INDIA BUSINESS WORLD SEPTEMBER (16^th - 30^th) 2007
The Month that was ...

COURT CAN REVIEW GOVT CONTRACTS TO ENSURE HEALTHY COMPETITION SUPREME COURT

THE Supreme Court has said the judiciary can review a contract awarded by the government to ensure healthy competition. This ruling may help corporates who feel wronged by a government decision.

A bench comprising Justice Arijit Pasayat and Justice S H Kapadia said the essence of the doctrine of level-playing field was to promote competition between bidders "so as to subserve the larger public interest."

"Decisions or acts, which result in unequal and discriminatory treatment, would violate the doctrine of level-playing field embodied in the Constitution," said the court while ruling in favour of Reliance Energy which moved the court after its disqualification from bidding for the Mumbai Trans- Harbour Sea Link project.

"When Article 19 confers the fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of level-playing field... however, subject to public interest," Justice Kapadia said in the verdict.

Losing bidders had knocked the court's doors in cases relating to the modernisation of Delhi and Mumbai airports and privatisation of Balco.

Underlining the importance of clarity in the terms and conditions for inviting tenders, the apex court said: "If there is vagueness or subjectivity in the said norms it may result in unequal and discriminatory treatment. It may violate the doctrine of level-playing field."

Citing the case of Reliance Airport Developers' petition against the Airports Authority of India, the court said it has been held that in matters of judicial review the basic test is to see whether there is any infirmity in the decision-making process and not in the decision itself.