Judicial Intervention Must Be Exercised Cautiously In Contractual Sphere, Specifically In Govt Contracts: Andhra Pradesh High Court

In the Contractual sphere, (like that of a tender), judicial scrutiny must be cautiously exercised because the author of the contract is the best judge of its requirements and eligibility conditions and courts should only interfere in case that eligibility criteria or conditions are arbitrary, irrational, unreasonable or malafide, Andhra Pradesh High Court has held. Justice U. Durga Prasad Rao while dismissing a petition seeking to declare a tender notification illegal citing arbitrary and unreasonable eligibility conditions, observed that judicial intervention in state instrumentalities must be limited, arising only when there are doubts about the procedure being arbitrary and against public interest. Facts An e-procurement tender notification was issued in January 2021 for the supply of school bags for the year 2021-2022 under Jagananna Vidya Kanuka Scheme. This notification was floated in consonance with Central Government's Samagra Shiksha Scheme and procurement of school's bags under this scheme is governed by the manual of Financial Management and Procurement and the grants under the scheme are to be governed by various mandatory provisions of GFR. Petitioner's case was that the first tender notification had an eligibility criteria condition that the annual turnover of the firm for the previous three years immediately preceding the tender notification should be more than INR 30 Crores and the firm should also furnish the latest solvency certificate (adding the condition "for a minimum value of 50% of the ECV" two days prior to bid closing date). Petitioner attended the pre-bid meeting and raised an issue that the eligibility criteria of furnishing of solvency certificate of such a high value, two days prior to bid closing was unreasonable and then emailed the same objection on 10th March 2021 but without considering Petitioner's objections, another tender was floated and the criteria were made even more onerous by changing the turnover requirement from 30 crores to 100 crores and thus, the petitioner argued that for a contract estimated at 78 Crores, the condition to impose average annual turnover was arbitrary, illegal and unreasonable and was added specifically to benefit certain bidders at the behest of the others. Respondent's case was that the entire tender process was looked into by a High-Level Committee constituted by the Government of Andhra Pradesh which was to implement the project under APSSA. And APSSA had the liberty to frame its own procedure for procurement for the scheme's purpose. This Committee had issued both the tender notifications. When the first notification was issued, the writ petitioner had not participated in the tender and 5 firms had submitted applications, out of which during technical evaluation, no bidder was found to have fulfilled the eligibility criteria. And thus, the Committee decided to cancel the previous bid and float another bid with a different criterion, increasing the annual turnover, so that qualified, efficient firms could participate in the tender for better quality and timely supply and the entire process was fair and transparent. In this round, six firms had participated and five had qualified the technical evaluation and respondent no. 4 was declared as L1 and the bidding was closed. Thus, the respondents argued that there was no violation of Articles 14 and 19 as alleged by the petitioner and no public interest was being hampered and the writ petition must be dismissed on grounds of maintainability. The respondents had also vociferously claimed that since the petitioner had not participated in either bid, he had no locus standi to even file the present writ petition. The respondents also claimed that because the tender invitations come under the realm of Contracts, the present Court should not sit as a court of appeal to scrutinize the conditions therein. Judgment The High Court at the outset looked at whether the petitioner had the locus standi in the current case and stated that "mere appearance in a pre-bid meeting does not amount to participation in the tender process". Further noting that the petitioner did not even offer a quotation in response to the tender notification, he is already not suited to question the legality of the tender. However, the Court still decided to test the veracity of these conditions on judicial principles noting that the petitioner had challenged the eligibility criteria itself. The Court determined whether it could question the tender conditions and referred to a plethora of judgments, including but not limited to Kasturi Lal Lakshmi Reddy v. State of Jammu & Kashmir, Food Corporation of India v. Kamdhenu Cattle Feed Industries, Sterling Computers Limited v. M&N Publications Limited, Tata Cellular v. Union of India, Jamshed Hormusji Wadia v. Board of trustees, Jagdish Mandal v. the State of Orissa, and...

Judicial Intervention Must Be Exercised Cautiously In Contractual Sphere, Specifically In Govt Contracts: Andhra Pradesh High Court

Rashmi Bagri

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