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Can Court Interfere If State Cancels Tender For Public Interest? High Court Rules No
The has reaffirmed the limited scope of in matters, ruling that the state is not obligated to finalize a tender if the successful bidder’s credentials fall under a cloud. Presided over by Justice Sanjay Parihar, the court dismissed a petition filed by , which sought to challenge the cancellation of its selection for a ₹161.23 crore electricity infrastructure project.
A Dispute Over Eligibility
The controversy stemmed from a tender issued by the () for developing distribution infrastructure in Kathua district under the Revamped Distribution Sector Scheme (RDSS). Although M/s SPBL Energy emerged as the L-1 (lowest) bidder, its success was short-lived. A complaint from a former business associate, Mr. Rajeev Talreja, alleged that the company had been blacklisted for financial irregularities.
While the petitioner initially convinced the respondent to proceed after furnishing an affidavit promising the cancellation of its tender should any disqualifying facts be uncovered, the situation escalated when further reports surfaced. It was alleged that (), Agra, had blacklisted the firm following an inquiry into forged bank guarantees amounting to ₹11.55 crore. Faced with these revelations, cancelled the tender process, citing the necessity to protect public interest.
Arguments Presented
The petitioner contended that the cancellation was , , and violative of the . Counsel argued that the company held a '' of being awarded the contract after passing initial technical evaluations and receiving clearance from the corporation. They maintained that the blacklisting allegations were either cleared or stayed by other legal authorities.
In response, the argued that the petitioner had suppressed material facts during the bidding process, specifically its blacklisted status with multiple agencies. The respondents asserted that participating in a tender creates no vested right, and the corporation possessed an inherent right under the tender conditions to cancel the process if the bidder’s integrity was compromised.
Judicial Analysis and Precedent
The High Court conducted an extensive review of constitutional law principles regarding administrative actions. Relying on settled precedents such as and , the court emphasized that in contract matters is confined strictly to testing the decision-making process for or .
Justice Parihar noted that when public interest is at stake, especially in government-funded welfare projects, commercial interests of individual contractors must yield. The court held that the respondent corporation had acted with transparency by providing multiple opportunities for the petitioner to clarify its status, rather than acting on hearsay.
Key Observations
The judgment highlighted that the state must be able to verify bidder credibility to safeguard public funds:
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"Merely because the petitioner emerged as the L-1 bidder did not confer upon it an
to the award of the contract."
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"The respondents acted on tangible material, followed a transparent process and exercised the contractual powers reserved in their favour in furtherance of public interest."
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"The
cannot be invoked where the State, acting in public interest, cancels a
after following a fair and discernible process."
The Court’s Verdict
Finding that the respondents had reasonable grounds to doubt the petitioner’s integrity, the Court dismissed the . The ruling establishes that state corporations are not merely bystanders to procurement fraud and are well within their rights to cancel tender processes when credible information emerges regarding a bidder’s eligibility. The was granted liberty to initiate a fresh tender process, while the court clarified that the petitioner may participate in future tenders should it successfully clear its record and meet all prescribed eligibility criteria.
