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Question Bank
Question
What is the fundamental principle governing the scope of judicial review by courts in matters related to the award or cancellation of government contracts?
Solution
The cornerstone of judicial review in government contracts is the principle of judicial restraint. Courts do not act as a court of appeal over the decisions of administrative authorities. The primary role of the court is to review the decision-making process to check for arbitrariness, irrationality, unreasonableness, bias, or mala fides. Crucially, the purpose is to check whether the decision is made "lawfully" and not to assess whether it is "sound." Courts acknowledge that evaluating tenders is an essentially commercial function of the state, and they must grant the administration "fair play in the joints," meaning a necessary degree of freedom in its contractual decisions. Interference is warranted only in cases of patent arbitrariness and not merely because of a procedural aberration or a disagreement with the authority's decision.
Question
Explain the legal doctrine of "fair play in the joints" as applied to the actions of a government tendering authority.
Solution
The doctrine of "fair play in the joints" is a judicial principle that recognizes the autonomy and discretion of state authorities in commercial and contractual activities. It means that the government, as a contracting party, must have the freedom of contract. This doctrine grants the tendering authority significant leeway in interpreting tender documents, formulating conditions, and making executive decisions, including the cancellation of a tender, if done to serve a discernible public interest. The authority is considered the guardian of the finances of the State and is expected to protect its financial interests. Therefore, a court will not interfere simply because it might have taken a different view, provided the authority's action is reasonable, fair, and bonafide.
Question
Under what circumstances can a government authority cancel a tender process after bids have been received?
Solution
A government tendering authority generally reserves the right, through clauses in the notice inviting tender, to reject any or all tenders or to cancel the bidding process without assigning any reason. This right is exercised as an executive function. The validity of such cancellation is judged on the touchstone of arbitrariness and mala fides. If the cancellation is based on a bona fide belief that it will ensure wider participation, secure better financial terms for the state, or address a legitimate concern like providing a fresh opportunity to eligible bidders who were previously unable to participate, the action is likely to be upheld. The motive to protect the financial interest of the State is a valid and justifiable ground for cancelling a tender and initiating a fresh process.
Question
What is the legal threshold that must be met for a court to invalidate a government contract decision on the grounds of arbitrariness?
Solution
For a court to invalidate a decision in a government contract, the challenger must demonstrate patent arbitrariness. This is a high threshold. It is not enough to show that the decision could have been better or that there was a minor procedural lapse. The court must be convinced that the decision is one that "no responsible authority acting reasonably and in accordance with relevant law could have reached." The test is whether the action is so irrational and devoid of logic that it amounts to a whimsical exercise of power. The burden is on the petitioner to prove that the action was not merely erroneous, but so fundamentally flawed that it violates the principle of fairness in action mandated by Article 14 of the Constitution.
Question
What is the significance of establishing "mala fides" in a challenge to a government contract, and what does it entail?
Solution
Establishing mala fides (bad faith) is a critical element in challenging an administrative action. It signifies that the decision was made with an ulterior purpose or was intended to favour someone arbitrarily. When a decision is tainted by mala fides, it is per se arbitrary and violates the Constitution. However, the allegation of mala fides must be specifically pleaded and proved with compelling evidence. It implies a dishonest intention or a corrupt motive on the part of the decision-making authority. In the absence of a clear finding of mala fides, a court will be very reluctant to interfere with a decision, even if it appears to be based on an error of judgment, as the authority is generally presumed to have acted bonafide and in public interest.
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