SC on Judicial Review of Administrative Decisions

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786

April 04, 2018

Case name: Municipal Corporation, Ujjain & Anr. v. BVG India Limited and Ors.

Date of Judgement: March 27, 2018

In the case the Appellant had challenged High Court’s order, whereby the Court had set aside the contract awarded in favour of Global Waste Management Cell Private Limited by Ujjain Municipal Corporation for door to door collection and transportation of Municipal Solid Waste.

The tender floated by Municipal Corporation was awarded to Global Waste Management Cell Pvt. Ltd. amongst the three bidders by getting the highest score. However, the award of contract was challenged by the unsuccessful bidder (B.V.G. India Limited) before the High Court. The High Court subsequently set aside the contract awarded to Global Waste Management Cell Pvt. Ltd. Aggrieved by High Court’s decision, the Appellant Municipal Corporation approached the Supreme Court.

In view of the facts and circumstances, the Supreme Court allowed the appeal and set aside High Court’s order. One of the intrinsic issue on which the Apex Court elucidated was scope of judicial review of administrative decisions.

While allowing the appeal, the Three-Judge Bench of the Supreme Court made the following observations in the case:

  • That the successful bidder was more technically qualified and it got more marks. Normally, the contract could be awarded to the lowest bidder if it is in the public interest. Merely because the financial bid of BVG India Ltd. is the lowest, the requirement of compliance with the Rules and conditions cannot be ignored.
  • That a statutory authority granting licences should have the latitude to select the best offer on the terms and conditions prescribed. As clarified earlier, the power of judicial review can be exercised only if there is unreasonableness, irrationality or arbitrariness and in order to avoid bias and mala fides.
  • That evaluating tenders and awarding contracts are essentially commercial transactions/contracts. If the decision relating to award of contract is in public interest, the Courts will not, in exercise of the power of judicial review, interfere even if a procedural aberration or error in awarding the contract is made out.
  • That the power of judicial review will not be permitted to be invoked to protect private interest by ignoring public interest.
  • That attempts by unsuccessful bidders with an artificial grievance and to get the purpose defeated by approaching the Court on some technical and procedural lapses, should be handled by Courts with firmness.
  • That the exercise of the power of judicial review should be avoided if there is no irrationality or arbitrariness.
  • While arriving at its decision, the Supreme Court heavily relied on its verdict in the case of Tata Cellular v. Union of India[1], wherein the Court had remarked that the terms of the tender are not open to judicial scrutiny as the invitation to tender is a matter of contract. Thus, only when a decision making process is so arbitrary or irrational that no responsible authority proceeding reasonably or lawfully could have arrived at such decisions, power of judicial review can be exercised. However, if it is bona fide and in public interest, the Court will not interfere in the exercise of power of judicial review even if there is a procedural lacuna. The power of judicial review will not be permitted to be invoked to protect private interest by ignoring public interest.

Scope of Judicial Review of Decisions Pertaining to Award of Contract

  • Under the scope of judicial review, the High Court could not ordinarily interfere with the judgment of the expert consultant on the issues of technical qualifications of a bidder when the consultant takes into consideration various factors including the basis of non-performance of the bidder;
  • A bidder who submits a bid expressly declaring that it is submitting the same independently and without any partners, consortium or joint venture, cannot rely upon the technical qualifications of any 3rd Party for its qualification.
  • It is not open to the Court to independently evaluate the technical bids and financial bids of the parties as an appellate authority for coming to its conclusion inasmuch as unless the thresholds of mala fides, intention to favour someone or bias, arbitrariness, irrationality or perversity are met, where a decision is taken purely on public interest, the Court ordinarily should exercise judicial restraint.

The entire case can be accessed here.

[1] (1994) 6 SCC 651