Shrishti Infrastructure Development Corporation Limited Vs. The State of Madhya Pradesh and others
Madhya Pradesh High Court (Division Bench (DB)- Two Judge)
WRIT PETITION, 10786 of 2021, Judgment Date: Jun 30, 2021
Law laid down:-
1. Scope of jurisdiction of the High Court in the matter of award of contracts by the Government and its instrumentalities - Held - evaluation of tenders and awarding of contracts are essentially commercial functions and principles of equity and natural justice stay at a distance in such matters. If the decision relating to award of contract is bona fide and is in public interest, the courts will not interfere by exercising power of judicial review even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. Power of judicial review will not be invoked to protect private interest at the cost of public interest, or to decide contractual disputes.
Interference in tender or contractual matters in exercise of power of judicial review is permissible only if: (i) the process adopted or decision made is mala fide or intended to favour someone, or (ii) the same is so arbitrary and irrational that no responsible authority acting under law could have arrived at it, or (iii) it affected the public interest. The purpose and scope of judicial review is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides, its purpose is to check whether the choice or decision is made "lawfully" and not to check whether the choice or decision is "sound".
2. Decision making process of Government or its instrumentality should exclude remotest possibility of discrimination, arbitrariness and favoritism. It should be transparent, fair, bona fide and in public interest. Therefore, Power of judicial review can only be exercised when the decision making process is so arbitrary or irrational that no responsible authority acting reasonably or lawfully could have taken such decision, but if it is bona fide and in public interest, court will not interfere with the same in exercise of power of judicial review even if there is a procedural lacuna. Principles of equity and natural justice do not operate in the field of such commercial transactions.
3. Action taken by the authorities in awarding contracts can be judged and tested in the light of Article 14 of the Constitution of India and the Court cannot examine details of the terms of the contract entered into by public bodies or State. The Court has inherent limitations on the scope of any such enquiry.
4. The party issuing the tender (the employer) has the right to punctiliously and rigidly" enforce the terms of the tender. If a party approaches a court for an order restraining the employer from strict enforcement of the terms of the tender, the court would decline to do so. Employer could deviate from the terms and conditions of the tender if the "changes affected all intending applicants alike and were not objectionable".
5. Administrative action ought to bear a reasonable relationship to the general purpose for which the power has been conferred. Any administrative authority while exercising a discretionary power will have to necessarily establish that its decision is balanced and in proportion to the object of the power conferred. The test of proportionality is concerned with the way in which the decision maker has ordered his priorities, i.e. the attribution of relative importance to the factors in the case. It is not so much the correctness of the decision that is called into question, but the method to reach the same. If an administrative action is contrary to law, improper, irrational or otherwise unreasonable, a court competent to do so can interfere with the same while exercising its power of judicial review.
6. Decision of the respondents treating the bid submitted by the petitioner as technically non-responsive can neither be said to be mala fide nor intended to favour someone. It cannot be termed so arbitrary or irrational which no responsible body of person acting under law could on available facts arrived at. It is trite that when power is given to do a certain thing in a certain way, the thing must be done in that way or not at all. A partially completed work even if its value exceeds the total value of the work for which tenders are being invited, cannot be treated as completed work.
Words used in the tender document as conditions of acceptability of technical bid have to be construed in the way the employer has used them while formulating such terms and conditions, therefore, the interpretation of the employer in that respect has to be accepted unless it is so obnoxious that it defies reason and logic and is not a possible interpretation of the language used in formulation of the conditions. Moreover, whether a particular condition is essential or not also is a decision to be taken by the employer. The tender inviting authorities have to be allowed greater play in the joints not only in formulating the terms and conditions of tender but also in interpreting them. No words in the tender documents can be treated as surplusage or superfluous or redundant. The decision of the employer has to be respected by the court unless it is shown to be ex-facie arbitrary, outrageous, and highly unreasonable. If non-fulfillment of the mandatory conditions of eligibility conditions of the terms of the NIT results in the bid submitted by a particular bidder being rendered non-responsive, the court cannot substitute the opinion of the employer by its own unless interpretation of such condition by the tender inviting authority suffers from mala fides or perversity.
Shrishti Infrastructure Development Corporation Limited Vs. The State of Madhya Pradesh and others