M J Antony: Frontiers of judicial review

OUT OF COURT

Supreme Court vows that the power will not be invoked to decide contractual disputes or to protect private interest at the cost of public interest.

The Supreme Court expanded the power of judicial review last week, creating a flutter in the executive and among the law-makers. However, the good news for the administrators is that a few other judgements delivered by the court in recent days have spared government's action in contractual and commercial matters. It has sworn again that the judiciary would not interfere in policy matters unless there was gross inequity.

"The expansive role of courts in exercising its power of judicial review is not in dispute, but each case must be decided on its own facts," the Supreme Court said in its judgement, Ramachandra Murarilal vs State of Maharashtra. In fact, the apex court criticised some high courts for meddling in commercial matters without justification.

In the above case, several parties bid for the development of the Bandra Kurla complex in Mumbai. The metro authorities decided to reject all the tenders. This led to litigation in the Bombay high court and the Supreme Court. The high court gave several reasons to uphold the metro authorities' decision. It said that it could not review the functions of metropolitan development authorities in a writ petition. These authorities consist of persons with expertise and skill in the respective fields. Therefore their decisions could not be faulted in a petition. On appeal, this stand was largely upheld by the Supreme Court.

It reaffirmed the view expressed in the 1995 judgement in the New Horizons Ltd case that the court would not substitute its views with that of the statutory authority. "The court in a case like this must exercise judicial restraint. It may be one thing to say that having regard to public interest, the court may itself invite bids so as to verify the justification of accepting a palpably lower bid as was done in 1985 in Ram & Shyam Co, but it is another thing to say that the court would, under all circumstances, not allow a play in the joint in favour of the employer," the Supreme Court emphasised.

In another judgement, Nagar Nigam, Meerut vs Al Faheem Meat Exports Ltd, the Supreme Court set aside the ruling of the Allahabad high court which asked the corporation to allow the meat export company to run a slaughter house for ten years. Earlier, the corporation had floated tenders for modernising the abattoir and the company had given its project. However, the corporation advertised for new bids. This was struck down by the high court. The corporation therefore moved an appeal in the Supreme Court. It termed the high court directions "totally unwarranted".

The Supreme Court judgement said, "The jurisdiction of the high court to entertain an application in the nature of a public interest litigation is well-known but it is trite that the court should exercise its jurisdiction only when it is essential to do so. It is also trite that ordinarily, the high court would not interfere in an administrative action of the state unless it is, inter alia, found to be contrary to a legislative policy or arbitrary, attracting the wrath of Article 14 of the Constitution (equality and non-arbitrariness). The jurisdiction of the high court is limited in this regard." Contracts should not be given by private negotiation, but by open public auction after giving wide publicity. In this case, the private negotiation was conducted by the high court itself, which was impermissible. It was not for the high court to fix the terms and conditions of the contract.

The court asserted that "save and except in some very rare and exceptional case, the question of fixing any terms of the contract or laying down the terms and conditions is for the concerned authority to decide, and it is not a matter within the domain of the courts."

The judgement in Jagdish Mandal vs State of Orissa was even more categorical. It said, "Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some procedural violation, should be resisted."

Evaluating tenders and awarding contracts are essentially commercial functions. The principles of equity and natural justice stay at a distance, the judgement pointed out. If the decision relating to the award of contracts is bona fide and is in public interest, courts will not interfere even if a procedural aberration or error in assessment or prejudice to the tenderer is made out. "The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest or to decide contractual disputes," according to the court. Such disputes should therefore, be resolved in the civil courts. These are strong and clear words and the principle would speed up overall development, especially infrastructure projects, where litigation is a huge roadblock.