Supreme Court expunges High Court’s observations on tender discrimination: Union of India vs. Bharat Fritz Werner Limited (2022)

Date of the Judgment: 17 February 2022
Citation: (2022) INSC 166
Judges: Justice M.R. Shah and Justice B.V. Nagarathna

Can a High Court make sweeping remarks about discrimination in government tenders without fully examining the merits of the case? The Supreme Court of India recently addressed this question in an appeal against a Delhi High Court order. The High Court had made observations about potential discrimination against Indian manufacturers in a tender process, even though it did not rule on the merits of the case. The Supreme Court, in this judgment, clarifies the boundaries of judicial commentary in such matters.

The judgment was delivered by a two-judge bench comprising Justice M.R. Shah and Justice B.V. Nagarathna. The opinion was unanimous, with Justice M.R. Shah authoring the judgment.

Case Background

Bharat Fritz Werner Limited (respondent no. 1) filed a writ petition before the High Court of Delhi challenging the Letter of Acceptance dated 05.06.2020, issued by the Union of India (appellant) in favor of respondent no. 2. This Letter of Acceptance was related to a tender for Lot No. 3, ICB Ref. No. 21/TCSP/GOODS/P41/2018/TR/TC (Package-41). The High Court, noting that considerable time had passed since the tender award, chose not to interfere with the proceedings. However, it allowed the petitioner to raise their grievances in separate civil proceedings.

Despite not ruling on the merits of the case, the High Court made certain observations regarding the evaluation of bids and potential discrimination against Indian manufacturers. The High Court referred to a previous case, Macpower CNC Machines Limited v. Union of India [W.P. No. 3942/2020], where it had found merit in similar claims of discrimination. The High Court suggested that the matter required serious consideration at the highest level, given the government’s emphasis on “Make in India (Atma-Nirbharta).”

The Union of India, feeling aggrieved by these observations, filed the present appeals seeking to have these remarks expunged.

Timeline

Course of Proceedings

The High Court of Delhi, while disposing of the writ petition filed by Bharat Fritz Werner Limited, did not delve into the merits of the case. Instead, it allowed the petitioner to pursue their claims through a civil suit. However, the High Court made observations regarding potential discrimination against Indian manufacturers, referring to a previous case where it had found merit in similar claims. The Union of India, aggrieved by these observations, appealed to the Supreme Court seeking to expunge these remarks.

Legal Framework

There is no specific legal provision discussed in the judgment. However, the Supreme Court’s decision revolves around the principle of judicial restraint and the appropriate scope of judicial observations, particularly in cases where the merits of the matter have not been fully examined.

Arguments

The Union of India, represented by Shri Balbir Singh, Additional Solicitor General of India, argued that the observations made by the High Court were unwarranted. They contended that the High Court did not decide the writ petition on merits and should have restricted itself to the controversy between the parties. Furthermore, they argued that general observations about discrimination against Indian bidders should not have been made based on a single case.

Shri Gaurav Juneja, representing respondent no. 1, did not make any specific arguments in relation to the observations made by the High Court.

Issues Framed by the Supreme Court

The Supreme Court did not frame any specific issues. However, the core issue before the court was whether the High Court’s observations regarding discrimination in the tender process were warranted, given that the High Court did not decide the case on its merits.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following case:

• Macpower CNC Machines Limited v. Union of India [W.P. No. 3942/2020] – High Court of Delhi: The High Court referred to this case, where it had found merit in claims of discrimination against Indian manufacturers.

Judgment

The Supreme Court held that the observations made by the High Court were unwarranted. The Court emphasized that the High Court did not decide the writ petition on merits and should have restricted itself to the controversy between the parties. The Court also noted that general observations about discrimination should not be made based on a single case.

The Supreme Court expunged the following observations made by the High Court:

“..We also permit the petitioner to make a representation addressed to the Hon’ble Prime Minister of India highlighting the aspects with regard to wrongful evaluation of the bids and discrimination meted out to some of the bidders. In case such a representation is made, we request the PMO to ensure that the same receives the attention of the Hon’ble Prime Minister of India. We are inclined to grant this liberty to the petitioner in the light of the fact that the petitioner is an Indian manufacturer and we had earlier found merit in the claim of the petitioner in Macpower CNC Machines Limited v. Union of India [W.P. No. 3942/2020] that Indian bidders are being discriminated against, even though the tender conditions itself stipulated that Indian manufacturers would be given preference. Keeping in view the fact that the Government of India is laying emphasis on “Make in India (Atma-Nirbharta), the grievances of the petitioner appear to be correct and, in our view, require serious consideration at the highest level.”

The Supreme Court advised High Courts to refrain from making sweeping observations that are beyond the scope of the controversy before them.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily driven by the principle of judicial restraint. The Court emphasized that High Courts should not make general observations or findings of fact, especially when they have not fully examined the merits of the case. The Court was of the opinion that the High Court should have restricted itself to the specific dispute between the parties and should not have made broad statements about discrimination based on a single case. The court also took into account that the High Court had not decided the matter on merits and hence its observations were unwarranted.

Key Takeaways

• High Courts should exercise judicial restraint and avoid making general observations, especially when not deciding a case on its merits.
• General observations about discrimination should not be made based on a single case.
• High Courts should restrict themselves to the specific controversy and issues before them.

Directions

The Supreme Court directed High Courts to refrain from making sweeping observations that are beyond the scope of the controversy before them.

Development of Law

The ratio decidendi of this case is that High Courts should not make general observations about discrimination or other issues if they have not decided the case on its merits. This case reinforces the principle of judicial restraint and clarifies the boundaries of judicial commentary, particularly in cases where the merits of the matter have not been fully examined. There is no change in the previous position of law, but this case clarifies the application of the principle of judicial restraint in the context of High Court orders.

Conclusion

The Supreme Court’s decision in Union of India vs. Bharat Fritz Werner Limited clarifies the limits of judicial commentary by High Courts. The Court emphasized that High Courts should refrain from making broad observations, especially when not deciding a case on its merits. The Supreme Court expunged the High Court’s remarks about discrimination, reinforcing the principle of judicial restraint and ensuring that courts focus on the specific issues before them.