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transparency and fairness and provide room for manipulation to suit the whims of the State agencies in picking and choosing a bidder for awarding contracts as in the case of distributing bounty or charity. In our view such approach should always be avoided. Where power to relax or waive a rule or a condition exists under the rules, it has to be done strictly in compliance with the rules. We have, therefore, no hesitation in concluding that adherence to the ITB or rules is the best principle to be followed, which is also in the best public interest.” (emphasis ours)


In Asia Foundation & Construction Ltd. vs. Trafalgar House Construction (I)

Ltd.; (1997) 1 SCC 738, the Supreme Court observed:


  • …………

    We are of the considered opinion that it was not within the permissible

limits of interference for a court of law, particularly when there has been no allegation of malice or ulterior motive and particularly when the court has not found any mala fides or favoritism in the grant of contract in favour of the appellant. In Tata Cellular v. Union of India (1994) 6 SCC 651 this Court has held that: “The duty of the court is to confine itself to the question of legality. Its concern should


  • 1.

    Whether a decision-making authority exceeded its powers,

  • 2.

    committed an error of law,

  • 3.

    committed a breach of the rules of natural justice,

  • 4.

    reached a decision which no reasonable tribunal would have reached or,

  • 5.

    abused its powers.

Therefore, it is not for the Court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:


Illegality: This means the decision-maker must understand correctly the law that

regulates his decision-making power and must give effect to it;

  • (ii)

    Irrationality, namely, Wednesbury unreasonableness.

  • (iii)

    Procedural impropriety.

The above are only the board grounds but it does not rule out addition of further grounds in course of time.”


Therefore, though the principle of judicial review cannot be denied so far as

exercise of contractual powers of government bodies are concerned, but it is intended to prevent arbitrariness or favouritism and it is exercised in the larger public interest or if it is brought to the notice of the Court that in the matter of award of a contract power has

been exercised for any collateral purpose…………..


Now, coming to the rival submissions in the instant case, it is seen that the

stipulations in the RFQ provided for a “Conflict of Interest” clause i.e. Clause 2.2.1(c), whereby it was postulated that any applicant having a cross holding with another applicant or its consortium partners, in excess of one per cent was disqualified from participating in the tender. It is an admitted position that Abertis, a constituent of the

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