Although successive governments have attempted to bring transparency and efficiency to the awarding of contracts, the process of awarding infrastructure development projects has often been subject to judicial scrutiny. Sometimes injunctions are granted summarily by the courts even after the bidding process is complete. If the contractual agreement has been signed, the works are blocked ab-initio. If work has started, timely completion is hampered and project costs increase. The historical grounds for judicial intervention have been: the acceptance or rejection of a bidder for reasons such as failure to deposit the amount of the bid security by check from a prescribed bank, a difference in the amount of the financial bid in words and figures, a difference in details regarding the resources to be deployed or between the original and other copies of the bid submission document and such others. When the courts suspend the implementation of the project even after the work has started, it affects the overall social and economic development of the area which was to benefit from it.
A March 2022 Supreme Court ruling by a panel of Justices Hemant Gupta and V. Ramasubramanian barred lower courts from intervening in commercial cases related to tenders for infrastructure projects. The unsuccessful party in the bid had requested the cancellation of a 2019 tender after the successful bidder had already started reconstruction works on the Nagaruntari-Dhurki-Ambakhoriya road in Jharkhand.
Times have changed, bidding processes have become finer and more complex. Technical expertise and experience are required to review detailed bidding documents and appreciate their nuances. Very often, a losing bidder files a writ simply to harass the winning party and simultaneously frustrate the procuring entity. Sometimes this is planned to extort money through a backroom deal. The courts then play into the hands of one of the bidders and end up encouraging unfair practices.
The Supreme Court therefore rightly concluded that road construction is an essential part of infrastructure development and that the courts must themselves realize their own limitations and the havoc that unnecessary interference in commercial affairs can cause. While quashing the judgment of the Jharkhand High Court which ordered a new tender, the Supreme Court observed that in view of the complex technical problems, “the High Court would have been well advised to suspend the construction of the infrastructure . Such a provision should be kept in mind even by the Magistrate Court in exercising its jurisdiction under Section 226 of the Constitution of India. The granting of an interim injunction by the HC has in fact helped no one except a contractor who lost a contract offer and caused only a loss to the state with no corresponding gain for nobody “. Authorizing the successful bidder, NG Projects, to take over and complete the reconstruction of the road project, the Supreme Court said the court’s approach should be “not to find fault with the magnifying glass in its hands”.
Another innovative aspect of this decision is that even if any arbitrariness or irregularity is found in the procedure and the awarding of the offer, it would still be prudent for the court to refrain from interfering in the granting of the offer. bidding and awarding a project. At best, it could be decided that the losing party could seek damages for the wrongful exclusion rather than injunction to perform the contract. An injunction deals a double whammy to the government and its citizens – firstly by paying the escalating costs of the project and secondly – by being deprived of the multiple benefits of timely infrastructure development.
The author is a former Indian government secretary
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