Considerations Of Public Interest Should Not Be Narrowly Confined To Financial Aspect Only: Supreme Court

The Supreme Court has cautioned that considerations of public interest should not be narrowly confined to financial aspect only.

The Court was hearing a Civil Appeal preferred against the Judgment of the Calcutta High Court’s Division Bench.

The two-Judge Bench of Justice Manoj Misra and Justice Ujjal Bhuyan observed, “Public tenders are designed to provide a level playing field for all potential bidders, fostering an environment where competition thrives. The integrity of this process ensures that public projects and resources are delivered efficiently and effectively, benefiting the society at large. Therefore, sanctity of public tenders and contract is a fundamental principle that underpins the stability and predictability of legal and commercial relationships. Infact this Court put in a word of caution that considerations of public interest should not be narrowly confined to financial aspect only.”

The Bench said that public tenders are the cornerstone of governmental procurement processes, being competitive and ensuring fairness and transparency in the allocation of public resources.

Senior Advocate Kavin Gulati appeared for the Appellant while AORs Anurag Soan and Nandini Sen Mukherjee appeared for the Respondents.

Facts of the Case

The Respondent filed an Intra-Court Appeal against the final Order of the Single Judge of the High Court which dismissed a Writ Petition. The said Petition assailed the action of the authorities i.e., State of West Bengal and its officials refusing to treat the Respondent as the highest bidder by permitting it to rectify its financial bid after the bidding process was over. After observing that there was no scope for interference, the Single Judge dismissed the Petition. Aggrieved by such dismissal, the Respondent filed an Appeal. According to the Division Bench, the error in quoting the figure by the Respondent was inadvertent; instead of quoting the price for the entire contract period of 1095 days, Respondent had uploaded per day amount of the Bill of Quantity (BOQ) of Rs. 9,72,999.00.

The Bench further observed that the Respondent had promptly sought for correction of the error immediately after reopening of the price bids. Hence, it allowed the Appeal and set aside the Order of the Single Judge. It directed the authorities to evaluate the BOQ rate of the Respondent by treating the amount offered as the per day amount and then on that basis to compute the total amount for the entire contract period of 1095 days. However, the Division Bench was of the view that an opportunity should be granted by the tendering authority to the other bidders as well to match the price of Respondent and thereafter to take a final decision with regard to the award of contract. It was this Judgment and Order which was under challenge before the Apex Court.

Reasoning

The Supreme Court after hearing the contentions of the counsel, remarked, “The owner or an employer of a project having authored the tender documents is the best person to understand and appreciate its requirements and interpret its documents. Constitutional courts must defer to this understanding and appreciation of the tender documents unless there is mala fides or perversity in the understanding or appreciation or in the application of the terms of the tender documents. It is possible that the view taken by the owner or the employer may not be acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given.”

The Court reiterated that even assuming for a moment that there was technical fault in the tender, which if rectified had the possibility of generating more revenue, the same by no stretch could be said to be a cogent reason for concealing an already existing tender.

“This Court highlighted the importance of maintaining the sanctity of tenders in governmental procurement processes”, it noted.

The Court was of the view that the Division Bench of the High Court clearly fell in error in directing the Respondent to allow rectification of the financial bid by treating the amount offered by it as the per day figure and on that basis to compute the total amount for the entire contractual period of 1095 days.

“Such an exercise is clearly impermissible having regard to the terms and conditions of the contract which are required to be understood on the anvil of this Court’s judgments. The authority granted to the tendering authority by clause 5B (v) of the Instruction to Bidders cannot be stretched to construe the price bid of respondent No. 1 as the per day offer, contrary to the bid declaration of respondent No. 1 itself, and thereafter, on that basis to work out a new bid amount for the entire contractual period making it the highest”, it further said.

The Court added that the Respondent was not at all vigilant; rather, it displayed a very casual approach and in such circumstances, clause 5B(v) cannot be invoked to resurrect the bid of Respondent to make it H1.

“Clause 5B(v) of the Instruction to Bidders has to read conjointly with clause 4(g) of the notice inviting electronic bid. … While judicial review is not excluded to assail administrative decisions even in matters of tenders and contract, the long line of consistent judicial pronouncements tells us that the constitutional courts should exercise utmost restraint in interfering with a tender process unless the threshold of judicial review are met”, it also observed.

Conclusion

The Court said that the Appellant was a necessary party to the proceedings before the High Court instituted by Respondent being the H1 bidder and impugned directions of the High Court has adversely affected the case of the Appellant, downgrading its H1 status.

“The proposition that equity and natural justice should be kept at bay during the course of tender evaluation, while fully applicable to the case of respondent No. 1, cannot be applied to judicial proceedings where tender evaluation is under judicial scrutiny, fairness and natural justice being integral to the judicial process. Therefore, non-impleadment and consequential non-hearing of the appellant by the High Court, has vitiated the impugned judgment and order”, it noted.

The Court, therefore, concluded that the expression ‘public interest’ in the arena of commercial transactions cannot and should not be confined to any straight jacket definition and while benefit or accrual of more revenue to the public exchequer is certainly an important aspect, equally important, if not more, is adherence to the rules and conditions of tender; sanctity of the tender process being paramount and should be maintained at all cost.

Accordingly, the Apex Court allowed the Appeal and quashed the impugned Judgment.

Cause Title- Prakash Asphaltings and Toll Highways (India) Limited v. Mandeepa Enterprises and Others (Neutral Citation: 2025 INSC 1108)

Appearance:

Appellant: Senior Advocate Kavin Gulati, AOR Krishna Kumar Singh, Advocates Monish Panda, Anmoj Jassal, Amrita Singh, Mohisth Shivkumar, and Dushyant Sharma.

Respondents: AORs Anurag Soan, Nandini Sen Mukherjee, Tuhin, Advocates Akshay Saxena, Ritu Raj, Kanika, and Ayush Mishra.

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