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Government is free to set terms of tender unless it is arbitrary, malafide or discriminatory: High Court of Jammu and Kashmir

The court will not interfere in the matter of terms and conditions of a tender issued by the government unless, they are blatantly discriminatory, arbitrary or of malafide nature. This was held in the judgement passed by a single member bench of the High Court of Jammu and Kashmir consisting of Justice Ali Mohammad Magrey in the case of Rural Contractors Welfare Association & Others v Union Territory of Jammu & Kashmir [WP(C) No. 1602/2021; CM No. 5391/2021] pronounced on 17th August 2021.

The petitioner, Rural Contractors Welfare Association filed the present petition challenging the validity of Notice Inviting Tenders No. 59 of R&B/4727-37 dated 28th July 2021 and No. 60 of R&B/4899-4908 dated 29th July 2021. According to the petitioner, the impugned NITs had the condition that any interested contractor would need to upload card verification certificate and such a condition would allegedly deprive many contractors from participating in the process which lead to a reduction in competition. The petitioner further contended that allowing these NITs would be against the spirit of justice and fairness as it seriously prejudiced the rights and interests of the petitioners and would only benefit a few contractors.

The counsel representing the respondent stated that the authority issuing a tender prescribes eligibility criteria to serve the best purposes; someone or the other’s interests are likely to be hurt, but this cannot be labelled as discriminatory or malafide in nature. The case of Tata Cellular V. Union of India [(1994)6 Supreme Court Case 651] was cited, where the Supreme Court of India stated that “The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness but must be free from arbitrariness not affected by bias or actuated by mala fides;”. The High Court observed that matters like the terms and conditions of tenders issued by the government came under administrative action and this court does not sit as the Court of Appeal in such a case.

Justice Ali Mohammad Magrey came to the conclusion that “If the decisions have been taken in bonafide manner, although not strictly following the norms laid down by the Courts, such decisions are upheld on the principle laid down by Justice Holmes that Courts, while judging the constitutional validity of executive decisions, must grant certain measure of freedom of play in the joints to the executive. Looking at the instant case in the above perspective, the Petitioners have not been able to establish before the Court that the decision taken by the Respondents in fixing the terms and conditions of the impugned NITs is an arbitrary exercise of power or that the same was/ is malafide in Nature.”

Click here for the judgement

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