A Bench of Justices Dinesh Maheshwari and Vikram Nath delivered a significant judgment explaining the manner of interpreting tender documents in exercise of the power of judicial review. The High Court had accepted the writ petition filed by M/s. Resoursys Telecom disapproving the technical disqualifications and consequential rejection of their technical bid in respect of a tender floated by Navodaya Vidyalaya Samiti (hereinafter referred to as ‘NVS’) for want of fulfilment of ‘past performance’ criterion about supply of ‘same or similar category products’ of 60% of bid quantity in at least one of the three financial years. Agmatel India Private Limited was the bidder whose offer was accepted by NVS after technically disqualifying Resoursys Telecom.

The tendering process is perhaps the most common method for procurement of goods and services by public authorities in India. Being instrumentalities of the State, they do not enjoy absolute freedom in such procurement and have to maintain a strict level of transparency as expenditure of public money is involved. A tender document specifies the scope and obligations of the bidder during the bidding process and also for the procurement project as a whole. The bidders have to ensure that they are in a position to fulfil any obligations that are expected to be performed. It is essential to fulfil these provisions in order to meet the requirements and expectations of the contract which they intend to enter into by way of the tender document.

The current dispute arose out of the Notice Inviting Tenders (‘NIT’) as issued by NVS on the Government e-market Place (‘GeM’) for the supply of 68,940 tablets for school children. M/s. Resoursys Telecom responded to the said NIT and offered its bid for the product i.e., “Tablet” which is being manufactured by an Indian company namely, Lava International Limited, after having necessary approvals from the manufacturer (OEM). NVS rejected their bid while citing the reason of rejection as ‘technical specification mismatch’. The writ petitioner felt that the grounds for rejection were not discernible or reasonable and the rejection was arbitrary and ambiguous; and, thereafter, made a representation seeking clarification of the reason for the same.

The High Court objected to the apparently restrictive interpretation given to the phrase— “same or similar category products” which according to NVS, referred to different classes and categories of tablets only. According to the High Court, the Technical Evaluation Committee of NVS decided to curtail the competition by narrowing the scope of the eligibility criteria, by consideration of only tablets as falling under a similar category, making it ultra vires to the tender document. Such arbitrary alteration in the interpretation of a tender document, at the time of evaluation of bids extinguishes and discourages healthy competition between bidders and ends up beating the very purpose of issuing a tender; as such, it cannot find favour with any Court, in public interest.

However, the Supreme Court was pleased to set aside the High Court’s decision citing irrelevant considerations by the latter with regard to ambiguity in the terms of the tender and post facto interpretations. The Apex Court found allegations against the tender floating authority to be baseless as there was no bias on their part in interpreting terms of the tender in order to suit a particular bidder. The work orders concerning smart phones, laptops, Aadhar kits, printers and power banks were not considered to be same or similar products with respect to tablets. Moreover, disqualification of Resoursys Telecom was due to the shortfall of required quantity as per the past performance clause. There was no ambiguity in the terms and conditions of the tender document and therefore, the interference of the High Court on the dictionary meaning of the words and on semantics was unnecessary and unjustified. Interference by the Court would arise only if the questioned decision fails on the salutary tests of irrationality or unreasonableness or bias or procedural impropriety.

From careful perusal of the decision, it is pertinent to take into consideration that there are organizations where “smartphones” and “tablets” are taken as products of a similar category, in relation to their requirements, both under the same tender process. Sometimes, the expressions are used interchangeably. Even the utility based application issued by various Governments do not make any distinction between “Tablets” and “Smart Phones”. With rapid technological advancements, there may also be cases where products are interconnected or is an intermediate device which cannot, in general be categorized. But will a generalized and easily comprehensible interpretation always lead to a definite conclusion? The Apex Court answered in the negative in the Agmatel decision. In the case of Galaxy Transport Agencies, Contractors, traders, Transports & Suppliers Vs New J.K. Roadways, Fleet Owners & Transport Contractors and Others, 2020 SCC OnLine SC 1035, it was argued that the view taken by the tender inviting authority and its evaluation committee remains a reasonable view that “Smart Phones” are not similar to “Tablets”. A special emphasis was given on the decision laid down in Afcons Infrastructure Limited Vs Nagpur Metro Rail Corporation Ltd., (2016) 16 SCC 818, where it was reiterated that the author/ inviting authority of the tender is the best person to interpret its documents and requirements. An interpretation by the owner or employer of a project to the tender document may not be acceptable to the Constitutional Courts but that, by itself, would not be a reason for interfering with the interpretation given. Furthermore, in the case of Silppi Constructions Contractors v. Union of India, 2019 SCC Online SC 1133, the Court, inter alia, held as follows—

“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.”

Time and again, it has been said that the threshold of mala fide intention to favour someone or arbitrariness or irrationality or perversity must be met before the Court can interfere with the decision making process or the decision itself. What is becoming increasingly apparent, that the Courts are refraining from interfering in contractual disputes, specifically in the interpretation of tender documents where the State or any of its organs are involved. What is generally reviewed is not the decision itself but the manner in which it was arrived at. It is assumed that the writ Court does not have the expertise to rectify or modify or alter such decisions by providing an interpretation that it deems fit. This has clearly been held in the celebrated case of Tata Cellular v. Union of India, (1994) 6 SCC 651, which stated as under:

“94. The principles deducible from the above are:

• The modern trend points to judicial restraint in administrative action.
• The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
• The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
• The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
• The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasiadministrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
• Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.”

Thus, it has been consistently opined by the Hon’ble Supreme Court that judicial activism with respect to the decisions of public authorities relating to the awarding of contracts ought to be limited, and contracts entered into between private parties must not be scrutinized via writ jurisdiction. While the scenario seems majorly favourable, it does give rise to the question- What are the factors to be taken under active consideration in order to prove mischievousness or arbitrariness on the part of the author/inviting authority while interpreting tender documents and terms laid down therein? The Courts do leave some room for intervention in terms of how a decision or process was arrived at, specifically where public authorities are involved. The main objective of the tender is an obvious factor that immediately comes to mind. What is beyond the objective of a tender, is the importance of the behaviour of the tender inviting authority, specifically during the bidding process. There have been numerous decisions on this issue and it can be said that the law is crystallized and settled. But on ponderation, one might feel inclined to reject the Court’s rationalization of NVS’s decision and say—