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Govt has prerogative to fix tender criteria: SC

The government has the prerogative to fix the tender value and norms for awarding a contract as long as it is in the national interest and is not arbitrary or whimsical, the Supreme Court has ruled.



New Delhi: The government has the prerogative to fix the tender value and norms for awarding a contract as long as it is in the national interest and is not arbitrary or whimsical, the Supreme Court has ruled.

While formulating conditions for tendering a contract, greater latitude is required to be conceded to the state authorities and unless the action is found to be malicious and misuse of its statutory powers, "interference by courts is not warranted," said the apex court, citing its earlier rulings.

A bench of justices P Sathasivam and Ranjan Gogoi gave the verdict dismissing an appeal of Michigan Rubber (India) Ltd against the August 4, 2005 norms of the Karnataka State Road Transport Corporation for supply of tyres, tubes and flaps, specifying certain pre-qualification criteria.

"The appellant has failed to establish that the same was contrary to the public interest and beyond the pale of discrimination or unreasonableness.

"We are satisfied that to have the best of the equipment for the vehicles, which ply on road carrying passengers, the 2nd respondent (KSRTC) thought it fit that the criteria for applying for tender for procuring tyres should be at a high standard and thought it fit that only those manufacturers who satisfy the eligibility criteria should be permitted to participate in the tender," said Justice Sathasivam, writing the judgement.

One of the two pre-qualification criteria fixed by the
KSRTC stipulated that "Only the tyre manufacturers who have supplied a minimum average of 5000 sets of tyres, tubes and flaps set per annum, in the preceding three years between 2003 and 2007 to any of the heavy goods/ passenger vehicles/ chassis manufacturers in the country are eligible to participate."

The second norm said "The firm should have minimum average annual turnover of Rs.500 crores in the preceding three years between 2003 and 2007 from the sale of tyres, tubes and flaps.

Citing a number of earlier rulings the bench said, fixation of a value of the tender is entirely within the purview of the executive and the courts hardly have any role to play, unless it is arbitrary or unreasonable.

The bench said certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work.

"If the State or its instrumentalities act reasonably, fairly and in public interest in awarding the contract, here again, interference by court is very restrictive since no person can claim fundamental right to carry on business with the government," the bench observed.

PTI

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