A. Precedents Cited
i. Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd.
The Court relied on Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd. (2016) 16 SCC 818 to reaffirm that
tender decisions should not be interfered with unless the process is mala fide, intended to favour someone,
or so arbitrary/irrational that no reasonable authority could have reached it—i.e., it must be perverse,
not merely “faulty or incorrect or erroneous”.
This authority was used to reject the High Court’s approach of treating a tiny scoring delta as a sufficient basis to undo an awarded and executed contract,
particularly when the High Court itself did not find arbitrariness or illegality in GPPC’s process.
ii. Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium)
Quoted through Afcons, Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium) (2016) 8 SCC 622 reinforced the narrow gate
for judicial interference: the court’s role is supervisory over legality, not appellate over merits.
In STEAG, the Supreme Court treated the High Court’s “winner selection” exercise as crossing from review into substitution.
Montecarlo Ltd. v. NTPC Ltd. (2016) 15 SCC 272 was deployed to emphasize:
(a) modern tenders often involve complex technical assessments best left to experts/consultants; and
(b) courts must apply a principle of restraint—technical comparison by courts is “impermissible” unless the process is arbitrary or mala fide.
The judgment echoes Montecarlo’s articulation of “free play in the joints”: owners must have operational flexibility to achieve the tender’s purpose
(timely, workable, realistic outcomes), which should not be defeated by rigid judicial second-guessing.
iv. Tata Motors Ltd. v. Brihan Mumbai Electric Supply & Transport Undertaking (BEST)
From Tata Motors Ltd. v. Brihan Mumbai Electric Supply & Transport Undertaking (BEST) (2023) 19 SCC 1, the Court reiterated that
courts should not use a “magnifying glass” to inflate small issues into decisive flaws and must preserve “fair play in the joints”
in government contracting—especially where technical issues are involved.
In STEAG, this principle supported the Court’s view that a judicial remedy is not found in mathematical rigidity where bids are highly competitive and
margins are naturally slim.
The Court referenced Silppi Constructions Contractors v. Union Of India (2020) 16 SCC 489 to highlight public interest considerations:
courts should be slow to derail a tender once the contract is underway; delays harm public projects and may cause loss to the public exchequer.
This supported the Supreme Court’s criticism that the High Court (and the litigating bidders) lost sight of GPPC’s operational imperative:
the existing O&M arrangement was ending in June 2025, and transition/mobilisation required timely certainty.
vi. Assn. of Registration Plates v. Union of India
Through Silppi, the Court also invoked Assn. of Registration Plates v. Union of India (2005) 1 SCC 679 to reiterate that even where
some defect exists, writ discretion should be exercised with caution; intervention should be driven by overwhelming public interest,
not merely the availability of a legal point.
B. Legal Reasoning
i. The Court’s core holding: review is not substitution
The Supreme Court’s decisive move was to reframe what the High Court did: it did not merely enforce a tender clause; it effectively
re-awarded the contract by applying the QCBS formula itself and concluding that the writ petitioner must win because its total score
was marginally higher after re-evaluation. The Supreme Court held this to be incompatible with the limited scope of judicial review in tender matters.
ii. “Highest score” clause does not convert courts into tender-evaluators
The tender stated: “The successful bidder will be the one who has highest score (S).”
The Supreme Court accepted the clause’s existence but stressed an institutional point: the entity empowered to “consider” and apply this in context is
the Owner (GPPC), not the court.
The Court anchored this in the broader idea that owners require “fair play in the joints” and operational flexibility. It also highlighted clause 23.1
reserving GPPC’s right to accept/reject any bid and cancel the process prior to award—illustrating that tendering is not a mechanical arithmetical exercise
divorced from administrative judgment and public interest constraints.
iii. Marginal differences in competitive tenders: courts should avoid rigid mathematical finality
The High Court had found the difference “minuscule” (about 0.002). The Supreme Court accepted the practical point advanced for the writ petitioner:
where tender conditions constrain price ranges, differences will naturally be small. But it rejected the idea that the judicial solution lies in
“mathematical precision or application of rigid formulae”.
The Court instead advocated a nuanced judicial posture: ensure integrity and legality, but avoid binary judicial “winner selection”
where no mala fides/arbitrariness is shown, especially after award and contract execution.
iv. Timing, mobilisation, and public interest: the “owner’s needs” are not peripheral
A notable feature of the judgment is its insistence that judicial review must remain alert to the owner’s operational needs and transition timelines.
Here, STEAG had mobilised; the contract had been executed; and more than a year had passed in litigation-induced uncertainty.
The Supreme Court treated these facts as reinforcing restraint, particularly absent any serious illegality.
v. Re-evaluation ordered by the High Court: cooperation by counsel is not a gateway to deeper intervention
The High Court’s re-evaluation direction led to a report that reduced STEAG’s marks from 10 to 8 under item 3 of clause 20.2(B),
creating a technical tie. The Supreme Court observed that the High Court’s reliance on the fact that GPPC’s counsel had agreed to re-evaluation
could not justify an “intense inquiry” beyond settled principles. Counsel cooperation is part of good practice; it does not lower the threshold
for judicial interference.
vi. Limited interference maintained on the separate issue (sea water system marks)
The Supreme Court declined to disturb the High Court’s findings on STEAG’s claim for additional marks under clause 4 of 20.02(B),
describing the High Court’s conclusion as factually correct and based on a reasonable interpretation.
This illustrates the Court’s calibrated approach: it was not endorsing STEAG across the board, but correcting what it saw as an overreach in
contract re-award.