Source: Allahabad High Court

Why in News?

Justices Mahesh Chandra Tripathi and Prashant Kumar observed if the State or its instrumentalities acts fairly in the tenders proceedings interference by the Court is very restrictive as no bidder can claim fundamental right to carry on business with the Government.

• The Allahabad High Court gave this observation in the case of M/S Jai Hanuman Construction Jagdish Saran v. State of UP And 9 Others.

What is the Background of M/S Jai Hanuman Construction Jagdish Saran v. State of UP And 9 Others Case?

• A tender invitation was released for the expansion and beautification of State Highway in Mirzapur District.
• The stipulated time period for completion was 18 months.
• The case of the petitioner is that they successfully submitted their technical bid through the Prahari website, where the technical sheet was downloaded and subsequently uploaded onto the e-tender platform.
• The outcome posted on the Prahari website indicated that the petitioner's technical bid was deemed "responsive" in every aspect.
• They alleged that several documents were deleted from the website and hence their financial bid became “non-responsive”, and they alleged this act as arbitrary under Article 14 of the Constitution of India, 1950.

What were the Court’s Observations?

• The Allahabad HC held the Government, or his undertaking shall have a free hand in setting up the terms of the tender.
• And said that Court will interfere in the tender matters only if it is arbitrary, discriminatory, mala fide, or actuated with bias.

What is Article 14 of the Constitution of India, 1950?

• Article 14 is a fundamental right that embodies the principle of equality before the law and equal protection of laws.
• It states that the State shall not deny to any person equality before the law or the equal protection of laws within the territory of India.
• The essence of Article 14 lies in treating equals equally and unequals unequally, ensuring that the law is applied uniformly to all persons without discrimination.
• The concept of reasonable classification is recognized, allowing the state to classify individuals for legitimate purposes, as long as such classification is not arbitrary or unreasonable.

What are the Landmark Judgments Involved in the Case? 

• National High Speed Rail Corporation Ltd. v. Montecarlo Limited & Another (1994):
  • The Hon’ble Supreme Court (SC) has held that “the court should be extremely careful in exercising the powers in the tender matters”.
• Tata Cellular v. Union of India (1994):
  • The SC held that the court would interfere in tender matters of government only if it finds favoritism or arbitrariness in the procedure.
• N.G. Projects Ltd. v. Vinod Kumar Jain & Anr. (2022):
  • The SC held that “If the Court finds that there is total arbitrariness or that the tender has been granted in a malafide manner, still the Court should refrain from interfering in the grant of tender but instead relegate the parties to seek damages for the wrongful exclusion rather than to injunct the execution of the contract”.
    • The injunction or interference in the tender leads to additional costs on the State and is also against public interest.