Case Note & Summary
The case involves a dispute over the rejection of a tender submitted by The Silppi Constructions Contractors (the petitioner) for two works at Kochi, with estimated costs of Rs. 53 crores and Rs. 72 crores. The petitioner's technical bids were rejected on 28.03.2019, and its appeals were dismissed on 09.04.2019. The petitioner then filed a writ petition in the Kerala High Court, arguing that no reasons were given for the rejection. The respondents contended that the petitioner did not satisfy the eligibility criteria because its sister concern, M/s Silppi Realtors and Contractors Pvt. Ltd., had not renewed its enlistment and had adverse remarks. The Single Judge allowed the writ petition, holding that the appellate order was not speaking and that adverse remarks against the sister concern could not be used against the petitioner. The Division Bench reversed this decision, emphasizing the limited scope of judicial review in contractual matters and that the Single Judge should not have interfered with the administrative decision regarding the sister concern. The Supreme Court dismissed the Special Leave Petitions, affirming the Division Bench's judgment. The Court relied on a series of precedents, including Tata Cellular v. Union of India, Raunaq International Ltd. v. I.V.R. Construction Ltd., and Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., to reiterate that courts should not interfere in tender matters unless there is arbitrariness, mala fides, or perversity. The Court held that the employer is the best judge of tender conditions and that the petitioner failed to establish any illegality or arbitrariness in the rejection of its tender.
Headnote
A) Administrative Law - Judicial Review - Tender Matters - Scope of Interference - The court reiterated that judicial review in contractual matters is limited to preventing arbitrariness, irrationality, bias, or mala fides. Courts should not sit as appellate authorities over commercial decisions of public sector undertakings. (Paras 6-18) B) Contract Law - Tender - Eligibility Criteria - Sister Concern - Adverse Remarks - The court held that the High Court erred in setting aside adverse remarks against the sister concern without the sister concern challenging them. The rejection of the petitioner's tender based on the sister concern's adverse remarks was not shown to be mala fide or arbitrary. (Paras 4-5) C) Constitutional Law - Article 226 - Writ Jurisdiction - Contractual Disputes - The court held that writ courts should exercise restraint in contractual matters and interfere only when substantial public interest is involved or the decision is perverse. (Paras 6-18)
Issue of Consideration
Whether the High Court was justified in interfering with the rejection of the petitioner's tender and the adverse remarks against its sister concern, and whether the Division Bench correctly applied the principles of judicial review in contractual matters.
Final Decision
The Supreme Court dismissed the Special Leave Petitions, affirming the judgment of the Division Bench of the Kerala High Court. The Court held that the Single Judge erred in interfering with the administrative decision regarding the sister concern and that the rejection of the petitioner's tender was not shown to be arbitrary or mala fide.
Law Points
- Judicial review in contractual matters is limited
- Courts should not interfere in tender decisions unless arbitrariness or mala fides is established
- Employer is the best judge of tender conditions
- No fundamental right to carry on business with the Government
- Principles of Wednesbury reasonableness apply
