Case Note & Summary
The dispute arose from a Tender Call Notice dated 30.12.2019 issued by the Office of the Superintendent, SCB Medical College and Hospital, Cuttack, for diet preparation and catering services. The tender required bidders to have a valid labour licence and a minimum of three years' experience. Four bids were received, including from the appellant and respondent no.1. The Technical Committee disqualified respondent no.1 for not submitting a valid labour licence under the Contract Labour (Regulation and Abolition) Act, 1970, and shortlisted the appellant and another for financial bids. The appellant was the lowest bidder and was awarded the contract via a work order dated 27.11.2020. Respondent no.1 filed a writ petition challenging the disqualification. The High Court, by judgment dated 23.03.2021, quashed the work order, holding that the labour licence requirement could be satisfied by a registration under the Odisha Shops and Commercial Establishments Act, 1956, and that respondent no.1 had the requisite experience. It directed the authority to issue a work order to respondent no.1 if its financial bid was lower. The appellant appealed to the Supreme Court. The core legal issues were whether the High Court exceeded its jurisdiction in judicial review by reinterpreting tender conditions, and whether the authority's decision was perverse or mala fide. The appellant argued that the High Court second-guessed the authority's interpretation and made erroneous findings on mala fides and experience. Respondent no.1 contended that the Contract Labour Act did not apply as the tender did not specify 20 or more workmen, and that it had the required experience. The Supreme Court analyzed the tender clauses, particularly those indicating contract labour employment, and held that the authority's interpretation requiring a licence under the Contract Labour Act was correct. It reiterated principles from Tata Cellular v. Union of India, emphasizing that judicial review is limited to the decision-making process, not substituting the court's view. The Court found no evidence of mala fides and set aside the High Court's judgment, reinstating the award to the appellant as the lowest bidder.
Headnote
A) Administrative Law - Judicial Review in Tender Matters - Scope and Limits - Supreme Court of India - The High Court exceeded its jurisdiction by substituting its interpretation of tender conditions for that of the tendering authority. Judicial review is limited to examining the decision-making process, not the merits of the decision itself. The court does not have expertise to correct administrative decisions. Held that the High Court's interference was unwarranted as the authority's reading of its own tender was not perverse or mala fide (Paras 10-11). B) Contract Law - Tender Eligibility Criteria - Labour Licence Requirement - Contract Labour (Regulation and Abolition) Act, 1970 - The tendering authority interpreted its own tender to require a labour licence under the Contract Labour Act, based on clauses indicating contract labour employment. The High Court erroneously held that a registration under the Odisha Shops and Commercial Establishments Act, 1956 sufficed. Held that the authority's interpretation was correct and the High Court could not second-guess it (Paras 10-11). C) Administrative Law - Mala Fides in Tender Process - Burden of Proof - Supreme Court of India - The High Court's finding of mala fides against the authority was set aside as unsupported by evidence. Mala fides must be specifically pleaded and proved, which was not done. Held that the authority's action in awarding the contract to the lowest bidder was not mala fide (Paras 8, 11).
Issue of Consideration
Whether the High Court exceeded its jurisdiction in judicial review by substituting its interpretation of tender conditions for that of the tendering authority, and whether the authority's decision to disqualify a bidder for lacking a valid labour licence under the Contract Labour (Regulation and Abolition) Act, 1970 was perverse or mala fide
Final Decision
Supreme Court allowed the appeals, set aside the High Court judgment dated 23.03.2021, and reinstated the award of the tender to the appellant as the lowest bidder
Law Points
- Judicial review in tender matters is limited to examining the decision-making process
- not substituting the court's view for the authority's
- Tendering authority's interpretation of its own tender conditions is paramount unless perverse or mala fide
- Eligibility criteria in tender documents must be strictly construed as per the authority's understanding
