Even though successive governments have attempted to bring in transparency and efficiency in the award of contracts, infrastructure development has often attracted judicial scrutiny of the project award process. Sometimes, injunctions are granted summarily by courts even after the bidding process has been completed. If the contract agreement has been signed the work is stalled ab-initio. If work has commenced then timely completion is stymied and project cost balloons. Historical grounds for judicial intervention have been: acceptance or rejection of a bidder on grounds such as not depositing of bid security amount through a cheque of a prescribed bank, discrepancy in the financial bid amount in words and figures, discrepancy in details about resources to be deployed or between the original and other copies of bid submission document and such others. When Courts stay the implementation of the project even after the work has started, it affects the overall social and economic development of the area that was to be benefitted.
A March 2022 Supreme Court judgement by a bench of Justices Hemant Gupta and V Ramasubramanian has prohibited lower courts from interfering in commercial matters related to bidding of infrastructure projects. The unsuccessful party in the bid had sought cancellation of a 2019 tender after the successful bidder had already commenced work on reconstruction of the Nagaruntari-Dhurki-Ambakhoriya Road in Jharkhand.
Times have changed, bidding processes have become more fine-tuned and complex. Technical expertise and experience is required to scrutinize detailed bid documents and to appreciate their nuances. Quite often a losing bidder files a writ petition merely to harass the winning party and to simultaneously frustrate the awarding entity. Sometimes this is planned to extort money through a back-room deal. Courts then play into the hands of one of the bidding parties and end up encouraging unfair practices.
The Supreme Court has, therefore, rightly concluded that construction of roads is an essential part of infrastructure development and the courts must themselves realize their own limitations and the havoc which needless interference in commercial matters can wreak. While setting aside the Jharkhand High Court’s judgment that ordered fresh tendering process, the Supreme Court has observed that in view of the complex technical issues, “the High Court would have been well advised to hold its hand to stay the construction of the infrastructure project. Such provision should be kept in view even by the writ court while exercising its jurisdiction under Article 226 of the Constitution of India. The grant of interim injunction by the HC has actually helped no-one except a contractor who lost a contract bid and has only caused loss to the State with no corresponding gain to anyone”. Allowing the successful bidder, NG Projects, to resume and complete reconstruction of the road project, the apex court said that the approach of the court should be “not to find fault with magnifying glass in its hands”.
Another path-breaking aspect of this ruling is that even if some arbitrariness or impropriety is found in the procedure and award of the bid, it would still be prudent for the court to refrain from interfering in the grant of tender and award of project. At best it could be decided that the losing party could seek damages for the wrongful exclusion rather than to injunct the execution of the contract. An injunction causes government and its citizens to suffer a double whammy – firstly by paying escalation costs for the project and, secondly – by being deprived of the multiple benefits from the timely development of infrastructure.