In CA No. 3897 of 2023- SC- ‘Court should exercise a lot of restraint while exercising judicial review in contractual or commercial matters’, says Supreme Court while upholding Bombay High Court order rejecting Tata Motors’ claim to be eligible bidder due to disqualification
Chief Justice Dhananjaya Y. Chandrachud, Justices PS Narasimha & J.B. Pardiwala [19-05-2023]

Read Order: Tata Motors Limited v Brihan Mumbai Electric Supply and Transport Undertaking

Simran Singh

New Delhi, May 22, 2023- In a Civil Writ Petition, the Supreme Court dismissed the challenge put forward by Tata Motors to the impugned order of the Bombay High Court, which had rejected its claim to be an eligible bidder for a transport contract due to disqualification. The Top Court, nonetheless, set aside a part of the judgment through which the decisions of the Brihan Mumbai Electric Supply & Transport Undertaking (BEST) to accept the tender of EVEY Trans Private Limited was set aside. It was further left it to the discretion of BEST to undertake a fresh tender process.

“The High Court has rightly observed in its impugned judgment that the bid of the TATA Motors failed to comply with the said clause. TATA Motors deviated from the material and the essential term of the Tender. It may not be out of place to state at this stage that it is only TATA Motors who deviated from the conditions.…However, we are of the view that the High Court having once declared TATA Motors as non-responsive and having stood disqualified from the Tender process should not have entered into the fray of investigating into the decision of BEST to declare EVEY as the eligible bidder. We are saying so because the High Court was not exercising its writ jurisdiction in public interest. The High Court looked into a petition filed by a party trying to assert its own rights,” said a Bench comprising Chief Justice Dhananjaya Y. Chandrachud, Justice PS Narasimha and Justice J.B. Pardiwala

In the matter at hand, the tender process was for supplying 1,400 electric buses worth INR 2,450 crores whose first and foremost requirement was the prescribed operating range of the single-decker buses which would operate for around an average of 200 Kms in a single charge in ‘actual conditions' with 80% State of Charge without any interruption. The High Court in its impugned order had upheld the disqualification of TATA Motors and rejected their claim from being considered as an eligible bidder as they failed to comply with the technical requirements of the Tender.

"It is unambiguous that operating range provided in the tender document is that the electric vehicles manufacturers have to provide the vehicles which can run 200 kms in single charge…in actual conditions with 80% SoC without any interruption….Petitioner No.1 did not submit its bid for 200 Kms@ 80% SoC in single charge on actual condition but at standard test conditions as per AIS 040…The tender of the Petitioner certainly was not compliant with the said clause. The Petitioner has deviated from the material and the substantial term of the tender. The Petitioner, as such, is rightly disqualified for deviating from the material requirements stipulated in the tender.” had held the High Court.

The High Court in its impugned order had declared EVEY as an unsuccessful bidder and had stated that the principle of equity and natural justice stay at a distance and no judicial interference was warranted in case of an error in assessment. However, the same holds good, if the decision is bona fide. “We are also aware that interference of the Court would lead to some delay…The Courts upon coming to the conclusion that the decision making process was not fair. The same lacked fair play in action and arbitrary, will have to step in.”

The issue for consideration for the Bench was the whether the High Court after upholding the disqualification of TATA Motors from the Tender was justified in undertaking further exercise to ascertain whether EVEY also stood disqualified and that BEST in its discretion may undertake a fresh tender process.

The Court opined that it was the guardian of fundamental right who was duty bound to interfere when there was arbitrariness, irrationality, mala fides and bias. “However, this Court has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters.”

The Bench stated that in todays time many public sector undertakings compete with the private industry and the contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. “No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and the havoc which needless interference in commercial matters can cause.”

The Court stated that the Courts should be even more reluctant in contracts involving technical issues “because most of us in Judges robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. The courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder…”

The Bench navigated through Jagdish Mandal v. State of Orissa which had stated that "while invoking power of judicial review in matters as to tenders or award of contracts, certain special features should be borne in mind that evaluations of tenders and awarding of contracts are essentially commercial functions and principles of equity and natural justice stay at a distance in such matters.”

It was the opinion of the Bench that the Court should exercise a lot of restraint while exercising judicial review in contractual or commercial matters. Further noted, that the contracts entered into between private parties were not subject to scrutiny under writ jurisdiction. The Court, accordingly, dismissed the challenge put forward by the Tata Motors to the impugned order of the Bombay High Court, which had rejected its claim to be an eligible bidder due to disqualification.