No Bidder Can Claim Fundamental Right To Carry On Business With Govt: Allahabad High Court Reiterates, Refuses To Interfere With Tender Conditions

The Allahabad High Court has held that tender proceedings carried out fairly by State and its instrumentalities cannot be interfered with by the Court easily as no bidder has a fundamental right to carry on business with the Government.

Relying on various decisions of the Supreme Court, bench comprising of Justices Mahesh Chandra Tripathi and Prashant Kumar held,

“While considering the dispute wherein award of the tender has been challenged, the Court only has to see whether the decision making process had any error or the authorities have exceeded its jurisdiction or there was violation of rules of natural justice.”

Factual Background:

An advertisement/notice inviting tenders was issued for expansion and beautification of State Highway No. 150 in District-Mirzapur to be completed within 18months. Petitioner claimed to submit its technical bid online on Prahari website and the technical sheet was then downloaded and re-uploaded on the e-tender website. In the result declared on Prahari website, technical bid of the petitioner was declared as “responsive” in all respects.

Evaluating various objections against the petitioner, its bid was declared non-responsive by Tender Evaluating Committee on grounds of discrepancies in invoices. Petitioner alleged that the tender process was conducted by the official who was supposed to hand it over to another officer as per the directions of the Engineer-in-Chief. Further, it was alleged that certain documents had been deleted from the Prahari Website.

Petitioners bid could not be opened to financial bid as it was declared non-responsive. One M/s Ganga Sagar Singh emerged as a successful bidder. Reliance was placed on M.P. Power Management Company Limited, Jabalpur v. Sky Power South-East Solar India Pvt. Ltd. wherein the Supreme Court defined the scope of judicial review of State action in contracts. Arbitrary action of State can only be adjudged based on facts and circumstances of each case, it was held.

Per Contra, Counsel for State argued that on 11 counts the bid remained non-responsive on reevaluation by the Tender Evaluating Committee. Accordingly, the financial bid was not opened to the petitioner. The tender process was transparent and substantial work has already been completed by the successful bidder, it was submitted. It was argued that State has the power to frame tender qualifying conditions which is not open to judicial scrutiny.

Counsel for private respondents placed reliance on various decisions of the Supreme Court to argue that the decision of the tender committee can only be tested by the application of Wednesbury Principle of reasonableness.

High Court Verdict:

While holding that the petitioner’s bid was rightly declared non-responsive, Court observed that Notice Inviting Tenders is a policy decision in which the Court cannot interfere unless the conditions are “absolutely arbitrary whimsically and be made for ulterior purposes.” The Court held that if the State acts within the bounds of reasonableness, tender matters remain outside the purview of judicial review.

“If the State or its instrumentalities acts fairly in the tenders proceedings and thereafter award the contract, in that case, interference by the Court is very restrictive as no bidder can claim fundamental right to carry on business with the Government,” held Justice Kumar (speaking for the bench).

Relying on the decision of the Supreme Court in Tata Cellular v. Union of India and N.G. Projects Ltd. v. Vinod Kumar Jain & Anr, amongst others, the Court held that in challenge to award of tender, the Court can only look into whether the decision making process was erroneous, jurisdiction was exceeded or principles of natural justice were violated.

“The Hon’ble Supreme Court in a number of judgements has held that the Court would not normally interfere with the policy decision and in the matters challenging the award of contract by the State or public authorities unless the petitioner establishes that the action of the State Authorities was contrary to public interest and beyond the pale of discrimination or unreasonableness, the petition cannot be entertained. The Court further held that the Government or his undertaking shall have a free hand in setting up of the terms of the tender and only if it is arbitrary, discriminatory, mala fide or actuated with bias, the Court will interfere in the tender matters.”

Accordingly, the writ petition was dismissed as the petitioner had failed to demonstrate arbitrariness, malafide, perversity or that the award of bid was intended to favour someone.

Case Title: M/S Jai Hanuman Construction Jagdish Saran vs. State Of U.P. And 9 Others [WRIT - C No. - 15519 of 2023]

Case Citation: 2023 LiveLaw (AB) 377

Appearances: Shri Anoop Trivedi, Senior Advocate assisted by Shri Vibhu Rai, Abhinav Gaur and Ami Tandon, counsel appearing for petitioner and Shri Manish Goel, Additional Advocate General assisted by Mr. Ajit Sinha, Senior Advocate along with Mr. Anurag Khanna, Senior Advocate assisted by Ms. Devika Kapoor, counsel for respondents.

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