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Judgment
Per: Vivek Rusia, Acting Chief Justice The present petition under Article 226 of the Constitution of India has been filed challenging the communication dated 20.09.2025 (Annexure P-1) whereby the petitioner has been declared "Not Eligible" in the tender process initiated pursuant to Notice Inviting Tender No. 04/Proc./MPJN/2025-26 dated 05.07.2025 (Annexure P-3) issued by respondent No.1.
FACTS OF THE CASE:
The brief facts of the case are that the petitioner is a Joint Venture comprising SBE Engineering and Infrastructure Private Limited (SBEIPL) and Hindustan Projects (HP), formed for participation in infrastructure projects. Respondent No.1, Madhya Pradesh Jal Nigam, issued the Notice Inviting Tender No. 04/Proc./MPJN/2025-26 dated 05.07.2025 for execution of works relating to survey, design verification/confirmation, validation, engineering, procurement, construction, testing, commissioning, operation and maintenance for ten years of Multi-Village Drinking Water Supply Schemes in the districts of Dindori, Jabalpur and Mandla.
Pursuant to the tender notification, the petitioner participated in the tender process and submitted its bid as a Joint Venture on 06.09.2025. Upon evaluation of the documents submitted by the bidders, respondent No.1, vide communication dated 08.09.2025 (Annexure P-6), declared the petitioner technically qualified at the stage of pre-qualification and technical evaluation.
Subsequently, respondent No.1, through e-mail dated 12.09.2025 (Annexure P-7), sought certain clarifications from the petitioner regarding turnover computation, financial credentials and experience in execution of similar nature projects. In response thereto, the petitioner submitted a detailed reply dated 16.09.2025 along with supporting documents, including a takeover agreement dated 02.05.2023, Chartered Accountant certificates and documents relating to its experience and financial eligibility.
Thereafter, respondent No.1 issued the impugned communication dated 20.09.2025 declaring the petitioner as "Not Eligible". The communication does not assign any reason for such a declaration. Following the said disqualification, the financial bids were opened on 22.09.2025, and respondent No.2 was declared the lowest bidder.
Aggrieved by the rejection of its bid and the consequential exclusion from further participation in the tender process, the petitioner submitted a representation and thereafter approached this Court by filing the present writ petition.
SUBMISSIONS ON BEHALF OF THE PETITIONER:
Shri Prakash Upadhyay - learned Senior Advocate for the petitioner submitted that the impugned decision dated 20.09.2025 is arbitrary, unreasonable and violative of Articles 14 and 19(1)(g) of the Constitution of India. It is argued that after having declared the petitioner technically qualified on 08.09.2025, the respondents could not have reversed their decision without assigning cogent reasons and without considering the clarifications furnished by the petitioner.
It is further submitted that the impugned communication merely records the petitioner as “Not Eligible” and does not disclose any basis or reasoning for such disqualification. The action of the respondents, therefore, amounts to a non-speaking order and reflects complete non-application of the mind. Learned counsel contends that reasons constitute the foundation of every administrative decision, and an order affecting civil and commercial rights cannot be sustained in the absence of reasons.
It is also contended that the respondents failed to appreciate that SBE Engineering and Infrastructure Private Limited had lawfully taken over the proprietorship concern, namely SB Enterprises, through a takeover agreement dated 02.05.2023, under which all assets, liabilities, experience and financial credentials stood vested in the successor entity. According to the petitioner, the turnover and experience of the predecessor concern were therefore liable to be considered while evaluating eligibility criteria.
Learned senior counsel further submitted that despite furnishing detailed replies to every query raised by the respondents, no consideration appears to have been accorded to such clarifications. The rejection of the bid without affording an opportunity of hearing and without dealing with the material placed on record is stated to be contrary to the principles of natural justice and fairness governing public procurement.
Lastly, it is submitted that the petitioner had quoted a financial bid lower than that of respondent No.2. Consequently, the arbitrary exclusion of the petitioner has resulted in distortion of fair competition and has caused avoidable financial loss to the public exchequer. On these grounds, prayer is made for quashing the rejection dated 20.09.2025 and for a direction to the respondents to reconsider the petitioner’s bid in accordance with law.
SUBMISSIONS ON BEHALF OF THE RESPONDENT No. 1 :
1 2 . Per contra, learned counsel appearing for the respondent submitted that the instant petition is not maintainable as the Court does not sit as an appellate authority over decisions taken by expert tender evaluation committees. It is contended that the evaluation of eligibility criteria, technical qualifications and experience requirements falls within the exclusive domain of the tendering authority.
It is further submitted that the petitioner was called upon to furnish clarifications regarding turnover, financial credentials and experience of similar nature works. Upon scrutiny of the documents, clarifications furnished, and upon obtaining the opinion of legal experts, the competent authority found that the petitioner did not meet the eligibility requirements prescribed under the tender conditions and consequently declared the petitioner ineligible.
Learned counsel contended that participation in a tender process does not confer any vested right upon a bidder to be declared qualified merely because it was initially permitted to proceed in the evaluation process. The tendering authority retains the power to verify credentials and to determine eligibility at every stage in accordance with the tender conditions.
Learned counsel for Respondent No. 1 submits that SB Enterprises was a proprietorship concern, whereas SBEIPL was incorporated as a private limited company on 24.09.2020. Since the takeover agreement between the two entities was executed only on 02.05.2023, both remained separate legal entities prior thereto. It is, therefore, contended that for the purpose of determining eligibility under the tender conditions, only the standalone turnover of the bidding entity, namely SBEIPL, can be considered, and the turnover of the proprietorship concern cannot be clubbed with that of the company.
It is further submitted that in an identical matter concerning M/s Narendra Sharma Construction Pvt. Ltd., expert opinions obtained from two Chartered Accountant firms categorically opined that the turnover of two separate legal entities cannot be combined for determining eligibility. It is contended that the same principle squarely applies to the present case.
Shri Siddharth Sharma, learned counsel, further submitted that an identical issue had earlier been considered by this Court in W.P. No. 21846/2023, wherein the petition was dismissed by order dated 28.08.2023 with liberty to the petitioner therein to avail the appropriate remedy before the competent authority. It is further submitted that the said order was challenged before the Hon'ble Supreme Court by filing SLP (C) No. 19952/2023, which also came to be dismissed vide order dated 20.11.2023. Hence, it is submitted that the present petition deserves to be dismissed.
Learned counsel contended that the petitioner cannot claim parity with the earlier tender, as the turnover certificate therein described SBEIPL as "formerly known as S.B. Enterprises." In the absence of any clarification regarding a merger or takeover, the Technical Evaluation Committee, with bona fide intentions, accepted the certificate. However, upon subsequent verification, it was found that both were separate legal entities and their turnover could not be clubbed for determining eligibility in the present tender.
It is also argued that the Respondent No. 1, has declared the bid of Petitioner found to be non-responsive after following the due procedure of law, as well as after conducting due diligence by means of seeking opinions from an independent chartered accountancy firm, which cannot be interfered with. The respondent no. 2, being a successful L-1, has already been awarded a contract and has been executing the contract; no interference is called for.
It is lastly submitted that no arbitrariness, mala fides or procedural illegality is made out, warranting interference under Article 226 of the Constitution of India and the writ petition deserves to be dismissed.
REPLY ON BEHALF OF RESPONDENT NO. 2:
The respondent No. 2, by filling a reply, submitted that the writ petition is not maintainable as it seeks interference in the technical evaluation undertaken by the Tender Evaluation Committee, which is beyond the limited scope of judicial review under Article 226 of the Constitution. Reliance is placed on the decisions of this Court in Shrishti Infrastructure Development Corporation Ltd. v. State of M.P. and Narendra Sharma v. State of M.P., affirmed by the Hon'ble Supreme Court, to contend that the Court ought not to interfere with expert decisions unless the same are shown to be arbitrary, mala fide, or actuated by bias.
It is further pleaded that the petitioner's bid was rejected after a detailed evaluation conducted by the Tender Evaluation Committee on the basis of independent opinions obtained from two Chartered Accountant firms. That S.B. Enterprises, a proprietorship concern, and SBE Engineering & Infrastructure Pvt. Ltd. were distinct legal entities until the takeover became effective on 03.05.2023. Consequently, the turnover of both entities could not be clubbed for determining eligibility under the tender conditions, and the standalone turnover of the bidding entity alone fell below the prescribed threshold.
That before taking the final decision, the petitioner was afforded an opportunity to furnish clarifications, which were duly considered. However, the explanations furnished were found inconsistent with the provisions of the Companies Act and the tender conditions. Accordingly, the Tender Evaluation Committee, by a reasoned decision, declared the petitioner technically ineligible.
It is also submitted that the petitioner cannot claim parity with an earlier tender wherein the turnover certificate described SBEIPL as "formerly known as S.B. Enterprises". The said certificate was accepted by the Technical Evaluation Committee under a bona fide impression that the proprietorship concern had been converted into the company. Upon subsequent verification, it was found that both entities had co-existed as separate legal entities, and their turnovers could not be clubbed.
It is lastly submitted that the tender process was transparent, fair and free from arbitrariness or mala fides. Respondent No. 2 fulfilled all the eligibility conditions and has already been issued the Letter of Acceptance. In the absence of any illegality or procedural infirmity, no interference is called for under Article 226 of the Constitution and the writ petition deserves to be dismissed.
Heard the counsel for the parties and perused the record.
APPRECIATION AND CONCLUSION:
Learned senior counsel for the petitioner argued that Mr Sukhram Bishnoi, the present Director and highest stakeholder (87.64%) in ‘SBEIPL', started his business by forming a proprietorship in the name of SBE and thereafter formed the company (SBEIPL) which then took over ‘SBE’ and taking over agreement was produced with technical bid with all physical experience, financial credentials, assets, liabilities, tax liabilities, personnels, machineries, tools, plants and rights to continue ongoing works originally awarded in favor of ‘SBE’. The petitioner's Chartered Accountant has issued a Financial Certificate combining SBEIPL and SBE. The transformation/amalgamation/takeover doesn’t distinguish the acquirer and acquiree as two separate entities; instead, it is termed as continuity of business. Such as, the change in constitution of business entity (like SBE to SBEIPL) is admissible in the course of contract duration, disregarding the credentials of the new entity, but treating this as continuity of business; therefore, the same principle should be followed while treating the financial statement of acquirer ‘SBEIPL’ and acquiree ‘SBE' in the technical evaluation. It has also been argued by learned senior counsel that SBEIPL has taken over SBE, which includes the realization of all Debtors of SBE and Creditors of SBE to be obligated. The turnovers of two entities entered into a Joint Venture Agreement for bidding have been allowed by the respondent no. 1, and whereas the Joint Venture is completely an ad-hoc and temporary arrangement, the addition of turn overs of 'SBE’ by ‘SBEIPL' which is completely an permanent arrangement and further not allowed to alter for another five years as per Indian Companies Act, is a clear in equal treatment which is prohibited under the Article 14 of Indian Constitution which provides Equality before Law. It is also argued that the present case squarely falls within the scope of judicial interference in tender matters as the actions of the Respondent No. 2 suffer from the vice of arbitrariness, bias, and violation of natural justice. The rejection of the Petitioner’s bid is arbitrary, as despite the Petitioner having been declared technically qualified and having furnished complete clarifications sought by the Respondents, the bid came to be rejected abruptly without any justifiable basis. The rejection is founded upon an erroneous interpretation of the eligibility conditions by disregarding the experience and turnover of the erstwhile proprietorship concern taken over by the Company. AS argued that the impugned rejection dated 20.09.2025 is wholly cryptic and non-speaking, as no reasons whatsoever have been assigned therein, despite the tender conditions themselves requiring reasons to be recorded for rejection. The Respondent no.1 has relied upon opinions obtained subsequently from Chartered Accountants, including the CA firm associated with Respondent No. 2 itself, solely to justify the rejection, which cannot be said to be a fair and objective evaluation of the bid.
In support of his contention, learned senior counsel has placed reliance on the judgment passed by the Apex court in the case of New Horizon Limited and CRRC Corporation Limited reported in (1995) 1 SCC 478, para 23, which is reproduced below:
"23.Even if it be assumed that the requirement regarding experience as set out in the advertisement dated 22-4-1993 inviting tenders is a condition about eligibility for consideration of the tender, though we find no basis for the same, the said requirement regarding experience cannot be construed to mean that the said experience should be of the tenderer in his name only. It is possible to visualise a situation where a person having past experience has entered into a partnership and the tender has been submitted in the name of the partnership firm which may not have any past experience in its own name. That does not mean that the earlier experience of one of the partners of the firm cannot be taken into consideration. Similarly, a company incorporated under the Companies Act having past experience may undergo reorganisation as a result of merger or amalgamation with another company which may have no such past experience and the tender is submitted in the name of the reorganised company. It could not be the purport of the requirement about experience that the experience of the company which has merged into the reorganised company cannot be taken into consideration because the tender has not been submitted in its name and has been submitted in the name of the reorganised company which does not have experience in its name. Conversely there may be a split in a company and persons looking after a particular field of the business of the company form a new company after leaving it. The new company, though having persons with experience in the field, has no experience in its name while the original company having experience in its name lacks persons with experience. The requirement regarding experience does not mean that the offer of the original company must be considered because it has experience in its name though it does not have experienced persons with it and ignore the offer of the new company because it does not have experience in its name though it has persons having experience in the field. While considering the requirement regarding experience it has to be borne in mind that the said requirement is contained in a document inviting offers for a commercial transaction. The terms and conditions of such a document have to be construed from the standpoint of a prudent businessman. When a businessman enters into a contract whereunder some work is to be performed he seeks to assure himself about the credentials of the person who is to be entrusted with the performance of the work. Such credentials are to be examined from a commercial point of view which means that if the contract is to be entered with a company he will look into the background of the company and the persons who are in control of the same and their capacity to execute the work. He would go not by the name of the company but by the persons behind the company. While keeping in view the past experience he would also take note of the present state of affairs and the equipment and resources at the disposal of the company. The same has to be the approach of the authorities while considering a tender received in response to the advertisement issued on 22-4-1993. This would require that first the terms of the offer must be examined and if they are found satisfactory the next step would be to consider the credentials of the tenderer and his ability to perform the work to be entrusted. For judging the credentials past experience will have to be considered along with the present state of equipment and resources available with the tenderer. Past experience may not be of much help if the machinery and equipment is outdated. Conversely lack of experience may be made good by improved technology and better equipment. The advertisement dated 22-4-1993 when read with the notice for inviting tenders dated 26-4-1993 does not preclude adoption of this course of action. If the Tender Evaluation Committee had adopted this approach and had examined the tender of NHL in this perspective it would have found that NHL, being a joint venture, has access to the benefit of the resources and strength of its parent/owning companies as well as to the experience in database management, sales and publishing of its parent group companies because after reorganisation of the Company in 1992 60% of the share capital of NHL is owned by Indian group of companies namely, TPI, LMI, WML, etc. and Mr Aroon Purie and 40% of the share capital is owned by IIPL a wholly-owned subsidiary of Singapore Telecom which was established in 1967 and is having long experience in publishing the Singapore telephone directory with yellow pages and other directories. Moreover in the tender it was specifically stated that IIPL will be providing its unique integrated directory management system along with the expertise of its managers and that the managers will be actively involved in the project both out of Singapore and resident in India."
Learned senior counsel has also relied on the judgment passed by the High Court of Guwahati in the case of R. Engineering Works Ltd. vs Oil India Ltd and Ors.MANU/GH/0099/200716, in which it is held as under:
"16.While considering the question as to whether the experience of M/s. Fabtech Engineers could have been counted in favour of the respondent No.3 it is important to bear in mind that there is no provision in law, which bars a company from taking over the business of any proprietary concern or of a registered or unregistered firm. In the absence of any law barring the taking over of the business of a firm by a company, interpretation of law has to be consistent with the view, which would help strengthen the commercial relationship and lead to growth of the economy. It also needs to be borne in mind that the taking over of the business of a firm by a company, as in the present case, is, in the ultimate analysis, a commercial transaction. It is, therefore, necessary that the facts are considered, as would be considered, by a person, who is in business.
17.It may, now, be pointed out that when the owner of a proprietary concern decides, in order to expand his business, to form a partnership firm with some others, strictly speaking, a new entity is born in the form of a firm. The firm, which may be so born, could not have had any experience in its own name. This does not mean that a businessman would not take into consideration the earlier experience of one of the partners of such a firm for the purpose of determining the capability of the firm to execute a contract if allotted to them. Similarly, a firm may consist of two persons as partners and in order to expand their business, they may bring in some new partners and a new firm, in a new name, may be organised and formed. Though the newly born firm may not have any experience in its own name, would the experience of those, who had been carrying on the business of the type, which the newly born firm is required to do, not be counted by a prudent businessman for determining the technical experience of the newly born firm to do the business ? It is not uncommon that a company, on account of merger or amalgamation, undergoes a re-organization and a tender may be submitted in the name of such a reorganized company. Shall the experience of the company, which has merged into re-organized company, not be taken into consideration, because the tender has not been submitted in the name of the company, which has merged, but has been submitted in the name of a re-organized company, which has no experience, in its own name ? Similarly, there may be a split in a company and the persons, who had been looking after a particular field of the business of the company, may form a new company after leaving the earlier company. The new company, though have persons with experience in the field, may not have experience in its own name ; while the original company would have experience in its own name, but it would lack persons with experience, who had done work in the field. The requirements, regarding experience, cannot mean that the offer of the original company must be considered, because it has experience, in its name, though it does not have any experienced person with it to carry on the work and ignore the offer of the new company on the ground that it has no experience in its own name, though it has persons having experience in the field and also capability to undertake and execute the work. A tender process, in such a case, is nothing, but a commercial transaction. The terms and conditions of the bidding documents have to be, therefore, construed, from the standpoint of a prudent businessman. When a businessman enters into a contract, whereunder some work is required to be performed, he would seek to assure himself about the credentials of the person whom he has to choose for the purpose of performance of the work. If such credentials are to be examined from a commercial point of view, it logically means that if the contract is to be entered into, a company, as a prudent person in business, will look into the background of the entity, be it a company or firm, and the persons, who are in control of the same and capable to execute the work. A businessman would not go by the name of the company alone, but by the persons behind it, who have experience to do the work. Similar has to be approach of the State and its instrumentalities, while considering the eligibility of a tenderer, as is the case at hand, for the purpose of awarding the contract. These aspects of law have been succinctly explained in New Horizon Ltd. v. Union of India.
18.
19.Though a cursory reading of the above condition, as regards experience appearing in the advertisement, reflected as if the experience has to be of the tenderer himself, the Apex Court, having discussed the position of law, as indicated hereinabove, clearly held that while considering the past experience of a tenderer, the persons, behind the company, which bids, and. the experience, which the persons working behind the company have, would be taken into consideration by a prudent businessman and the same shall be the approach, in such a tender process, by the State and its instrumentalities. In the present case, it is not in dispute that in terms of the volume of business, which M/s. Fabtech Engineers had carried out in the past, they had acquired such experience and they had reflected such financial soundness that had M/s. Fabtech Engineers not been dissolved M/s. Fabtech Engineers which made would have been competent to participate in the impugned tender process. When M/s. Fabtech Engineers was competent, in terms of the relevant eligibility criteria fixed by the impugned NIT, it would be illogical to hold, in the face of the authoritative pronouncement by the Apex Court in New Horizons Ltd. (supra), that with the taking over of the running business of M/s. Fabtech Engineers by respondent No. 3, the entire experience, which M/s. Fabtech Engineers had acquired, and the financial soundness, which M/s. Fabtech Engineers enjoyed, would instantly vanish, particularly, when with the taking over of business, the respondent No. 3 has also taken over the assets including goodwill and also liabilities of the said firm. In such circumstances, there was no impediment in law in taking into account the experience and financial soundness, which M/s. Fabtech Engineers had, particularly, when the persons, who were partners of M/s. Fabtech Engineers not only became the shareholders, but directors of respondent No. 3. When M/s. Fabtech Engineers was competent, in terms of the relevant eligibility criteria, to participate in the impugned tender process, their experience and financial capacity could have been counted in favour of the respondent No. 3, when the business of the said firm was taken over (as already indicated hereinabove), by the respondent No.
3.There was, therefore, no impediment in law in taking into account the experience and financial capability, which M/s. Fabtech Engineers had, particularly, when, the persons, who were partners of M/s. Fabtech Engineers, became not only the shareholders, but directors of respondent No. 3."
The Apex Court was dealing with the matter of the past experiences of members/parties of the Joint Venture, which participated in the bidding process, and held that the Company is functioning as a joint venture wherein the Indian group (TPI, LMI and WML) and Mr Aroon Purie hold 60% shares and the Singapore-based company (IIPL) holds 40% shares. Both the groups have contributed towards the resources of the joint venture in the form of machines, equipment and expertise in the field. The Company is like a partnership between the Indian group of companies and the Singapore-based company, which have jointly undertaken this commercial enterprise, wherein they will contribute to the assets and share the risks. In respect of such a joint venture company, the experience of the company can only mean the experience of the constituents of the joint venture, i.e., the Indian group of companies (TPI, LMI and WML) and the Singapore-based company (IIPL). In the case in hand, the bidding by the Joint Venture Company was permissible. Even the company, individually or the partnership firm were also permitted to bid in the NIT. The case of the petitioner falls in a different category, which is not contemplated in the NIT.
Had this been disclosed in the NIT, the partnership firm turned into a company that may also bid, taking into account its past experiences as a partnership firm along with the experiences of the company jointly, then the similar companies, like the petitioner, would have submitted the bid. In fact, the respondent No.1 has come across first time with this type of situation therefore, they took an opinion from the chartered accountant before proceeding further with the matter of the tender submitted by the petitioner. Hence, there cannot be malafide nd at the most error in interpretation of law or the terms and conditions of the contract. The issue is whether, in such a condition, the interference by the High Court at this stage would be permitted under Article 226 of the Constitution of India.
In the catena of cases, the Apex Court has laid down the strict guidelines in respect of interference by the High Court in the matter of a government contract some of them are as under:-
In Tata Cellular v. Union of India, (1994) 6 SCC 651 , the Hon’ble Supreme Court held that while the power of judicial review extends to contractual actions of the State, such review is confined to examining the decision-making process and not the merits of the decision itself. The Court emphasized that the Government, being the guardian of public finances, possesses the discretion to accept or reject any tender and to select the most suitable bidder, provided such discretion is exercised fairly and without arbitrariness, mala fides or collateral considerations. The Court further held that constitutional courts are not equipped to substitute their views for those of administrative or technical authorities and may interfere only where the process is tainted by arbitrariness or favouritism.
The aforesaid principle was reiterated in Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517, wherein the Supreme Court observed that evaluation of tenders and award of contracts are essentially commercial functions. Judicial review is intended only to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides, and not to examine whether the decision is sound or preferable. The Court held that if the decision relating to the award of a contract is bona fide and in public interest, courts ought not to interfere even where some procedural irregularity or prejudice to a bidder is alleged. Unless the decision-making process is so arbitrary or irrational that no reasonable authority could have arrived at such a conclusion, or unless public interest is adversely affected, interference under Article 226 is unwarranted.
In Montecarlo Ltd. v. National Thermal Power Corporation Ltd., (2016) 15 SCC 272 and Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., (2016) 16 SCC 818, the Supreme Court underscored that tender matters often involve highly technical and specialized considerations requiring expert evaluation. The Court held that the tendering authority, being the author of the tender documents, is best placed to understand and interpret their requirements and conditions. Consequently, constitutional courts must defer to such an interpretation unless it is shown to be perverse, mala fide or intended to favour a particular bidder. Technical evaluation and comparison of bids by courts were expressly held to be impermissible.
The same principle has been consistently followed in Municipal Corporation, Ujjain v. BVG India Ltd., (2018) 5 SCC 462, The Bharat Coking Coal Ltd. v. AmrDevPrabha, (2020) 16 SCC 759, and Silppi Constructions Contractors v. Union of India, (2020) 16 SCC 489. These decisions reiterate that courts should not sit in appeal over administrative or commercial decisions of expert bodies. Interference is justified only where the decision suffers from mala fides, arbitrariness, irrationality, bias or perversity. The Supreme Court has further cautioned that unwarranted judicial intervention in public procurement may delay public projects, escalate costs and adversely affect public interest, and therefore judicial restraint is the rule while interference is the exception.
In Uflex Ltd. v. Government of Tamil Nadu, (2022) 1 SCC 165 and N.G. Projects Ltd. v. Vinod Kumar Jain, (2022) 6 SCC 127, the Supreme Court observed that unsuccessful bidders frequently invoke writ jurisdiction to challenge tender conditions and decisions, but the role of the Court is limited to scrutinizing the legality of the process and not the commercial wisdom underlying the decision. The Court held that economic and technical considerations are best left to the tendering authority, and that courts should refrain from magnifying minor procedural deviations into grounds for invalidating an entire tender process. Unless there is clear proof of mala fides, arbitrariness or perversity, judicial review ought not to be exercised.
Recently, in Tata Motors Ltd. v. BEST, (2023) 19 SCC 1, Travancore Devaswom Board v. Ayyappa Spices, (2024) 7 SCC 534, Jaipur VidyutVitran Nigam Ltd. v. MB Power (M.P.) Ltd., (2024) 8 SCC 513, and BTL EPC Ltd. v. MacawberBeekay Pvt. Ltd., (2024) 12 SCC 614 , the Supreme Court reaffirmed that courts should exercise great caution before interfering in tender matters, particularly when contracts are under implementation or where interference may cause substantial loss to the public exchequer. The Court emphasized that the scope of judicial review is restricted to examining whether the decision-making process is vitiated by arbitrariness, mala fides, irrationality or bias. In the absence of such infirmities, and particularly where public interest would suffer from judicial intervention, constitutional courts must refrain from disturbing commercial decisions taken by competent authorities.
Thus, the consistent view of the Supreme Court is that in tender and contractual matters, the Court is concerned with the fairness and legality of the decision-making process and not with the correctness of the decision itself. Unless a case of manifest arbitrariness, mala fides, bias, perversity, discrimination or violation of public interest is clearly established, interference under Article 226 of the Constitution is impermissible, and the commercial and technical decisions of the tendering authority are entitled to judicial deference.
Apart from the above, SB Enterprises was a proprietorship firm and SBEIPL was incorporated as a Private Limited Company under the provisions of the Companies Act on 24.09.2020. The takeover agreement was executed on 02.05.2023. Accordingly, two separate entities existed before the takeover of the Firm by the Company. Accordingly, their turnover cannot be combined to determine the eligibility as decided by the Tender selection Committee, which could be a plausible conclusion in the given circumstances and the standalone turnover of the bidding entity, i.e., SBEIPL, was considered while taking the decision. The decision taken by the Respondent no.1 is not based on bias or malafide or any other consideration, hence, no interference in writ petition, especially in the Tender and contract matters. It is consistent and settle position of law that if the decision relating to the award of a contract is bona fide and is in public interest, the courts will not interfere by exercising the power of judicial review even if a procedural aberration or error in assessment or prejudice to a tenderer is made out. The power of judicial review will not be invoked to protect private interests at the cost of public interest, or to decide contractual disputes. Interference in tender or contractual matters in exercise of power of judicial review is permissible only if: (i) the process adopted or decision made is mala fide or intended to favour someone, or (ii) the same is so arbitrary and irrational that no responsible authority acting under law could have arrived at it, or (iii) it affected the public interest. The purpose and scope of judicial review is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides in government contractual matters.
In the present case, although the petitioner immediately approached this Court by way of a writ petition against the awarding of the contract to the respondent No. 2, but no interim relief was granted. The respondent No. 2 commenced the work, and now more than a year has passed. Therefore, at this stage, the interference by the High Court would not be permissible.
Hence, the writ petition is dismissed. No order as to cost.