Judicial Review on Tender Conditions to be Restrictive

In a decision delivered by the High Court of Allahabad on October 12, 2023 in the case of M/S Jai Hanuman Construction Jagdish Saran v. State of U.P. and 9 Others [2023 LiveLaw (AB) 377], it was reiterated that judicial review can be exercised in matters regarding tender proceedings only if the conditions are absolutely arbitrary or unreasonable and that no bidder can claim a fundamental right to carry on business with the government.

The instant case was pertaining to the grant of a tender for the expansion and beautification of a State Highway in Mirzapur. An e-tender software, “Prahari” was used for the receipt and technical evaluation of bids. All bid-related documentation had to be transacted through the portal. The technical bid of the petitioner was declared “responsive” in all aspects by the software. However, the tender evaluating committee declared the petitioner’s bid “non-responsive” on the basis of various objections raised against the bid by the other bidders, saying that there were certain discrepancies in the invoices submitted by the petitioner. The petitioner objected to this decision claiming it was mala fide and also challenged the award of the contract.

The petitioner claimed that the decision on the responsiveness of the petitioner’s bid was taken by an official without authority since he had been directed by the Engineer-in-Chief to handover the matter to another official, which direction was not adhered to. Also, certain documents uploaded by the petitioner on the Prahari website had been deleted.

The respondent contended that the petitioner was not technically qualified as per the tender conditions and his bid was found to be “non-responsive” on several counts. Even after considering the representations made by the petitioner, only one count of non-responsiveness would change, leaving the bid to still be non-responsive on eleven counts. In addition, there was nothing on record to support the petitioner’s claim of malafide intentions and the entire tender process was conducted in a transparent manner. Further, the allegations that certain documents of the petitioner were deleted were baseless as they were all found to be intact. The respondent also put forth that the tender procedure was not open to judicial scrutiny as these decisions were made qualitatively by experts.

The Allahabad High Court observed that the petitioner’s bid was rightly declared non-responsive. Moreover, the tender conditions made in the Notice Inviting Tenders are a policy decision that is not amenable to judicial review unless the conditions are absolutely arbitrary and made for ulterior purposes. It was further noted that the State and State instrumentalities were free to draw out any conditions for qualifications for tenders to ensure that the contractor had the capacity and resources to successfully execute the work. Interference by the Court had to be very restrictive as no bidder can claim a fundamental right to carry on business with the Government.

It was further observed that, whenever the award of a tender is challenged, the Court only has the scope to evaluate whether the decision-making process had any error, or the authorities had exceeded their jurisdiction or if there was a violation of the principles of natural justice. In this regard, the court held that neither there was anything to show that the State or its instrumentalities had acted unreasonably nor was there any error in the decision-making process. Accordingly, the Court upheld the award of the tender and dismissed the petitioner’s claims.