Written By: Mohammed Zahid

A tender is an invitation of offer by government inviting private players to perform the service or supply goods. To invite bids government float tenders and notifies its requirement, criteria, and prerequisites of the tender, Once the prerequisites are compiled with the government determines the most preferable bid according to the nature of work. There are two stages which a bidder needs to qualify .i.e. Technical Bid and Financial Bid. In Technical bid all the prerequisites and paper. Usually, the lowest bid is chosen if the tender is for service. But also, other aspects are also considered such as turnover, image, past works of the bidder.
Article 298 of the Indian Constitution – Confers power to carry trade or business, and holding or disposal of governments property.
Article 299 of the Indian Constitution- Lays down those contracts made by the executive power of the state or union is made on behalf of the governor or president, such contracts are expressed, executed on behalf of Governor or president of the state, the procedure of contract shall be carried by a person authorized by President or the governor of the state.

What is the nature of the rights of bidders participating in the tender process?
No citizen or bidder possesses any right to oblige the state to enter into a contract and the state too cannot arbitrarily choose any person to enter into any such contract. However participating bidders of the tender have the right to equality and fair treatment in the evaluation of the bid offered by the government. Their evaluation should be transparent and should not conflict with any hidden agenda. The method of commercial activity adopted by the state must be transparent and fair, and everyone should be given the opportunity. The authority also has a right not to accept the highest bid. If a bidder’s offer is rejected the authority has to give a reason for rejection of the tender.

Scope of Judicial Review in Contractual Matters-
Judicial review is a great weapon in hands of judges; it must be exercised within the Constitutional limits. Judicial Review in administrative action is significant for keeping checks and balances and ensure fairness. Any unfair action must be quashed by the Court.

The object of the practice of Judicial Review is to ensure the authority does not abuse its discretionary power on individuals. The principle of Judicial review attracts the practice of contractual power of the government to arrest favoritism, arbitrariness, and irrationality. The Court is very strict in allowing the review of a tender unless there is something radically wrong or is arbitrary with the tender.

The Court has to review the design laid by the executive, Court if reviewing a contractual matter review that the government has not acted in a manner to benefit a particularly private person, at the cost of the state such action would be against public interest and unreasonable. This is a heavy burden to prove which needs to be discharged with adequate material or else it may affect the commercial interest of the country. Before reviewing any contractual or tender matter it should pose itself thorough following questions, Whether the decision made by authority is intended to favor someone? Whether the decision made by the authority is so arbitrary or irrational that it is easily determinable to the court? Whether public interest is affected? If answers to these aspects are fulfilled the court is bound to review the contractual decision.

The standard grounds on which governments action can be challenged is classified as under-
1) Irrational- Wednesbury principial of unreasonableness
2) Illegality
3) Procedural Impropriety

Court also said that while exercising discretionary power, the government should keep the financial interest of the state in mind. If the court finds a shadow of this classification in the decision of the government while allotting tender, then such a decision will be amenable to the judicial review.

Union of India v Dinesh Engineering Corp – In the said case railway authority added and clause in guidelines where it stated that the railway can reject any offer without any concrete reason. Court held that this clause was arbitrary in nature, and said the authority must not act in an unfettered manner and should abide by the principle laid down by the Supreme Court of India.
Barum K. Sinha v District Magistrate, Murshidabad – The Calcutta High Court here stated held that though the bidder i.e. Barum Sinha has no legal right to claim that his tender should be accepted, he had the right to be treated fairly and properly by the concerned authority. Arbitrarily rejecting the tender of the petitioner without considering its rates which were higher compared to other bidder’s. Court emphasized the rule that in a matter of a public contract, every bidder must be given equal opportunity.

Can the lowest tender be rejected?
Generally, the lowest tender is ought to be accepted, but it is not an absolute rule. If the government is rejecting the lowest tender, it should give a valid reason. It is noted that price is not the ultimate criteria to award a tender, there is an expert committee with special knowledge set up by the government for choosing the tender. This committee filters out the quality of service. Often tender isn’t given to bidder quoting higher price so that better work is secured, the court does not substitute the expert committee decisions over it.

G.E & E.Co v Chief Engineering – Government awarded a certain contract to bidders other than the lowest bidder. Here the bidder contended that the respondent has discriminated against him and given preferential treatment to the winner of the tender. The Kerala High Court rejected its contention stating that the tender authority chose another bidder over the petitioner because it has the quality to fulfill its work, and it is perfectly fine for the government to choose a bidder according to their liking who is capable to fulfill its work.

No participant can challenge the Prerequisites of the tender because it is the essence of the tender, the tenderer is the best judge and it sets the term and conditions accordingly. Prerequisites are to be laid down by the authority to ensure the bidder is eligible and experienced. If the prerequisites are not fulfilled then the bid can be rejected, but such terms and conditions must be reasonable and non-discriminatory, the validity of prerequisites can be assessed with reference to Article 14. If the tender is awarded to a bidder who has not fulfilled the prerequisites such awards are quashed by the court. The court is bound to intervene if it is shown that terms and conditions are discriminatory, unfair in accordance with the nature of the tender or the prerequisites are favoring a particular bidder. Once the bidding process is completed the tenderer cannot alter the prerequisites.
Monarch Infrastructures Pvt Ltd v Ulhasnagar Municipal – In this case, the tender calling authority after certain bid altered the pre, the court held that if terms of tender are changed after players enter into the arena it is like changing the rules of the whole game after it is begun, the Municipal corporation was allowed to make alteration in the conditions but only through a whole fresh process.

Tenders are a crucial factor for government in terms of revenue and many big firms and ventures usually compete for it, due to such large competition there are high chances of favoritism at the cost of the country’s economic fabric. The court is entitled to review such contracts to limit the abuse of power and keep a balance. If a tender has the shadow of arbitrariness or favoritism such tender should be rightly and swiftly challenged in the High Court. If the tender is allotted and the work of tender has started then the court will refrain from intervening in such matter. The Court accepts that the tenderer is the best judge to appoint a suitable bidder but in Government tenders it should be within the boundaries of Article 14 of the Constitution of India. Through Judicial review such arbitrariness can be curbed and a fair competition can be established for procurement of such Government Tenders.


Please enter your comment!
Please enter your name here