RAUNAQ INTERNATIONAL LTD. versus I.V.R. CONSTRUCTION LTD. AND ORS .

Citation: [1998] SUPP. 3 S.C.R. 421 · Decided: 09-12-1998 · Supreme Court of India · Bench: SUJATA V. MANOHAR · Disposal: Appeal(s) allowed

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Judgment (excerpt)

..... 
1" . 
RAUNAQ INTERN A TI ON AL LTD. 
A 
v. 
1.V.R. CONSTRUCTION LTD. AND ORS . 
DECEMBER 9, 1998 
[MRS. SUJATA V. MANOHAR AND B.N. KIRPAL, JJ.] 
B 
Constitution of India, 1950: 
Article 226-lnterim stay in writ petition-Grant of-Power Project-
Tenders-Award of Contract to a party whose offer was lowest by relaxing C 
the qualijj;ing criteria- Challenge by rival party, not fulfilling the qualijj;ing 
criteria-No allegation of malafides or collateral reasons in awarding 
contract-Grant of interim stay by High Court-Validity of-Held, High 
Court not justified in granting interim stay-Court should not interfere 
unless there is overwhelming public interest involved or the contract is D 
entered into for malafide or collateral reasons-Relaxation if granted for 
bonafide reasons within the permissible limits of tender contracts, Courts 
should hesitate to intervene-Award of contract cannot be stayed at the 
instance of a party who does not faljil the requisite criteria and whose offer 
is higher-Party obtaining interim orders must be made accountable for the 
consequences and liable to compensate the public. 
E 
Articles 226 and 32-Public Interest Litigation-Scope and object of 
The Maharashtra State Electricity Board issued a Tender for design, 
engineering, manufacture, supply, erection and commissioning of large 
diameter piping system for its power project. In response, the Board received F 
tenders from several bidders including those of appellant and respondent 
companies. After screening, the Technical Director of the Board submitted 
a note for consideration of the Board of Directors stating that out of the 
offers received, four tenderers qualified as per the qualifying criteria, which 
included the respondent company. Two offerers including the appellant though G 
not meeting the qualifying requirements had dbne CW piping for 210 MW 
units. The respondent company though recommended by Technical Director 
fell short of the requisite experience by one year. The note also stated that 
the offer of appellant was Lowest .. The Board of Directors after considering 
the above note decided to accept the offer of appellant company and awarded 
421 
H 
422 
SUPREME COURT REPORTS [1998) SUPP. 3 S.C.R. 
A contract to it. On challenge, the High Court by interim order stayed the 
award of contract to the appellant. Hence the present appeals. 
Allowing the appeals, this Court 
HELD : 1. Court should not interfere under Article 226 of the 
B Constitution in dispute between two rival tenderers unless it is satisfied that 
there is a substantial amount of public interest involved or the contract is 
entered iiito for malafide or collateral reasons. In the instant case there is 
neither an overwhelming public interest in stopping the project nor there is 
any allegation of any malafides against any member of the Board . Thus, the 
C High Court was not justified in granting interim order of stay. 
[428-A; 434-B) 
2. The relaxation which the Board has granted to appellant is on valid 
principles looking to the expertise of the tenderer and his past experience. 
The respondent has challenged the contract only on the ground that the 
D appellant did not fulfil the qualifying criterion. But the challenger also does 
not fulfil the qualifying criterion. Therefore, any judicial relief at the instance 
of a party which does not fulfil the requisite criteria seems to be misplaced. 
Even if criteria can be relaxed for both, it is clear that the offer of appellant 
is lower and it is on this ground that the Board has accepted the offer of 
appellant. Thus, the award of tender cannot be stayed at the instance of a 
E party w!iich does not fulfil the requisite criteria itself and whose offer is 
higher than the offer which has been accepted. (433-F-H; 434-A) 
F 
3. Where there is an allegation of malafides or an allegation that the 
contract has been entered into for collateral purposes, and the court is 
satisfied on the material before it, that the allegation. needs further 
examination, the court would be entitled to entertain the petition. But even 
here, the court must weigh the consequences in balance before granting 
interim orders. Where the decision-making process has been structured 
and the tender conditions set out the requirements, the court is entitled to 
examine whether these requirements have been considered. However, if any 
G relaxation is granted for bonafide reasons, the tender conditions permit 
such relaxation and 

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