The Bench of Justice Wasim Sadiq Nargal of the High of J&K and Ladakh while refusing to exercise its extra ordinary powers under Article 226 of the Constitution of India in a Writ Petition challenging e-bids for supply, installation and commissioning of grid connected rooftop solar photovoltaic power plants on Government buildings in the UT of J&K issued by the Respondent-Jammu and Kashmir Energy Development Agency (JAKEDA) called out the unscrupulous behavior of unsuccessful bidders and parties not even participating in the tender challenging the tenders leading to proxy litigations.
The Petitioner had thrown challenge to the tender aforesaid primarily on the grounds of arbitrary, discriminatory and unreasonable nature of the technical eligibility criteria, the lack of transparency in the tender process and the exclusion of local venders, which contradicting the principle of equality. Petitioner contended that the tender set a minimum cumulative experience requirement of 2.5 MW for all the participating vendors, which disproportionately excluded 31 out of 32 local vendors in UT of J&K including the petitioner, who otherwise, demonstrated capability in installing smaller rooftop solar systems.
Denying the allegations of the Petitioner, the Respondents argued that all eligibility criteria have been formulated in accordance with statutory regulations and MNRE guidelines, ensuring consistency and fairness in vendor selection.
Analyzing the case in hand, the Court reiterated the settled principle of law that judicial review of contractual matters has its own limitations, and that, in evaluating tenders and awarding contracts, the parties are to be governed by the principles of commercial prudence and not by the principles of equity and natural justice.
Elaborating the principles governing interference by Courts in contractual matters, the Court formulated certain issues, and answered them as under.
Issue I: What is the scope of judicial review in tender matters?
The Court, while relying upon a catena of judicial pronouncement by the Apex Court, ranging from “Tata Cellular vs Union of India(1994) 6 SCC 651” to “Silppi Constructions Contractors Vs. Union of India, (2020) 16 SCC 489”, observed that the Court cannot adjudge the soundness of a decision and it must concern itself only with the manner in which the decision was made. It observed, “The Government and other public authorities have the freedom of contract and in the absence of manifest unreasonableness, patent arbitrariness or clear mala fide and bias, the Court should show due deference to the decision of the public authority. Consequently, the scope of interference by the Court in matters like these is exceptionally minimal.”
Issue II: Whether a right is accrued to a party being ineligible to challenge the terms and conditions of the tender and whether the terms and conditions of the said tender can be tailor-made at the behest of that party to suit eligibility?
As against the contention of the Petitioner that minimum cumulative experience requirement of 2.5 MW is without any rational basis, the Court upon perusal of the record of the case noted that that the said experience criteria is based on sound reasoning keeping in mind the huge capacity of 70,000 KW and project cost of 400.00 crores and, as such, selecting only those contractors having sound financial capacity as well as past experience of undertaking such colossal project would be in the interest of general public.
Further, relying upon “Meerut Development Authority Vs. Association of Management Studies and Anr. (2009) 6 SCC 171” wherein the Supreme Court had observed that “the bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda”, held that the limited power of judicial review is available in cases, where it is established that the terms of the invitation to tender were so tailor-made to suit the convenience of any particular person with a view to eliminate all others from participating in the bidding process.
However, taking recourse to the record of the case, the Court noted, “the terms and condition outlining eligibility criteria is based on sound reasoning of the Government, which are not to be changed as per the convenience of the bidders who are ineligible to compete.”
Issue III: Whether it is permissible to bifurcate the terms and conditions of a tender costing around Rs. 400 crores for execution of a project involving cumulative capacity of 70,000 KW at the behest of a party, who is not financially capable to execute such project and lacks eligibility criteria to compete?
The Court, drawing reference from “Raunaq International Limited Vs. I.V.R. Construction limited, reported in (1999) 1 SCC 492” wherein it was held, “Therefore, any judicial relief at the instance of a party which does not fulfill the requisite criteria seems to be misplaced” noted that the petitioner company has not been found eligible as per the terms and conditions of the impugned tender, and that the tender making authority, who has authored the tender document is the best person to understand and appreciate its requirements and interpret its documents, thereby, holding that the petitioner has no indefeasible right to challenge the terms and conditions of the impugned tender on account of ineligibility.
ISSUE No. 4: The scope of interference by the Constitutional Court in a tender involving huge public interest and whether the individual interest has to be given due weightage over and above public interest?
The Court noting that the petitioner is projecting the cause of other thirty-one (31) other tenderers, who are not before this Court and according to the petitioner have been ousted from the consideration zone of participation, held, “petitioner through the medium of the instant petition is estopped under law to espouse the cause of public at large, as the petitioner has not filed the instant petition in public interest, where he can plead the cause of public at large or behalf of those, who are not parties before this Court.”
The Court further observed, “It is no more res integra that the power of the judicial review will not be permitted to be invoked to protect the private interest at the cost of the public interest, or to decide a contractual dispute. Importantly, even if a case for interference is made out, the Hon‟bleSupreme Court has sounded a caveat that Courts should always keep the larger public interest in mind in order to decide whether an intervention is called for or no.”
Ultimately, deciding all the issues in favor of the Respondent and against the Petitioner, the Court dismissed the Petition and granted liberty to the respondents to proceed ahead with the tender in question.
