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Tata Motors Limited vs The Brihan Mumbai Electric Supply and Transport Undertaking (BEST) and Others

Civil Appeal · 2023 INSC 574Decided 19 May 2023
Civil Appeal No. 3897 of 2023
Dr. Dhananjaya Y. Chandrachud · Pamidighantam Sri Narasimha · J.B. Pardiwala · Narasimha

Background

BEST, Mumbai's public bus utility, floated a tender for supply and operation of 1,400 electric buses, requiring bidders to offer buses capable of running 200 km on a single charge. Tata Motors, an unsuccessful bidder, challenged the process before the Bombay High Court, arguing that the winning bidder, EVEY Trans Pvt. Ltd., did not meet the technical criteria and should not have been allowed to correct a clerical error in one submitted document (Annexure Y, a letter of undertaking) after the technical bids were opened. The High Court partly ruled against BEST and EVEY, prompting cross-appeals to the Supreme Court by Tata Motors (seeking to fully invalidate the award), EVEY, and BEST.

Decision Breakdown

The Supreme Court held that Annexure Y was a document required only from the successful bidder after evaluation (not part of the technical bid submissions themselves), so the tender's bar on adding or correcting documents after the technical bid opening did not apply to it, meaning BEST committed no illegality or favoritism in allowing EVEY to submit a corrected version to fix a clerical error. Relying on established precedent (Jagdish Mandal, Air India v. Cochin International Airport, and others), the Court reaffirmed that courts must exercise great restraint in second-guessing commercial tender decisions of the State and its instrumentalities, intervening only where there is overwhelming public interest, mala fides, or a gross/palpable illegality, not merely because a rival bidder disagrees with the process or the contract is already substantially underway. Since none of that was shown here, and unwinding an already-progressing 1,400-bus contract would cause serious public harm and cost, the Court set aside the part of the High Court's order invalidating the award to EVEY, dismissed Tata Motors' appeal, and allowed the appeals of EVEY and BEST.

Lesson Learnt

Courts will not lightly interfere in government tender and contract awards: a losing bidder must show real bad faith, favoritism, or a serious, obvious illegality (not just a technical or procedural quibble) before a court will step in and disturb a public contract, especially one already in the process of being executed.

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

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