Supreme Court Emphasizes Tendering Authority’s Interpretation in Judicial Review of Tenders

Supreme Court Law Insider

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Published on: November 23, 2023 at 18:39 IST

The Supreme Court highlighted that in matters pertaining to tender clauses, the interpretation put forth by the tendering authority should be upheld, unless malafides are alleged or proven.

The bench, comprising Justice Sanjay Kishan Kaul, Justice Sudhanshu Dhulia, and Justice Ahsanuddin Amanullah, made this assertion, referencing the precedent set in the case of Jagdish Mandal vs. State of Orissa.

The case in question involved a tender floated by M/s. RITES Ltd (2nd Respondent) for transporting 34 railway coaches to Mozambique in Africa.

The appellant and the 1st Respondent submitted bids, and the appellant was awarded the work order, while the bid of the 1st Respondent was deemed unqualified.

Respondent 1 alleged that the appellant was ineligible due to two existing banning orders and challenged the tender awarded to the appellant in the Delhi High Court. The High Court directed the disgorging of profits earned by the appellant, based on the assumption that the appellant would have been disqualified.

The Supreme Court, in its consideration of the case, focused on whether there was a requirement for disgorging profits in such circumstances. Referring to clause 2(d) of the contract, the Court interpreted the terms to conclude that if a ban, though imposed, is not in force, it would not disqualify a tender.

The Court observed that the tendering authority had properly examined the complaint regarding the appellant and concluded that, since the banning orders were not in force, the appellant was not disqualified. The Supreme Court also noted that the appellant had not suppressed the information regarding the banning orders while applying for the tender.

Setting aside the High Court’s order, the Apex Court held that since there was a valid disclosure by the appellant and the bid was qualified, there was no basis for disgorging the appellant’s profits.


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