M/s. Galaxy Transport Agencies, Contractors, Traders, Transports and Suppliers vs M/s. New J.K. Roadways, Fleet Owners and Transport Contractors and others. Special Leave Petition (Civil) 127/2020 decided on 18 December 2020.
Judgment Link: https://main.sci.gov.in/supremecourt/2020/22944/22944_2020_33_1501_25092_Judgement_18-Dec-2020.pdf
Cases relied on: Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., 2016 (16) SCC 818, Bharat Coking Coal Ltd. v. AMR Dev Prabha 2020 SCC OnLine SC 335, Silppi Constructions Contractors v. Union of India, 2019 SCC OnLine SC 1133, Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517, Montecarlo Ltd. v. NTPC Ltd., 2016 (15) SCC 272.
Cumulative Ratio. Judicial interpretation of contracts in the sphere of commerce stands on a distinct footing than while interpreting statutes. The courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable. The owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given.
The court does not sit like a court of appeal over the appropriate authority; the court must realise that the authority floating the tender is the best judge of its requirements and, therefore, the court’s interference should be minimal. The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity. With this approach in mind we shall deal with the present case.
A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a 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.
Compiled by S. Basavaraj, Advocate, Daksha Legal.
Daksha Legal 