There is no dedicated or single piece of legislation which governs all aspects of public procurement in India. The public procurement and governmental actions in terms of procurement contracts are governed by the principles laid down in the Constitution of India (the “Constitution”) and judicial interpretation of these principles by the courts from time to time. More specifically, Article 14 of the Constitution has been interpreted to lay down standards to be followed in the government procurement process including transparent, non-discriminatory, non-arbitrary, reasonable and rational decision-making and ensuring equal opportunities to interested entities to participate in the procurement process. Furthermore, Article 299 of the Constitution stipulates that contracts legally binding on the government of India (the “GoI”) are required to be executed in writing by officers specifically authorised to enter into these contracts.

The Department of Expenditure (the “DoE”), which is part of the Ministry of Finance, which is itself part of the GoI issued the General Financial Rules, 2017 (the “GFRs”) (which are amended from time to time), primarily comprising of all rules and orders to be complied with by procuring entities (as discussed in 1.2 Entities Subject to Procurement Regulation) while dealing in matters of public finance.

The GFRs provide the regulatory framework and guides the procedural and administrative decision-making of procuring entities. The GFRs also take the form of executive instructions and are not covered by any legislation. The DOE is responsible for modifying and amending the GFRs from time to time.

The GFRs empower procuring entities to issue detailed guidelines and procedures to suit their specific sectoral requirements, in conformity with the principles laid down in the GFRs. Accordingly, specific ministries or departments have issued their own manuals and procedures in sectors such as defence, railways, oil and gas, telecommunications and energy for procurement within their administration.

The DOE has also issued the Manual for Procurement of Goods, 2024 (the “MPG”), the Manual for Procurement of Services, 2017 (the “MPS”) and the Manual for Procurement of Works, 2019 (the “MPW”) which serve as guiding principles for public procurement contracts (collectively referred to as the “Procurement Manuals”).

In addition to the executive instructions and manuals, the following pieces of legislation are also applicable:

• the Indian Contract Act, 1872 (the “Contract Act”) which governs any contract to be executed between the government and the successful bidder;
• the Sale of Goods Act, 1930, which governs any procurement of goods;
• the Competition Act, 2002, which regulates any unfair trade practices and abuse of dominance; and
• the Arbitration and Conciliation Act, 1996, which covers the resolution of disputes between the parties where the contract provides for dispute resolution through arbitration (which is typical in government contracts).

The public authorities in India, while executing administrative functions concerning procurement and public finance, are also subject to scrutiny and oversight of:

• the Comptroller and Auditor General of India (the “CAG”), which is a constitutional authority empowered to audit the accounts of central and state governments; and
• the Central Vigilance Commission (the “CVC”), which is a statutory authority for anti-corruption, empowered to investigate public officers and scrutinise matters of public finance. These authorities also issue circulars and guidelines which regulate and determine the process to be followed by procuring entities while procuring goods and services.

In addition, certain states such as Tamil Nadu, Karnataka, Rajasthan, Andhra Pradesh, Mizoram, Odisha, Punjab, Uttarakhand and Assam have issued their own public procurement laws which codify the principles in the Constitution and the jurisprudence laid down by the courts.

The entities that fall within the definition of the “state” under Article 12 of the Constitution are bound by the constitutional principles while procuring goods and services. These include governments, ministries and other authorities under the control of the government.

Rule 1 of the GFRs applies to procurement by the GoI, its ministries, departments, any units attached to it and attached or subordinate offices. The GFRs are also deemed to be applicable to autonomous bodies, provided that the by-laws of the autonomous body do not provide for separate financial rules which have been approved by the GoI. The Procurement Manuals specify the entities who could “benefit” from the Procurement Manuals and includes ministries, departments, or any of their units, or attached or subordinate officers or units, Central Public Sector Enterprises or CPSEs or undertakings (entities where the GoI or CPSE or any state government owns at least 51% of the paid share capital), or any other body (including autonomous bodies) substantially owned or controlled by or receiving substantial financial assistance from the GoI.

It is pertinent to note that the definition of “state” itself has been subject to judicial interpretation, and in certain cases, entities executing public-private partnership (PPP) projects have also been included within the definition of “state” for the purposes of Article 12 of the Constitution.

In terms of procurement by states or sectoral procurements, entities identified by the state legislation or sector-specific manuals and guidelines will be governed by them and typically include government departments, local authorities, corporations within the control of the respective state and/or the sector-specific ministry.

As a matter of constitutional principle, all contracts entered into by the “state” fall within the ambit of the constitutional provisions which govern procurement of government contracts. Therefore, in so far as any contract involves the use of public funds or the development or use of public infrastructure and is covered within the Procurement Manuals, the contracts will be administrated by the regulatory framework for public procurement (as discussed in 1.1 Public Procurement Legislation), unless specified otherwise. This will include contracts awarded for procurement of goods and services as well as grants of concessions on a PPP basis.

In addition, sectoral procurement guidelines and specific rules, also provide financial thresholds for ease of administration. For example, the GFRs allow the procurement of goods valued up to INR50,000 without the need for inviting bids or quotations. However, if these goods or services are available on the government e-market place (the “GEM”), then the procurement is required to be done mandatorily on the GEM. The GFRs outline distinct procedures for various contract values, such as the formation of a local purchase committee for goods purchased within the range of INR50,000 to INR5 million if the product is not available on the GEM.

The GFRs also identify certain types of contracts which may be utilised for the purposes of public procurement, which include:

• lump sum contracts;
• item rate (unit rate) contracts;
• time-based (retainership) contracts;
• percentage rate contracts;
• piece work contracts;
• indefinite delivery contracts;
• engineering, procurement and construction contracts; and
• PPPs.

Similarly, the states also specify the contracts within their procurement laws which are akin to contracts entered into by the “state”.

Each public authority or “procuring entity” has the discretion to determine the eligibility conditions for each procurement, along with principles of national interest and public policy. These conditions are determined on the basis of the nature, size, complexity and objective of the subject matter of the procurement. Therefore, subject to the constitutional scrutiny (as discussed in 1.1 Public Procurement Legislation), a “procuring entity” can allow or disallow foreign participation in the procurement process. Any exclusion of foreign participation would, however, have to be justified based on the constitutional principles. The courts in India have recognised reasons of national security and public policy such as local capacity building for excluding foreign participation in government procurement.

The GFRs also impose additional restrictions or compliance requirements (such as prior registration with the competent authority) on foreign participants from identified countries such as those sharing land borders with India.

The foreign direct investment policy (the “FDI Policy”) issued by the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry (the “DPIIT”) also has a bearing on foreign participation, since the FDI Policy specifies the sectoral cap on foreign investment. For example, 100% foreign investment, through the automatic route, is allowed in sectors such as mining and the exploration of metal, non-metal ores, coal and lignite, airports and railway infrastructure. However, foreign investment in sectors such as defence (beyond 74% equity) and telecom services (beyond 49% equity) requires approval from the GoI. In 2020, the GoI amended the FDI Policy by introducing mandatory GoI approval for inter alia investments by entities incorporated in countries such as Pakistan, Afghanistan, Nepal, Bhutan and China (including Hong Kong) with prohibitions on investments in the defence, space and atomic energy sectors by these countries.

The sectoral caps provided under the FDI Policy do not directly affect or restrict foreign participation in the tender procurement process. However, any foreign investment in infrastructure projects forming part of the procurement process or in entities setting up companies or manufacturing facilities under government initiatives (such as the “Make in India” programme) is regulated for the sectors specified under the FDI Policy.

Procuring entities are required to undertake the procurement process in line with the constitutional principles and ensure efficiency, economy, transparency and equitable treatment of participants in their procurement processes. In this context, the Hon’ble Supreme Court of India (the “Supreme Court”), in Ram and Shyam Co. v State of Haryana [(1985) 3 SCC 267] held that “the award of government contracts through public auction/public tender is to ensure transparency in the public procurement, to maximise economy and efficiency in Government procurement, to promote healthy competition among the tenderers, to provide for fair and equitable treatment of all tenderers, and to eliminate irregularities, interference and corrupt practices by the authorities concerned”.

The Procurement Manuals outline the obligations of procuring entities, while emphasising the following five fundamental principles:

• transparency;
• professionalism;
• responsibility and accountability;
• legal compliance; and
• public accountability.

Based on these principles and those provided in the state-specific legislation, the obligations of procuring entities will include the:

• preparation of the bid documents including identifying the eligibility criteria of the participants;
• identifying and enforcing statutory restrictions on participation such as entities which are insolvent, entities that have unpaid taxes, entities (or, their directors) convicted of any criminal offence or entities otherwise blacklisted from participating in any government bids;
• identifying the evaluation criteria which is typically technical evaluation followed by financial evaluation and objectively setting out any non-price conditions;
• conducting the bid process including proper publication of the bid documents, the schedule for the process and the circumstances in which the bid process may be cancelled;
• specifying the instances in which price negotiations can be undertaken;
• evaluating the bid proposals based on the eligibility criteria and conducting an objective responsiveness check;
• executing the contract with the successful bidder in a timely way; and
• maintaining documents for audit or review purposes.

There are no pieces of central legislation which govern public procurement in India. Therefore, any publication or disclosure requirements are primarily provided in the Procurement Manuals, state legislation or sector-specific manuals and guidelines. That said, the Supreme Court has stipulated that procurement notifications must be made publicly available by being published in daily newspapers with wide circulation in the relevant area along with relevant details such as the date, place, time and subject matter of the bid as well as the technical specifications and participation requirements, etc.

The Supreme Court’s directive was formally adopted by the CVC in a circular dated 11 December 2012, which emphasised the need for transparency in contracts related to works, purchases and consultancy services awarded on a nomination basis. The CVC guidelines also require the bid documents to be published in the relevant “procuring entity’s” website.

According to the GFRs, all ministries and departments of the GoI are required to publish their tender invitations, amendments, and bid award details on the Central Public Procurement Portal (the “CPPP”) (which can be accessed at https://eprocure.gov.in/eprocure/app). The CPPP allows bidders to submit their tenders online through the portal.

In the context of state-level procurement, several states have issued specific regulations governing the publication of tender notices. For instance:

• Rajasthan mandates that procurement contracts exceeding INR10 million be advertised on the “procuring entity’s” notice board, in one regional newspaper, a state-level newspaper, and a widely circulated national daily;
• Tamil Nadu requires tender notices for contracts valued above INR750 million to be published in all editions of both English and regional newspapers, as well as in the Indian Trade Journal; and
• Maharashtra requires procurement contracts exceeding INR50 million to be advertised in at least one national-level and one state-level newspaper.

For tenders below these specified thresholds, states usually implement alternative or limited modes of publication, such as displaying notices solely on the “procuring entity’s” notice board or publication in regional newspapers.

Furthermore, an invitation to tender is required to specify the details of the tendering authority, technical details of the subject matter of the procurement, terms of the procurement, brief of the eligibility conditions and details of the tender procedure (single-stage or two-stage). An invitation to tender is also required to specify the tender evaluation criteria including the timelines, form and place of submission and opening of bids, the evaluation criteria as well as the price (if any) and any other details such as procedure for submission, time, date and place of the opening of tenders.

In India, there is no restriction on procuring entities or awarding authorities conducting preliminary market consultations. In fact, procuring entities are expected to apply their commercial wisdom when awarding contracts. In the context of PPP projects, these consultations are usually undertaken to ensure tender documents are designed to encourage more participation, derive the best value in terms of the asset and assess the feasibility through stakeholder inputs. The PPP Guide for Practitioners issued by the Department of Economic Affairs, Ministry of Finance, GoI (the “PPP Guide”) recommends that consultations are conducted with the participants once the project is identified.

Procuring entities are also required to conduct pre-bid meetings which allow participants to provide their views on the subject matter of the procurement and the terms and conditions of the tender documents.

The regulatory framework as set out in 1.1 Public Procurement Legislation identifies different forms of tender processes and procedures to be followed based on the type of procurement and the related financial thresholds. The tender processes recognised under Indian law and generally adopted by procuring entities in India are set out below.

• Open tender enquiry: this process ensures the widest participation whereby tender documents are provided in the designated website or the CPPP. The tenders issued through this process are open to all participants who meet the eligibility criteria and are usually used for high-value procurements.
• Limited tender enquiry: this process is used for a restricted list of competitors, pre-selected or enlisted with the “procuring entity”. The pre-selected bidders are sent the tender documents and often do not have to advertise the enquiry in a public domain.
• Global tender enquiry: this process is used in cases where the technology, specifications or quality are not available within the country and therefore, procurement is sought through foreign entities. This is usually opted for in very high-value procurement cases.
• Single tender enquiry: this process is used in cases where the entity is the only manufacturer of the goods, for procuring spare parts compatible with existing machinery or in emergency situations.
• Single-stage bidding: under this process, the “procuring entity” invites the technical and financial tenders together. The technical bids submitted by the participants are evaluated first, and those participants who meet the eligibility criteria are shortlisted. Thereafter, only the financial bids for the shortlisted participants are evaluated.

• Two-stage bidding: under this process, an expression of interest (EOI) or technical bids through request for qualification (RFQ) are issued first. The entities who participate through the EOI or RFQ are shortlisted on the basis of the eligibility criteria and are invited to submit their financial proposals through a request for proposal (RFP).

• Electronic reverse auction: this process is required to enable qualified bidders to submit their financial bids on a designated portal during a scheduled period of time. This is an online real-time price determination method for automatic evaluation of bids and award of procurement contracts.

In terms of infrastructure projects, although used sparingly, procuring entities also employ the Swiss Challenge model. Under this model, the original bidder submits its proposal to the awarding authority and subsequently, other bidders are invited to submit their proposals with the original bidder’s proposal as the benchmark. The courts in India have upheld this as a valid method for awarding procurement contracts.

The GFRs and the Procurement Manuals discourage negotiation after the opening of bids, except in exceptional circumstances. The CVC guidelines prohibit awarding authorities from negotiating with the bidders after the completion of the bid process, other than limited negotiations with the lowest bidder but only under specified circumstances which include:

• procurement of proprietary items or items with limited source of supply;
• circumstances which indicate cartel formation;
• emergency procurement; or
• where the participation is non-responsive.

The guiding principle in these negotiations is that any negotiating cannot fundamentally alter the tender conditions or create a prejudice against the other bidders. All negotiations are required to be documented and approved by the competent authority to ensure accountability.

The bidders and procuring entities are also bound by the Code of Integrity for Public Procurement (the “CIPP”), which prohibits unethical practices, including collusion, coercive behaviour and any corrupt practices.

As stated in 2.3 Tender Procedure for the Award of a Contract, the public procurement framework allows procuring entities to choose from multiple tender procedures. While there is no legislative guidance on the choice of tender procedure, procuring entities have the discretion to choose the:

• tender procedure basis, inter alia;
• nature of the procurement;
• objective and interests of the “procuring entity”;
• value thresholds; and
• approval mechanisms.

The courts in India have also recognised that procuring entities have the freedom to apply their commercial mind while adopting the appropriate tender procedure provided the decision-making is within the constitutional principles and ensures fairness, transparency and value for money in public procurement.

The GFRs, the Procurement Manuals, the CVC guidelines and sector-specific guidelines set out certain value thresholds, approval mechanisms, urgency requirement and tender parameters which are to be considered before a tender procedure for a particular procurement is finalised.

The procurement framework permits direct contract awards under specific circumstances, including procurement on a nomination basis. The courts in India have also held that while tenders are the normal mode for procurement, there may be exceptional circumstances where a tender procedure can be dispensed with. However, any direct procurement or procurement on a nomination basis can only be carried out under the following circumstances:

• proprietary goods or services: only a specific manufacturer or supplier can provide the required goods or services due to proprietary rights or technological exclusivity;
• nomination basis: a specific supplier or contractor is selected based on their unique expertise, capability or previous association;
• absence of competition: open or limited tendering processes repeatedly fail to attract bids or result in non-responsive offers;
• small-value purchases: low-value purchases up to a threshold specified in the Procurement Manuals or the respective departmental regulations;
• compatibility with existing system: spare parts or machinery are required to be standardised with existing systems;
• framework agreements: procurement from pre-approved suppliers under rate contracts or framework agreements, provided the agreements are competitively established; and
• urgent or emergency requirements;

The Procurement Manuals and the CVC guidelines also set out specific compliance steps to be followed by procuring entities while awarding direct contracts or on a nomination basis such as intimation requirements to the board of the public sector entity for scrutiny and post facto vetting.

The procurement framework does not prescribe any timing for the publication of tender documents.

At the central level, there is no legislation which prescribes the time limits for the conducting of the tender procedure or the submission of tenders by the participants. Under the procurement framework, timeframes for a tender process are required to be set out in the tender documents. However, to ensure transparency and reduce delays, the GFRs require the “procuring entity” to define an appropriate timeframe for each stage of the tender process. The GFRs also provide that in open tender cases, a minimum tender submission timeframe of three weeks must be provided, and in the case of global tenders, both domestic and foreign bidders must be given at least four weeks to submit their proposals.

The eligibility criteria for each procurement process is determined on a “procuring entity” basis, the guidance provided in the procurement framework such as the GFRs, the Procurement Manuals and the sector-specific manuals. The “procuring entity” is therefore empowered to prescribe the eligibility conditions within this guidance under the procurement framework and on the basis of the nature, size, complexity and objective of the procurement concerned.

The “procuring entity”, however, is required to ensure that the constitutional ethos of fairness and transparency and the prescribed conditions are not arbitrary, irrational, discriminatory or mala fide. Procuring entities are also guided by model agreements, manuals and guides issued by specific authorities in the context of the subject matter of the procurement.

The GFRs along with the Procurement Manuals provide certain criteria such as minimum level of experience, past performance, technical capability, manufacturing facilities and production capability, turnover, financial position, etc, which should be considered to evaluate the technical eligibility of a bidder. Furthermore, the DPIIT issued the Public Procurement (Preference to Make in India) Order, 2017 (the “Make in India Order”) prescribing “local content requirement” to be fulfilled by domestic bidders and these bidders would be given preference in specified procurements.

The tender documents also typically include restrictions on participation from bidders who have been blacklisted or debarred from participation in government tenders for a specified period of time.

The procurement framework allows procuring entities to restrict participation of bidders to a small number of bidders. In India, this mode of tendering is referred to as limited tendering, as discussed in 2.3 Tender Procedure for the Award of a Contract. Procuring entities are also allowed to award direct contracts on a nomination basis as discussed in 2.5 Direct Contract Awards.

In addition to limited tendering, the procurement framework in India recognises restricted tendering in the following forms:

• pre-qualified bidders: a shortlist of bidders is maintained based on a pre-qualification process. Thereafter, pre-qualified bidders are only eligible to participate in the tender enquiry;
• proprietary article: where a specific supplier or group of suppliers holds exclusive rights (eg, patents) for the required goods or services;
• rate contracts: suppliers listed under pre-established rate contracts or framework agreements are considered for specific procurements; and
• empanelment: pre-approved suppliers or service providers are shortlisted based on a detailed registration or empanelment process conducted periodically.

Any decision to restrict participation in a procurement process is required to be documented with proper justification by the “procuring entity” and records of evaluation and shortlisting of participants are required to be maintained for audit purposes.

The GFRs and the Procurement Manuals require that in limited tendering cases, there must be at least three bidders.

As discussed in 2.8 Eligibility for Participation in a Procurement Process, procuring entities have the discretion to prescribe the eligibility conditions for the respective procurement, and each tender submitted by the participants have to be evaluated on the basis of these eligibility conditions. However, in evaluating the bids, procuring entities are required to ensure fairness, transparency, equality, non-arbitrariness and non-discriminatory treatment and that the process adopted or the decision-making is not mala fide or intended to favour a participant.

On the basis of the eligibility conditions, the bids are generally evaluated on the basis of the:

• responsiveness of the bidder;
• price or economic efficiency;
• quality of goods or raw materials;
• payment terms; and
• technical expertise.

In terms of the financial evaluation, one of the most prevalent methods of evaluation is the lowest price-bid mode (typically applied to rate contracts and lump sum contracts). In the cases of in revenue-sharing contracts or contracts where an upfront premium is payable to the procurer, the bidders are evaluated based on the highest quoted premium. That said, procuring entities also opt for a method that combines the technical and financial bid scores, assigning a pre-determined weightage to each component, and awarding the bid to the bidder with the highest weightage points.

Please refer to 2.5 Direct Contract Awards, which discusses the circumstances in which the tender award procedure can be dispensed with and direct contracts can be opted for.

The procurement framework which includes the GFRs, the Procurement Manuals, the CVC circulars and the model documents require the “procuring entity” to specifically disclose the evaluation criteria in the bid documents. This will form the basis on which the bids are evaluated. Any rejection or acceptance of the bids are to be strictly considered as per the evaluation criteria provided in the tender documents. The aim of the disclosure at the tender documents’ stage is to ensure transparency and fairness by allowing each participant to be aware of the tender conditions provided to itself and to others.

Tender documents which do not provide objective evaluation criteria are susceptible to challenges before the courts by bid participants.

There is no legal obligation on procuring entities to notify the unsuccessful bidders or disclose the reasons for selecting or rejecting a bid participant. While procuring entities have the discretion to reject bids without providing a reason, the courts in India have drawn limitations to this discretion by holding that procuring entities cannot act arbitrarily, unreasonably or with improper intent when awarding or rejecting bids. Separately, the GFRs provide that if a prospective bidder requests an explanation for the rejection of their bid, the “procuring entity” must provide a response.

Furthermore, entities falling within the definition of “state” as discussed in 1.2 Entities Subject to Procurement Regulation, are subject to the Right to Information Act, 2005 (the “RTI Act”). Therefore, if an unsuccessful bidder formally requests an explanation under the RTI Act, the “procuring entity” may be required to disclose the reasons for their decision. That said, certain categories of information are exempt from this disclosure obligation as follows.

• Information that could prejudicially affect India’s sovereignty, integrity, security, strategic, scientific or economic interests, impact its foreign relations or incite unlawful activities.
• Information explicitly prohibited from publication by a court or whose disclosure would amount to contempt of court.
• Information that could violate parliamentary or state legislature privileges.
• Confidential business data, trade secrets, intellectual property and cabinet papers, including records of ministerial deliberations and high-level discussions.

Considering most procurement tenders are price-sensitive, the evaluation of financial bids forms one of the most critical evaluation criteria. In order to ensure transparency, the financial bids are usually opened and evaluated in the presence of the relevant bidders. The GFRs and the Procurement Manuals require the name of the successful bidder to be published on the CPPP, the “procuring entity’s” website and its notice board and bulletin.

As a matter of practice, the “procuring entity” generally issues a letter of award (LOA) to the successful bidder which includes the details of the contract being awarded, the preliminary conditions to be met by the successful bidder (such as written acceptance of the LOA and providing any bank guarantees) and the requirement to execute the contract or concession agreement within the specified timeframe.

There is no specific obligation on procuring entities to grant prior hearings to the bidders before a decision is taken in terms of awarding a contract to the successful bidder. However, procuring entities conduct pre-bid conferences in order to understand the concerns of stakeholders and respond to any stakeholder queries and then revise the tender documents to the extent required based on the discussions and notify the bidders accordingly.

Separately, if the “procuring entity” is of the view that any bidder has breached the code of integrity, the bidder must be provided with a reasonable opportunity to be heard before any adverse actions (blacklisting or debarment) are ordered against the bidder. The Procurement Manuals also state that if a bidder believes the procurement process has not been properly conducted or its bid has been wrongly rejected, the bidder has the right to be heard (including through the submission of a written representation to the “procuring entity”).

The tender documents specify the timeframe for the procurement process and generally, the LOA issued to the successful bidder provides the timeframe within which the contract is to be executed with the awarding authority. There is no “standstill period” between the issuance of the LOA and the last date for the execution of the contract.

As discussed in 1.2 Entities Subject to Procurement Regulation, conducting procurement processes and awarding contracts by entities which fall within the definition of the “state” relate to the fundamental rights of citizens. Therefore, the courts have jurisdiction to adjudicate on matters concerning tender procedures and decisions regarding the awarding of these tenders based on the constitutional principles. In addition, sectoral regulators such as the electricity regulatory commissions have the authority to review procurement decisions within the remit of the Electricity Act, 2003. Meanwhile, regulators such as the Competition Commission of India have the authority to adjudicate on matters relating to public procurement in the context of monopolistic trade practices or unfair competition.

The CIPP or the integrity pact, which forms an integral part of the tender documents in tenders of a specified value, is crucial to ensuring ethical behaviour, integrity and reliability of all the stakeholders including the procuring entities in conducting and participating in the bid process. The CVC has created a panel of experts, called the Independent External Monitors (the “IEMs”), for the implementation of the CIPP. The key role of the IEMs is to ensure that there are no corrupt practices or activities during the procurement process including at the review and award of contract stages.

The IEMs have the authority to examine and investigate complaints alleging mala fide in the tendering process, settle disputes through mediation between the “procuring entity” and the participants and provide periodic reports to the CVC. The bidders are precluded from approaching the courts when a complaint is being examined by the IEMs.

The Supreme Court has affirmed that administrative decisions in tender processes can be challenged under Article 226 (writ jurisdiction of the High Courts) and Article 32 (writ jurisdiction of the Supreme Court) of the Constitution. However, the scope for judicial review of these administrative decisions has been limited by the courts. In Tata Cellular v Union of India [(1994) 6 SCC 651], the Supreme Court held that judicial scrutiny in procurement decision-making will only include review to the extent that the “procuring entity”:

• has exceeded its powers;
• has abused its powers;
• has breached the principles of natural justice; and
• is guilty of illegality, irrationality, mala fide or procedural impropriety.

In Jagdish Mandal v State of Odisha [(2007) 14 SCC 517], the Supreme Court held that judicial interference in tender processes should only take place if the following questions lead to a negative response:

• whether the process adopted, or decision made by the authority is mala fide or intended to favour someone; or whether the process adopted, or decision made is so arbitrary and irrational that the court can say the decision is such that no responsible authority acting reasonably and in line with relevant law could have reached it; and
• whether public interest is affected.

The courts have also consistently held that in determining whether an administrative decision with respect to awarding a tender has been made lawfully, the commercial prudence of the “procuring entity” in arriving at the decision will not be amenable to judicial review.

The remedies for procurement process breaches, the Procurement Manuals or the guidelines are often linked to the specific nature of the breach and whether any act of the “procuring entity” violates the constitutional principles including fundamental rights of citizens. While invoking the writ jurisdiction of the courts, aggrieved parties have the right to seek interim relief such as a stay on the tender proceedings, quashing the process itself or having the contract awarded.

As discussed in 4.2 Remedies Available for Breach of Procurement Legislation, aggrieved parties have the right to seek interim relief including orders seeking suspension of the tender process. However, any grant of this relief will be based on the scope of judicial review available to the courts and the specific facts in the case.

The writ jurisdiction of the High Court and the Supreme Court can be invoked if the fundamental rights of citizens are affected by any decision of the “state”. Therefore, the “procuring entity’s” decisions can be challenged, through the writ jurisdiction, by entities aggrieved by the decisions of the “procuring entity” (such as, excluded bidders or bidders whose bids were rejected).

Citizens (other than direct stakeholders or bid participants) can also challenge the procurement process or the decisions of the “procuring entity” through public interest litigation, on the grounds that the greater public interest has been adversely affected.

There are no prescribed time limits for invoking the writ jurisdiction of the High Court or the Supreme Court. However, significant delays in filing a writ petition may be considered by the courts when admitting the writ petition as it may raise concerns regarding the bona fide nature of a party filing the petition. Therefore, it is imperative that the writ petition is filed within a reasonable time.

The procurement laws of several states provide the timeframes within which the “procuring entity’s” decision may be challenged in line with the mechanism provided under the procurement laws of the relevant state. For example, the procurement laws of Rajasthan and Mizoram specify that an aggrieved bidder may appeal the decision of the awarding authority within 30 days from the date of receipt of the decision. Additionally, the procurement laws of Mizoram provide that an additional 30 days may be provided to an aggrieved bidder at the discretion of the designated appellate authority.

The length of legal proceedings until the final order of the court, in the context of writ petitions or public interest litigation relating to decisions of a “procuring entity”, may often be protracted and can take between a few months and several years. This typically depends on the complexity of the case, whether any investigations by specialised agencies are required and the scale and impact of the subject matter of the procurement. There have been instances where the Supreme Court has taken two to three years to deliver its judgments in cases where the manner of allocation of telecom licences and coal blocks were challenged through public interest litigation.

In the context of state procurement laws, some states specify the timeframe within which the appeals of the aggrieved bidders are required to be disposed by the designated officer or the state government. For example, Rajasthan’s procurement law specifies that the designated appellate authority should aim to resolve appeals within 30 days from the filing of the appeal.

In India, there is no specific database, either at the central or state level, which provides details on the numbers of claims or challenges to the decisions of procuring entities.

The costs involved in challenging the decisions of the “procuring entity” before the High Court or the Supreme Court can be substantial due to the length of the proceedings. Other factors which influence litigation costs in India include:

• fees associated with the filing of a petition: when filing a writ petition before the High Court or the Supreme Court, the petitioner is required to pay a court fee in line with the Court Fees Act, 1870 (in the case of the Supreme Court) and the state court fees legislation (in the case of the High Court); and
• counsel fees: the fees to be paid to arguing counsels and solicitors, which can be substantial based on the number of hearings, the nature of petitions to be filed, complexity of the matter, etc.

Once a contract has been awarded to the successful bidder by the “procuring entity” and the parties execute the procurement contract or the concession agreement, the contract is then governed by the Contract Act. The Contract Act allows the parties to a contract to mutually agree to amend its terms.

As a general rule, amendments or modifications to a procurement contract are discouraged. In fact, the CVC guidelines and the Procurement Manuals restrict any amendments to the contract if the amendments violate the terms of the original tender, substantially vary the contract or provide an unfair advantage to the successful bidder in any way.

The CVC guidelines also discourage the granting of any relaxation of the contract terms after the execution of the contract. However, modifications to procurement contracts may be allowed in certain exceptional circumstances if the modifications are required to satisfy public interest and prevent financial losses to the public purse. Where an amendment becomes unavoidable, the “procuring entity” is required to:

• examine the financial and other implications of the modification;
• obtain approval from the competent authority; and
• document the changes as formal amendments signed by both parties.

The termination of a contract is primarily governed by the Contract Act and the termination events provided within the contract itself. The Contract Act recognises the rights of the parties to terminate a contract, inter alia, on the following grounds.

• Frustration or impossibility of performance: if the contract becomes impossible to perform due to unforeseen circumstances or events beyond the contemplation of the parties.
• Breach of obligations: non-performance or breach of the obligations by parties which cannot be rectified.
• Fraud, misrepresentation or coercion: if a contract is spoiled or impaired by fraudulent acts, misrepresentation, undue influence or coercion, it is void.
• Termination clauses in the contract: termination in line with the terms of the contract includes termination for convenience or change of circumstances of the parties.

The CVC guidelines and the Procurement Manuals also provide that a contract may be terminated if the chosen bidder:

• fails to undertake any or all material obligations under the procurement contract or fails to perform any other contractual obligations;
• becomes insolvent, files for bankruptcy or enters liquidation; and
• substantially loses the technical or financial capacity that formed the basis of their selection.

In addition, the model agreements for PPP projects (published by Niti Aayog) set out certain additional grounds for termination, which include:

• failure to fulfil material obligations under the procurement contract;
• non-replenishment of performance security in line with the terms of the contract;
• change in ownership without the prior written approvals of the competent authority or amalgamation or reconstitution which leads to a material adverse effect; and
• breach of representations and warranties.

In the context of special prerogatives, the procurement framework gives procuring entities the discretion to determine the tender procedure, the mode of tendering and the evaluation methodology and award the contract to the party it deems fit, subject to maintaining and operating within the constitutional framework. As discussed in 2.8 Eligibility for Participation in a Procurement Process, procuring entities are empowered to exclude bidders on public policy and national interest grounds and exercise their autonomy to accept or reject bids on the basis of the evaluation criteria. As discussed in 2.5 Direct Contract Awards, procuring entities also have the power to enter into direct contracts on a nomination basis in limited circumstances.

In terms of interference by the courts, the decision-making by the procuring entities in awarding contracts is subject to limited judicial scrutiny (on the grounds of bias, arbitrariness or mala fide) as the courts have recognised the awarding authority or government’s freedom to contract. Please also refer to 4.1 Responsibility for Review of the Awarding Authority’s Decisions for discussion on the scope of judicial review of government procurement awards.

In the case of Subodh Kumar Singh Rathour v The Chief Executive Officer & Ors. [2024 SCC OnLine SC 1682], a three-judge bench of the Supreme Court while examining the scope of judicial review in contractual matters, especially in the context of “state” actions reaffirmed that judicial review is only permissible in cases where decisions of the “state” affect public interest, involve unfair trade practices or exhibit procedural improprieties.

This judgment has further strengthened the doctrine of fairness in public contracts, ensuring that “state” actions in commercial decision-making remain accountable and transparent.

No specific legislative amendments in relation to laws governing public procurement are being considered at present. However, the GFRs are periodically amended by the DOE. A notable example of an amendment is the revision of Rule 144(x) of the GFRs with respect to the registration requirement for bidders from countries sharing a land border with India. The revision in Rule 144(x) of the GFRs was introduced by DoE OM No F.7/10/2021-PPD dated 23 February 2023.