The timely judicial intervention in tender matters not only provides justice to parties in a particular case but also sets precedence for all such future issues. I. Background Over the last decade or so, a general consensus has been built in our country that corruption is the root cause of many problems in our country and a concerted… Read More »

The timely judicial intervention in tender matters not only provides justice to parties in a particular case but also sets precedence for all such future issues.

I. Background

Over the last decade or so, a general consensus has been built in our country that corruption is the root cause of many problems in our country and a concerted effort should be made to wipe out corruption from our system. People have looked towards the judiciary more often than not to provide much-needed intervention to prevent incidents of corruption. Judiciary has played a very important and decisive role in doing so.

It will not be an aberration if ‘public procurement’ is called the single biggest source of corruption. Inviting open tenders is widely considered to be the best system of public procurement as it invites competition amongst interested parties, brings in fair play and reduces the chances of corruption in the process. However, it has been widely seen that the processes of tenders have also been abused very frequently.

Abuse of the tender process has become a major source of corruption. Tender processes can be abused in different stages. It can start from framing clauses of a tender to suit a particular participant. Tender process abuse can also happen in the arbitrary evaluation of bids of parties. In fact, on many occasions, even cancellation of a tender process also becomes a tool to abuse.

II. Legal Position

It has been a consistent stand of our Hon’ble Courts that judicial intervention in the tender process should be very minimal to uphold institutional autonomy. To put it simply, Courts examines the decision-making process of a tender but does not interfere in the decision itself. The Apex Court restated the law in the realm of public contracts and policies that impact upon commercial or economic matters, after reviewing its previous decisions on the scope of judicial review. One of the principles, outlining the powers and duties of the State of its instrumentalities, was stated thus:

The Government must have freedom of contract. In other words, fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere.[i]

III. Fresh Outlook – Judicial Intervention in Tender Matters

It is the need of the hour that the judiciary takes a fresh look at the extent of intervention in the tender processes if plausible material is brought before the judiciary warranting its interference. In fact, many of the Hon’ble Courts have been doing it on many occasions and we wish to discuss one of such judgment of the Hon’ble High Court of Delhi passed in the year 2019[ii]

In general, when a tender process is cancelled by a public authority, Hon’ble Court’s rarely interferes in such a situation as cancellation of a process is generally considered as a policy decision. However, in the particular case under discussion, a public authority was repeatedly inviting tenders for service and thereafter cancelling the processes repeatedly.

Without attributing any malafide of the public authority, it can be safely stated that such cancellations were only helping the existing service provider to continue its services. Hence, when two of the participants of a cancelled tender process approached the Hon’ble High Court of Delhi in two separate writ petitions, the Hon’ble Court examined the reasons for repeated cancellation of the tender process and observed:-

There is no quarrel with the proposition that in judicial review, interference with the tender matters should be minimal. It is, however, equally well settled that even in tender matters, the decision-making process can be examined by the Court and in case it is found that there is arbitrariness or malafide in the decision-making process or that the tender process is not as per the Rules, the interference would be justified.

In the present case, we find that the action of the respondent is in violation of its own Rule 173. In addition, we also find that there is malice in law inasmuch as for the past 25 years, the respondent has not successful in any tender process and the present contractor is continuing. There is a substance in the contention of the learned senior counsel for the appellants that Respondent No. 1 wants to favour the present contractor and therefore, tenders have been invited a number of times but have been cancelled for one reason or the other.

The reason for which the present invitation of the tender was cancelled is completely perverse and against Rule 173 and this action of Respondent No. 1 is only a pointer to the fact that the effort was again to help respondent No. 2. We are, thus, of the opinion that the facts and circumstances of this case certainly warrant interference by this Court in judicial review. Thus the judgment relied upon by the Respondent would not come to its aid owing to the special facts and circumstances of this case.

The Hon’ble Court allowed both the writ petition and quashed the decision to cancel the concerned tender process directing the following:-

19. Thus, in so far as W.P.(C) 5020/2019 is concerned, we hold that the action of the respondents in not accepting the tender of the petitioner is totally illegal, arbitrary and against the Rules in question. We, thus, quash the letter dated 27/28.04.019 cancelling the NIT dated 18.11.2018. We further direct the respondents to comply with the tender process initiated pursuant to Notice Inviting Tender bearing Nos. ID 2018_DTU_162125_1 and Tender Reference No.DTU/Gen. Admn./090/2016-17 within a period of six weeks.

20. Insofar as W.P. (C) 3110/2019 is concerned, the respondent is directed to consider the documents/clarifications given by the petitioner including the letter dated 07.03.2018 and then take a decision thereon regarding the eligibility of his bid with respect to the NIT in question.”

Finally, the public authority acted in accordance with the directions of the Hon’ble Court and justice prevailed.

IV. Conclusion

The timely intervention of the higher judiciary not only provides justice to parties in a particular case but also sets precedence for all such future issues. Such proactive decisions are not only inspiring but also cautions public authorities to be careful while taking a decision in the tender process. To uproot corruption, timely and effective intervention of the judiciary in matters of public procurement is paramount. Hence, such judgment needs to be celebrated as much as possible.

[i] In Tata Cellular v. Union of India, (1994) 6 SCC 651


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Updated On 2021-05-09T13:41:08+05:30
Joydeep Sarma

Joydeep Sarma

Mr. Sarma is a practising advocate in Delhi. He has served various clients ranging from FMCG, Air Lines, Petroleum Giant, Real Estate, Facility Management, Mining, Power, numerous individual clients as well as Government of India Undertakings, various nationalized, government, semi-government, private banks and NBFCs.

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