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In cases involving Tender Documents, Judicial Review is equivalent to Judicial Restraint: Supreme Court

While addressing a civil appeal to reverse the decision of the High Court regarding Tender call Notices, the Supreme Court held that where tender documents come into the picture the High court can intervene only when the decision is malafide and arbitrary. Otherwise, the judicial review becomes judicial restraint. This judgment was passed in the case of M/S Utkal Suppliers vs. M/S MAA Kanak Durga Enterprises & Ors. [C.A.No.1517-1518/2021] by a Double Bench consisting of Hon’ble Justice Rohinton Fali Nariman and Hon’ble Justice B.R. Gavai. 4

The present appeals arose out of a tender call notice [TCN] issued by Respondent no.4, by this TCN sealed tenders in a two-bid system were invited from registered diet preparation and catering firms, suppliers, etc. They also had to have a valid labour license and food license with a minimum of 3 years experience in preparation and distribution of therapeutic and non-therapeutic diet to the government or private health institution having a minimum of 200 beds for the year 2019-20. The clauses of the “Terms of Reference” attached to the TCN laid down the eligibility criteria, the right to reject a bid by the Hospital Administration, the right to Disqualification by the Medical Hospital, and General information to the bidder. Based on the aforesaid, four bids came- Appellant, Respondent no.1, no.5, and no.6.  respondent no.1 and no.6 were disqualified since they did not have a valid labour license. Bids were opened for Respondent no.5 and Appellant and appellant was the lowest bidder with an average cost of  Rs.82/- per patient, per day. Appellant and Respondent no.4 entered into an agreement for a period of one year while respondent no.4 filed a writ petition seeking the tender.

After hearing both the parties to the case, the High Court observed that the tender given to the appellant was malafide, illegal, and contrary to the TCN. The Supreme Court after hearing both sides of the case observed that the authority concerned read its own TCN to refer to the license to be submitted by bidders as the labour license under the Contract Labour Act.

The tender document was clear that the staff employed would be employed by the agency as contract labour and the agency being responsible to make alternative arrangements in cases where their staff goes on strike. The Supreme court held that from various decisions it had passed, it was clear that in these cases judicial review is equivalent to judicial restraint since the review is not of the decision but the manner in which it was made. The writ court does not have the expertise to correct such decisions by substituting its own decision for the decision of the authority.

The Supreme Court held that the High Court overstepped the bounds of judicial review by second-guessing the requirement of a license under the contract labour act. When the contract labour Act’s applicability is extended only to establishments in which there are 20 or more workmen can be done away with by the appropriate government it is clear that this is not an inflexible requirement. Further, the decision of the concerned authority cannot be second-guessed unless it is arbitrary, perverse, or mala fide. The Supreme court observed that the High Court’s decision to characterize the action of accepting the Appellant’s tender as mala fide is itself open to question and held that no malafide has been made out in the facts of the case.

The Supreme Court concluded by holding, “The Appellant is to be put back, within one week from the date of this judgment, to complete performance under the agreement entered into between the Appellant and the authority on 27.11.2020.”

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