While dismissing a petition seeking the quashing of an E-Tender issued by Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited, the Allahabad High Court has emphasised the need for judicial restraint and caution in contractual matters. The High Court has held that only overwhelming public interest can justify judicial intervention in such matters involving the State instrumentalities.

The Petition before the Allahabad High Court was filed under Article 226 seeking issuance of a writ of certiorari quashing the impugned E-Tender No. ET-60/ MMC/PD/ETPS/HTPS/2024 dated July 10, 2024, as amended on August 13, 2024, issued by the Superintending Engineer, Material Management Circle (MMC), Harduaganj Thermal Power Station (HTPS), Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited, Kasimpur, Aligarh (third respondent), whereby the petitioner was restricted from participating in E-Tender.

The Division Bench comprising Justice Shekhar B. Saraf and Justice Vipin Chandra Dixit observed, “The essence of the law laid down in a catena of judgments referred to above emphasizes the need for judicial restraint and caution, and that only overwhelming public interest can justify judicial intervention in contractual matters involving the State instrumentalities. The court must acknowledge that the authority floating the tender is the best judge of its requirements and, therefore, the court's interference should be minimal.”

Advocate Satyendra Chandra Tripathi represented the Petitioners while Standing Counsel Mukul Tripathi represented the Respondent.

Factual Background

The petition was filed by a firm registered at District Ambedkar Nagar, Uttar Pradesh, engaged in the small-scale business of supplying non-torrefied biomass pellets for coal handling plants. In 2017, the Ministry of Power published a Standard Operating Procedure (SOP) regarding biomass utilization for power generation through co-firing in coal-based power plants. On July 10, 2024, Vidyut Utpadan Nigam Limited floated an ETender inviting bids for the supply of non-torrefied biomass pellets, a renewable fuel source promoted by the Central Government to reduce pollution and encourage cleaner energy in thermal power plants. The petitioner’s firm was excluded from participating due to the restrictive clause mentioned in the tender documents. Aggrieved by the exclusionary condition under Clause 3(i) of the tender, the petitioner approached the High Court.

Reasoning

On a perusal of the umpteen judgments and sifting through the ratios laid down by the Apex Court in the various judgments such as Tata Cellular v. Union of India reported in (1994), Caretel Infotech Ltd. v. Hindustan Petroleum Corpn. Ltd. (2019), the Bench said, “...it emerges that Courts can scrutinize the award of contracts by Government or its agencies in exercise of its power of judicial review to prevent arbitrariness or favouritism, but there are inherent limitations in the exercise of such power. It becomes crystal clear that conventionally the Writ Court does not intermeddle with the terms and conditions mentioned in the tender documents, unless there is a prima facie arbitrariness, favouritism, irrationalism or perversity”.

The Bench thus carved out the following principles for judicial intervention in tender cases

  • The emerging trend of globalisation and competition equates judicial review with judicial restraint in tender matters. Principles of equity and natural justice would normally stay at a distance in tender matters, unless there is patent illegality.
  • The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender equates with an invitation to offer, which is in the realm of contract.
  • Tender-making authority must have the freedom of contract.
  • Tender making authority is the best person to understand and appreciate its requirements and has the right to choose the best quotation as per its requirement. It is free to grant any relaxation or impose any restriction, for bona fide reasons.
  • No person could claim a fundamental right to carry on business with the government. If the authority is exercising its right to choose in order to get the best person or the best quotation, there can be no question of infringement of fundamental rights.
  • Quashing decisions may impose a heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.

Coming to the facts of the case, the Bench noted that considering the hazardous environmental conditions in the NCR region, the respondent authority floated the tender with a pre-qualifying condition allowing only manufacturers located either in NCR region or within 100 km from the Truck Gate (main gate) of the power plant to participate in the tender process. This ensured that the raw materials were procured from nearby areas such as Punjab, Haryana and NCR region. If manufacturers from outside this region were permitted, they might have sourced biomass from their local areas rather than the targeted regions, defeating the objective of reducing stubble burning in NCR adjacent agricultural zones. Thus, the restriction served the specific environmental goal of curbing local pollution, it held.

“This Court is of the view that the impugned conditions are tailor-made and incorporated with a specific motive for public interest and no material has been placed on record to show as to how the petitioner has been targeted for their exclusion in the tender process. There is no material to show that the impugned condition is designed to favour a particular bidder”, it stated.

Emphasising that the tender condition was also in consonance with the policy of the Government, the Bench said, “The respondents, in its counter-affidavit, has also averred that the purpose behind incorporating such stringent clause as a pre-qualifying condition of the tender is the distressing environmental condition in the NCR region. This indicates that the raison d'être of imposition of a stringent condition, that is, allowing only the existing pellet manufacturers having their plant location in NCR region or within 100 km from the truck gate of the power station to participate in the tender proces is to reduce stubble burning by farmers which is the persistent and root cause for air pollution in the NCR region.”

Thus, finding no evidence of mala fide intent or partisanship aimed at excluding manufacturers outside the NCR region, the Bench held, “...the conditions were structured to advance the public interest by ensuring the effective and secure implementation of the Government’s policy, which is crucial for public safety and welfare.”

In light of such factual and legal aspects, the writ petition came to be dismissed.

Cause Title: M/s Rajan Construction Company v. State of U.P. And Another (Neutral Citation- 2025:AHC:57344-DB)

Appearance:

Petitioners: Advocate Satyendra Chandra Tripathi, Shiv Poojan Yadav

Respondents: Standing Counsel Mukul Tripathi, Advocates Shad Khan, Shishir Prakash

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