Court Must Avoid Interfering In Matters Of Tenders And Contract, SC Observes

The Supreme Court has ruled that the Court should generally avoid interfering in matters related to tenders or contracts. A writ court should refrain from imposing its decision on the employer regarding the acceptance or rejection of a tender bid unless there is a clear and significant issue at hand.

In the case Tata Motors Limited v. The Brihan Mumbai Electric Supply & Transport Undertaking (BEST) and Others, Chief Justice Dr. Dhananjaya Y. Chandrachud, Justice Pamidighantam Sri Narasimha, and Justice J. B. Pardiwala observed that initiating a fresh tender process when a contract is already in progress leads to time-consuming delays and financial losses for the public exchequer. The court stated that the financial implications on the state's public exchequer, which would arise if a fresh tender notice is directed by the court, should be a guiding factor to consider.

The dispute arose when BEST floated a tender for the supply, operation, and maintenance of 1400 Single Decker AC Electric Buses in Mumbai. Tata Motors submitted a bid that deviated from the tender specifications, while EVEY complied with the specifications. BEST declared Tata Motors as "technically non-responsive" due to deviations in the operating range, and EVEY was declared the successful bidder.

Tata Motors filed a writ petition in the High Court seeking to overturn BEST's decision and requested a reconsideration of its bid. The High Court upheld the disqualification of Tata Motors for failing to meet the technical requirements and set aside the acceptance of EVEY's bid, directing BEST to conduct a fresh auction if desired.

Both Tata Motors and EVEY appealed the High Court's decision to the Supreme Court. The Supreme Court emphasized that it should exercise its power of judicial review in commercial matters only when there is evidence of arbitrariness, malice, bias, or irrationality. The court recognized that public sector undertakings often engage with private parties under contracts that are not subject to writ jurisdiction.

The Supreme Court cautioned against unnecessary interference in technical and commercial matters where judges lack expertise and highlighted the potential harm such interference can cause. It stressed the need to exercise restraint, particularly when the court's intervention could result in loss to the public exchequer.

The court concluded that a writ court should refrain from imposing its decision on the employer regarding the acceptance of a tender bid unless there is a significant and obvious issue. Initiating a fresh tender process at a later stage could lead to time delays and significant financial burden for the state. The Supreme Court dismissed Tata Motors' appeal and allowed EVEY's appeal, partly setting aside the High Court's order. The court reversed the High Court's decision to set aside the acceptance of EVEY's bid and directed against initiating a fresh tender process.