Government contracts: India

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Technical bids

SC restrains courts from evaluating technical bids

Dhananjay Mahapatra, SC rider to review of technical bids, March 31, 2018: The Times of India

‘If Decision Is Taken In Public Interest, Courts Should Exercise Restraint’

In a significant order, the Supreme Court has barred courts from evaluating technical bids submitted by companies to bag contracts for public works.

While giving this verdict, a bench of Justices Ranjan Gogoi, R Banumathi and Mohan M Shantanagoudar held that door-to-door garbage collection was intrinsically linked to public health, for which municipalities should be free to choose a private firm with sound technical ability to carry out the task and not necessarily award the contract to a company which submitted the lowest financial bid.

Writing a 52-page judgment for the bench, Justice Shantanagoudar said, “It is not open to the court to independently evaluate the technical bids and financial bids of the parties as an appellate authority for coming to its conclusion” unless the challenger proved mala fide, intention to favour someone or bias, arbitrariness, irrationality or perversity on the part of the authorities. “Where a decision is taken purely in public interest, the court ordinarily should exercise judicial restraint,” he said.

The SC reversed a judgment by the Madhya Pradesh high court, which had set aside Ujjain Municipal Corporation’s decision to award door-to-door garbage collection contract to Global Waste Management Cell Private Ltd instead of BVG India Ltd, which alleged that its offer was rejected despite its financial bid being the lowest.

Discussing the nature of tender process and scope of judicial interference, the bench said, “Evaluating tenders and awarding contracts are essentially commercial transactions/contracts. If the decision relating to award of contract is in public interest, the courts will not, in exercise of the power of judicial review, interfere even if a procedural aberration or error in awarding the contract is made out.

“The power of judicial review will not be permitted to be invoked to protect private interest by ignoring public interest. Attempts by unsuccessful bidders with an artificial grievance and to get the purpose defeated by approaching the court on some technical and procedural lapses should be handled by courts with firmness. The power of judicial review should be avoided if there is no irrationality or arbitrariness.”

The SC disapproved of the HC decision to set aside the award of contract to Global Waste despite there being no allegation of bias or mala fide against the technical committee. While approving the formula applied by technical experts to evaluate the bids, the SC faulted the method employed by the HC for the same.

Attempts by unsuccessful bidders with an artificial grievance to get the purpose defeated should be handled with firmness. The power of judicial review should be avoided if there is no irrationality or arbitrariness

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