There is no specific central legislation governing procurement of all government contracts in India. The provisions of the Constitution of India, as interpreted by the judiciary over the years, are the primary source of law concerning government action for procurement of contracts. The Public Procurement Bill, 2012 was introduced in the Parliament of India in 2012, and again in 2015 with a view to enact a law to regulate the public procurement process in India, but such a law has not been enacted as yet.

In particular, Article 14 of the Constitution of India has been interpreted as imposing certain standards on the government in the procurement process, such as whether the process adopted, and decisions made are reasonable, rational, non-arbitrary and non-discriminatory. These principles have been used to test the award and performance of public contracts by the government. For example, in 2012, the Supreme Court of India cancelled allocations of spectrum to private telecommunications operators on the grounds that a public auction had not been carried out while making the allocations, and that there was insufficient justification to demonstrate why a public auction should not have been carried out.

Some states in India have their own laws which regulate public procurement by the state government and its entities. For example, the states of Tamil Nadu, Karnataka, Rajasthan, Andhra Pradesh and Assam have laws on public procurement at state level. While even these can be questioned on the basis of constitutional principles, generally these state laws codify the principles established by the courts under constitutional jurisprudence.

There are also certain sector-specific laws, such as in the power sector, which govern some aspects of public procurement.

Public authorities are also subject to the oversight of the Comptroller and Auditor General of India (CAG), which has constitutional authority to review and audit all accounts of central and state governments, and the Central Vigilance Commission (CVC), which is an anti-corruption statutory body with the power to inquire into matters and investigate public servants. Circulars and guidelines issued by these authorities also have a bearing on how public authorities procure goods and services.

Where not covered under a state or sector-specific law, detailed guidance for public authorities on various aspects of the procurement process comes from executive instruction by government departments and organisations. For instance, certain aspects of the procurement process form the subject matter of the general financial rules of central and state governments issued by the Ministries of Finance, to be observed in matters involving public finances. Additionally, public authorities are guided in the public procurement process by means of other executive guidance in the form of model agreements, manuals, guides, etc. In 2022, the Department of Expenditure, Ministry of Finance issued the updated Manual for Procurement of Goods and the Manual for Procurement of Works (the “Procurement Manuals”) as standard reference documents for public procurement across all government contracts in India. In this chapter, relevant provisions of CVC circulars and other executive guidance have also been referred to, as these provide more detailed guidance to public authorities. It should be noted, however, that a lot of these take the form not of sources of law, but rather of executive guidance. In reading this chapter, it should be kept in mind that while courts would give due consideration to such executive guidance, government action is open to scrutiny by courts on the basis of compliance with constitutional provisions and other applicable laws, whether or not such internal executive instruction and guidance or circulars issued by the CVC or CAG have been followed.

All entities that come within the purview of the “state” under Article 12 of the Constitution of India are subject to constitutional provisions. All governments, local and other authorities under the control of the government fall within this definition. 

Executive guidance also determines applicability. For instance, the Procurement Manuals apply to all ministries, departments, attached and subordinate bodies, and Central Public Sector Enterprises or undertakings (bodies where the central government or enterprise owns more than 50% of the issued share capital), or any other body (including autonomous bodies) substantially owned or controlled by or receiving substantial financial assistance from the central government. 

Companies carrying out public private partnership (PPP) projects may also fall within this definition, but this is determined on a case-by-case basis. Although there is no bright-line test, over the years courts have identified various factors to take into account when determining whether such an entity may fall within the definition of “state” for the purposes of the Constitution of India. These include:

• ownership of share capital by the government or public authorities; 
• financial assistance provided by the “state”; 
• extent of government control; and 
• whether the activities of the concerned entity are of public importance and closely related to government functions. 

For example, the Bombay High Court held that Mumbai International Airport Limited, a company set up as a joint venture between private parties and the Airports Authority of India (a statutory body) to operate and manage the Mumbai International Airport, to be a “state” company within the meaning of Article 12 of the Constitution of India.

State and sector-specific laws govern the entities identified within those laws. State laws will typically cover all government entities and local authorities within a given state.

Constitutional provisions which govern the procurement of government contracts are fundamental rights granted to citizens of India, and therefore apply to all interactions of the “state”. This includes contracts awarded for the procurement of goods and services as well as grants of any largesse, including concessions for PPP projects.

State procurement laws specify the type of contracts governed under this law. Typically, these will also cover all forms of public procurement, including grants of concessions for PPP projects. Similarly, each sector-specific law specifies its applicability with respect to which sector it regulates. CVC circulars and CAG guidelines also specify which entities they apply to.

Other rules and directions referred to in 1.1 Legislation Regulating Procurement of Government Contracts, may have specific thresholds. For example, the General Financial Rules, 2017 issued by the Department of Expenditure, Ministry of Finance, the government of India (the “GFR 2017”) and the Procurement Manuals state that the purchase of goods up to the value of INR25,000 may be made without inviting quotations or bids.

Determination of the eligibility criteria for each procurement is at the discretion of the relevant public authority, which stipulates such criteria in light of the nature, size, objective and complexity of the procurement concerned. On the basis of the aforesaid factors, the relevant authority may either allow interested parties from foreign jurisdictions to participate in the procurement process or exclude them from participating. Exclusion of participants from other jurisdictions would, however, be subject to the same constitutional scrutiny as set out in 1.1 Legislation Regulating Procurement of Government Contracts, and exclusion of foreign participants would have to be justified by the public authority on the basis of constitutional provisions.

Courts in India have previously upheld the exclusion of non-Indian participation on grounds, inter alia, of public policy, such as protecting indigenous industries from foreign competition. These exceptions are recognised in some state procurement laws as well.

Regulatory restrictions on foreign investments, while not governing award procedure, may also become relevant if the award requires the establishment of a company or an entity in India. For example, foreign investment in a defence sector entity in India beyond 74% (equity threshold) requires the approval of the government of India, while 100% foreign investment is permitted in the airports sector.

As mentioned in 1.1 Public Procurement Legislation, there is no specific central legislation governing procurement of government contracts in India. State legislation deals with, inter alia, the following key obligations for the procuring authority. 

• Framing the eligibility criteria – typically, these provisions are aimed at prohibiting discrimination, with exceptions such as:
1. promotion of domestic industry;
2. socio-economic policy of the central government or state government; or
3. any other consideration in public interest in furtherance of a notified policy of the central government or state government.
• Statutory restrictions on participation by entities – typically, these are:
1. entities that have not paid taxes;
2. entities which are insolvent, in receivership, bankrupt or being wound up;
3. entities, or their directors, that have been convicted of any criminal offence related to professional conduct.
• Conduct of the bidding process, including circumstances in which the bidding process may be cancelled.
• How the evaluation criteria should be determined – for example, the Assam procurement law provides that evaluation criteria may include the following:

1. the price;
2. time for delivery of goods or completion of works; and
3. the experience, reliability and professional and technical competence of the bidder.
• Further, the non-price criteria should be objective and quantifiable. 
• Circumstances in which price negotiations can be undertaken.
• Maintenance of documents for audit or review purposes.

The Procurement Manuals also state the obligations of the procuring entity, including specifying 5 key principles that all procurement entities must abide by:

• transparency;
• professionalism;
• responsibility and accountability to facilitate achievement of broader principles;
• legal responsibilities; and
• public accountability.

Further, while interpreting the provisions of the Constitution of India, courts have imposed certain standards (such as whether the process adopted and decisions made by the “state” are reasonable, rational, non-arbitrary and non-discriminatory) which are also relevant for public authorities in relation to public procurement. For example, the Allahabad High Court struck down the concession agreement for one of the first PPP projects in the roads sector in India as unconstitutional on the grounds, inter alia, that due to the nature and terms of the concession agreement it had become a perpetual concession.

Other than the state legislation and sector-specific regulations, there is no specific central legislation governing procurement of government contracts in India. The Supreme Court of India has laid down that the notifications for public auction or inviting tenders should be advertised in well-known dailies having wide circulation in the relevant locality, with all relevant details such as date, time and place of auction/tender, subject matter of auction/tender, technical specifications, estimated cost, earnest money deposit, etc.

Further, the CVC guidelines stipulate that in addition to publicising the notifications for public auctions/tenders through newspapers and trade journals, the notifications (along with relevant auction/bid documents) should be published on the website of the public authority concerned.

The Procurement Manuals specify that the due date of opening of the tender should be a minimum of 21 days after the date of advertisement of tenders on the website of the procuring entity. 

Certain states have laid down detailed requirements for the publication of notices inviting tenders. For example, in the state of Tamil Nadu, tender notices for contracts having an estimated value above INR750 million are required to be published in the Indian Trade Journal.

Similarly, in the state of Rajasthan, notices inviting tender for procurement above INR10 million must be published:

• on the notice board of the procuring authority;
• in one regional newspaper;
• in two state-level newspapers;
• in one all-India-level daily newspaper with wide circulation; and
• any trade journal known for publication of notices inviting tenders.

Additionally, the invitation to tender shall contain, inter alia:

• the name and address of the procuring authority;
• a summary of the principal required;
• the terms and conditions of the procurement contract;
• whether the bid procedure is to be conducted in a single stage or two stages;
• the criteria and procedure for evaluating the qualification of bidders;
• the price (if any) charged by the procuring entity and the mode of payment;
• the manner, place and deadline for submission of bids; and
• the time, date and place of the opening of bids.

There is no bar on the awarding authority carrying out preliminary market consultations before launching the tender procedure. Market and stakeholder consultations are commonly undertaken by awarding authorities for PPP projects. The PPP Guide for Practitioners issued by the Department of Economic Affairs, Ministry of Finance, Government of India (the “DEA PPP Guide”) also recommends that the awarding authorities carry out consultations with stakeholders after identification of the project.

Further, under the central government’s procurement framework (consisting of various sources set out in response to 1.1 Legislation Regulating Procurement of Government Contracts, as well as state laws, awarding authorities are required to hold pre-bid conference(s), providing a platform for the bidders to give their feedback on the project/procurement and the terms and conditions of the bid documents.

There is no central legislation mandating a particular tender procedure. Different types of tender processes which are recognised under various rules, circulars and other forms of executive guidance of the central government and procurement laws enacted by various state governments, and generally adopted in India, are set out below.

• Two-stage bidding – under this process, as part of the first stage, the public authority invites expression of interest (EOI) or technical bids pursuant to a request for qualification (RFQ), as the case may be, from all interested parties. Thereafter, the applications submitted in response to the EOI or RFQ are evaluated, and the applicants who meet the minimum eligibility criteria on the basis of their technical qualifications are shortlisted for the second stage. In the second stage, a request for proposal (RFP) is issued to the shortlisted applicants who are invited to submit their financial bids pursuant to the RFP, and the contract is awarded on the basis of the comparison of such financial bids.
• Single-stage bidding – under this process, the public authority invites technical and financial bids together. Thereafter, the technical bids submitted in response to the RFP are evaluated, and the applicants who meet the minimum eligibility criteria on the basis of their technical qualifications are shortlisted. Subsequently, financial bids of only such shortlisted bidders are opened and evaluated, and the contract is awarded on the basis of the comparison of such financial bids.

• Limited tender – under this process, the tender documents are issued only to a pre-determined list of potential bidders, identified by the awarding authority in advance, and bids are invited from such potential bidders only. A limited tender process may be a two-stage bidding process or a single-stage bidding process.

Apart from the above-mentioned commonly used tender processes, other modes of procurement adopted include two-stage auction processes, the Swiss challenge method, electronic reverse auctions, spot purchases, etc. The Procurement Manuals provide guidelines, terms and conditions and risk mitigation strategies for, inter alia, open tenders, limited tenders, global tenders, single tenders and direct procurements. 

The awarding authorities permit the interested parties to submit queries arising out of, and suggestions/requests pertaining to, the bid documents during the bid process. 

The CVC guidelines strictly prohibit the awarding authority from undertaking negotiations with the bidders after completion of the bid process. As an exception to this norm, the CVC prescribes that the awarding authority may undertake negotiations with the lowest bidder (ie, the bidder that makes the best bid, referred to hereafter as “L1”) only under exceptional circumstances which include procurement of proprietary items, procurement of items with limited sources of supply, procurement of items where there is suspicion of a cartel formation and urgency in procurement. Where the procurement is done in urgency, the awarding authority should undertake negotiations with L1 for the supply of a bare minimum quantity of the relevant item(s); the balance quantity should, however, be procured expeditiously through a re-tender, following the normal tender process.

Similarly, state laws also prescribe that no price negotiations can be undertaken by the awarding authority, except under certain exceptional circumstances specified in such laws. For example, under Tamil Nadu’s procurement law:

• if the awarding authority is of the view that the price quoted by the L1 is higher than the prevailing market rate, the awarding authority may negotiate for a reduction in price; and 
• in cases where the quantity offered by L1 is less than the total quantity required, the awarding authority may, after placing an order for the entire quantity proposed to be supplied by L1, negotiate with the next-lowest bidder to match the price offered by L1 and place order for the balance quantity required. 

Finalisation of the tender procedure for each project is at the discretion of the relevant public authority. The courts in India have held that awarding authorities have sufficient latitude to adopt their own techniques of management of projects depending upon the exigencies of a situation, guided by appropriate financial policy, in the best interests of the authority and motivated by the public interest.

As there is no central legislation governing public procurement, guidance for central government’s public authorities with respect to the tender procedure to be adopted comes from executive instruction from government authorities/departments and through other executive guidance, in the form of model agreements, manuals, guides, etc.

For example, the GFR 2017, the CVC guidelines, Procurement Manuals, the DEA PPP Guide and certain state laws provide factors which should be considered by the public authority in order to finalise a particular tender procedure. The aforesaid factors include the expected number of potential bidders, estimated value of the contract, urgent requirement of good/service, bidding parameters, etc.

With respect to states which have enacted procurement laws, state governments and their entities are required to follow the conditions set out in such state laws. Typically, the choice is left to the awarding authority.

The Supreme Court has held that while undertaking public procurement, though the normal method is auction or calling for tenders, there may be exceptional situations where the adoption of such a course may not be insisted upon. What is to be seen in such cases is only whether the action was fair and what has been done is the best available arrangement under the circumstances.

The GFR 2017 provides that contracts may be awarded on a nomination basis in the following circumstances:

• if it is in the knowledge of the awarding authority that only a particular firm manufactures the required goods;
• in a case of emergency; or
• for standardisation of machinery or spare parts to be compatible to the existing sets of equipment.

The Procurement Manuals state that direct procurements should be undertaken only for the smallest value procurements that do not exceed the threshold of INR25,000, in case of an urgent requirement of goods or works that have standard specifications, such as those required for the day-to-day needs of the procuring entities and on-field units.

The CVC guidelines provide that in exceptional events, if procurement is undertaken through nomination basis by a public sector entity, the following should be observed by such entity:

• all works awarded on nomination basis should be brought to the notice of the board of directors of the relevant public sector entity for scrutiny and vetting post facto;
• the reports relating to such awards will be submitted to the board of directors of the public sector entity every quarter; and
• the audit committee of the board of directors of the public sector entity should check at least 10% of such cases.

Certain state procurement laws provide that contracts may be awarded on a nomination basis, inter alia, under the following circumstances:

• the subject matter of procurement is available only from a particular entity;
• in the case of an emergency;
• for standardisation of goods or for compatibility with existing goods, equipment, technology or services;
• if there is an existing contract for the subject matter of procurement which can be extended for additional goods, works or services, and the procuring entity is satisfied that no advantage would be obtained by further competition (however, the existing contract is required to have a provision enabling such extension);
• if the procuring entity is of the view that any other mode of procurement is not appropriate in the interest of national security; or
• the subject matter is of artistic nature. 

There are no timelines prescribed for the publication of documents under the various sources of guidance available to the public authority.

No timelines for receipt of expressions of interest in a contract award procedure or the submission of tenders are prescribed under the various sources of guidance available to the public authority under the aegis of the central government. However, the GFR 2017 and the CVC guidelines state that the public authorities should provide the bidders reasonable time to submit bids under the bid documents. The Procurement Manuals state that for open tenders, a minimum of 21 days and for global tenders, a minimum of four weeks should be provided for submission of documents. 

State laws generally prescribe provision of adequate time to the bidders for submitting bids, however, certain state laws specify the minimum time required to be provided to the bidders. For example, Tamil Nadu’s procurement law prescribes that for tenders above INR20 million, at least 30 days shall be provided between the date of notice inviting tender and the last date of submission of tenders. 

Under the central government’s procurement framework and state laws, timelines for a tender process are required to be set out in the tender documents, which may be extended by the project authority during the tendering process.

The determination of the eligibility criteria for each project is at the discretion of the relevant public authority, which stipulates such criteria in light of the nature, size, objective and complexity of the project concerned.

Guidance for central public authorities with respect to the setting of eligibility criteria comes from executive instruction from government authorities/departments, and through other executive guidance in form of model agreements, manuals, guides, etc.

For example, the GFR 2017, Procurement Manuals, the CVC guidelines and the DEA PPP Guide provide factors which should be considered by the public authority in order to finalise the eligibility criteria. Some of the aforesaid factors include minimum level of experience, past performance, technical capability, manufacturing facilities and production capability, turnover, financial position, etc.

In states which have enacted procurement laws, state governments and their entities are required to follow the provisions with respect to the minimum eligibility criteria set out in the relevant procurement law. Please refer to 1.5 Key Obligations, in relation to eligibility conditions under state laws.

Further, courts in India have held that the project authority concerned is the best judge of its interests and is open to prescribe suitable eligibility criteria in a tender document so as to best serve its purposes. However, while the project authority can prescribe suitable eligibility criteria, competent courts can intervene if the tender conditions or the actions of the authority are arbitrary/irrational, discriminatory or mala fide.

Although open competitive tendering is typically the most commonly adopted mode of tendering, it is possible to restrict the participation of bidders to only a small number. In India this process is known as limited tendering, as discussed in 1.3 Type of Contracts Subject to Procurement Legislation. 

The GFR 2017, Procurement Manuals, the CVC guidelines and certain state procurement laws provide guidance on the factors which should be considered by the public authority to adopt limited tendering. For example, the GFR 2017 and Procurement Manuals stipulate that limited tendering may be adopted when the estimated value of goods is up to INR2.5 million, while the CVC guidelines provide that limited tendering may be adopted when the number of contractors is known to be small. The CVC guidelines also permit empanelment for the purposes of limited tendering, so long as the empanelment is done in a transparent manner and updated on a yearly basis. Similarly, Assam’s procurement law provides, inter alia, that limited tendering may be adopted if the time and cost involved to examine and evaluate a large number of bids is not commensurate with the value of the subject matter of the procurement. 

The GFR 2017 and Procurement Manuals require that the minimum number of bidders in a limited tender process should be more than three, and the Procurement Manuals state that a list of registered bidders must be maintained for limited tendering to ensure that selection takes place in a transparent manner. Certain state procurement laws require that the number of bidders in a limited tender process should be sufficient to ensure effective competition.       

The evaluation criteria for each project is finalised by the relevant project authority at its discretion in light of the nature, size, objective and complexity of the project concerned. With respect to states which have enacted procurement laws, the laws themselves set out the parameters which should be kept in mind while formulating the evaluation criteria. Please refer to 1.5 Key Obligations, in relation to evaluation of bids under state laws.

The Supreme Court of India has held that evaluating tenders and awarding contracts are essentially commercial functions, and courts will not generally review the commercial considerations. However, the evaluation criteria and the tender procedure in general can be reviewed on other grounds, such as:

• whether the process adopted or decision made by the authority is mala fide or intended to favour someone;
• whether the process adopted or decision made is so arbitrary and irrational as to be one which no responsible authority acting reasonably and in accordance with relevant law could have reached; or
• whether public interest is affected, etc.

Further, the Supreme Court has also held that price may not always be the sole criterion for awarding a contract and that the past record of the tenderers, the quality of goods or services which are offered (assessing such quality on the basis of past performance of the tenderer), its market reputation and so on all play an important role in deciding to whom the contract should be awarded. The Supreme Court has further held that at times, a higher price for a much better quality of work can be legitimately paid in order to secure proper performance of the contract and good quality of work, which is as much in public interest as a low price.

Please see 2.5 Direct Contract Awards.

Not providing the evaluation criteria upfront in the bid documents exposes the procuring authority to the risk of challenges in courts on the grounds of arbitrariness.

The GFR 2017, Procurement Manuals, the CVC’s circulars, the DEA PPP Guide and other model documents provide that the evaluation criteria which the public authority will adopt to evaluate the bids is required to be explicitly stated in the bid documents, and that the acceptance/rejection of any bid should be on justified grounds as per these criteria.

The state procurement laws also require the bid document to clearly indicate the criteria which will be adopted for evaluating the tenders. The evaluation should be conducted by the procuring entity in accordance with these criteria.

There is no obligation for the awarding authority to notify any interested parties that have not been selected for participation in the contract award procedure. However, entities which fall under the purview of “state” under Article 12 of the Constitution of India are bound by the provisions of Right to Information Act, 2005 (the “RTI Act”), and may be required to disclose their reasons if an interested party makes a formal request in accordance with the RTI Act. Exceptions to such disclosure include:

• information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the “state”, its relation with any foreign state, or lead to incitement of an offence;
• information which has been expressly forbidden to be published by any court or disclosure of which may constitute contempt of court;
• information, the disclosure of which would cause a breach of privilege of the parliament of India or a state legislature;
• information such as commercial confidence, trade secrets or intellectual property rights; and
• cabinet papers including records of deliberations of the council of ministers, secretaries and other officers. 

To maintain transparency, the financial bids for a procurement process are typically opened in the presence of the bidders whose financial bids are being evaluated. The GFR 2017 and Procurement Manuals prescribe that the name of the successful bidder should be published on the Central Public Procurement Portal, the website of the public authority and on the notice board or bulletin of the public authority. The Procurement Manuals also provide that the award of contract should be published in a searchable format and should be linked to its notice inviting tender in order to ensure transparency.

Certain state procurement laws require that upon acceptance of a bid, the procuring authority is required to communicate its decision to all participating bidders and also publish it on the relevant state’s procurement portal.

Typically, there is no mandatory obligation to grant a prior hearing to bidders before a decision is taken. 

However, the GFR 2017 states that in cases where the procuring authority is of the view that the bidder has contravened the code of integrity, such bidder must be provided with a reasonable opportunity to be heard before appropriate measures (such as blacklisting or debarment) are taken against the bidder. 

Similarly, the Procurement Manuals provide that if the bidder is of the view that the procurement process is not effectively followed or its bid has been rejected wrongly, the bidder shall have a right to be heard, including by way of a written representation to the procuring authority.

There is no standstill period between the notification of an award and the signing of the contract. Typically, tender documents provide a maximum time period, commencing from the issuance of a letter of award, within which the contract is required to be signed by the parties.

As stated in 1.1 Legislation Regulating Procurement of Government Contracts and 2.10 Evaluation Criteria, tender procedures and decisions of the awarding authority can be challenged and adjudicated upon by courts on the basis of constitutional principles. Also, certain sectoral regulators, such as the central and state electricity regulatory commissions, can review the awarding authority’s decisions falling within the scope of the Electricity Act, 2003.

Additionally, certain state procurement laws provide a mechanism for appeal, and a tenderer aggrieved by a decision of the awarding authority may appeal to the officer designated by the procuring authority or the state government, as prescribed under the relevant state procurement law.

Depending on the facts and circumstance of each case, courts can, inter alia, grant interim measures, stay and/or strike down the tender process or award of a contract if they are found to be unconstitutional.

Additionally, certain state procurement laws empower the appellate authority (as described in 4.1 Responsibility for Review of Awarding Authority’s Decisions) to stay the procurement proceedings, pending disposal of appeal.

As stated under 4.2 Remedies Available for Breach of Procurement Legislation, depending on the facts and circumstance of each case, courts can, inter alia, grant interim measures including a suspension order.

Further, some state procurement laws provide the discretion to the appellate authority to grant interim measures during the pendency of the appeal. For instance, in Tamil Nadu, tenderers may seek interlocutory orders from the government, pending an appeal challenging the decision of the awarding authority.

Writ jurisdiction of courts can be invoked against an awarding authority’s decisions by persons affected by its decisions. These would typically include persons who are excluded from participating in the bid process and bidders. 

Additionally, any citizen (other than persons who are excluded from participating in the bid process and bidders) may challenge the bid process or and/or any decision(s) of the awarding authority through a public interest litigation, on the grounds that the general public interest at large is adversely affected.

Certain state procurement laws provide a redressal mechanism for bidders aggrieved by decisions of the awarding authority. However, it should be noted that the provision of such a redressal mechanism does not preclude a challenge before courts on the grounds of violation of constitutional principles.

As a general principle, a delay may be a relevant factor considered by courts in admitting a writ petition. However, there are no time limits for invoking the writ jurisdiction of competent courts.

Some state procurement laws prescribe time limits within which an awarding authority’s decision may be challenged under the mechanism provided in the concerned state law. For example, Tamil Nadu’s procurement law provides that a tenderer aggrieved by the decision of the awarding authority may appeal to the government of Tamil Nadu within ten days of receipt of the relevant order of the awarding authority.

The disposal of proceedings can take from a few months to several years based on the complexity of the case, the forum where the dispute is raised, etc. For example, the Supreme Court of India took approximately two years to deliver its judgment in Centre for Public Interest Litigation v Union of India (popularly known as the 2G spectrum case) and in Manohar Lal Sharma v The Principle Secretary (popularly known as the coal blocks allocation case). 

Some state procurement laws also prescribe timelines within which the appeals of aggrieved bidders are required to be disposed by the officer designated by the procuring authority or the state government, as prescribed under the relevant state procurement law. For example, under Tamil Nadu’s procurement law, the government of Tamil Nadu is required to dispose an appeal within 15 days, whereas under Assam’s procurement law, the concerned appellate officer of the awarding authority will endeavour to dispose the appeal within 30 days.

There is no public information available concerning the number of procurement claims annually considered by the review body.

The cost for challenging the decision of the awarding authority in the Supreme Court or High Courts can be substantial, and would depend on the counsel fees, number of hearings, etc.

Contracts in India are governed under the provisions of the Indian Contract Act, 1872, (the “Contract Act”) pursuant to which the parties to a contract are free to mutually agree to amend the contract. Having said that, the CVC guidelines discourage the public authorities from granting relaxations in the contract terms and specifications after execution of the contract. As per the guidance available under the CVC guidelines and Procurement Manuals, no amendment to the contract should be made that could lead to a vitiation of the original tender decision or bestow an undue advantage on the contractor, but if in exceptional cases modification/amendments are considered to be absolutely essential, they can be carried out after taking into account the financial implications of such modifications/amendments.

As stated in 5.1 Modification of Contracts After the Award, contracts in India are governed by the Contract Act, which provides that contracts can be terminated by parties, inter alia, on the following grounds: 

• frustration of contract, or if the contract becomes impossible to perform;
• breach of obligations by the parties, such that the breach cannot be rectified; 
• termination as per the terms of the contract, including termination at will or change of circumstances of the parties; and
• fraud, misrepresentation, undue influence or coercion by a party.

Additionally, as per the CVC Guidelines, if the selected bidder becomes insolvent, files for bankruptcy or goes into liquidation, or substantially loses the technical or financial capacity on the basis of which the bidder was selected, the contract may be terminated by the procuring entity. 

Niti Aayog, the policy thinktank of the government of India publishes standard form PPP contracts. Some grounds of termination provided in these model contracts are as follows:

• failure to fulfil material obligations; 
• non-replenishment of performance security within the prescribed cure period;
• change in ownership or liquidation, amalgamation or reconstitution in a manner that would cause a material adverse effect; and
• breach of representations and warranties. 

Special prerogatives are established in favour of awarding authorities by way of judicial precedent. For instance, in the case of Tata Celular v Union of India, [(1994) 6 SCC 651], the Supreme Court held that courts do not have the required expertise to correct administrative decisions, and the government must have freedom of contract, which should only be tested in cases of bias, arbitrariness or mala fides. 

In Silppi Constructions Contractors v Union of India [(2020) 16 SCC 489], the Supreme Court held that the tendering authority is the best judge as to how tender documents are to be interpreted. If one or more interpretations are possible, the interpretation of the tendering authority should prevail. The courts interference in such cases should be minimal. 

In the case of Tata Motors v Brihan Mumbai Electric Supply and Transport Undertaking (BEST) and Others [2023 SCC OnLine SC 671], a three-judge bench of the Supreme Court upheld the principle that courts should exercise considerable restraint while exercising their powers of judicial review in case of contractual and commercial matters, especially in contracts involving technical issues. Any decisions of the court should be made keeping public interest and the public exchequer in mind. 

No legislative amendments are currently being considered.