Summary
The Supreme Court restored a hospital catering contract after the High Court substituted its interpretation of a labour-licence requirement for the tendering authority’s plausible reading. The tender, read as a whole, required a contract-labour licence, not merely registration of an establishment under the Orissa Shops Act. The allegation of mala fides lacked factual support. The successful bidder was to resume performance within one week.
Issues
- Whether the High Court could substitute establishment registration for the contract-labour licence required by the tendering authority.
- Whether mala fides justified interference with the tender award.
Provisions considered
- Section 4(1), Orissa Shops and Commercial Establishments Act, 1956Registration categorising an establishment was not equivalent to the labour licence required under this tender. (¶ 14)
- Section 1(4), including proviso, Contract Labour (Regulation and Abolition) Act, 1970The twenty-workman argument did not defeat the authority’s plausible tender interpretation; the proviso permits notified application below that number. (¶ 15)
Held
- Tender review examines the decision-making process rather than replacing the authority’s commercial assessment. Courts ordinarily defer to the author’s plausible interpretation, while retaining review for arbitrariness, perversity, bias or mala fides. Mere disagreement over interpretation is insufficient. (¶ 11-14)
- The staff recruitment, discipline and strike-contingency clauses supported the authority’s reading that bidders required a contract-labour licence. Registration under the Orissa Shops Act did not satisfy that requirement. (¶¶ 10, 14)
- The contention that the tender did not require twenty employees did not establish that it referred to Shops Act registration. Section 1(4)’s proviso also showed that the numerical threshold was not inflexible. No finding of an actual notification lowering the threshold was made. (¶ 15)
- The writ petition’s allegations, contrasted with the authority’s explanation of the evaluation and approval process, did not establish mala fides. The High Court’s contrary characterisation could not sustain displacement of the appellant’s contract. (¶ 16)
Result
Appeals allowed; High Court judgment set aside. Appellant to be restored within one week to complete performance under its agreement dated 27 November 2020.