Allahabad High Court: Bidders Can’t Claim Fundamental Right to Government Business in Tender Cases

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Published on: October 18, 2023 at 10:06 IST

The Allahabad High Court, in a recent ruling, has underscored that bidders cannot assert a fundamental right to engage in business with the government, particularly in the context of tender cases, due to their inherently limited nature.

The Court declined to intervene in a legal challenge related to a road construction tender, citing the constrained scope of judicial review when dealing with such matters.

The petitioner had contested a tender process concerning a road construction project, raising concerns about the decision-making procedures employed by government authorities and alleging misconduct by the respondents.

A Division Bench comprising Justice Mahesh Chandra Tripathi and Justice Prashant Kumar explained that when challenging the award of a tender, the court’s role is restricted to determining whether any errors occurred in the decision-making process or if the authorities exceeded their jurisdiction or violated principles of natural justice.

In this particular case, the Court found no evidence to suggest that the State or its instrumentalities had acted unreasonably, arbitrarily, or with any ulterior motives. The Court concluded that there were no errors in the decision-making process, and no violations of natural justice had occurred.

The Court further emphasized that if the State or its instrumentalities conduct tenders fairly and subsequently award contracts, the court’s interference is highly limited. Bidders cannot claim a fundamental right to do business with the government in such circumstances.

The bids for the road construction project were submitted using the “Prahari” software. The petitioner’s bid was initially considered “responsive” but later classified as “non-responsive” due to objections raised by competitors regarding the authenticity of documents.

Allegations were made regarding an engineer’s improper involvement and document deletion. Even after a reevaluation, the petitioner’s bid retained its “non-responsive” status, and their financial bid was not opened.

The petitioner’s legal counsel argued that the decision of the Tender Evaluating Committee was arbitrary and changed the initial “responsive” status of the petitioner’s bid for questionable reasons.

The respondents, represented by their legal team, contended that the petitioner’s bid was legitimately declared “non-responsive” based on the evaluation of objections raised by other bidders. They emphasized that the allegations of malfeasance were unfounded, and the decision-making process was transparent.

The Court noted that the petitioner claimed to have been initially declared “responsive” but was later categorized as “non-responsive.”

However, objections were raised against their bid, leading to a comprehensive evaluation. The Tender Evaluating Committee determined that the petitioner’s bid was “non-responsive” on twelve counts.

Following the petitioner’s representation, only one count was reconsidered, and their bid remained “non-responsive” on eleven counts. The Court concluded that the petitioner’s assertion of being “responsive” was incorrect.

The Court also observed that the petitioner had alleged that a department, in collaboration with one of the respondents, had deleted their uploaded documents. This claim was debunked as the number of uploaded documents remained consistent, and no evidence of tampering was found. The use of the Prahari App was confirmed to be transparent and tamper-proof.

The Court found no merit in the petitioner’s contention that respondent no. 9 engaged in unlawful actions to favor another bidder after promotion. It emphasized the meticulousness of the valuation process and the fact that decisions were based on objective criteria.

The Court highlighted the limited scope of judicial review in tender-related matters and cited previous Supreme Court rulings that discourage judicial interference in tender matters unless they are patently mala fide and arbitrary.

The Court concluded that the petitioner failed to demonstrate any arbitrariness, malafide intentions, or procedural violations. Allegations against State Authorities for favoring a specific bidder were also dismissed as groundless. As a result, the petition was dismissed.

This ruling by the Allahabad High Court provides important guidance on the limited role of courts in reviewing tender cases and affirms that bidders cannot claim a fundamental right to do business with the government. The decision reinforces the importance of transparency and fairness in the tendering process.

Case Title: M/S Jai Hanuman Construction Jagdish Saran v. State of U.P. & Ors.

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