In a landmark decision, the Supreme Court quashed West Bengal authorities' move to cancel a private contract for maintaining two Kolkata underpasses, highlighting that the state is not the absolute owner of resources. The apex court labelled the cancellation as a "classic textbook case of an arbitrary and capricious exercise of power," citing a West Bengal minister's undue influence.
"Public tenders are a cornerstone of governmental procurement processes, ensuring transparency, competition, and fairness in the allocation of public resources. It emanates from the Doctrine of Public Trust which lays down that all natural resources and public use amenities and structures are intended for the benefit and enjoyment of the public. The State is not the absolute owner of such resources and rather owns it in trust and as such it cannot utilise these resources as it pleases,” said a bench of Chief Justice D Y Chandrachud and justices JB Pardiwala and Manoj Misra as quoted by news agency PTI.
Judicial review of state actions
The judgement elaborated on the scope of judicial review in contract disputes, emphasising that arbitrary state actions could be challenged under writ jurisdiction.
"A relief by way of a writ under Article 226 of the Constitution will also lie against termination or a breach of a contract, wherever such action is found to either be palpably unauthorised or arbitrary.
"Before turning away the parties to the remedy of civil suit, the courts must be mindful to see whether such termination or breach was within the contractual domain or whether the State was merely purporting to exercise powers under the contract for any ulterior motive," it said.
Doctrine of public trust emphasised
The ruling reinforced that public tenders should ensure transparency and fairness, rooted in the Doctrine of Public Trust, which mandates that state resources be managed for public benefit.
Also read | Uttarakhand floods: Body of drowned girl recovered in Dehradun, CM Dhami conducts aerial survey in Kumaon
