J. Venkatesan

NEW DELHI: The Supreme Court has ruled that award of a contract without tenders being invited is permissible if it is for a public purpose, but this should be done under exceptional circumstances.

Calling for tenders is a rule, and finalising a contract without tenders being invited should be an exception, said a Bench consisting of Chief Justice K.G. Balakrishnan and Justices P. Sathasivam and J.M. Panchal, upholding the contract awarded to Bennet Coleman and Co Ltd. (BCCL) and Prithvi Associates by the Brihan Mumbai Electric Supply and Transport Undertaking for construction of bus queue shelters.

Exceptional cases

Writing the judgment, Justice Sathasivam said: “Nothing should be done by the public authorities which gives an impression of bias, favouritism, and ordinarily these factors will be absent if the matter is brought to public auction by inviting tenders.” The Bench said: “We have no doubt that in exceptional cases having regard to the nature of the trade or largesse or for some other good reason, a contract may have to be granted by private negotiation, but clearly that should not be done without adequate reasons as it shakes the public confidence.”

Citing earlier rulings, the Bench said the authority should justify the action assailed on the touchstone of justness, fairness, reasonableness and as a reasonable prudent owner. Acting on a writ petition, the Bombay High Court set aside the contract awarded to BCCL and Prithvi Associates, and directed BEST to invite fresh tenders. BEST and others filed appeals. Disposing of the appeals, the apex court said under the scheme, it was BCCL and Prithvi Associates that were to spend money on the modernisation as per the approved plan of BEST and maintenance of bus queue shelters.