The Supreme Court has taken strong objection to disgruntled participants of government tenders turning their ire into subjects of “public interest litigation (PILs)” in constitutional courts.
A Bench of Justices S.K. Kaul and Hrishikesh Roy noted how unsuccessful parties of a tender process approach the courts with their “imaginary grievances”.
Making mountains out of molehills
“Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted,” the apex court observed in its judgment on September 17.
Not a single public tender goes unchallenged, the court noted.
“The enlarged role of the government in economic activity and its corresponding ability to give economic ‘largesse’ was the bedrock of creating what is commonly called the ‘tender jurisdiction’,” the court explained how tender cases starting crowding court dockets.
The law, to promote transparency, had allowed parties to approach the High Courts directly.
“However, the ground reality today is that almost no tender remains unchallenged. Unsuccessful parties or parties not even participating in the tender seek to invoke the jurisdiction of the High Court,” Justice Kaul wrote in the judgment.
The judgment reiterated that the power of judicial review in a tender process was limited.
Unhappy tenderers or contractors could always sue for damages in a civil court, the court advised.
Judicial intervention in the administrative actions of the government, especially in cases of public tender, was meant to prevent arbitrariness, irrationality, unreasonableness, bias and mala fide.
“The purpose is to check whether the choice of decision is made lawfully and not to check whether the choice of decision is sound. In evaluating tenders and awarding contracts, the parties are to be governed by principles of commercial prudence. To that extent, principles of equity and natural justice have to stay at a distance,” the government said.
The judgment came in an appeal filed by Uflex Ltd against the Madras High Court order of April 29, giving Tamil Nadu government four months’ time to float a fresh tender for production and supply of polyester based hologram stickers to be pasted across the caps of bottles of liquor sold by the Tamil Nadu State Marketing Corporation (TASMAC).
The High Court had passed the order on a plea filed by two other competing firms, who were not selected in the tender process.
Allowing the appeal, the top court awarded over ₹23.25 lakh to Uflex Ltd and even awarded ₹7.58 lakh to the State government as compensation payable by the two rival firms for defending the litigation.
