2013 (11) TMI 1700 - SC - Indian Laws

Cancellation/Discharge of the tender - Discovery of serious deficiency in the Tender - Non-Disclosure of the terms and conditions in Tender Forms - HELD THAT - Every public authority was required to act fairly while granting contracts and that reasons for cancellation of the tender process should have been set out in the communication sent to the appellant instead of being disclosed subsequently in the affidavit filed in opposition to the writ petition. The learned Single Judge accordingly allowed the writ petition with a direction that so long as the appellant undertook to accept the penalty clause as a part of the contract between the parties the railway administration would consider its bid for acceptance and resultant allotment of the contract within 15 days of receipt of the undertaking. As pointed out the decision to cancel the tender process was in no way discriminatory or malafide. On the contrary, if a contract had been awarded despite the deficiencies in the tender process serious questions touching the legality and propriety affecting the validity of the tender process would have arisen. In as much as the competent authority decided to cancel the tender process, it did not violate any fundamental right of the appellant nor could the action of the respondent be termed unreasonable so as to warrant any interference from this Court. The Division Bench of the High Court was, in that view, perfectly justified in setting aside the order passed by the Single Judge and dismissing the writ petition. Decision in this case Tata Cellular v. Union of India (1994) 6 SCC 651 1994 (7) TMI 307 - SUPREME COURT , Raunaq International Ltd. s case 1998 (12) TMI 623 - SUPREME COURT and in Jagdish Mandal v. State of Orissa and Ors. (2007) 14 SCC 517 2006 (12) TMI 447 - SUPREME COURT were followed. In the result this appeal fails and is hereby dismissed with costs assessed at ₹ 25,000/-.

Summary

Issues:
1. Validity of the cancellation of tender process by railway administration.
2. Judicial review scope in tender matters.
3. Fairness and legality in awarding contracts by government agencies.

Analysis:

1. Validity of the cancellation of tender process by railway administration:
The case involved a dispute arising from the cancellation of a tender process by the railway administration. The appellant had bid the highest amount for a lease contract, but the tender was canceled due to technical and administrative reasons. The railway administration defended the cancellation, stating that the tender process lacked essential terms and conditions, including a penalty clause. The High Court initially ruled in favor of the appellant, directing the railway administration to consider the bid if the penalty clause was accepted. However, the Division Bench overturned this decision, emphasizing that the cancellation was legal and not against public interest. The Supreme Court upheld the Division Bench's decision, stating that the cancellation was not discriminatory or mala fide, and awarding the contract despite deficiencies would raise legal and administrative concerns.

2. Judicial review scope in tender matters:
The Supreme Court discussed the scope of judicial review in tender matters, highlighting that the government agencies have the discretion to accept or reject tenders. Bidders cannot demand acceptance solely based on the highest bid. The Court emphasized that judicial review is limited to ensuring fair, non-discriminatory treatment of bidders and legality in decision-making processes. The Court cited previous cases to establish that interference in tender processes is warranted only if decisions are mala fide, arbitrary, or against public interest. The Court stressed that the government must act reasonably and fairly in awarding contracts, protecting the rights of tenderers to fair treatment.

3. Fairness and legality in awarding contracts by government agencies:
The judgment underscored the importance of fairness and legality in awarding contracts by government agencies. It outlined that the government must act reasonably and in public interest while awarding contracts. The Court referenced previous cases to establish principles governing the tender process, emphasizing that the executive's decision-making should align with national priorities and healthy standards. The Court highlighted that interference by the courts should be limited unless actions are proven to be arbitrary, unreasonable, or malicious. The judgment emphasized the need for transparency, fairness, and adherence to legal norms in the tendering and contract awarding processes.

In conclusion, the Supreme Court dismissed the appeal, upholding the Division Bench's decision regarding the cancellation of the tender process. The judgment reiterated the principles of fairness, non-discrimination, and legality in tender matters, emphasizing the government's obligation to act reasonably and in public interest while awarding contracts.