Public tender not private bargain: Supreme Court

New Delhi, Nov 7 (PTI) Observing that a public tender is not a private bargain, the Supreme Court on Friday said courts must intervene in a case of misconstruction of a tender condition or irrationality.

A bench of Justices Sanjay Kumar and Alok Aradhe said that when an authority misinterprets the tender condition, it diminishes competition. The apex court said the misinterpretation of the tender condition deprives the State of its legitimate revenue.

"A public tender is not a private bargain. It is an instrument of governance, a mechanism through which the State discharges its solemn duty as trustee of public wealth.

"Its purpose is not merely procedural compliance, but maximisation of public value through a process, i.e. fair, transparent and competitive," the bench said.

The observations of the apex court came on a plea relating to bids for the extraction of sand on lease for a period of five years at Mahanadi Sand Quarry under Tangi Chowdwar tehsil in Odisha's Cuttack district.

The top court said the obligation of the Tendering Authority is twofold, namely, to interpret its own terms with consistency and to ensure that such interpretation advances, not defeats, the object of the tender.

"The court must intervene in a case of demonstrable misconstruction of a tender condition or irrationality which affects the public interest," the bench said.

The apex court said that when an interpretation of a tender condition narrows competition and excludes the highest bidder on a ground unsupported by law, the decision-making process is vitiated.

"The interpretation of the terms of tender must, therefore, serve the object and purpose of the tender mainly to maximise the revenue to the State, when it deals with a natural resource," it said. PTI PKS RHL