UFLEX LTD. versus GOVERNMENT OF TAMIL NADU & ORS.

Citation: [2021] 7 S.C.R. 571 · Decided: 17-09-2021 · Supreme Court of India · Bench: SANJAY KISHAN KAUL · Disposal: Appeal(s) allowed

Cited by 4 judgment(s) · cites 9 · see the full citation network in Lexace

Judgment (excerpt)

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UFLEX LTD.
v.
GOVERNMENT OF TAMIL NADU & ORS.
(Civil Appeal Nos.4862-4863 of 2021)
SEPTEMBER 17, 2021
[SANJAY KISHAN KAUL AND HRISHIKESH ROY, JJ.]
Government contract: Tender – Award of – Scope of judicial
review – Held: Transparency is always required in such tenders
because of the nature of economic activity carried on by the State –
However, contours to examine are restricted – Objective is not to
make the Court an appellate authority to scrutinize as to whom the
tender should be awarded – Economics must be permitted since the
tendering authority knows best as to what is suited in terms of
technology and price for them – In commercial tender matters there
is an aspect of commercial competitiveness – Merely because a
company is more efficient, obtains better technology, makes more
competitive bids and, thus, succeeds more cannot be a factor to
deprive that company of commercial success on that pretext –
Furthermore, for every succeeding party who gets a tender there
may be parties who are not awarded the tender as there can be only
one lowest tender – On facts, issuance of notice inviting tender for
supply of polyester bases hologram excise labels to be pasted across
the caps of bottles of liquor sold by the State Government with
various technical specifications and eligibility criteria – Two
prospective tendering parties challenged the tendering process –
Single Judge of the High Court dismissed the writ petitions –
However, the Division Bench of the High Court by directing the
State to float a fresh tender, erred in almost sitting as an appellate
authority on technology and commercial expediency which is not
the role which a Court ought to play – It appears that the two
prospective tendering parties endeavoured to continuously create
impediments in the way of the succeeding party merely because they
could not succeed – When the concerned Committees were looking
into the suggestions of the prospective parties, the parties moved to
the court – Few issues raised by the parties have already been
addressed by the Committees – Thus, the order passed by the
[2021] 7 S.C.R. 571
571
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SUPREME COURT REPORTS
[2021] 7 S.C.R.
Division Bench cannot be sustained and is set aside – Constitution
of India – Art. 226.
Costs: Commercial matters – Award of costs – Held: Usually
the judicial system hesitates to impose costs, presuming it to be a
reflection on the counsel – In a tussle for enforcement of rights
against a State different principle apply – However, in commercial
matters costs must follow the cause – Tender jurisdiction was created
for scrutiny of commercial matters – If parties continuously seek to
challenge award of tenders, the succeeding party must get costs
and the party which loses must pay costs – On facts, parties litigating
are financially strong and took a commercial decision to carry the
dispute right up to this Court – They must face the consequences
and costs of success or failure in the present proceedings –
Furthermore, the instant proceedings do arise from a writ proceeding
u/Art. 226 but it is really a commercial dispute, thus, the failing
party cannot contend that the present dispute is a writ proceeding –
Actual costs quantified on the basis of the bill of fee and costs –
Issuance of direction to the respondent companies to pay Rs 23
lakh to the appellant-successful tenderer, and Rs 7.5 lakhs to State
Government for defending the litigation.
Costs: Award of – Principles prevailing in England, United
States of America, Australia, Hong Kong and Canada while awarding
Costs in Civil litigation and Commercial litigation – Stated.
Allowing the appeals, the Court
HELD: 1.1 In commercial tender matters there is an aspect
of commercial competitiveness. For every succeeding party who
gets a tender there may be parties who are not awarded the tender
as there can be only one L-1. The question is should the judicial
process be resorted to for downplaying the freedom which a
tendering party has, merely because it is a State or a public
authority, making the said process even more cumbersome.
Element of transparency is always required in such tenders
because of the nature of economic activity carried on by the State,
but the contours under which they are to be examined are
restricted. The objective is not to make the Court an appellate
authority for scrutinizing as to whom the tender should be
awarded. Economics must be permitted to play its role for which
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the 

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