Scope of Judicial Review in Government Tenders and Public Auctions

 

INTRODUCTION

 

Today, I will talk about the case of State of Punjab & Others v. Mehar Din, Civil Appeal No. 5861 of 2009, wherein the Hon’ble Supreme Court discussed the scope of Judicial Review in the matters of Government Tenders and Public Auction.

 

MEANING

 

Briefly speaking, Judicial Review is the process through which the administrative, executive and legislative actions are subject to review by the Judiciary. And Tenders are formal procedures for generating competing offers from potential contractors that seek to obtain award of works, supply, services or other types of contracts, whereas Public Auction are auctions that are conducted by the governmental authorities to transfer rights or property.

 

SCOPE OF JUDICIAL REVIEW

 

“Normally speaking, the decision to accept the tender or awarding the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.”

 

 “When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind.” Typically, “judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made “lawfully” and not to check whether choice or decision is “sound.””

 

It is important to understand that “a contract is a commercial transaction. If the decision relating to award of contract is bona fide and is in public interest, courts will not interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out.”

 

Basically, the power of judicial review cannot be permitted to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. And any attempt by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, should be declined. If interference is made in such matters, then it may delay public work and increase the overall cost of the project.

 

Thus, “superior courts should not interfere in the matters of tenders, unless substantial public interest was involved, or the transaction was mala fide.  The need for overwhelming public interest should always be kept in mind to justify judicial intervention in contracts involving the State and its instrumentalities and while exercising power of judicial review in relation to contracts, the Courts should consider primarily the question whether there has been any infirmity in the decision-making process.”

 

SUMMARY AND CONCLUSION

 

Consequently, in essence, following important points emerge: -

 

a. Exercise of restraint and caution is required while exercising the power of judicial review.

 

b. There is a need for overwhelming public interest to justify judicial intervention in matters of contract.

 

c. “The courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable.”

 

d. The court does not sit as a court of appeal but merely reviews the manner in which the decision was made by the authority floating the tender.

 

e. The authority floating the tender is the best judge of its requirements and, therefore, the court's interference should be minimal.

 

f. If there is any ambiguity in interpretation of the tender documents, the interpretation of the author/appropriate authority must be accepted. And

 

g. The courts should only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity.

 

Therefore, I hope that the scope of Judicial Review in the matters of Government Tenders and Public Auction is clear by now.