JUDICIAL REVIEW OF GOVERNMENT TENDERS
Lianne D’Souza, Research Fellow, CEERA, NLSIU
Judicial review of administrative action is a pillar upon which lies a fair, just and impartial government. It is an instrument through which the judiciary may inquire about the legality of administrative action and is a means of creating checks and balances vis-à-vis decisions taken by any public authority. However, in cases pertaining to commercial transactions such as contracts, courts are to exercise this power sparingly. Contracts being a matter of private law norms, the obligations arising out of them are based on the consent of the parties as opposed to the coercive power of the state. Thus, the court has a minimal role in terms of scrutiny of compliance typically associated with its power of judicial review. This being stated, owing to the distinguishing and compelling factor of public interest involved in government contracts, the role of the court cannot be entirely ousted. To avoid procedural unfairness, arbitrariness, perversity and mala fide intentions in commercial transactions, it is imperative for the court to intervene. But to what extent can the court extend its judicial reach in this regard has been a matter of deliberation. In the case of Galaxy Transport Agencies, Contractors, Traders, Transports and Suppliers v. NEW J.K. Roadways, Fleet Owners and Transport Contractors and Ors., this quandary has been attempted to be resolved. Based on the issue of judicial review of government tenders, the case reiterates the limited interference the judiciary must have in reviewing government contract and more specifically, in interpreting government tenders.
Background of the Case
The factual matrix of the present case is such that the Inspector General of Police, Kashmir Zone, Srinagar had issued an e-tender inviting bids from transporters, registered firms and associations to supply a specific category of commercial vehicles for the carriage of troops and equipment for the Financial Year 2020-2021. The tender process included financial and technical bids based on the eligibility criteria that the bidder must (a) hold a valid service license, (b) furnish a list of 30 Heavy Motor Vehicles (“HMV”)/Light Motor Vehicles (“LMV”) owned by the bidder and (c) have work experience for a minimum of 5 years which shall not be for an amount less than 2 crores. The tender received 4 bids which included those of M/s. Galaxy Transport Agencies, Contractors, Traders, Transports and Suppliers (hereinafter “Galaxy Agencies”) and M/s. NEW J.K. Roadways, Fleet Owners and Transport Contractors (hereinafter “New J.K. Roadways”). Upon scrutiny of the bids, the Tender Opening Committee found that New J.K. Roadways was ineligible by virtue of not meeting the minimum qualification of the technical bid. In turn, it allotted the contract to Galaxy Agencies for meeting the technical qualifications and submitting the lowest financial bid. Pursuant to this, New J.K. Roadways challenged the allotment and sought for quashing the impugned allotment vide a writ petition before the Jammu and Kashmir High Court.
The Single Judge of the High Court dismissed the petition on the grounds that Galaxy Agencies fulfilled the eligibility criteria prescribed in the tender and that public interest did not warrant for interference by the Court in the matter. Contrary to this view, on appeal, the Division Bench of the High Court held that New J.K. Roadways fulfilled the eligibility criteria and was wrongly disqualified. The Division bench fortified its decision by delving into the interpretation of the expression ‘HMV/LMV’ in the tender. The Court observed that the use of the punctuation ‘/’ coupled with the absence of the word ‘and’ implied that that a tenderer had the option of furnishing the particulars of either HMVs or LMVs or both types of vehicles. Therefore, the actions of the Authority was rejected for by the Court’s interpretation, New J.K. Roadways met the technical requirements for the tender. Aggrieved by the decision of the Division Bench, Galaxy Agencies preferred an appeal before the Apex Court.
The issue for deliberation by the Supreme Court was based on whether the Division Bench of the Jammu and Kashmir High Court overstepped its mark in construing the eligibility criteria in the tender contrary to that of the tendering authority.
Ruling of the Court
At the outset, on the issue of whether the expression ‘HMV/LMV’ implied both categories of vehicles, the Supreme Court affirmed the Tendering Authority’s decision by relying on the terms of the contract which referred to the expression “both HMV/LMV”. The Court held that “the author of the tender document is the best person to understand and appreciate its requirements, and thus, its interpretation should not be second-guessed by a court in judicial review proceedings.” It relied on a series of judicial precedents to vindicate its stance on deference to the Authority’s interpretation. The Court noted that judicial interpretation of contracts in the sphere of commerce stands on a distinct footing than while interpreting statutes, therefore if the decision relating to award of contract is bona fide and is in public interest, courts should not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. Thus, in light of the established law, the Court held that the Division Bench of the High Court ought not to have interfered with the allotment of the contract by giving its own interpretation and the impugned order of the Division Bench was set aside.
The present case is an apt representation of the restraint the court must maintain in the exercise of its power of judicial review. The modern notion of judicial restraint precludes the court from taking the place of the decision-making authority. It implies that the court cannot substitute the decision of an authority with that of its own but can merely review the manner in which the decision has been made. The interference of the court is warranted only to prevent arbitrariness, irrationality, bias, mala fides or perversity of a decision. In other words, in matters concerning review of administrative actions, the court must confine itself to scrutinizing the ‘legality ‘of a decision and not its ‘soundness’. For in not doing so, the court would transgress into the domain of the executive, thereby hitting at the fundamental ideal of separation of powers.
In the present case, the ruling that the expert evaluation of a contract should not be perturbed by the court is based on such notions of separation of powers. An administrative decision, by its nature, is a matter of expertise. Especially, in matters relating to commercial transactions such as contract bids, administrative decisions will be grounded on the commercial expertise of the decision-making authority. Therefore, if the court – which does not ordinarily possess the requisite expertise in the given realm – were to substitute such expert decision with its own, the same may be rendered fallible for want of expertise. Furthermore, in matters pertaining to commercial transactions, the court must show deference to the Government’s freedom to contract. As a contract is founded on the common intention of the parties, the Court cannot intrude upon the same by rendering an interpretation that is contrary to that of the author of the contract. In other words, the court ought not to overstep its mark to fortify or protect a private interest unless of course a larger public interest in involved.
The present case is a relevant example wherein the Supreme Court has sought to strike a balance in recognising the rights of the public authority under private law and enforcing the parallel obligations of the authority to the public at large. While it has been established through a series of judicial pronouncements that courts have a limited role in deliberating upon government tenders, the present case clarifies the independence that must be attributed to administrative actions. It highlights the sanctity that must be afforded to administrative action and at the same time reiterates the concomitant duty associated with administrative discretion. Thus, by clearly demarcating the role of judicial review vis-à-vis government contracts and tenders, the Court has given a lucid understanding of the doctrine of separation of powers.
Featured Image sourced from –
 Civil Appeal No. 4107 of 2020 (Arising out of Special Leave Petition (Civil) No. 12766 of 2020)
 Id. ¶ 3d.
 Id. ¶ 5.
 Id. ¶ 12.
 Id. ¶ 14.
 Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., 2016 (16) SCC 818;
 Bharat Coking Coal Ltd. v. AMR Dev Prabha 2020 SCC OnLine SC 335
 Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517, ¶ 22.
 In Tata Cellular v. Union of India (1994) 6 SCC 651