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KEY TAKEAWAYS

  • When the State is bringing up allegations of financial loss or defence through public interest onus vests on the State and it is bound to produce evidence in material facts and numbers.
  • Fairness and bona fide standard embedded in contracts is applicable to all parties to a contract. They are bound to fulfil the agreement that they have entered into. As upholding the principles of Law as well as equity. This obligation has no exemption for State, who can be a party to a contract.
  • Sheer reasoning of “Public Interest” cannot be used to revoke the work done by the previous regime. As it leads to jeopardizing the public interest in the long run.
  • Such abuse of bureaucratic power would result in the reluctance of businessmen to engage in government contracts comprises.
  • Public authorities have a responsibility to maintain the Right to Equality under Article 14 of the Constitution, Fairness, Arbitrariness and to maintain zero favouritism in the process of transparent bidding for government contracts
  • The decision was made by the division bench represented by Honourable Chief Justice N V Ramana, Justice Vineet Saran and Justice Surya Kant.

BACKGROUND

  • Tender was called by the City and Industrial Development Corporation of Maharashtra (CIDCO) to lease a certain property (land) for infrastructural development.
  • Metropolis Hotels bid on this tender which was objected by Indian Hotels Company Ltd. Yet, the CIDCO officials rejected the objection and proceeded with the former as it was the highest bidder.
  • Letter of allotment issued by CIDCO officially confirmed the winning of bid. Later due to the global pandemic and recession, there were a couple of requests to change in use of land made to the CIDCO which got accepted.
  • Due to complaints made to CIDCO regarding alteration from the terms and conditions a preliminary inquiry was held by the officials of the Urban Development Authority.
  • According to its findings, the aforementioned allotments for winning bids got cancelled.
  • The decision was challenged by the said Companies and the High Court quashed the cancellations as the authority was initially granted by CIDCO and failed to provide factual evidence and figure on behalf of CIDCO and on the basis of Estoppel.
  • Said decisions were appealed by CIDCO in the Supreme Court.

OBSERVATIONS OF THE SUPREME COURT

  • Dissolving over hyper-technical reasons cannot be granted for being contrary to the doctrine of fairness.
  • Initiating the tender process therein after receiving money from the selected bidders and changing tender allotment is an act of abusing bureaucratic power.
  • Further, the mere use of the ground of public interest or financial loss caused to treasury cannot redeem the decisions taken by the previous regime; unless factual and figurative evidence is provided.
  • The Constitution, in the chapter of Fundamental rights strongly establishes the guarantee against arbitrariness by ensuring the exercise of a transparent, fair process.
  • Even in the instance of public interest demand is contradictory a degree of consideration should be given to private legitimate expectations.
  • In conclusion of the above findings the Supreme Court Division Bench held that the appeals made by (CIDCO) City and Industrial Development Corporation of Maharashtra and others, Sanjay Kumar Surve were dismissed.

QUESTIONS

  • What are your thoughts on revoking decisions by governmental institutes due to a change of regimes?
  • Do you think such decisions affect macroeconomics?
  • Should the Doctrine of Estoppel be given more recognition by exercising?
  • Do you believe the view taken by the Supreme Court rendered Justice?

Drop your questions & opinions in the comments section below.

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