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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 of government contracts or tenders?
Solution
The cornerstone of judicial review in government contractual matters 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 merely to review the decision-making process to check for arbitrariness, irrationality, mala fides, or bias. Courts acknowledge that the government and its instrumentalities must have "fair play in the joints" – meaning a necessary degree of freedom in contractual matters. The courts lack the expertise to correct administrative decisions on technical or commercial merits, and undue interference can cause administrative burdens and increased public expenditure. The threshold for judicial intervention is high, requiring a clear case of illegality or unreasonableness, not just a disagreement with the decision.
Question
Explain the legal doctrine of "fair play in the joints" as applied to the evaluation of tenders and award of contracts by state authorities.
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, like any other contracting party, must have the freedom to enter into contracts. This doctrine grants the tendering authority significant leeway in interpreting tender documents, evaluating bids, and making choices that, in its commercial wisdom, best serve public interest. The authority is considered the best judge of its own requirements. Therefore, unless the decision is manifestly arbitrary, mala fide, or perverse, a court will not substitute its own judgment for that of the administrative expert, even if another interpretation of the tender terms is possible.
Question
In a writ petition challenging the rejection of a bid, is it mandatory to implead all other tenderers as parties to the petition?
Solution
No, it is not an inflexible rule that all other tenderers must be made parties in every writ petition. The requirement for necessary parties depends on the nature of the challenge and the stage of the tender process. If a bidder is only challenging the rejection of its own technical bid and not the award of the contract to another party, the other tenderers may not be necessary parties at that juncture. Their rights are not directly affected by a challenge that seeks only to have the petitioner's bid reconsidered. However, the position would be different if the petition challenges the acceptance of a rival's bid, as that successful tenderer would be a necessary and proper party to defend its award.
Question
How is a "business relationship" between firms defined in the context of tender eligibility, and what is its legal significance?
Solution
In tender processes, a "business relationship" is a crucial factor used to identify related firms. Firms are typically considered "related" if they have common partners or directors. This relationship is significant because the past performance, including adverse remarks or defaults, of one related entity can be attributed to the other when evaluating a bid. The underlying principle is to prevent a firm from circumventing its own poor track record by simply applying under a different, but closely connected, legal entity. Therefore, tender authorities are legally permitted to consider the credentials and history of sister concerns to make a holistic assessment of the bidder's reliability and eligibility.
Question
Is an authority inviting tenders, which is a 'State' under Article 12 of the Constitution, legally obligated to provide detailed reasons for rejecting a bid?
Solution
Generally, no. The decision to accept or reject a tender is an administrative decision in the realm of contract, and it is neither judicial nor quasi-judicial in nature. Therefore, the tendering authority is not required to provide detailed reasons at the time of rejecting a bid. Insisting on reasons at every stage could bring the commercial activities of the State to a grinding halt. The State must be given sufficient leeway in this regard. However, if the decision is challenged in a court of law, the authority is expected to justify its decision in its counter-affidavit by disclosing the grounds for rejection, which are then scrutinized for arbitrariness or illegality.
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