Supreme Court Upholds Tender Terms, Highlights Limited Judicial Review in Contractual Matters Under Article 226.

The SC set aside the HC's judgment, dismissing the writ petitions challenging the tender terms. The SC emphasized the limited scope of judicial review under Article 226 in contractual matters, reinforcing that courts should not alter tender terms unless they are arbitrary or discriminatory. The appeals were accepted, with no costs ordered.

---

---

Issues Involved:
1. Extent of judicial review permissible u/Article 226 of the Constitution regarding the terms of tender prescribing eligibility criteria.
2. Whether the High Court could change the terms incorporated in the tender notice on the ground of its being inappropriate.

Summary:

Issue 1: Extent of Judicial Review u/Article 226
The Supreme Court examined the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders. It reiterated that courts can scrutinize the award of contracts by the government or its agencies to prevent arbitrariness or favoritism. However, there are inherent limitations in the exercise of judicial review in such matters. The principles deduced from Tata Cellular vs. Union of India [1994 (6) SCC 651] were highlighted, emphasizing judicial restraint in administrative action, the court's role in reviewing the decision-making process rather than the decision itself, and the necessity for the government to have freedom of contract. The court also referenced Air India Limited vs. Cochin International Airport Limited [2000 (2) SCC 617] and Monarch Infrastructure (P) Ltd. vs. Commissioner, Ulhasnagar Municipal Corporation and Others [2000 (5) SCC 287], reinforcing that the terms of the invitation to tender are not open to judicial scrutiny as they fall within the realm of contract.

Issue 2: High Court's Authority to Change Tender Terms
The Supreme Court disagreed with the High Court's view that the term requiring a turnover of at least Rs. 20 crores did not have a nexus with the increase in the number of schools or the quality of education to be provided. The court noted that the government introduced the turnover criteria to ensure financial stability and capacity to implement the project, which involved significant expenditure. The court emphasized that it is for the authority to set the terms of the tender, and courts should not interfere unless the terms are shown to be arbitrary, discriminatory, or actuated by malice. The provision of the turnover criteria was not found to be arbitrary or discriminatory.

Conclusion:
The Supreme Court set aside the judgment of the High Court and dismissed the writ petitions filed by the respondents. The appeals were accepted, and no order as to costs was made. The court left it to the appellants to decide whether to continue with the tenders already floated or to invite fresh tenders in light of the changed circumstances.

---