Introduction
Across public procurement and PPP projects in India, allegations that eligibility criteria and technical specifications are "tailor‑made" is a recurring exercise with worrying frequency. The pattern is familiar: an authority drafts restrictive/broad specific conditions; floats the tenders in public domain; competitors/participants face prejudice; writ petitions seek to stall the process; and courts are asked to test the fairness of what is, at its core, an administrative and executive decision. When tailor-made tender conditions effectively foreclose competition or imperil the level playing field, courts have stepped in to meet the ends of justice.
This article dissects the exercise of tailor-made tender conditions and how the tailor‑made clauses unleash a chain reaction as they compel pre‑bid disputes, multiple litigation arises requiring interference of courts to review the procurement minutiae they would rather avoid which is targeted and limited early judicial scrutiny limited to rule out cases of bias, fraud or mala fide intent.
Meaning of "tailor‑made" Tender conditions
For the purposes of tender process, "tailor‑made" conditions are such eligibility criteria, specifications, financial criteria, experience thresholds, or bespoke technical standards that (a) travel beyond what is necessary for the project's legitimate objectives and (b) in effect favour a specific bidder and/or oust plausible competitors/bidders. Article 14 of the Constitution of India provides a fundamental right that guarantees equality before the law and equal protection of the laws and inherently prohibits arbitrary state action. The principle of non-arbitrariness, as established by the Hon'ble Supreme Court, ensures that state actions are fair, just, and reasonable, preventing discrimination based on whims or personal preferences. Further, Article 19(1)(g) of the Constitution of India provides a fundamental right that all citizens have a right to practise any profession, or to carry on any occupation, trade or business. Article 14 coupled with Article 19(1)(g) underpins the Doctrine of Level Playing Field in tendering process.1
Scope of judicial interference in administrative decisions of the Government
Presence of mala fides, intention to favour someone or arbitrariness, irrationality or perversity are the factors which lead to interference of the constitutional court with the decision making process or the decision.2 In Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium)3, the Hon'ble Supreme Court, relying on a host of decisions, held that if the decision making process is mala fide or is intended to favour someone, then interference of courts is permissible. The Hon'ble Court further held that the decision of the authority can be interfered with by the court if such decision taken is so arbitrary or irrational that the court could examine and observe that such decision taken is one which no responsible authority acting reasonably and in accordance with law could have reached at.
When Courts have intervened
Doctrine of Level Playing Field
In Reliance Energy Ltd. v. MSRDC4, the Hon'ble Supreme Court articulated the level playing field doctrine as part of constitutional doctrine and insisted on legal certainty in norms to avoid discriminatory outcomes. The Hon'ble Court, whilst finding merit in the appeal, held that Article 14 is not a free-standing provision and it has to be coupled with the fundamental rights conferred in Article 21 of the Constitution of India. It also reiterated the nine-judge bench judgment in the case of I.R. Coelho vs. State of Tamil Nadu that Article 14 and Article 21 of the Constitution is the heart of the chapter on fundamental rights. The Hon'ble Court held that "Article 14 of the Constitution embodies the principle of "non-discrimination". However, it is not a free-standing provision. It has to be read in conjunction with rights conferred by other articles like Article 21 of the Constitution. The said Article 21 refers to "right to life". In includes "opportunity". In our view, as held in the latest judgment of the Constitution Bench of nine-Judges in the case of I.R. Coelho vs. State of Tamil Nadu (2007) 2 SCC 1, Article 21/14 is the heart of the chapter on fundamental rights. It covers various aspects of life. "Level playing field" is an important concept while construing Article 19(1)(g) of the Constitution. It is this doctrine which is invoked by REL/HDEC in the present case. When Article 19(1)(g) confers fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of "level playing field". We may clarify that this doctrine is, however, subject to public interest." The Hon'ble Court has further held that "Decisions or acts which results in unequal and discriminatory treatment, would violate the doctrine of "level playing field" embodied in Article 19(1)(g). Time has come, therefore, to say that Article 14 which refers to the principle of "equality" should not be read as a standalone item, but it should be read in conjunction with Article 21 which embodies several aspects of life." Further, the Court has opined that "Article 14 applies to government policies and if the policy or act of the government, even in contractual matters, fails to satisfy the test of "reasonableness", then such an act or decision would be unconstitutional."
Thus, the said principle in Reliance Energy Ltd. (supra) held to be applicable in tailor-made tender conditions.
Decision Oriented Systematic Analysis (DOSA)
In Uflex Limited vs. Government of Tamil Nadu5, whilst the Hon'ble Supreme Court observed that the judicial review of contractual matters has its own limitations, however, it relied on the principles of 'Decision Oriented Systematic Analysis' (DOSA) whilst examining the aspect of whether the terms and conditions envisaged in the tender documents have been so tailor made to suit convenience of prospective bidders/participants. The Hon'ble Court observed that to reap the benefit of tailor-made clauses and award a particular contract to a bidder, reverse engineering process is evolved to achieve that objective by making the tender conditions such that only one party may fit the bill and such an endeavour has been categorized as DOSA.
The Hon'ble High Court at Calcutta analysed the issue of modification of tender conditions, after bid submissions, which favoured a specific bidder and acknowledged the legal framework allowing judicial review of tenders under specific circumstances and criticized the alteration of tender conditions after the bid submission as arbitrary and against the principles of fair competition. The Hon'ble Court further observed that the impugned resolution after modification of tender conditions solely favour a specific bidder and thereby, declaring it as arbitrary, unreasonable and tailored to suit specific interests.6
The 'chain reaction' – How tailor-made clauses emanate disputes
It has been observed that once a tailor-made clause is introduced in a tender document, the prospective bidders/participants, initially, opt for raising such issues through pre-bid queries and representations and invoke the writ jurisdiction of Courts seeking quashing/stalling the process of tender through writ petitions. In Uflex Limited (supra), the Hon'ble Supreme Court contextually discussed and held that "The enlarged role of the Government in economic activity and its corresponding ability to give economic 'largesse' was the bedrock of creating what is commonly called the 'tender jurisdiction'. The objective was to have greater transparency and the consequent right of an aggrieved party to invoke the jurisdiction of the High Court under Article 226 of the Constitution of India (hereinafter referred to as the 'Constitution'), beyond the issue of strict enforcement of contractual rights under the civil jurisdiction."
Author's Note & Conclusion
The law does not forbid the minimum eligibility criteria envisaged in tenders as employer/authority deems fit; however, it strictly forbids arbitrariness and discriminatory nature of tenders tailored to benefit and/or oust bidders from a transparent competition, thereby violating the doctrine of level playing field. PPP projects often rely on a multi-step bidding process with issuance of NIT, ITB, RFQ, RFP, pre-bid queries, LoA etc. and yet, the tailor-made clauses are incorporated at the stage of RFQ/RFP either by narrowing the eligibility experience that only bidders or their affiliates qualify or by setting the financial parameters such as turnover/net-worth with are not aligned with the basic requirements of the projects. Tailormade clauses, whether by deliberation or inadvertence, undermine the fairness of competition in public-private partnership and invites un-avoidable litigation. Further, disqualification of bidders without rationale to under-cut competition invites litigation. The balance to strike is clear i.e. reasonable justification for every restrictive criterion mentioned in the tender document, rigorous adherence to model frameworks and draft contracts, and requirement of judicial intervention where the tailor-made clauses in the tender reveals arbitrariness, mala fide intent, or legal error and the said balance shall safeguard the public function with utmost diligence.
Footnotes
1 Reliance Energy Ltd. v. MSRDC, (2007) 8 SCC 1
2 Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., (2016) 16 SCC 818
3 (2016) 8 SCC 622
4 (2007) 8 SCC 1
5 (2021) SCC Online SC 738
6 Saheli Nandi v. Union of India, 2023 SCC OnLine Cal 4953.
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