The landmark judgement which holds the field and is a seminal precedent in matters of this nature is Tata Cellular v. Union of India, (1994) 6 SCC 651wherein the Supreme Court had succinctly observed that Courts must not countenance interference with the decision of the tendering authority merely at the behest of an unsuccessful bidder in respect of a technical or procedural violation. Reproduction of the relevant portion of the said Judgement is as follows:
“70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down.
Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:
(i) Illegality : This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.
(ii) Irrationality, namely, Wednesbury unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. Secretary of State for the Home Department, ex Brind [(1991) 1 AC 696] , Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, “consider whether something has gone wrong of a nature and degree which requires its intervention”.”
- It is clear from the foregoing analysis that a considerable latitude of administrative discretion is exercised by the State in the award of government contracts by the process of inviting tender. Though this discretion of the State is subject to judicial review, however, this review is limited to the analysis if such exercise of the discretion is illegal or arbitrary. What must primarily be borne in mind that matters relating to tenders or award of contract are essentially commercial in nature, and if a decision communicated in relation to the same is bona fide and is in public interest, then Courts must not, in exercise their power under Article 226.In the instant case, what is evident from the arguments advanced and the material on record is that it is a matter of a disgruntled bidder who has failed to qualify for the financial bid on the ground of not fulfilling the essential requirements as enumerated in the bid document. When viewed from this prism, this Court finds no reason to intervene in the tendering process and substitute the tendering authority’s opinion with its own.
. The duty of the court is to confine itself to the question of legality. Its concern should be:
- Whether a decision-making authority exceeded its powers?
- Committed an error of law,
- committed a breach of the rules of natural justice,
- reached a decision which no reasonable tribunal would have reached or,
- abused its powers.
Pragati Engineers vs Government Of Nct Delhi in W.P.(C)-14808/2022
- It is clear from the foregoing analysis that a considerable latitude of administrative discretion is exercised by the State in the award of government contracts by the process of inviting tender. Though this discretion of the State is subject to judicial review, however, this review is limited to the analysis if such exercise of the discretion is illegal or arbitrary. What must primarily be borne in mind that matters relating to tenders or award of contract are essentially commercial in nature, and if a decision communicated in relation to the same is bona fide and is in public interest, then Courts must not, in exercise their power under Article 226. In the instant case, what is evident from the arguments advanced and the material on record is that it is a matter of a disgruntled bidder who has failed to qualify for the financial bid on the ground of not fulfilling the essential requirements as enumerated in the bid document. When viewed from this prism, this Court finds no reason to intervene in the tendering process and substitute the tendering authority’s opinion with its own.