Judicial review or judicial restraint? Supreme Court explains where the virtue itself turns into vice

Supreme Court: The Division Bench comprising of Rohinton Fali Nariman* and B.R. Gavai, JJ., addressed the issue of overstepping of review jurisdiction by the High Courts in policy matters. The Bench expressed,

“Judicial review in these matters is equivalent to judicial restraint in these matters…the writ court does not have the expertise to correct such decisions by substituting its own decision for the decision of the authority.”

Background

A Tender Call Notice (TCN) was issued by SCB Medical College and Hospital, Cuttack, inviting sealed tenders in a two-bid system (technical and financial) from eligible registered diet preparation and catering firms/suppliers etc. having a valid labour licence and a food licence with a minimum of three years of relevant experience in the field of preparation and distribution of therapeutic and non-therapeutic diet.

Pursuant to the aforesaid TCN, four bids were received by the Tender Committee. Vide the Technical Committee meeting dated 17-02-2020, Respondent 1 and Respondent were held to be disqualified inter alia for the reason that they had not submitted a valid labour licence, i.e., a contract labour licence from the competent authority, as per the TCN requirement and the Appellant and Respondent 5 were shortlisted for opening of financial bids. Consequently, the Tender Committee opened the financial bids, and found the Appellant to be the lowest bidder, quoting an average cost of Rs.82/- per patient per day. Meanwhile, Respondent 1 filed a writ petition before the High Court, praying that the Tender Committee proceedings be set aside and that Respondent 1 be awarded the tender.

Findings of the High Court

The High Court opined that the eligibility criteria were candid and clear requiring valid license of Labour Department. The said stipulation never mandated the license to be issued under the Contract Labour (Regulation and Abolition) Act, 1970. In the wake of the purpose, which was to supply diet, therapeutic and non- therapeutic to the patients to the hospital, there was no need for labour license under the Contract Labour Act. Hence, the bid of the Petitioner was found to be rejected illegally and contrary to the conditions of the TCN.

Whether a registration certificate under Shops and Commercial Establishments Act, 1956  can be the equivalent to labour licence issued under the Contract Labour Act, 1970?

The respondent argued that the TCN did not require that establishments/firms etc. that applied have 20 or more workmen, hence, it was obvious that it was not this Contract Labour Act that was the subject matter for eligibility but it was the Orissa Act, the registration certificate under which was produced to the satisfaction of the High Court by Respondent 1.

The Court observed that the requirement of Contract Labour Act that its applicability be extended only to establishments in which there are 20 or more workmen can be done away with by the appropriate government under the proviso, making it clear that this was not an inflexible requirement. In any case, the acceptance of such argument would amount to second-guessing the authority’s interpretation of its own TCN which could not be so second-guessed unless it was arbitrary, perverse or mala fide. The Bench stated that,

The registration of an establishment under the Orissa Act was to categorise the establishment as a shop, commercial establishment, hotel, etc. and not for the purpose of issuing a labour licence which, in the context of the present TCN, could only be a labour licence under the Contract Labour Act.

Judicial Review or Judicial Restraint?

The Court had repeatedly held that judicial review in these matters is equivalent to judicial restraint in these matters. What is reviewed is not the decision itself but the manner in which it was made. The writ court does not have the expertise to correct such decisions by substituting its own decision for the decision of the authority. Referring to the judgment in Silppi Constructions Contractors v. Union of India, 2019 SCC OnLine SC 1133, wherein, the Court had held that, the authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted; the Court stated that the constitutional courts must defer to this understanding and appreciation of the tender documents.

In any case, a registration certificate under Section 4 of the Orissa Act could not possibly be the equivalent of a valid labour licence issued by the labour department. High Court, in second-guessing the authority’s requirement of a licence under the contract Labour Act, has clearly overstepped the bounds of judicial review in such matters.

Decision

Hence, the Bench concluded that except for an incantation of the expression mala fide, no mala fide had in fact been made out on the facts of this case. The High Court’s judgment was set aside and the Appellant was directed to be put back to complete performance under the agreement entered into between the Appellant and the authority.

[M/S Utkal Suppliers v. M/S Maa Kanak Durga Enterprices,  2021 SCC OnLine SC 301, decided on 09-04-2021]


Kamini Sharma, Editorial Assistant has put this report together

*Judgment by: Justice Rohinton Fali Nariman

Know Thy Judge| Justice Rohinton F. Nariman

Appearance before the Court by:

For the Appellant: Sr. Adv. Siddhartha Dave

For the Respondent 1: Adv. Aditya Kumar Chaudhary

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