Contracts Entered Into Between Private Parties Are Not Subject To Scrutiny Under Writ Jurisdiction: Chhattisgarh High Court
The Chhattisgarh High Court reiterated that the contracts entered into between the private parties are not subject to scrutiny under the writ jurisdiction.
The Court reiterated thus in a writ petition preferred by a Non-Government Organisation (NGO) seeking order of commanding the authorities to submit all the relevant records pertaining to the tender process.
A Division Bench comprising Chief Justice Ramesh Sinha and Justice Sachin Singh Rajput referred to the judgment of the Supreme Court in the case of Tata Motors Limited v. The Brihan Mumbai Electric Supply & Transport, Civil Appeal No. 3897 of 2023 in which it was observed as under –
“This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala ides and bias. However, this Court has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala ides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction.”
The Apex Court in the aforesaid case remarked that the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution.
Advocate Hari Agrawal appeared for the petitioner while Advocate General Prafull N. Bharat and Senior Advocate Abhishek Sinha appeared for the respondents.
Brief Facts -
The petitioner was the NGO and the respondent was the trust/non-profit perpetual body in the mining operation affected district, working for the interest and benefit of persons and areas affected by mining related operations. It was funded through the contribution from miners and fully controlled by the State Government, coming within the purview of ‘State’ under Article 12 of the Constitution. In 2020, the respondent invited bids for preparation of a master plan/vision document for the works relating to identification of mining affected areas/persons, necessary survey, supervision of projects, and social audits thereof. The petitioner submitted its tender strictly in conformity with the terms and conditions and after clearance of the eligibility criteria, it was called for the technical presentation before the Tender Evaluation Committee. The petitioner’s representatives put forth the presentation very well before the said Committee and the members also seemed satisfied.
Thereafter, the financial bid was opened wherein the bid of the petitioner was found to be the lowest one. However, the final results were neither communicated on the official website, nor any information in this regard was available in the respondent’s office. Later, the petitioner came to know that the tender was awarded to the other as a result of which it contacted its local counsel to obtain copies of relevant documents but soon thereafter, lockdown was imposed in the State due to Covid-19 pandemic and all the administrative offices were closed. Afterwards, the petitioner came to know that the difference between the total score of the other organisation and the petitioner was of 0.53 marks and that the same failed to adhere to one of the technical requirements. It alleged that the respondent malafidely, illegally, arbitrarily, and capriciously declared the other as qualified and awarded the contract. Being aggrieved, it was before the High Court.
The High Court in view of the facts and circumstances of the case noted, “According to learned counsel for the respondent No. 3, the petitioner has not even come before this Court with clean hands as the petitioner had not iled the relevant documents and had chosen to file only selective documents. The petitioner has not iled the inancial bid submitted by him and the rates quoted were the higher than that of the petitioner as the price quoted by the petitioner was Rs. 1,53,046 whereas the ofer of the respondent No. 3 was 1,10,000/-. Even otherwise, the NIT in question was not based on the lowest price but was under the quantity cost based system. So far as the contention of the petitioner that in the peak of covid 19 pandemic, the respondent No. 3 has surveyed 450 villages, is noticed to be rejected as the said issue cannot be decided by this Court.”
The Court added that it is for the tendering authority either to accept the survey report submitted by the other organisation and to ascertain as to how and in what manner the same has done the survey work.
“Even otherwise, as stated by the learned counsel for the respondents, the irst phase of the survey has been completed and payments in that regard has also been made, this Court does not deem it proper to interfere at this stage especially in the light of catena of decisions rendered by the Apex Court relating to tender matters”, it said.
In the referred Supreme Court’s judgment, it was observed that the courts must realise their limitations and the havoc which needless interference in commercial matters can cause and in contracts involving technical issues, the courts should be even more reluctant because most in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond their domain.
“The courts should not use a magnifying lass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give “fair play in the joints” to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer”, the judgment read.
It was also noted in the judgment that a writ court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer unless something very gross or palpable is pointed out and the court ordinarily should not interfere in matters relating to tender or contract.
“… while invoking power of judicial review in matters as to tenders or award of contracts, certain special features should be borne in mind that evaluations of tenders and awarding of contracts are essentially commercial functions and principles of equity and natural justice stay at a distance in such matters. If the decision relating to award of contract is bona ide and is in public interest, courts will not interfere by exercising powers of judicial review even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. Power of judicial review will not be invoked to protect private interest at the cost of public interest, or to decide contractual disputes”, it further read.
Accordingly, the High Court dismissed the petition in view of the settled principles of law regarding contractual disputes and award of tender.
Cause Title- Janmitram Kalyan Samiti v. State of Chhattisgarh & Ors. (Neutral Citation: 2024:CGHC:20866-DB)
Appearance:
Petitioner: Advocate Hari Agrawal
Respondents: Advocate General Prafull N. Bharat, Senior Advocate Abhishek Sinha, Government Advocate Sangharsh Pandey, and Advocate Somkant Verma.