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Jaipur Vidyut Vitran Nigam Ltd. & Ors. vs MB Power (Madhya Pradesh) Limited & Ors.

Not available · 2024 INSC 23Decided 8 Jan 2024
Not available
Justice B.R. Gavai · Justice Prashant Kumar Mishra

Background

Rajasthan's power distribution utilities ran a competitive bidding process under the Electricity Act's Competitive Bidding Guidelines to procure 1000 MW of electricity. MB Power was not an original successful bidder, but after litigation concerning a higher-ranked bidder (SKS Power, ranked L-5) whose rates were found not "market aligned," MB Power (ranked lower, at L-7) sought to be brought into the procurement instead. The Rajasthan High Court allowed MB Power's writ petition and directed the state utilities to purchase 200 MW of power from MB Power (via PTC India) at MB Power's higher quoted tariff, with an interim tariff pending final resolution of a related appeal already before the Supreme Court.

Decision Breakdown

The Supreme Court held that the Bid Evaluation Committee's decision-making process, rejecting the L-5 bidder's rates as not market-aligned, was conducted properly and in line with established principles (citing Tata Cellular), and that courts under Article 226 should intervene in procurement/tendering decisions only where there is arbitrariness, mala fide, or irrationality in the decision-making process, not merely because a different outcome seems arguable. Since MB Power's quoted tariff was even higher than the rejected L-5 bidder's, forcing the state utilities to buy power at that rate would impose a financial burden of potentially thousands of crores of rupees, ultimately passed on to consumers: contrary to the public and consumer interest that courts must weigh before issuing a mandamus compelling a contract. The Court therefore quashed the High Court's judgment (and a related APTEL order built on it), allowed all connected appeals, and ordered MB Power to pay costs of Rs. 5 lakh in each of two of the appeals.

Lesson Learnt

Courts exercising writ jurisdiction over government tenders and procurement decisions should defer to a fair and lawful decision-making process rather than substitute their own commercial judgment, especially where intervening would burden public finances and, ultimately, ordinary consumers.

Official source (sci.gov.in)View Judgment (PDF)

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