The State retains the right to cancel tenders prior to contract award; no vested rights accrue until a contract is concluded, emphasizing fairness and economic viability.

Headnote:(A) Constitution of India - Articles 226 and 227 - Writ petitions filed to challenge the cancellation of tender notifications by the Bangalore Solid Waste Management Ltd. (BSWML) - Petitioners alleged arbitrary rejection of bids and sought to quash the tender cancellations - Court held that the government retains the right to cancel tenders prior to the award of contract, emphasizing that no vested rights accrue until a contract is formally concluded. The court found sufficient reasoning for the tender cancellation based on economic viability and public interest, allowing petitioners to participate in new tenders. (Paras 1-15)

(B) Judicial Review - Scope of judicial review in contractual matters involving the State - The court affirmed that while the State has discretion in awarding contracts, it must act fairly and not arbitrarily. The court reiterated that a mere highest bid does not confer a right to award, and the State's actions are subject to scrutiny under Article 14 of the Constitution. (Paras 11-12)

Facts of the case:
The petitioners, contractors for solid waste management, challenged the cancellation of tenders issued by BSWML, alleging arbitrary rejection on frivolous grounds. The State argued that the cancellations were necessary due to high bid premiums and economic viability issues. (Paras 1-6)

Findings of Court:
The court upheld the State's right to cancel the tenders, citing the absence of a concluded contract and the necessity for economic viability in public procurement. The petitioners were permitted to participate in the new tender process. (Paras 13-15)

Issues: Whether the cancellation of the tender notifications was arbitrary and whether the petitioners had a vested right to the contract. (Paras 10-12)

Ratio Decidendi: The court ruled that the absence of a concluded contract means no rights are vested, allowing the State to cancel the tender for valid reasons. The court emphasized the need for transparency and fairness in public procurement. (Paras 11-12)

Result: All writ petitions disposed of; petitioners allowed to participate in the new tender process.

CAV ORDER

The petitioners in all these cases are participants in a tender that was notified by the respondent/Bruhat Bengaluru Mahanagara Palike (hereinafter referred to as ‘the BBMP’ for short) for the purpose of solid waste management.

2. Heard Sri R S Ravi, learned senior counsel for petitioners in W.P.Nos.26089 of 2023 and 4698 of 2023; Sri H.V.Nagaraja Rao, learned counsel for petitioner and Sri P Chandrashekar, learned counsel for C/R3 in W.P.No.21940 of 2022; Sri Ashok Haranahalli, learned senior counsel for petitioner and Sri B L Sanjeev for respondent No.2/BBMP in W.P.No.2935 of 2023; Sri Jayakumar S Patil, learned senior counsel for petitioners in W.P.Nos.4301 of 2023, 4308 of 2023, 4477 of 2023, 4987 of 2023 and 5071 of 2023; Sri Ashok Haranahalli, learned senior counsel for respondent No.4 in W.P.Nos.4301 of 2023, 4308 of 2023 and 4477 of 2023; Sri Muniraju K, learned counsel for respondent No.4 in W.P.Nos.4987 of 2023 and 5071 of 2023; Sri N.S.Vijayanth Babu, learned counsel for petitioner in W.P.No.3913 of 2024; Sri Mithun G A, learned counsel for petitioners in W.P.No.4069 of 2024; Sri K Shashikiran Shetty, learned Advocate General for State; Sri S N Prashanth Chandra and Smt Namitha Mahesh B G, learned counsels for Solid Waste Management and Sri P Prasanna Kumar, learned senior counsel for respondent No.5 in W.P.No.2935 of 2023.

3. Facts, in brief, germane are as follows:-

The petitioners, in the cases at hand, are all contractors handling collection, transportation and disposal of solid waste in several wards of the BBMP. The Urban Development Department of Government of Karnataka establishes a separate entity called the Bangalore Solid Waste Management Limited, a Public Limited Company (‘the Company’ for short) exclusively for handling solid waste within the limits of BBMP. A request for Proposal (‘RFP’)/tender was notified by the Company on 22-08-2022 inviting applications from service providers for 89 packages on certain terms and conditions. The Company is said to have withdrawn the RFP and notified a fresh RFP on 28-09-2022 for the same purpose.

This becomes the subject matter of challenge before this Court in Writ Petition No.21876 of 2022 and connected cases. Validity of the notification comes to be confirmed by this Court and a direction was issued to conclude the tender expeditiously.

4. After the order was passed by this Court, it appears that several of the contractors were blacklisted or their tenders were not accepted on alleged frivolous grounds contrary to the Karnataka Transparency in Public Procurements Act, 1999 . All these petitioners are those whose tenders have been declined to be accepted on certain grounds. During the pendency of the subject petitions the tender that was notified comes to be cancelled or withdrawn. On such withdrawal, the learned Advocate General representing the State has contended that no right of any party is taken away, as no contract is awarded to any person. The matter was at the stage of consideration of award of contract and there is an interim order granted in few of the cases before this Court. Therefore, the State thought it not economically viable to continue the tender with the change in prices and wanted to bring a new tender which can also be monitored by the Court.

5. The learned senior counsel Sri Jayakumar S. Patil and the learned counsel Sri P.Prasanna Kumar who are participants in the subject tender would vehemently oppose the submissions of the learned Advocate General. The learned senior counsel would contend that the earlier tender was also monitored by the Court. On certain frivolous grounds the tenders were rejected. Those rejections have been stayed and this Court had directed financial bid to be opened and opening of the financial bid was made subject to the result of the petitions. He would contend that this is not the first time that the State is wanting to recall the tender and re-issue the tender. It has been repeated for extraneous reasons. He w

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