Tender Law III

Recently, in Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium) it was held by this Court, relying on a host of decisions, the decision making process of the employer or owner of the project in accepting or rejecting the bid of a tenderer should not be interfered with. Interference is permissible only if the decision making process is mala fide or is intended to favour someone. Similarly, the decision should not be interfered with unless the decision is so arbitrary or irrational, Court could say, the decision is one which no responsible authority acting reasonably and in accordance with law could have reached. In other words, the decision making process or the decision should be perverse and not merely faulty or incorrect or erroneous.

In Dwarkadas, (1989) 3 SCC 293 it was held, Constitutional Courts are concerned with the decision making process. Tata Cellular, (1994) 6 SCC 651 went a step further and held, a decision if challenged (the decision having been arrived at through a valid process), Constitutional Courts can interfere if the decision is perverse. However, Constitutional Courts are expected to exercise restraint in interfering with the administrative decision and ought not to substitute its view for that of the administrative authority. This was confirmed in Jagdish Mandal, (2007) 14 SCC 517 as mentioned in Central Coalfields. In other words, a mere disagreement with the decision making process or the decision of the administrative authority is no reason for a Constitutional Court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before Constitutional Court interferes with the decision making process or the decision. 

We may add, the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. Constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible, the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to Constitutional Courts but that by itself is not a reason for interfering with the interpretation given.”

Hon’ble Justice Madan B. Lokur, Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., [Civil Appeal No. 9078 of 2016].