Article 226 | Non-Participant in Tender Process Lacks Locus Standi to Challenge Conditions: Andhra Pradesh HC

The Andhra Pradesh High Court has reaffirmed the settled legal position that a non-participant in a tender process lacks the locus standi to challenge the tender conditions or outcomes under Article 226 of the Constitution of India. The judgment underscores that only an aggrieved party - one who has suffered a legal injury or participated in the tender - can invoke the extraordinary jurisdiction of the High Court, dismissing the petitioner's claims on grounds of lack of standing and inordinate delay.

Background & Facts

The Dispute

The petitioner, Indukuri Venkata Rama Raju, filed a writ petition under Article 226 seeking a Writ of Mandamus against the respondents, including the State of Andhra Pradesh, the Commissioner of Endowments, and Sri Durga Malleswara Swamy Varla Devasthanam (3rd respondent). The dispute arose from a tender process initiated by the 3rd respondent for the procurement of provisions for temple rituals, including cashew nuts, for a six-month period from 01.10.2018 to 31.03.2019.

Key Facts

• The 3rd respondent issued Notification No. H1279/2018 (Tender I.D. No. 207588) inviting tenders for provisions.
• Tender Condition No. 11 stipulated that if the approved tenderer failed to supply provisions within the stipulated time, the Devasthanam reserved the right to procure provisions from other tenderers or the open market, recovering the financial loss from the defaulting tenderer.
• Tender Condition No. 29 provided that breach of tender conditions would result in forfeiture of the Earnest Money Deposit (EMD) and blacklisting of the firm for five years.
• Four bidders participated in the tender, with Sai Manikanta Agencies (4th respondent) quoting the lowest price of Rs. 278.42 per kg for cashew nuts, significantly below the market price of Rs. 700 per kg.
• The 4th respondent later withdrew from supplying cashew nuts, citing a typographical error in their bid (claiming they intended to quote Rs. 678.42 per kg instead of Rs. 278.42 per kg).
• The 3rd respondent forfeited the EMD of Rs. 3 lakhs deposited by the 4th respondent but did not blacklist the firm or recover the differential amount incurred due to the withdrawal.
• The petitioner, claiming to be an interested person under Section 2(18) of the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1987, sought reliefs including blacklisting of the 4th respondent and recovery of financial losses.

Procedural History

• 06.08.2018: Technical bid opened; four agencies participated.
• 06.08.2018: 4th respondent submitted a letter claiming a typographical error in their bid.
• 25.08.2018: 3rd respondent forfeited the EMD of Rs. 3 lakhs and awarded the tender for cashew nuts to the next lowest bidder, Good Life Enterprises.
• 25.08.2018: Tenders for other provisions approved by the Trust Board.
• 26.09.2018: Commissioner of Endowments approved the tenders.
• 31.03.2019: Supply period concluded.
• 2025: Petitioner filed the present writ petition after a delay of 7 years.

Relief Sought

The petitioner sought:

1. A declaration that the 3rd respondent’s failure to blacklist the 4th respondent was illegal and contrary to tender conditions.
2. A declaration that the 3rd respondent’s failure to forfeit the EMD and recover the differential amount was illegal.
3. Directions to initiate action against officials complicit in the alleged collusion.

The Legal Issue

The central questions before the Court were:

1. Whether the petitioner, who did not participate in the tender process, had locus standi to challenge the tender conditions under Article 226?
2. Whether the petitioner was an aggrieved person entitled to invoke the extraordinary jurisdiction of the High Court?
3. Whether the writ petition was barred by laches due to the inordinate delay of 7 years in filing the petition?

Arguments Presented

For the Petitioner

• The petitioner, though not a participant in the tender, contended that he was an interested person under Section 2(18) of the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1987.
• Argued that the 4th respondent’s withdrawal from the tender process caused financial loss to the Devasthanam, and the 3rd respondent’s failure to blacklist the 4th respondent violated Tender Condition No. 29.
• Contended that the 4th respondent’s actions demonstrated collusion and unethical practices, warranting criminal action against complicit officials.

For the Respondents

• The 3rd respondent asserted that the 4th respondent had withdrawn due to a typographical error in their bid and that the EMD of Rs. 3 lakhs was forfeited as per tender conditions.
• Argued that the petitioner lacked locus standi as he did not participate in the tender process and had not suffered any legal injury.
• Contended that the writ petition was barred by laches, as it was filed 7 years after the conclusion of the tender period, with no explanation for the delay.

The Court's Analysis

The Court conducted a detailed analysis of the petitioner’s locus standi, the concept of an aggrieved person, and the doctrine of laches, relying on established precedents:

1. Locus Standi of Non-Participants: The Court relied on the judgment of the Calcutta High Court in Gypsum Structural India Pvt. Ltd. v. Brihanmumbai Municipal Corporation (W.P. No. 4209 of 2023), which held that a stranger to the tender process cannot challenge the tender conditions. The Court observed:

   "A non-participant in the tender process cannot be deemed to have locus standi to question the tender process. The doctrine of locus standi is well settled in this regard."

   The Court further noted that permitting such challenges would lead to an unending process, as situations evolve over time, and multiple writ petitions could be filed by third parties.

2. Aggrieved Person Under Article 226: The Court cited the Supreme Court judgment in Jonnale Narasimharao & Company v. State of A.P. ([1971 (2) SCC 163]), which held that a writ petitioner must demonstrate a legal injury or disadvantage to invoke Article 226. The Court observed:

   "The existence of a right is the foundation of a petition under Article 226. The petitioner must establish that they have suffered a legal grievance."

   In this case, the petitioner had not participated in the tender, nor had he suffered any legal injury, rendering him ineligible to invoke the Court’s jurisdiction.

3. Doctrine of Laches: The Court emphasized that the petitioner had not provided any explanation for the 7-year delay in filing the writ petition. The tender process concluded on 31.03.2019, and the petition was filed in 2025. The Court relied on the Supreme Court judgment in D. Nagaraj v. State of Karnataka ([1977 (2) SCC 148]), which held:

   "The existence of the right is implicit for the exercise of the extraordinary jurisdiction under Article 226. A writ petition is liable to be dismissed on the ground of delay and laches if not filed within a reasonable time."

   The Court also cited State of Orissa v. Ram Chandra Dev ([1963 SCC Online SC 179 = AIR 1964 SC 685]), which reiterated that a writ petitioner must establish a legal right that has been invaded or threatened.

4. Discretionary Powers Under Article 226: The Court referred to Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd. ([2005 (6) SCC 138]), which held that the State and its instrumentalities have the discretion to relax tender conditions for bona fide reasons. The Court observed:

   "Even when some defect is found in the decision-making process, the Court must exercise its discretionary powers under Article 226 with great caution and only in furtherance of public interest, not merely on the making out of a legal point."

   The Court concluded that the petitioner had failed to establish a legal peg for his justiciable claim, rendering the writ petition devoid of merit.

The Verdict

The Court dismissed the writ petition, holding:

1. The petitioner lacked locus standi as he did not participate in the tender process and had not suffered any legal injury.
2. The petitioner was not an aggrieved person under Article 226, as he had no legal right that was invaded or threatened.
3. The writ petition was barred by laches, as it was filed 7 years after the conclusion of the tender period without any explanation for the delay.
4. No costs were awarded, and all pending interlocutory applications were closed.

What This Means For Similar Cases

Locus Standi Is Non-Negotiable for Third Parties

• Non-participants in tender processes cannot challenge tender conditions or outcomes under Article 226, even if they claim to be interested persons under statutory provisions.
• Courts will strictly apply the doctrine of locus standi, requiring petitioners to demonstrate participation in the tender or a legal injury suffered.
• Practical Takeaway: Practitioners must ensure that clients have direct involvement in the tender process or a legal grievance before filing writ petitions challenging tender outcomes.

Delay Defeats Remedy: The Doctrine of Laches

• Writ petitions challenging tender processes must be filed within a reasonable time. Delays of 7 years, as in this case, will almost certainly result in dismissal.
• Courts will not entertain petitions where the petitioner fails to provide a plausible explanation for the delay, especially when the tender period has long concluded.
• Practical Takeaway:
  • Advise clients to act promptly in challenging tender-related grievances.
  • Document all communications and representations made to authorities to justify timelines in case of delays.

Discretionary Powers of Courts Under Article 226

• Courts will exercise judicial restraint in interfering with tender processes, even if minor defects are alleged, unless public interest is demonstrably affected.
• The State and its instrumentalities have broad discretion to relax tender conditions for bona fide reasons, and courts will not substitute their judgment unless there is patent illegality or arbitrariness.
• Practical Takeaway: Petitioners must establish clear arbitrariness or violation of statutory provisions to succeed in challenging tender processes.