MP HC | Courts to interfere only when decision taken by authority/State is irrational or arbitrary in Notice Inviting Tender

Madhya Pradesh High Court: The Bench of S.K Seth, C.J. and Vijay Kumar Shukla, J. dismissed a writ petition challenging the conditions of Notice Inviting Tender and the relevant bid document.

The petitioner contended that, associated bid document imposed restriction and made bidder ineligible for submitting the impugned tender, it debarred previously blacklisted candidates from participating in the tender by the State-owned Power Generating Companies/NTPC/Govt./PSUs in India on the date of submission of tender.

Petitioner’s company was previously blacklisted by the Central Coalfields Ltd. at Ranchi due to non-performance of the contract, for a period of three years, and the said petition challenging the Order is pending before the High Court of Jharkhand. Petitioner contended that as the matter is pending for adjudication the decision of debarring is arbitrary, unreasonable and violative of Fundamental Rights guaranteed under Articles 14 and 19(1)(g). Further placed reliance on, Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016) 16 SCC 818, for proving the condition onerous.

The Court referred to the judgment of Supreme Court in, Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216, where it was highlighted, “that basic requirement of Article 14 is fairness in action by State and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose.” In Montecarlo Ltd. v. NTPC Ltd., (2016) 15 SCC 272, it was held “that in the competitive commercial field in the matter of award of contract through tender, the conditions regarding bidder’s expertise and technical capability and capacity are decided by the experts”.

The Court further observed that, if the Government acts in conformity with norms the powers to interfere of Court are restricted. There are certain matters which have to be decided by the Executives, such as fixation of the value of tenders, and Courts have a very limited role to play in such matters. Courts can only interfere when such decisions of the Executives are arbitrary, malafide or irrational and only when the public interest is affected.

The Court from the principles deducible from judgments of Supreme Court, held, the employer of a project who has authored the tender is the best judge to decided the requirements to achieve the work; also Courts must not interfere unless the action of the authority is found to be malicious and the process adopted or decision made by the authority is irrational or arbitrary or is vitiated by him by favoritism or malafide. Hence, the Court dismissed the petition as it found no illegality or arbitrariness in conditions of NIT.[Punya Coal Road Lines v. M.P Power Generating Co. Ltd., 2019 SCC OnLine MP 766, Order dated 06-05-2019]

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