criteria of the bids, and still were rejected.
The Apex Court laid down some the following guidelines in respect of court
interference in awarding of tenders:
Municipal Corporation, Ujjain & Anr. v. BVG India Limited and
- The modern trend points to judicial restraint in administrative action.
- The court does not sit as a court of appeal but merely reviews the
manner in which the decision was made.
- The court does not have the expertise to correct the administrative
decision. If a review of the administrative decision is permitted it will be
substituting its own decision, without the necessary expertise, which itself
may be fallible.
- The terms of the invitation to tender cannot be open to judicial
scrutiny because the invitation to tender is in the realm of contract.
- The Government must have freedom of contract. In other words, a fair
play in the joints is a necessary concomitant for an administrative body
functioning in an administrative sphere or quasi-administrative sphere.
However, the decision must not only be tested by the application of
Wednesbury principle of reasonableness (including its other facts pointed
out above) but must be free from arbitrariness not affected by bias or
actuated by mala fides.
- Quashing decisions may impose heavy administrative burden on the
administration and lead to increased and unbudgeted expenditure.
In the case the Appellant had challenged High Courtís order, whereby
the Court had set aside the contract awarded in favour of Global Waste
Management Cell Private Limited by Ujjain Municipal Corporation for door to door
collection and transportation of Municipal Solid Waste.
The tender floated by Municipal Corporation was awarded to Global Waste
Management Cell Pvt. Ltd. amongst the three bidders by getting the highest
score. However, the award of contract was challenged by the unsuccessful bidder
(B.V.G. India Limited) before the High Court. The High Court subsequently set
aside the contract awarded to Global Waste Management Cell Pvt. Ltd. Aggrieved
by High Courtís decision, the Appellant Municipal Corporation approached the
In view of the facts and circumstances, the Supreme Court allowed the appeal and
set aside High Courtís order. One of the intrinsic issue on which the Apex Court
elucidated was scope of judicial review of administrative decisions.
That the successful bidder was more technically qualified and it
got more marks. Normally, the contract could be awarded to the lowest bidder if
it is in the public interest. Merely because the financial bid of BVG India Ltd.
is the lowest, the requirement of compliance with the Rules and conditions
cannot be ignored.
That a statutory authority granting licences should have the latitude to select
the best offer on the terms and conditions prescribed. As clarified earlier, the
power of judicial review can be exercised only if there is unreasonableness,
irrationality or arbitrariness and in order to avoid bias and mala fides.
That evaluating tenders and awarding contracts are essentially commercial
transactions/contracts. If the decision relating to award of contract is in
public interest, the Courts will not, in exercise of the power of judicial
review, interfere even if a procedural aberration or error in awarding the
contract is made out.
That the power of judicial review will not be permitted to be invoked to protect
private interest by ignoring public interest.
That attempts by unsuccessful bidders with an artificial grievance and to get
the purpose defeated by approaching the Court on some technical and procedural
lapses, should be handled by Courts with firmness.
That the exercise of the power of judicial review should be avoided if there is
no irrationality or arbitrariness.
While arriving at its decision, the Supreme Court heavily relied on its verdict
in the case of Tata Cellular v. Union of India
, wherein the Court had remarked
that the terms of the tender are not open to judicial scrutiny as the invitation
to tender is a matter of contract. Thus, only when a decision making process is
so arbitrary or irrational that no responsible authority proceeding reasonably
or lawfully could have arrived at such decisions, power of judicial review can
However, if it is bona fide and in public interest, the Court will
not interfere in the exercise of power of judicial review even if there is a
procedural lacuna. The power of judicial review will not be permitted to be
invoked to protect private interest by ignoring public interest.
In these cases we can see that the Constitutional Courts usually do not
interfere in tender matters, as it believed that commercial wisdom cannot be
supplanted by judicial wisdom. Now let us see the cases in which the
Constitutional Courts have interfered.
State Of Up Vs Sudhir Kumar Singh & Ors:
Respondent had been awarded
tender for loading/unloading of goods from various storage units controlled by
the UP government. The Respondent was awarded the tender in the region of
Eastern Uttar Pradesh. The Managing Director of the Uttar Pradesh Warehousing
Corporation received complaint about financial irregularities and unilaterally
cancelled the tender awarded in the Respondentís favour, without giving them the
opportunity to explain oneself.
The action of the Petitioner was challenged by
way of Writ Petition in the Allahabad High Court. The High Court contended that
the tender had been cancelled without giving the Petitioner an opportunity to be
heard, which was an flagrant violation of Natural Justice, and quashed the order
of cancellation as being arbitrary and mala fide. The State of UP appealed to
the Supreme Court of India.
The Supreme Court contended that Audi Alterum partem
is an intrinsic part of natural justice and the state cannot act in a whimsical
and capricious manner while discharging any of its functioning, and that
cancellation of the tender without giving opportunity to hear the other side is
a manifest disregard for natural justice, and hence the stand cancellation order
Eursian Equipment And Chemicals Ltd Vs State Of West Bengal:
Petitioners were engaged in the business of selling cinchona products, their
tender to supply the State Government was accepted. Their final offer was
rejected by the State Government even though their offer was the highest. They
filed a Writ Petition before the Calcutta High Court which was rejected and the
arguments of the State that they had not declared customs, which amounted to
hiding material facts was upheld. Appeal was made to the Supreme Court of India.
The Supreme Court said that even when enters into the domain of trading and
business it is still bound by the procedural fairness of Article 14 of the
Constitution of India, and the government is duty to act in a unbiased manner.
Activities carried out by the Government contain a public element in them, and
therefore it is expected that government should act fairly, duty to act fairly
is a vital part of the rules of natural justice. The Supreme Court directed the
Government of West Bengal to hear them before they are blacklisted.
Ram & Shyam Vs State Of Haryana:
The State of Haryana under its powers
under the Haryana Minor Minerals Act granted various leases for mining in the Faridabad area. The Petitioners gave the highest bid for a particular mine,
which was accepted by the presiding officer of the auction but unilaterally
reversed by the State Government. The Single Bench and Division Bench of the
Punjab and Haryana High Court rejected the Writ Petition and contended that
alternative remedies have to be exhausted before recourse is sought to the Writ
We do not agree with the observations of the High Court
as regarding exhaustion of alternate remedies which as held in State of Uttar
Pradesh vs Mohammed Nooh
, a mere rule of convenience. Supreme Court criticized
the action of the State Government and said that the State is the public trustee
of the wealth of the country and is duty bound to act in a manner to maximize
the value of the country, and not awarding the tender to the Petitioner despite
his being the highest offer is mala fide.
As per the above illustrated case Laws we can see that Courts are
usually loath to interfere in tenders, and usually prefer that they be dealt by
personal who are subject-matter experts. It is however to be noted that Courts
will not hesitate to interfere if salutary principles of natural justice, such
as Audi Alterum Partem and the rule against bias is breached.
- AIR 2000 7 SCC
- Civil Appeal No. 3330 Of 2018
- Civil Appeal No. 3498 Of 2020
- 1975 AIR 266
- 1985 AIR 1147