FOSTERING TRANSPARENCY IN PUBLIC PROCUREMENTS THROUGH PUBLIC INTEREST LITIGATIONS

Authored by Bhavpreet Singh and Kritika

Public procurements is “the purchase of goods or services by different entities such as ministries and departments of the government for public service delivery, and it encompasses activities ranging from assessment of procurement needs to awards of contract and final payment.”[1] An efficient procurement system helps an entity to make appropriate budgetary decisions and identify the required investment opportunities.[2]

But in India, the public procurement system is prone to unfair practices, political interest, fragmented bidding process, multiplicity in interpreting the tender clauses, etc.[3] Significant amounts of public money, as well as development aid, are wasted instead of being utilized efficiently to improve the provision of vital infrastructure and public services.[4] Global Financial Integrity estimates that the developing countries lose around $US 1 trillion each and every year due to corruption in public contracts.[5]

This article highlights the issues and repercussions of the existing system of public procurements in India, and discusses the manner in which Public Interest Litigations (PIL) could usher probity and transparency therein.

IMPORTANCE OF TRANSPARENCY IN PUBLIC PROCUREMENTS

There are a large number of life-changing situations associated with efficient or inefficient government procurement regimes; for instance, whether the State is capable of using resources efficiently to build quality public hospitals could potentially make an enormous difference to mothers giving birth.[6] An inefficient public procurement system impacts a country's governance profile and capacity to develop sustainably in a significant manner.

In India, the absence of comprehensive legislation, violation of procedural norms, and weak monitoring procedures have emerged as the major reasons behind the corrupt practices in public procurements.[7] The corruption level in India is perceived to be high in recent years leading to low quality of public services which ultimately hampers the development process.[8]

A well-functioning and efficient public procurement system addresses issues like inefficiency, corruption, and waste, and thus, it helps the development process by improving the public administration. A transparent public procurement system is also required to ensure the best value for public money and to establish public confidence.[9]

Thus, considering such a large-scale public expenditure on procurement and its adverse repercussions on the general public, ensuring transparency in the procurement process has become imperative.

EVOLVING JUDICIAL APPROACH – FROM CONSERVATIONIST TO ACTIVIST

The earlier line of reasoning adopted by the courts was one of restriction and restraint from interfering in procurements made by the government. The power of judicial review was being exercised with great care and circumspection and the Court ordinarily did not interfere with the policy decisions of the Government in financial matters.[10] The Courts restrained themselves from substituting its opinion for that of experts in a particular field and accorded due respect to the wisdom of those entrusted with the task of framing policies.[11]

Subsequently, the courts began to take a broader view from the earlier narrower approach and began to interfere only in cases where the governmental action was arbitrary or discriminatory or the policy adopted was mala fide or had no nexus with the object sought to be achieved.[12] However, the advent and emergence of Public Interest Litigations in India in the recent decades carved an exception to the conservationist approach and the courts began to proactively interfere in governmental actions for achieving goals like social justice, probity, transparency and good governance.

PUBLIC INTEREST LITIGATIONS AND THEIR IMPORTANCE IN MATTERS INVOLVING PUBLIC PROCUREMENTS

The courts have attempted to infuse transparency and accountability in the public procurement system through the mechanism of PILs. The courts by taking into consideration the changing needs of the society, liberalized the rule of locus standi and gave birth to a flexible public interest litigation system.[13]

Meaning and Origin of Public Interest Litigation

The PILs are the product of realisation of the constitutional obligations of the courts. Predominantly, to provide access to justice to the poor, deprived, vulnerable, discriminated and marginalised sections of the society, the Supreme Court initiated, encouraged and propelled the public interest litigation.[14] The High Courts exercised similar jurisdiction under Article 226 of the Constitution. This jurisdiction has been created and carved out by the judicial creativity and craftsmanship.[15]

The PIL is not in the nature of adversarial litigation but is a challenge and an opportunity to the Government and its officers to make basic human rights meaningful.[16] The public interest litigation is for assuring social, economic and political justice.[17] The three phases of Public interest litigation as enumerated by the Supreme Court are:[18]

Phase I: Dealt with cases where directions and orders were passed primarily to protect fundamental rights under Article 21 of the marginalised groups and sections of the society who because of extreme poverty, illiteracy and ignorance cannot approach this Court or the High Courts.

Phase II: Dealt with the cases relating to protection, preservation of ecology, environment, forests, marine life, wildlife, mountains, rivers, historical monuments, etc. etc.

Phase III: Dealt with the directions issued by the Courts in maintaining the probity, transparency and integrity in governance.

PILs and Public Procurements

The PIL is an extremely important jurisdiction exercised by the Supreme Court and the High Courts. In several important cases, the courts have given important directions and passed orders which positively impacted the public procurement system and helped in maintaining probity and transparency in public procurements to a certain extent. Importantly, the courts have appreciated the proactive and public interest role played by the petitioners who had approached the court in these PILs. As an illustration, a select list of cases is being discussed to demonstrate the positive impact of PILs in matters involving allotments and public procurements.

In Union of India v. Hetovi Kappo[19],a PIL was filed in the Gauhati High Court,[20] seeking the expediting of the laying of a road whose construction had been stalled. The contract was scheduled to be completed within a period of four years and the contract had been cancelled since the contractor had not completed 80% of the total contracted work. The contribution of the public interest petitioner was appreciated by the court and the PIL was entertained and allowed. The court directed the government to retender the project by initiating a fresh process. The matter came before the Supreme Court which also made certain directions relating to the completion of the work. The court directed the Union of India to ensure the completion of the project within a specified period.

In Centre for Public Interest Litigation v. Union of India,[21] a PIL was filed against the misallocation of licences/radio spectrum by the Ministry of Communications and Information Technology, Government of India in January 2008 to provide 2G services. The controversy arose due to irregularities in the allocation process and certain beneficiaries earning huge profits by procuring spectrum at throw-away prices and then selling at higher prices. The Comptroller & Auditor General (CAG) had also made adverse comments in the audit report. The Supreme Court entertained the PIL and quashed the allotments. It held that the State must act in consonance with the principles of equality and public trust in the allocation of natural resources and ensure that no action is taken detrimental to the public interest is taken. The court also observed that although the State is empowered to make allocations and distribution of natural resources, the process of distribution must be guided by constitutional principles including the doctrine of equality and larger public good.

In Akhil Bhartiya Upbhokta Congress v. State of M.P.,[22] the allotment of a land without any advertisement and without inviting other similarly-situated organisations/institutions to participate in the process of allotment was challenged. The Supreme Court appreciated the role played by the public interest petitioner and held that every action/decision of the State and its agencies/instrumentalities to give largesse or confer benefit must be founded on a sound, transparent, discernible and well-defined policy, which is required to be made known to the public and implemented by adopting a non-discriminatory and non-arbitrary method. The court also emphasised that the allotment of land by the State or its agencies/instrumentalities to a body/organisation/institution which carry the tag of caste, community or religion is not only contrary to the idea of a secular democratic republic, but is also fraught with grave danger of dividing the society on caste or communal lines.[23]

In Ravi Development v. Shree Krishna Prathisthan & Ors.[24], a PIL was filed before the High Court challenging the public notice issued by MHADA for the development of Mira Road Project by ‘Swiss Challenge Method’. The court appreciated the project undertaken by the Government of Maharashtra and MHADA but provided certain suggestions to make the system more efficient and transparent. The court observed that the State/Authority shall publish in advance the nature and particulars of the ‘Swiss Challenge Method’ and the nature of projects falling under such a method. It was also observed that the rules should be made regarding time limits on the approval of the project and respective bidding and that all persons interested in such developmental activities should be given equal and sufficient opportunity to participate and there must be healthy inter se competition amongst such developers.[25]

The Gujarat High Court entertained a PIL in Sapara Dilip Bharatbhai v, State of Gujarat and Ors.,[26] wherein the allotments for the construction of a flyover in Ahmedabad were challenged. The challenge was made on grounds of the allottee not fulfilling the essential eligibility qualifications prescribed in the tender document. The court upheld the locus standi of the petitioner by observing that “as the Corporation decided to select a particular applicant who has no requisite qualification as specified, the court through Public Interest Litigation can definitely question the bona fide of the Corporation in not selecting others having requisite qualification.” The court set aside the work order executed in favour of the successful bidder for lacking the required essential eligibility qualifications.

POSITIVE IMPACT OF INTERVENTION THROUGH PIL

The constitutional courts in entertaining PILs have relaxed the rule of locus and appreciated the role played by vigilant public-spirited citizens and non-governmental organisations in questioning governmental actions and in fighting for good governance, transparency and accountability.[27] Through the mechanism of PILs, the courts have become important vehicles for ensuring a transparent public procurement system.

[1] Sean Lewis-Faupel et al., Can Electronic Procurement Improve Infrastructure Provision? Evidence from Public Works in India and Indonesia, 8 American Economic Journal: Economic Policy 258–283 (2016). [2] Bhabesh Hazarika & Pratap Ranjan Jena, Public Procurement in India: Assessment of Institutional Mechanism, Challenges, and Reforms, Working Papers (2017), Available at: https://ideas.repec.org/p/npf/wpaper/17-204.html (last visited Jul 31, 2022). [3] Ibid. [4] Nicholas C. Niggli, Helping Nations, Businesses and People to Succeed: How Government Procurement Influences Institution Building, Good Governance, Economic Growth and Sustainable Development 7(1) TRADE L. & DEV. 8 (2015). [5] Ibid. [6] supra note 4. [7] Bhabesh Hazarika & Pratap Ranjan Jena, Public Procurement in India: Assessment of Institutional Mechanism, Challenges, and Reforms, Working Papers (2017), Available at: https://ideas.repec.org/p/npf/wpaper/17-204.html (last visited Jul 31, 2022). [8] As per the Report of the Transparency International 2016, India’s rank in Corruption Perception Index is 79 out of 179 ranks (http://www.transparency.org/news/feature/corruption_perceptions_index_2016). [9] supra note 7. [10] Centre for Public Interest Litigation v, Union of India, (2012) 3 SCC 1. [11] Ibid. [12] Monarch Infrastructure Pvt. Ltd. v. Commissioner, Ulhasnagar Municipal Corporation, (2000) 5 SCC 287. [13] Dr. Saroj Bohra, Public Interest Litigation: Access to Justice, MANUPATRA, Available at: http://www.manupatra.com/roundup/379/Articles/Public%20Interest%20Litigation.pdf (last visited: Aug 27, 2022). [14] State of Uttaranchal v. Balwant Singh Chaufal and Ors., (2010) 3 SCC 402. [15] Ibid. [16] Manohar Joshi v. State of Maharashtra, (2012) 3 SCC 619. [17] Ramsharan Autyanuprasi v. Union of India, AIR 1989 SC 549. [18] State of Uttaranchal v. Balwant Singh Chaufal and Ors., (2010) 3 SCC 402. [19] Union of India v. Hetovi Kappo, (2018) 14 SCC 743. [20] Hetovi Kappo v. Union of India, 2015 SCC OnLine Gau 1091;Union of India v. Hetovi Kappo, 2016 SCC OnLine Gau 887. [21] Centre for Public Interest Litigation v. Union of India, (2012) 3 SCC 1. [22] Akhil Bhartiya Upbhokta Congress v. State of M.P., (2011) 5 SCC 29. [23] Ibid. [24] Ravi Development v. Shree Krishna Prathisthan & Ors., (2009) 7 SCC 462. [25] Ibid. [26] Sapara Dilip Bharatbhai v, State of Gujarat and Ors., 2014 SCC OnLine Guj 6921. [27] Centre for Public Interest Litigation v. Union of India, (2012) 3 SCC 1.