Procurement Laws in India: An Amalgamation of Administrative Volition, Economic Acumen, and Legal Accountability

Author by: Adv. Devraj Singh, Palak Goel (Intern)

 

I. Introduction and Constitutional Framework

Procurement Laws in India are an amalgamation of administrative volition, economic acumen, and legal accountability. The procurement laws were carved out of Articles 298 and 299, which constitutionally authorise the Union and State governments to engage in trade or business, enter into contracts, and outline procedures for executing such contracts. In India, there is no unified code of procurement laws; rather, there are the General Financial Rules, 2017, as a regulatory framework with additional Manuals of Procurement: the Manual for Procurement of Goods, Second Edition, 2024, the Manual for Procurement of Works, 2019, the Manual for Procurement of Consultancy and Other Services, Second Edition, 2025 and the Manual for Procurement of Non-Consultancy Services, 2025. Along with these manuals, there are respective manuals for some major states.

 

II. Administrative Law and Judicial Review of Tenders

The Procurement laws enable the government to publish tenders as invitations for contracts; thus, they come within the purview of administrative law. The Supreme Court has held that judicial review is limited to certain principles of equality and reasonableness. Usually, the Supreme Court does not intervene in the scrutiny of decisions made by competent administrative bodies, as courts prioritise administrative expertise, commercial freedom, and the prevention of project delays over second-guessing technical choices. However, the Apex Court established certain grounds for judicial review of tender evaluation in the landmark judgment of Tata Cellular v. Union of India to ensure transparency, absence of arbitrariness and malfeasance. Moreover, the Court categorised tenders as offers and delineated the requisites of a valid tender. It also stated the dichotomy between powers of writ and appellate jurisdiction and the areas where the court can implement judicial review. The Court noted the grounds upon which an administrative action is subject to judicial review: (i) 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(infringing natural justice principles). The Court also reiterated the Wednesbury principle-the court noted that by reasonableness, the court doesn’t examine whether a decision prima facie is unreasonable, but whether any other administrative unit in the four corners of jurisdiction would have adopted the impugned decision or not. However, this definition of Wednesbury has been expanded to include the Doctrine of Proportionality. According to this doctrine, the administrative actions of the government should not infringe the fundamental rights of the citizens.

 The Apex Court has delineated that administrative entities of the government do not have any carte blanche; even though their decisions are immune from judicial scrutiny, their decision-making process is subject to Article 13 of the Indian Constitution. The principles that govern the procurement laws and tender evaluation are fairness, transparency, non-arbitrariness, and proportionality, derived from the Wednesbury Principle and Article 14.

 

III. Contractual Framework of Tenders

The contracts of tender furnished between the bidder and any entity are governed by the Indian Contract Act, 1872. As per Spencer v. Harding, invitations to tender were classified as an invitation to treat or an offer. Tenders differ depending on the document type and invitation method.  They may be classified by method of invitation into open tenders, published universally on portals such as the CPPP(Central Public Procurement Portal) for any eligible bidder; limited tenders, sent to a pre-approved panel for smaller or urgent purchases; single tenders, issued to one supplier for proprietary or emergency reasons; and global tenders, open to domestic and foreign bidders for large or high technology projects. By document type, they include the NIT(Notice Inviting Tender), the official invitation for bids; the RFP(Request for Proposal), used for consultancy or service contracts inviting proposed strategies and pricing; the RFQ, seeking price quotations for standardised goods; and the EOI(Expression of Interest), a pre-qualification step preceding a full RFP. Selection methods are similarly calibrated to project complexity: L1(Lowest Evaluative Responsive Bidder) awards the contract to the lowest priced technically qualified bidder and suits standard recurring purchases, QCBS(Quality and Cost-based Selection) scores bidders on both technical merit and cost using a fixed weightage such as seventy thirty and suits complex assignments, QBS(Quality Based Selection) prioritises technical quality with fees negotiated afterward, LCS(Least Cost Selection) awards the lowest bid among those crossing a minimum technical threshold, and FBS(Fixed Budget Selection) awards the bidder offering the best quality and scope within a fixed, non negotiable budget.

 

IV. Instances of Arbitrariness, Unfair Treatment, and Opaqueness in the Tender Process

It is commonly observed that even in public procurements, the tender process is misused in many ways. The following are instances of arbitrariness, unfair treatment and opaqueness experienced in the process.

1. The evaluation parameters are applied selectively or are ambiguous enough to create confusion among the bidders and can lead to unfair competition. (GFR)
2. The pre-bid clarifications are answered selectively.
3. The disqualification of bids happens on insignificant technical grounds which are overlooked in other bids.
4. The rationale behind the decision of disqualification of bid is not disclosed. The reasons for disqualification are vague, ambiguous, and unjustifiable.
5. There is a deviation from the tender’s rules and regulations. There is an explicit error in the calculation of scores and misinterpretation of the bid’s provisions by the evaluation committee.
6. There is arbitrary and manifest delay on the part of the authority entity during the performance of the contract for approval and dissemination of funds. The delay leads to the authority’s unilateral termination of the contract.
7. There is wrongful exclusion by the evaluation committee.

V. Remedies and Judicial Recourse

The remedies or recourses available to the aggrieved agency are to file a writ in the High Court under Article 226 for the pre-tender bottleneck, and the aggrieved can file civil suits or alternate dispute resolution for damages and a writ petition during and after the execution of the project. Due to the administrative classification of the procurement process, only judicial review is the recourse in the former case. However, judicial review many a times does not change or cancel the award; it only reviews the award-deciding process on the lines of Article 14. Even after finding arbitrariness, it orders the subordinate court to initiate proceedings under the Specific Relief Act for damages caused to the aggrieved party, instead of any re-tendering option. The rationale behind this practice of the Court is not to hamper the public welfare projects, as well as not to alienate the right to damages of the aggrieved tenderer under private law’s contractual disputes.  However, there have been cases where the Court exercised judicial restraint due to the progression of the project and to discourage the probable prolonged delay maybe caused by the injunction order of the Court to safeguard public interest. This ensures that the aggrieved has ample opportunity for indemnity. In the latter case of post-tender, the case can be addressed by the Court even in the progression of projects when there is explicit evidence of arbitrariness. So, to avoid judicial restraint, as noted by the Apex Court in several precedents, time is of the extreme essence in cases involving public interest. Moreover, the tenders which are for a period of 3-6 months, so in between, if there is a delay in approval or instalments by the authorities, then, as per the present recourse to claim damages, the aggrieved agency has to wait a minimum of 3-4 years for the verdict of the writ courts and civil courts, which is uncertain regarding damages. In the meantime, the aggrieved party has to incur losses, and it may end up in insolvency. The aggrieved party should file a complaint with the Central Vigilance Commission and on the CM Jansunwai Portal and the CP-GRAMS portal to avoid judicial restraint due to temporal delay and to establish malfeasance on the part of the authority. Additionally, along with civil and writ cases, one can file a Right to Information application to the concerned department regarding the pending instalments and the reason behind bid rejection, etc reasons.

 

VI. Conclusion and Recommendations

This article recommends that principles of fairness, transparency, and public interest should be given utmost importance, but the aggrieved agencies’ indemnity should be given equal importance to achieve the objectives of Articles 298 and 299 of the Indian Constitution through establishment of proper specialised tribunals or courts for rapid disposal of justice in procurement-related cases. Moreover, to minimise the several objections of unsuccessful bidders and to facilitate transparency, a proper mechanism for bid evaluation should be laid down.