SC seeks ₹30L as deposit from firms after challenge to award of tender

NEW DELHI: To prevent frivolous litigants from challenging award of tender processes before high courts, the Supreme Court on Friday set an example by directing deposit of over ₹30 lakh towards litigation costs and other expenses incurred by the successful bidder and the Tamil Nadu government in defending multiple rounds of litigation over a state government tender issued in October last year for supply of hologram excise labels on liquor bottles sold by the state.

The top court also set aside the Madras high court order of April 29, directing the state to float fresh tenders with generic specifications and noted the present reality where every tender is challenged before court either by parties who did not take part in bidding or in public interest litigations. The court cautioned high courts from falling into an error by sitting as an “appellate authority” on technology and commercial expediency in tender matters and said that the courts should only consider whether the choice of decision to award the tender was “lawful” and not whether it was “sound”.

Justifying the award of costs, the bench of Justices Sanjay Kishan Kaul and Hrishikesh Roy said, “There seems to be often hesitancy in our judicial system to impose costs, presuming as if it is a reflection on the counsel. This is not the correct approach. In a tussle for enforcement of rights against a state, different principles apply but in commercial matters costs must follow the cause,” it observed.

Based on counsel fees and other actual expenses incurred by the successful bidders – Uflex Limited and Montage Enterprises – as well as Tamil Nadu Government, the bench ordered the corporate entities – Kumbhat Holographics and Alpha Lasertek India LLP – who challenged the tender before the high court to equally share the burden of costs of over ₹23.25 lakh to the successful bidders and ₹7.58 lakh to the state government within four weeks. The bench said, “...where continuously parties seek to challenge award of tenders, we are of the view that the succeeding party must get costs and the party which loses must pay costs.”