Orissa High Court
Va Tech Wabag Limited vs Steel Authority Of India Limited on 17 January, 2025
Author: Savitri Ratho
Bench: Savitri Ratho
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No.3888 of 2024
An application under Article 226 of the Constitution of India.
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VA TECH WABAG LIMITED, having its registered office at
„WABAG HOUSE‟ No.17, 200 Feet Thoraipakkam- Pallavaram Main
Road, Sunnambu Kolathur, Chennai- 600117, represented through Mr. P.
Meenakshi Sundaram, working as Senior Manager, Legal, aged about 39
years, R/o- 158B, Masthan Gori Street, Adambakkam Kancheepuram,
Tamil Nadu- 600088. ..... ...Petitioner
-Versus-
1. Steel Authority of India Limited, Rourkela Steel Plant,
represented through the Executive Director (Projects), At- Rourkela, Pin-
769011, Odisha.
2. Deputy General Manager (MM) (Projects), Steel Authority of
India, Rourkela Steel Plant, At: Rourkela, Pin: 769011, Odisha.
3. Senior Manager (MM) (Projects), Steel Authority of India,
Rourkela Steel Plant, At: Rourkela, Pin: 769011, Odisha.
4. M/s. Effwa Infra & Research Pvt Ltd, represented through its
Managing Director, at 07, Vardhaman Complex, LBS Marg, Gokul
Nagar, Thane (W) -400601.
5. M/s. SMC Resources, SDN represented through its Director-
cum-General Manager, at 7-2-1, Jalan 3/109F, Danau Business Centre,
Taman Danau Desa, Kuala Lumpur- 58100.
6. M/s. Gaja Engineering Private Limited, represented through its
Managing Director, at Modern Profound Tech Park, at 202/P, 203/P &
204 Part-2nd Floor, Survey No. 12, Kondapur, Hyderabad- 500084.
7. M/s. Triveni Engineering & Industries Limited, Water
Business Group, represented through its Chairman & Managing
Director, at A-44, Hosiery Complex, Phase-Il Extension, Noida, Uttar
Pradesh-201305.
8. M/s. Tecton Engineering & Construction India Private
Limited, represented through its Director, at Olive Towers, 7th Floor,
Door No. 6, Arcot Road, Porur, Chennai- 600116.
9. M/s. Tecton Engineering & Construction LLC, represented
through its Chief Executive Officer, at P.O. Box 6039, Anjam, UAE.
10. M/s. Arvind Envisol Limited, represented through its Chief
Executive Officer at Arvind Mill Premises, Naroda Road, Ahmedabad-
380025. ...Opposite Parties
Advocates appeared in this case through Hybrid Mode:
For the Petitioner : Mr. S.P. Mishra, Senior Advocate with
Mr. O. Panda, Advocate
For Opposite Parties No.1 to 3 :Mr. Gautam Misra, Sr.Advocate with
Mr. A.K. Dash, Advocate
For Opposite Party No.4 : Mr. Subir Palit, Senior Advocate with
Mr. P. Jena, Advocate
CORAM:
HON'BLE THE CHIEF JUSTICE
AND
HON'BLE MS. JUSTICE SAVITRI RATHO
.......................................................................................................
Date of Judgment : 17.01.2025
... .....................................................................................................
SAVITRI RATHO, J. The petitioner has filed the writ application
praying primarily for the following reliefs:
i) For quashing the Letter/Office Order dated 10.02.2024
issued by the opposite party No. 3 vide Annexure -11,
cancelling the tender vide Tender Notice No.
P/PROJ/677/2190000042/R1/64 dated 19.07.2022,
ii) For quashing the Tender Notice vide Tender No.P /
PROJ/ 677/2190000042/R2/13 dated 13.02.2024
BRIEF FACTS
2. Pursuant to an Invitation for Bid (in short „IFB‟) floated by the
Opposite Party No. 1- Steel Authority India Limited (in short "SAIL")
vide Tender No. P/PROJ/677/21190000042/R1/64 dated 19.07.2022 for
Treatment System-2 under Zero Liquidated Discharge including the
operation and Maintenance for 5 years at Rourkela (Package No. 4), the
petitioner company had submitted its bid.
3. Four bidders were found eligible in the technical bid, including the
petitioner. The petitioner was declared as L1 Bidder after financial
bidding, but was not issued the Letter of Award (hereinafter referred to
as „LoA‟). As per the requirement, the petitioner had submitted the
declaration for blacklisting on 12.09.2022 along with the bid stating that
the petitioner was blacklisted only by the Delhi Jal Board (in short „DJB
‟). The petitioner had also disclosed the debarment letter issued by the
DJB dated 15.10.2020 and it was further declared that the debarment will
not prevent the petitioner from participating in bidding in view of the
order dated 02.12.2021 passed in W.P. (C) 8342/2020 & CM APPL.
27045/2020 the High Court of Delhi at New Delhi.
4. The opposite parties No. 1 to 3 sought clarifications regarding the
status of the debarment by the DJB, subsequent to which the petitioner
disclosed the details regarding the litigation involving the said debarment
notice by the DJB referring to the order dated 02.12.2021 passed in WP
(C) No. 8342 of 2020 and CM APPL. 27045 of 2020 passed by the
Delhi High court and LPA No. 8 of 2023 filed before the Delhi High
Court. No order of the Court was furnished to show that the order of
blacklisting by the DJB had been set aside.
5. On 10.06.2023 the opposite parties, based on the records available
before it, rejected the bid of the petitioner vide rejection letter dated
10.06.2023 citing that the said debarment by DJB continues.
6. The petitioner had filed WP( C) No. 19399 of 2023 before this
Court challenging order dated 10.06.2023 disqualifying the petitioner‟s
technical bid on the ground of debarment by DJB .
7. WP (C) No. 19399 of 2023, was disposed of by an order dated
08.08.2023, quashing the letter dated 10.06.2023 with a direction to
consider the bid of the petitioner. The relevant portion the judgment
reads as follows:-
"24. In view of the aforesaid facts and circumstances, the order
impugned dated 10.06.2023 under Annexure-16 cannot be
sustained and accordingly the same is liable to be quashed and
is hereby quashed. As a consequence thereof, the opposite
parties are directed to take into consideration the bid submitted
by the petitioner for award of work in question in its favour.
8. On 10.02.2024 the opposite party No. 3 issued a letter to petitioner
informing that the entire tender process had been cancelled and the
original EMD bank guarantee vide BG No. 24031GV002252022 dated
22.08.2022 by Bank of Baroda of Rs. 70 Lakhs was being returned
without citing any reason.
9. On 13.02.2024 the opposite party No 3 intimated the petitioner
that a fresh tender had been issued for the same work vide Tender No. -
P/PROJ/677/2190000042/R2/13 dated 13.02.2024.
10. The petitioner has participated in this fresh tender and submitted
its bid on 19.03.2024.
11. This writ petition has been filed challenging the decision dated
10.02.2024 to cancel the tender dated 19.07.2022 ; and the tender Notice
dated 13.02.2024 inviting fresh tenders for the same work, stating that
the tender dated 19.07.2022 was cancelled vide the rejection letter dated
10.02.2024 without stating any reasons and without hearing the
petitioner and in order to avoid the directions of this Court in Judgment
dt.08.08.2022 passed in in W.P.(C) 19399 of 2023, which is illegal,
actuated by malafides and liable for interference.
ORDERS PASSED BY THIS COURT
12. On 22.02.2024, while issuing notice to the Opposite parties in this
writ application, the following interim order had been passed in I.A.
No.2765 of 2024:-
"5. As an interim measure, it is directed that any final decision
taken in the meanwhile shall be subject to final outcome of the
writ petition. The petitioner shall be at liberty to approach this
Court seeking any interim order if any such development takes
place in the meanwhile which may render the cause of action
redundant."
13. On 06.05.2024, in I.A. 6205 of 2024 filed by the petitioner, the
following order had been passed:-
... "5. Considering the contentions raised by learned counsel for
the parties and after going through the records, since the
opposite parties have proceeded with the matter by issuing fresh
tender under Annexure-12 dated 13.02.2024, this Court directs
that the process of tender may continue, but no final decision
shall be taken till 19.06.2024. Needless to say, if the petitioner
has already participated in the process of tender without
prejudice to its rights, in the event the price bid is opened and it
became successful, in that case the present writ petition may not
survive. Therefore, it is open to the opposite parties to proceed
with the bid process, pursuant to tender call notice dated
13.02.2024 under Annexure-12, but the tender may not be
finalized till 19.06.2024."...
14. On 02.09.2024, I.A. No 8177 of 2024 filed for impleading the
seven bidders who had participated in the tender process was allowed
and they were impleaded as opposite parties No 4 to 10 in the writ
application. But notice was directed to be issued only to opposite party
No. 4 and the matter directed to be listed on 23.09.2024 and interim
order was extended till the next date.
15. The opposite parties No. 1-3 have filed a Counter Affidavit in
which they have interalia stated that subsequent to the judgment of this
court on 08.08.2022 in WP (C) 19399 of 2023, an opinion was sought
from the Solicitor General. Thereafter, after considering other relevant
parameters like delay and increased cost of project as well as the advice
of the learned Solicitor General regarding offer of the petitioner, it was
decided by the Board of SAIL to cancel the tender dated 19.07.2022 and
go for retendering. It has also been stated that participation of the
petitioner in the fresh tender amounts to acquiescence and waiver, for
which the process of tender should not be interfered with. It has also
been stated that the decisions relied on by the petitioner cannot help the
petitioner as no legal right of the petitioner has been infringed .The
allegation of malafides has also been denied.
SUBMISSIONS
16. We have heard the learned counsel for the parties and gone
through the writ application, counter affidavit and additional affidavit of
opposite parties No. 1 to 3 and the rejoinder and reply affidavit filed on
behalf of the petitioner .
17.1. Mr. S.P. Mishra learned Senior counsel appearing on behalf of the
Petitioner, relying on the decision of the Supreme Court in the case of
the Subodh Kumar Singh Rathour v. The Chief Executive Officer and
others: 2024 INSC 486 ( para 55) , he has contended that writ
jurisdiction can be exercised even before the contract has been awarded
if there exists arbitrariness in the order.As the decision to cancel the
tender and float a fresh tender for the very same work is arbitrary and
unreasonable, this Court has the power to intervene in the matter by
exercising the power of judicial review. He relies on the decision of the
Supreme Court in the case of Union of India vs. AIR 2001 SC 3887
Dinesh Engineering and another where the Supreme Court has held
that the Clauses gave the authority to the Railways to accept or reject any
tender offer without assigning any reason, but such power has to be
exercised within the realm for which the clause was incorporated.
17.2. Relying on the decisions in Mohinder Singh Gill and Another v.
The Chief Election Commissioner, New Delhi and Others, (1978) 1
SCC 405 (para 8) and Commissioner of Police, Bombay v. Gordhandas
Bhanji, (1951) SCC Online SC 1088 (para 9), which have been
followed in Shree Ganesh Construction v. State of Orissa and Others,
2016 (II) OLR 237 and Kailash Chandra Lenka v. Managing Director,
IDCO & Others, 2016 (II) ILR CUT 937 , he has submitted that the
impugned order of cancellation dated 10.02.2024 contains no reason and
is therefore illegal and liable for interference. The reasons that have
been provided subsequently for cancellation of the tender, in the
affidavits filed in this Court by the Opposite Parties No. 1 to 3 , cannot
be considered as this is contrary to the law laid down in these cases.
17.3. He has also contended that the impugned order of cancellation is
liable to be set aside as the tender has been cancelled with a malafide
intention to avoid compliance of the order passed by this Court.
17.4. His further submission was that the petitioner had a "legitimate
expectation" that the LoA would be granted in favour of the petitioner as
it was the L1 bidder. So the petitioner should have been given a fair
hearing and denial of such expectation should have been justified by
showing some overriding public interest. To bolster his submission he
has relied on the decision in the case of State of Bihar v. Shyama
Nandan Mishra, (2022) 17 SCC 420 in which R v. Inland revenue
Commissioners, ex parte MFK Underwriting Agents Ltd., (1990) 1
WLR 1545 has been referred.
17.5. Further the learned counsel on behalf of the Petitioner has relied
on a decision of this Court in M/s Sical Logistics Ltd. v. Mahanadi
Coalfields Ltd., 2017 SCC OnLine Ori 991 (WP (C) No. 5272 of 2017,
Orissa High Court dated 08.09.2017) to contend that the facts of this
case are similar to the case in Sical Logistics (supra), where this Court
has held that cancellation of the tender before finalization of contract in
favour of L1 bidder and subsequent re-tender is illegal.
17.6. Mr S.P. Mishra learned Senior Counsel has also submitted that
participating in the second tender cannot amount to acquiescence and
waiver, as because after being informed about the order dated
22.02.2024 of this Court, the last date of tender was extended from
13.03.2024 till 19.03.2024 by the opposite parties, for which the
petitioner has no choice but to submit a bid without prejudice to the legal
recourses taken by it.
18. The counsel appearing on behalf of the opposite parties have
submitted at the outset that the petitioner had participated in the second
tender that was floated in respect of the work on 13.02.2024 and
submitted its bid on 19.03.2024. The petitioner was declared as L5
bidder in the second tender. They have contended that the action of the
petitioner participating in the second tender per se amounts to "waiver
and acquiescence" and therefore the claim of petitioner cannot be
sustained and writ application is liable to be dismissed on this ground
alone.
18.1. Mr. Gautam Misra, learned Senior Counsel appearing on behalf
of opposite parties No 1 to 3, has submitted that it has been settled in a
catena of decisions that in tender matters the scope of judicial review is
narrow. In the absence of arbitrariness and unreasonableness or any
malafides in the decision making process, there should not be any
judicial intervention. In support of his submissions, he relies on the
decisions in the cases of:-
i) Raunaq International Ltd. v. I V R Construction Ltd. and Others,
(1999) 1 SCC 492;
ii) Jagdish Mandal v. State of Odisha, (2007) 14 SCC 517;
iii) Michigan Rubber (India) Ltd. v. State of Karnataka and others,
(2012) 8 SCC 216;
iv) N G Projects Ltd. v. Vinod Kumar Jain and others, 2022 OnLine
SC 336.; and
v) Raj Kishore Sahoo v. State of Orissa, 2024 SCC Online Ori 1271;
18.2. He has also contended that the Opposite Parties have acted in
the interest of the public as the second round of tender has saved the
opposite parties (SAIL) an amount of Rs. 21,98,51,300/- which portrays
that such action is completely justified in financial terms and he has also
submitted that the requirements for making out a case of malafides have
not been satisfied .
ISSUES
19. Taking into consideration the factual matrix and the contentions
that have been placed before this court, the issues which arise for
consideration are :-
i) whether the petitioner which was the L1 bidder on account of
its legitimate expectations, should have been heard before the
decision to cancel the tender was taken
ii) whether the order of cancellation is liable for interference as it
did not contain reasons which have been subsequently supplied in
the counter affidavit.
iii) whether the decision to cancel the contract was actuated by
malafides.
iv) Whether the writ application is liable to be dismissed on the
ground of acquisence and waiver as the petitioner has participated
in the subsequent tender ?
CASE LAW.
20. Before proceeding to decide the issues which are necessary to
be examined before deciding the writ application, it would be apposite to
refer to the decisions relied on by the parties and other relevant
decisions.
21. Legitimate expectation
In State of Bihar v. Shyama Nandan Mishra, (supra), the
decision in R v. Inland revenue Commissioners (supra ) has been
referred . Para 35 , 36 and 37 of the decision are extracted below :-
"35. To understand the legal consequences arising
therefrom, useful reference can be made to R. v. IRC [R. v.
IRC, (1990) 1 WLR 1545] (1989) where Thomas Bingham,
L.J. while invoking fairness as a rationale for protecting
legitimate expectations, expressed the following : (WLR pp.
1569-70)
"... If a public authority so conducts itself as to
create a legitimate expectation that a certain course
will be followed it would often be unfair if the
authority were permitted to follow a different course
to the detriment of one who entertained the
expectation, particularly if he acted on it. ... The
doctrine of legitimate expectation is rooted in
fairness."
36. Another facet of denial of legitimate expectations is
underscored by the Court of Appeal of England and Wales
in the seminal case of Coughlan [R. v. North and East
Devon Health Authority, ex p Coughlan, 2001 QB 213 :
(2000) 2 WLR 622 (CA)] , where the Court preferred to use
abuse of power as one of the criteria for testing whether a
public body could resile from a prima facie legitimate
expectation. In the Court's opinion, if the government
authority induced an expectation which was substantive, the
upsetting of that expectation, through departure from the
expected course of action in the absence of compelling
public interest, would be so unfair, that it would amount to
abuse of power. In the present case, the abuse of power is
discernible in the State's disparate decision in encadering
the +2 lecturers with the teachers of nationalised schools,
notwithstanding the contrary representation through the
1985 notification which created the +2 lecturer posts and
the 1987 advertisement under which, the respondents
entered service. Such manifest departure from the projected
course smacks of arbitrariness and the government action,
to selectively protect the interest of the BES cadre, does not
conform to rules of justice and fair play.
37. Taking a cue from above, where the substantive
legitimate expectation is not ultra vires the power of the
authority and the court is in a position to protect it, the
State cannot be allowed to change course and belie the
legitimate expectation of the respondents. As is well known,
regularity, predictability, certainty and fairness are
necessary concomitants of Government's action and the
Bihar Government in our opinion, failed to keep to their
commitment by the impugned decision, which we find was
rightly interdicted by the High Court."
In the case of Union of India v. Hindustan Development
Corporation reported in (1993) 3 SCC 499, the Supreme Court has held
as follows:
"Time is a three-fold present: the present as we experience
it, the past as a present memory and future as a present
expectation. For legal purposes, the expectation cannot be
the same as anticipation. It is different from a wish, a desire
or a hope nor can it amount to a claim or demand on the
ground of a right. However earnest and sincere a wish, a
desire or a hope may be and however confidently one may
look to them to be fulfilled, they by themselves cannot
amount to an assertable expectation and a mere
disappointment does not attract legal consequences. A pious
hope even leading to a moral obligation cannot amount to a
legitimate expectation. The legitimacy of an expectation can
be inferred only if it is founded on the sanction of law or
custom or an established procedure followed in regular and
natural sequence. Again, it is distinguishable from a
genuine expectation. Such expectation should be justifiably
legitimate and protectable. Every such legitimate
expectation does not by itself fructify into a right and
therefore it does not amount to a right in the conventional
sense."
In the case of Army Welfare Education Society v. Sunila
Kumar Sharma and others , 2024 INSC 501, the Supreme Court after
discussing various decisions on legitimate expectation has held as
follows :
"48. A reading of the aforesaid decisions brings forth the
following features regarding the doctrine of legitimate
expectation:
a. First, legitimate expectation must be based on a right as
opposed to a mere hope, wish or anticipation;
b. Secondly, legitimate expectation must arise either from
an express or implied promise; or a consistent past practice
or custom followed by an authority in its dealings;
c. Thirdly, expectation which is based on sporadic or casual
or random acts, or which is unreasonable, illogical or
invalid cannot be treated as a legitimate expectation;
d. Fourthly, legitimate expectation operates in relation to
both substantive and procedural matters;
e. Fifthly, legitimate expectation operates in the realm of
public law, that is, a plea of legitimate action can be taken
only when a public authority breaches a promise or deviates
from a consistent past practice, without any reasonable
basis.
f. Sixthly, a plea of legitimate expectation based on past
practice can only be taken by someone who has dealings, or
negotiations with a public authority. It cannot be invoked by
a total stranger to the authority merely on the ground that
the authority has a duty to act fairly generally.
49. The aforesaid features, although not exhaustive in
nature, are sufficient to help us in deciding the applicability
of the doctrine of legitimate expectation to the facts of the
case at hand. It is clear that legitimate expectation,
jurisprudentially, was a device created in order to maintain
a check on arbitrariness in state action. It does not extend to
and cannot govern the operation of contracts between
private parties, wherein the doctrine of promissory estoppel
holds the field."
In the case of Suboudh Kumar Singh Rathour ( supra ) , the
Supreme Court referring to its decision in the case of M.P. Power
Management Co. Ltd., Jabalpur v. Sky Power Southeast Solar India
Pvt. Ltd. & Ors. : (2023) 2 SCC 703 , has observed that the decision is
in two parts: - i) Scope of judicial review in contractual matters and ii)
Exercise of Writ Jurisdiction in disputes at the stage prior to the Award
of Contract . The relevant portion of paragraph 55 and paragraph 127
which deals with sanctity of contracts concerning public authorities and
refers to the decision in Sivanandan C.T. v. High Court of Kerala
reported in (2024) 3 SCC 799 , are extracted below : -
"55....... Exercise of Writ Jurisdiction in disputes at the
stage prior to the Award of Contract: -
An action under a writ will lie even at the stage prior to the
award of a contract by the State wherever such award of
contract is imbued with procedural impropriety,
arbitrariness, favouritism or without any application of
mind. In doing so, the courts may set-aside the decision
which is found to be vitiated for the reasons stated above
but cannot substitute the same with its own decision. The
relevant observations read as under: -
iv. An action will lie, undoubtedly, when the State purports to
award any largesse and, undoubtedly, this relates to the stage
prior to the contract being entered into [See R.D. Shetty
(supra)]. This scrutiny, no doubt, would be undertaken within
the nature of the judicial review, which has been declared in the
decision in Tata Cellular vs. Union of India."
"127. The sanctity of contracts is a fundamental principle
that underpins the stability and predictability of legal and
commercial relationships. When public authorities enter
into contracts, they create legitimate expectations that the
State will honour its obligations. Arbitrary or unreasonable
terminations undermine these expectations and erode the
trust of private players from the public procurement
processes and tenders. Once a contract is entered, there is a
legitimate expectation, that the obligations arising from the
contract will be honoured and that the rights arising from it
will not be arbitrarily divested except for a breach or non-
compliance of the terms agreed thereunder. In this regard
we may make a reference to the decision of this Court in
Sivanandan C.T. v. High Court of Kerala reported in
(2024) 3 SCC 799 wherein it was held that a promise made
by a public authority will give rise to a legitimate
expectation that it will adhere to its assurances. The
relevant portion reads as under: -
"18. The basis of the doctrine of legitimate
expectation in public law is founded on the principles
of fairness and non-arbitrariness in Government
dealings with individuals. It recognises that a public
authority's promise or past conduct will give rise to a
legitimate expectation. The doctrine is premised on
the notion that public authorities, while performing
their public duties, ought to honour their promises or
past practices. The legitimacy of an expectation can
be inferred if it is rooted in law, custom, or
established procedure xxx xxx xxx 45. The underlying
basis for the application of the doctrine of legitimate
expectation has expanded and evolved to include the
principles of good administration. Since citizens
repose their trust in the State, the actions and policies
of the State give rise to legitimate expectations that
the State will adhere to its assurance or past practice
by acting in a consistent, transparent, and
predictable manner. The principles of good
administration require that the decisions of public
authorities must withstand the test of consistency,
transparency, and predictability to avoid being
regarded as arbitrary and therefore violative of
Article 14.""
22. Right to be heard and recording of reasons
Paragraphs 8 , 92 and 126 of the decision in Mohinder Singh
Gill ( supra)in which the observation in the decision in Gordhandas
Bhanji ( supra) is quoted , are extracted below : -
"8.The second equally relevant matter is that when
a statutory functionary makes an order based on
certain grounds, its validity must be judged by the
reasons so mentioned and cannot be supplemented
by fresh reasons in the shape of affidavit or
otherwise. Otherwise, an order bad in the beginning
may, by the time it comes to court on account of a
challenge, get validated by additional grounds later
brought out. We may here draw attention to the
observations of Bose J. In Gordhandas Bhanji (AIR
1952 SC 16) (at p. 18):
"Public orders publicly made, in exercise of a
statutory authority cannot be construed in the
light of explanations subsequently given by
the officer making the order of what he meant,
or of what was in his mind, or what he
intended to do. Public orders made by public
authorities are meant to have public effect
and are intended to affect the acting and
conduct of those to whom they are addressed
and must be construed objectively with
reference to the language used in the order
itself".
Orders are not like old wine becoming better
as they grow older."
"92. In sum, a pragmatic modus vivendi between the
Commission's paramount constitutional responsibility vis
a vis elections and the rule of law vibrant with fair acting
by every authority and remedy for every right breached,
is reached."
"126. In view of our conclusion that the High Court had
no jurisdiction to entertain the writ application under
Art. 226 of the Constitution, it will not be correct for us,
in an appeal against the order of the High Court in that
proceeding, to enter into any other controversy, on the
merits, either on law or on facts, and to pronounce
finally on the same. The pre-eminent position conferred
by the Constitution on this Court under Art. 141 of the
Constitution does not envisage that this Court should lay
down the law, in an appeal like this, on any matter which
is required to be decided by the election court on a full
trial of the election petition, without the benefit of the
opinion of the Punjab and Haryana High Court which
has the exclusive jurisdiction under Sec. 80A of the Act to
try the election petition. Moreover, a statutory right to
appeal to this Court has been provided under S. 116A, on
any question, whether of law or fact, from every order
made by the High Court in the dispute."
In the cases of Laxmikant v. Satyawan, (1996) 4 SCC 208 ;
Rajasthan Housing Board v. G.S. Investments, (2007) 1 SCC 477;
Meerut Development Authority v. Assn. of Management Studies,
(2009) 6 SCC 171; U.P. Avas Evam Vikas Parishad v. Om Prakash
Sharma, (2013) 5 SCC 182 and State of Jharkhand vs .CWE- SOMA
Consortium : (2016) 14 SCC 172 , it has been held that until the bid of
a bidder is accepted and the agreement has been entered into , there
accrues no vested right upon the bidder to any claim , in case of
cancellation of the tender.
In the case of Laxmikant v. Satyawan, (1996) 4 SCC 208, the
Supreme Court has held as under : -
"4. Apart from that the High Court overlooked the
conditions of auction which had been notified and on basis
of which the aforesaid public auction was held. Condition
No. 3 clearly said that after the auction of the plot was over,
the highest bidder had to remit 1/10 of the amount of the
highest bid and the balance of the premium amount was to
be remitted to the trust office within thirty days "from the
date of the letter informing confirmation of the auction bid
in the name of the person concerned". Admittedly, no such
confirmation letter was issued to the respondent. Conditions
Nos. 5, 6 and 7 are relevant:
"5. The acceptance of the highest bid shall depend on the
Board of Trustees.
6. The Trust shall reserve to itself the right to reject the
highest or any bid.
7. The person making the highest bid shall have no right to
take back his bid. The decision of the Chairman of the
Board of Trustees regarding acceptance or rejection of the
bid shall be binding on the said person. Before taking the
decision as above and informing the same to the individual
concerned, if the said individual takes back his bid, the
entire amount remitted as deposit towards the amount of bid
shall be forfeited by the Trust."
In the case of Rajasthan Housing Board ( supra ) , the
Supreme Court has interalia held : -
"9. This being the settled legal position, the respondent
acquired no right to claim that the auction be concluded in
its favour and the High Court clearly erred in entertaining
the writ petition and in not only issuing a direction for
consideration of the representation but also issuing a
further direction to the appellant to issue a demand note of
the balance amount. The direction relating to issuance of
the demand note for balance amount virtually amounted to
confirmation of the auction in favour of the respondent
which was not the function of the High Court."
The relevant portions of the decisions in Meerut
Development Authority (supra) are extracted below:-
"What is the nature of rights of a bidder participating in the
tender process?
26. A tender is an offer. It is something which invites and is
communicated to notify acceptance. Broadly stated it must
be unconditional; must be in the proper form, the person by
whom tender is made must be able to and willing to perform
his obligations. The terms of the invitation to tender cannot
be open to judicial scrutiny because the invitation to tender
is in the realm of contract. However, a limited judicial
review may be available in cases where it is established that
the terms of the invitation to tender were so tailor-made to
suit the convenience of any particular person with a view to
eliminate all others from participating in the bidding
process.
27. The bidders participating in the tender process have no
other right except the right to equality and fair treatment in
the matter of evaluation of competitive bids offered by
interested persons in response to notice inviting tenders in a
transparent manner and free from hidden agenda. One
cannot challenge the terms and conditions of the tender
except on the abovestated ground, the reason being the
terms of the invitation to tender are in the realm of the
contract. No bidder is entitled as a matter of right to insist
the authority inviting tenders to enter into further
negotiations unless the terms and conditions of notice so
provided for such negotiations.
28. It is so well settled in law and needs no restatement at
our hands that disposal of the public property by the State
or its instrumentalities partakes the character of a trust. The
methods to be adopted for disposal of public property must
be fair and transparent providing an opportunity to all the
interested persons to participate in the process.
29. The Authority has the right not to accept the highest bid
and even to prefer a tender other than the highest bidder, if
there exist good and sufficient reasons, such as, the highest
bid not representing the market price but there cannot be
any doubt that the Authority's action in accepting or
refusing the bid must be free from arbitrariness or
favouritism."
In the case of U.P. Avas Evam Vikas Parishad (supra) the
Supreme Court framed a specific question whether there is any vested
right any vested right upon the plaintiff / bidder until the bid is accepted
by the competent authority and held as follows :
" The substantial questions framed by the court in the
second appeal did not arise for its consideration. The
High Court ought to have noticed that the legal right
claimed by the plaintiff seeking relief under Section 34 of
the Specific Relief Act on the basis of the pleadings is
wholly untenable in law. In view of the fact that no legal
right accrued in his favour in the absence of a concluded
contract which was said to have existed by mere offering
of highest bid in relation to the property in question to
obtain the property on lease for a period of 90 years
amounting to disposal of the property of the first
defendant being an authority under Article 12 of the
Constitution, no right was accrued upon the bidder in
relation to the property in question. Therefore, the suit
itself is not maintainable and the suit filed on the basis of
the alleged cause of action did not arise. Hence, the trial
court could not have granted any relief by not framing the
relevant and proper issue and answering the same. This
aspect of the matter is not considered by the trial court.
Therefore, the impugned judgment is set aside by the first
appellate court by recording reasons. It also did not
address and examine the points that arose for
consideration as framed by this Court in this judgment.
However, the conclusion arrived at by the first appellate
court in setting aside the impugned judgment and
dismissing the suit is perfectly legal and valid. The said
judgment has been erroneously interfered with by the High
Court by framing substantial questions of law. In fact and
in law, the aforesaid substantial questions do not arise for
its consideration and answer the same in favour of the
plaintiff, which are erroneous in law."
In the case of State of Jharkhand vs .CWE- SOMA
Consortium : (2016) 14 SCC 172, the Supreme Court has held as under :-
"13. In case of a tender, there is no obligation on the part
of the person issuing tender notice to accept any of the
tenders or even the lowest tender. After a tender is called for
and on seeing the rates or the status of the contractors who
have given tenders that there is no competition, the person
issuing tender may decide not to enter into any contract and
thereby cancel the tender. It is well settled that so long as the
bid has not been accepted, the highest bidder acquires no
vested right to have the auction concluded in his favour (vide
Laxmikant vs Satyawan: (1996) 4 SCC 208, (Rajasthan
Housing Board v. G.S. Investments, (2007) 1 SCC 477]
and U.P. Avas Evam Vikas Parishad v. Om Prakash
Sharma, (2013) 5 SCC 182 : (2013) 2 SCC (Civ) 737] )."
"15. The State derives its power to enter into a contract
under Article 298 of the Constitution of India and has the
right to decide whether to enter into a contract with a person
or not subject only to the requirement of reasonableness
under Article 14 of the Constitution of India. In the case in
hand, in view of lack of real competition, the State found it
advisable not to proceed with the tender with only one
responsive bid available before it. When there was only one
tenderer, in order to make the tender more competitive, the
Tender Committee decided to cancel the tender and invited a
fresh tender and the decision of the appellant did not suffer
from any arbitrariness or unreasonableness."
"23. The right to refuse the lowest or any other tender is
always available to the Government. In the case in hand, the
respondent has neither pleaded nor established mala fide
exercise of power by the appellant. While so, the decision of
the Tender Committee ought not to have been interfered with
by the High Court. In our considered view, the High Court
erred in sitting in appeal over the decision of the appellant to
cancel the tender and float a fresh tender. Equally, the High
Court was not right in going into the financial implication of
a fresh tender."
In the case of Suboudh Kumar Singh Rathour vs Chief
Executive Officer and Others : 2024 INSC 486, where the tender has
been cancelled after execution of the contract , the Supreme Court has
held as under :-
"126. The sanctity of public tenders lies in their role in
upholding the principles of equal opportunity and fairness.
Once a contract has come into existence through a valid
tendering process, its termination must adhere strictly to the
terms of the contract, with the executive powers to be
exercised only in exceptional cases by the public authorities
and that too in loathe. The courts are duty bound to
zealously protect the sanctity of any tender that has been
duly conducted and concluded by ensuring that the larger
public interest of upholding bindingness of contracts are not
sidelined by a capricious or arbitrary exercise of power by
the State. It is the duty of the courts to interfere in
contractual matters that have fallen prey to an arbitrary
action of the authorities in the guise of technical faults,
policy change or public interest etc.":
23. Judicial review in tender / contractual matters
In the case of Tata Cellular v. Union of India, reported in
(1994) 6 SCC 651, the Supreme Court has held as under:
"94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in
administrative action.
(2) The court does not sit as a court of appeal but merely
reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the
administrative decision. If a review of the administrative
decision is permitted it will be substituting its own decision,
without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to
judicial scrutiny because the invitation to tender is in the
realm of contract. Normally speaking, the decision to accept
the tender or award the contract is reached by process of
negotiations through several tiers. More often than not, such
decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other
words, a fair play in the joints is a necessary concomitant for
an administrative body functioning in an administrative
sphere or quasi-administrative sphere. However, the decision
must not only be tested by the application of Wednesbury
principle of reasonableness (including its other facts pointed
out above) but must be free from arbitrariness not affected by
bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative
burden on the administration and lead to increased and
unbudgeted expenditure."
The Supreme Court in the case of Air India Ltd. v. Cochin
International Airport Ltd., (2000) 2 SCC 617 has held as under:
"7. The law relating to award of a contract by the State, its
corporations and bodies acting as instrumentalities and
agencies of the Government has been settled by the decision of
this Court in Ramana Dayaram Shetty v. International
Airport Authority of India [(1979) 3 SCC 489] , Fertilizer
Corpn. Kamgar Union (Regd.) v. Union of India [(1981) 1
SCC 568] , CCE v. Dunlop India Ltd. [(1985) 1 SCC 260 :
1985 SCC (Tax) 75] , Tata Cellular v. Union of India [(1994)
6 SCC 651] , Ramniklal N. Bhutta v. State of
Maharashtra [(1997) 1 SCC 134] and Raunaq International
Ltd. v. I.V.R. Construction Ltd. [(1999) 1 SCC 492] The
award of a contract, whether it is by a private party or by a
public body or the State, is essentially a commercial
transaction. In arriving at a commercial decision
considerations which are paramount are commercial
considerations. The State can choose its own method to arrive
at a decision. It can fix its own terms of invitation to tender
and that is not open to judicial scrutiny. It can enter into
negotiations before finally deciding to accept one of the offers
made to it. Price need not always be the sole criterion for
awarding a contract. It is free to grant any relaxation, for
bona fide reasons, if the tender conditions permit such a
relaxation. It may not accept the offer even though it happens
to be the highest or the lowest. But the State, its corporations,
instrumentalities and agencies are bound to adhere to the
norms, standards and procedures laid down by them and
cannot depart from them arbitrarily. Though that decision is
not amenable to judicial review, the court can examine the
decision-making process and interfere if it is found vitiated by
mala fides, unreasonableness and arbitrariness. The State, its
corporations, instrumentalities and agencies have the public
duty to be fair to all concerned. Even when some defect is
found in the decision-making process the court must exercise
its discretionary power under Article 226 with great caution
and should exercise it only in furtherance of public interest
and not merely on the making out of a legal point. The court
should always keep the larger public interest in mind in order
to decide whether its intervention is called for or not. Only
when it comes to a conclusion that overwhelming public
interest requires interference, the court should intervene."
In the case of Jagdish Mandal v. State of Orissa, (2007) 14
SCC 517, the Supreme Court has held :
"22. Judicial review of administrative action is intended to
prevent arbitrariness, irrationality, unreasonableness, bias
and mala fides. Its purpose is to check whether choice or
decision is made "lawfully" and not to check whether choice
or decision is "sound". When the power of judicial review is
invoked in matters relating to tenders or award of contracts,
certain special features should be borne in mind. A contract
is a commercial transaction. Evaluating tenders and
awarding contracts are essentially commercial functions.
Principles of equity and natural justice stay at a distance. If
the decision relating to award of contract is bona fide and is
in public interest, courts will not, in exercise of power of
judicial review, interfere even if a procedural aberration or
error in assessment or prejudice to a tenderer, is made out.
The power of judicial review will not be permitted to be
invoked to protect private interest at the cost of public
interest, or to decide contractual disputes. The tenderer or
contractor with a grievance can always seek damages in a
civil court. Attempts by unsuccessful tenderers with
imaginary grievances, wounded pride and business rivalry, to
make mountains out of molehills of some
technical/procedural violation or some prejudice to self, and
persuade courts to interfere by exercising power of judicial
review, should be resisted. Such interferences, either interim
or final, may hold up public works for years, or delay relief
and succour to thousands and millions and may increase the
project cost manifold. Therefore, a court before interfering in
tender or contractual matters in exercise of power of judicial
review, should pose to itself the following questions:
(i) 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
accordance with relevant law could have reached";
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no
interference under Article 226. Cases involving blacklisting
or imposition of penal consequences on a tenderer
/contractor or distribution of State largesse (allotment of
sites/shops, grant of licences, dealerships and franchises)
stand on a different footing as they may require a higher
degree of fairness in action."
In the case of Michigan Rubber (India) Ltd. (supra), after
considering the law on the judicial scrutiny with respect to tender
conditions, ultimately it is concluded in paragraph 23 as under:
"23. From the above decisions, the following principles
emerge:
(a) The basic requirement of Article 14 is fairness in
action by the State, and non-arbitrariness in essence
and substance is the heartbeat of fair play. These
actions are amenable to the judicial review only to the
extent that the State must act validly for a discernible
reason and not whimsically for any ulterior purpose. If
the State acts within the bounds of reasonableness, it
would be legitimate to take into consideration the
national priorities;
(b) Fixation of a value of the tender is entirely within the
purview of the executive and the courts hardly have any
role to play in this process except for striking down such
action of the executive as is proved to be arbitrary or
unreasonable. If the Government acts in conformity with
certain healthy standards and norms such as awarding
of contracts by inviting tenders, in those circumstances,
the interference by courts is very limited;
(c) In the matter of formulating conditions of a tender
document and awarding a contract, greater latitude is
required to be conceded to the State authorities unless
the action of the tendering authority is found to be
malicious and a misuse of its statutory powers,
interference by courts is not warranted;
(d) Certain preconditions or qualifications for tenders have
to be laid down to ensure that the contractor has the
capacity and the resources to successfully execute the
work; and
(e) If the State or its instrumentalities act reasonably, fairly
and in public interest in awarding contract, here again,
interference by court is very restrictive since no person
can claim a fundamental right to carry on business with
the Government."
24. Therefore, a Court before interfering in tender or
contractual matters, in exercise of power of judicial review,
should pose to itself the following questions:
(i) 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 accordance with relevant law could have
reached"; and
(ii) Whether the public interest is affected. If the answers to
the above questions are in negative, then there should be no
interference under Article 226."
In the case of Rishi Kiran Logistics (P) Ltd. v. Kandla Port
Trust, (2015) 13 SCC 233
"20. It is more than obvious that larger public interest
demanded a fresh tender process in order to receive
maximum amount as the premium of Rs 612 per square metre
originally fixed and even the quotation of Rs 3000 and odd of
the appellant which were found to be the highest, was far
below the marked rate. Further, even when total premium
amount to be paid by the appellant was to the tune of several
crores for each plot at which LoI was issued in the year
2006, the appellant had paid only Rs 3 lakhs by way of EMD
in each case. No further amount was paid for want of final
allotment letter. However before taking a final decision in the
matter, the Port Trust sought legal opinion specifically on the
point as to whether it would be prudent to cancel 2005 tender
process and start fresh process so as to fetch the realistic
marked price in accordance with present market value of the
land. Based upon the expert legal opinion i.e. there was no
legal impediment in cancellation of the tender process, the
decision was taken by the Port Trust to cancel the earlier
tender process and to start fresh process.
21. On the aforesaid facts there is hardly any scope for
argument that the decision of the Port Trust is arbitrary. It is
based on valid considerations. We have to keep in mind that
while examining this aspect we are in the realm of
administrative law. The contractual aspect of the matter has
to be kept aside which would be examined separately while
dealing with the issue as to whether there was a concluded
contract between the parties. This distinction is lucidly
explained in Kisan Sahkari Chini Mills Ltd. v. Vardan
Linkers [(2008) 12 SCC 500]. Keeping in mind this
distinction between the two, we are not required to bring in
the contractual elements of the case while dealing with the
administrative law aspects.
22. When competing claims are private interest v. public
interest, then in the case of disposal of public property the
question would be whether the right of the person, who has
earned the right to the public property in a public auction, is
to be preferred over the right of the public in ensuring that
valuable public assets were not disposed of except for a fair
price and in a fair and transparent manner. Whether this
Court should, in judicial review, sit in judgment over the
decision of a public body which is of the view that it need not
go further ahead with the tender process. It is true if such a
decision is taken without any reasons to support it or mere
ipse dixit it would be arbitrary. In this case there are reasons.
The High Court analysed the reasons and has taken the view
that those reasons are valid. In our view in matters
particularly to the disposal of valuable assets by the State
when the State seeks to explore the possibility of getting
higher price (sic)."
In the case of Al FaheemMeetex (P) Ltd., (2016) 4 SCC
716, the Supreme Court has held as follows :
"15. The High Court has also gone wrong in finding fault
with the decision of BEC by holding that such a subsequent
decision could not have been taken by BEC without notice to
or in the absence of the appellant. When the decision-making
process had not reached any finality and was still in embryo
and there was no acceptance of the bid of Respondent 1 by
the competent authority, no right (much less enforceable
right) accrued to Respondent 1. In such a situation, there was
no question of giving any notice or hearing to Respondent 1.
16. In any case, there is yet another very forceful and
strong reason to interfere with the decision taken by the High
Court. Notice inviting tenders of RFQ was published way
back on 26-5-2010. Almost six years have passed. With this
passage of time, it becomes all the more important to have
fresh tendering for establishment of "New Modern
Slaughterhouse", Meerut by giving wide publicity."
In the case of Afcons Infrastructure Ltd vs Nagpur Metro
Rail Corporation Ltd. & Anr: AIR 2016 SC 4305: ( 2016) 16 SCC 818,
the Supreme Court has held as follows :
"11. Recently, in Central Coalfields Ltd. v. SLL-SML (Joint
Venture Consortium): (2016) 8 SCC 622) it was held by this
Court, relying on a host of decisions that the decision making
process of the employer or owner of the project in accepting
or rejecting the bid of a tenderer should not be interfered
with. Interference is permissible only if the decision making
process is mala fide or is intended to favour someone.
Similarly, the decision should not be interfered with unless
the decision is so arbitrary or irrational that the Court could
say that the decision is one which no responsible authority
acting reasonably and in accordance with law could have
reached. In other words, the decision making process or the
decision should be perverse and not merely faulty or
incorrect or erroneous. No such extreme case was made out
by GYT-TPL JV in the High Court or before us.
12. In Dwarkadas Marfatia and Sons v. Board of
Trustees of the Port of Bombay : (1979) 4 SCC 489 , it was
held that the constitutional Courts are concerned with the
decision making process. Tata Cellular v. Union of India (
supra) went a step further and held that a decision if
challenged (the decision having been arrived at through a
valid process), the constitutional Courts can interfere if the
decision is perverse. However, the constitutional Courts are
expected to exercise restraint in interfering with the
administrative decision and ought not to substitute its view
for that of the administrative authority. This was confirmed
in Jagdish Mandal v. State of Orissa (supra) as mentioned
in Central Coalfields ( supra) .
13. In other words, a mere disagreement with the
decision making process or the decision of the administrative
authority is no reason for a constitutional Court to interfere.
The threshold of mala fides, intention to favour someone or
arbitrariness, irrationality or perversity must be met before
the constitutional Court interferes with the decision making
process or the decision."
In the case of NG Projects ( supra), it has been held by the
Supreme as follows :
"23. In view of the above judgments of this Court, the Writ
Court should refrain itself from imposing its decision over the
decision of the employer as to whether or not to accept the bid
of a tenderer. The Court does not have the expertise to
examine the terms and conditions of the present- day economic
activities of the State and this limitation should be kept in
view. Courts should be even more reluctant in interfering with
contracts involving technical issues as there is a requirement
of the necessary expertise to adjudicate upon such issues. The
approach of the Court should be not to find fault with
magnifying glass in its hands, rather the Court should examine
as to whether the decision-making process is after com- plying
with the procedure contemplated by the tender conditions. If
the Court finds that there is total arbitrariness or that the
tender has been granted in a mala fide manner, still the Court
should refrain from interfering in the grant of tender but
instead relegate the parties to seek damages for the wrongful
exclusion rather than to injunct the execution of the contract.
The injunction or interference in the tender leads to additional
costs on the State and is also against public interest.
Therefore, the State and its citizens suffer twice, firstly by
paying escalation costs and secondly, by being deprived of the
infrastructure for which the present-day Governments are
expected to work."
The relevant paragraphs of the judgment of the Supreme Court
in the case of Airport Authority of India v. Centre for Aviation
Policy, Safety & Research (CAPSR), 2022 SCC OnLine SC 1334, the
Supreme Court read thus :-
"27. Even otherwise, even on merits also, the High Court
has erred in quashing and setting aside the eligibility
criteria/tender conditions mentioned in the respective RFPs,
while exercising the powers under Article 226 of the
Constitution of India. As per the settled position of law, the
terms and conditions of the Invitation to Tender are within
the domain of the tenderer/tender making authority and are
not open to judicial scrutiny, unless they are arbitrary,
discriminatory or mala fide. As per the settled position of
law, the terms of the Invitation to Tender are not open to
judicial scrutiny, the same being in the realm of contract.
The Government/tenderer/tender making authority must
have a free hand in setting the terms of the tender.
28. While considering the scope and ambit of the High
Court under Article 226 of the Constitution of India with
respect to judicial scrutiny of the eligibility criteria/tender
conditions, few decisions of this Court are required to be
referred to, which are as under:
29. In the case of Maa Binda Express Carrier (supra), in
paragraph 8, this Court observed and held as under:
"8. The scope of judicial review in matters relating to
award of contracts by the State and its instrumentalities
is settled by a long line of decisions of this Court. While
these decisions clearly recognise that power exercised by
the Government and its instrumentalities in regard to
allotment of contract is subject to judicial review at the
instance of an aggrieved party, submission of a tender in
response to a notice inviting such tenders is no more than
making an offer which the State or its agencies are under
no obligation to accept. The bidders participating in the
tender process cannot, therefore, insist that their tenders
should be accepted simply because a given tender is the
highest or lowest depending upon whether the contract is
for sale of public property or for execution of works on
behalf of the Government. All that participating bidders
are entitled to is a fair, equal and non-discriminatory
treatment in the matter of evaluation of their tenders. It is
also fairly well settled that award of a contract is
essentially a commercial transaction which must be
determined on the basis of consideration that are relevant
to such commercial decision. This implies that terms
subject to which tenders are invited are not open to the
judicial scrutiny unless it is found that the same have
been tailor-made to benefit any particular tenderer or
class of tenderers. So also, the authority inviting tenders
can enter into negotiations or grant relaxation for bona
fide and cogent reasons provided such relaxation is
permissible under the terms governing the tender
process."
24. Acquiescence and waiver
The Supreme Court in the case of Union of India v. N.
Murugesan, reported in (2022) 2 SCC 25 has held as under:
"25. Acquiescence would mean a tacit or passive
acceptance. It is implied and reluctant consent to an act. In
other words, such an action would qualify a passive assent.
Thus, when acquiescence takes place, it presupposes
knowledge against a particular act. From the knowledge
comes passive acceptance, therefore instead of taking any
action against any alleged refusal to perform the original
contract, despite adequate knowledge of its terms, and
instead being allowed to continue by consciously ignoring it
and thereafter proceeding further, acquiescence does take
place. As a consequence, it reintroduces a new implied
agreement between the parties. Once such a situation arises,
it is not open to the party that acquiesced itself to insist upon
the compliance of the original terms. Hence, what is
essential, is the conduct of the parties. We only dealt with the
distinction involving a mere acquiescence. When
acquiescence is followed by delay, it may become laches.
Here again, we are inclined to hold that the concept of
acquiescence is to be seen on a case-to-case basis.
Approbate and reprobate
26. These phrases are borrowed from the Scots law. They
would only mean that no party can be allowed to accept and
reject the same thing, and thus one cannot blow hot and cold.
The principle behind the doctrine of election is inbuilt in the
concept of approbate and reprobate. Once again, it is a
principle of equity coming under the contours of common
law. Therefore, he who knows that if he objects to an
instrument, he will not get the benefit he wants cannot be
allowed to do so while enjoying the fruits. One cannot take
advantage of one part while rejecting the rest. A person
cannot be allowed to have the benefit of an instrument while
questioning the same. Such a party either has to affirm or
disaffirm the transaction. This principle has to be applied
with more vigour as a common law principle, if such a party
actually enjoys the one part fully and on near completion of
the said enjoyment, thereafter questions the other part. An
element of fair play is inbuilt in this principle. It is also a
species of estoppel dealing with the conduct of a party. We
have already dealt with the provisions of the Contract Act
concerning the conduct of a party, and his presumption of
knowledge while confirming an offer through his acceptance
unconditionally."
25. In a recent larger Bench decision of this Court in the cases of
M/s Nanda Infra Construction Pvt. Ltd. v. State of Odisha ( WP (C)
No. 5790 of 2024 and WP ( C ) No.5535 of 2024 dated 15.01.2025) ,
the following questions had been referred for an authoritative
pronouncement :-
" i.) Whether the observations made by the Supreme Court in
paragraph-8 of the decision in Mohinder Singh Gill vs The
Chief Election Officer: AIR 1978 SC 851 has application to
test the correctness of a purely administrative order by an
authority, which is State within the meaning of Article-12 of the
Constitution of India, cancelling a tender process before
acceptance of the bid of a tenderer?
ii.) Whether there is any requirement of giving an opportunity
of hearing or prior notice to the highest / lowest bidder, before
cancellation of tender notice keeping in mind the settled legal
position that such bidder does not acquire any vested right to
have the auction confirmed in his favour on that basis alone?
iii.) Whether the Supreme Court decision in case of Sudhir
Kumar Singh (supra) on the point of compliance of principles
of natural justice is applicable when a tender process is
cancelled prior to confirmation of tender / auction in favour of
a bidder?
iv.) Whether the Division Bench in case of M/s. Bansal
Infraprojects Pvt. Ltd (supra) has correctly applied the
Supreme Court's decision in case of Sudhir Kumar Singh
(supra)?
v.) Whether it is permissible for the High Court exercising
power of judicial review under Article 226 of the Constitution
of India to direct the State or its instrumentalities to accept the
bid of the lowest/highest bidder, upon interfering with the
order of cancellation of tender on the ground of violation of
principles of natural justice or such order not being a reasoned
one?"
The larger Bench has answered the reference in the following
manner :-
"47. Considering the law laid down by the Supreme Court
in the cases discussed above , we answer the questions referred
to the Full Bench as under:-
i) While testing the correctness of a purely administrative
order passed by an authority, that is State within the
meaning of Article-12 of the Constitution of India , which
does not essentially require recording of any reason and
includes an order in the nature of cancellation of a tender
process / notice where a bid has not been accepted , the
observations made by the Supreme Court in paragraph-8
of the decision in Mohinder Singh Gill vs The Chief
Election Officer: AIR 1978 SC 851, will not have any
application .
ii.) Before cancellation of a tender notice, there is no
requirement of giving an opportunity of hearing or prior
notice to the highest / lowest bidder, as such bidder does
not acquire any vested right to have the auction confirmed
in his / her / its favour on that basis alone.
iii.) When a tender process is cancelled prior to
confirmation of tender / auction in favour of a bidder , the
decisions of the Supreme Court decision in the case of
Sudhir Kumar Singh (supra) is not applicable
iv.) In M/s. Bansal Infraprojects Pvt. Ltd (supra) , the
Division Bench of this Court has not applied the Supreme
Court's decision in the case of Sudhir Kumar Singh
(supra) correctly.
v.) The High Court while exercising the power of judicial
review under Article 226 of the Constitution of India,
cannot direct the State or its instrumentalities to accept the
bid of the lowest / highest bidder by interfering with the
order of cancellation of tender , solely on the ground of
violation of principles of natural justice or on the ground
that the order of is bereft of reasons, except in exceptional
circumstances."
ANALYSIS
26. Applying the ratio of the Nanda Infra (supra) the contention
made on behalf of the Petitioner that the order of cancellation has to be
reasoned and that cannot be supplemented afterwards, cannot stand as it
has been observed that in a purely administrative order, the observation
given in the case of Mohinder Singh Gill (supra) has no application.
27. The decision in Sical Logistics (supra) which had been relied
upon by the learned counsel for the petitioner to submit that in similar
this court had quashed the cancellation order of tender in pre-grant of
LoA stage stands overruled by the larger bench decision in the case of
Nanda Infra (supra).
28. As would be apparent from the decisions of the Supreme Court
referred to above and in a catena of other decisions, it is the settled
position of law that in contractual matters, the State enjoys autonomy in
entering into contracts. Interference in exercise of judicial review is
warranted only where it is found that the action of the authority is illegal,
arbitrary and actuated by malafides. In the present case we find that the
impugned decision to cancel the tender and hold fresh tender is in public
interest.
29. No substantive material has been placed by the petitioner before
this court to suggest that there was any arbitrariness in the actions of the
Opposite Parties No. 1 to 3. In view of the limited scope of judicial
intervention in tender matters, this court cannot interfere in a tender
matter in the absence any substantive material suggesting arbitrariness
especially when the petitioner has participated in the second tender and
decision to go for the second tender appears to be in public interest as the
highest bid in the subsequent tender is much lower than the bid of the
petitioner in the first tender.
30. In the case of Laxminkant ( supra) , the Supreme referring to
the its earlier decisions where the right of the highest bidder at public
auctions was examined, namely Trilochan Mishra v. State of
Orissa [(1971) 3 SCC 153], State of Orissa v. Harinarayan
Jaiswal [(1972) 2 SCC 36], Union of India v. Bhim Sen Walaiti
Ram [(1969) 3 SCC 146 : (1970) 2 SCR 594] and State of U.P. v. Vijay
Bahadur Singh [(1982) 2 SCC 365], has held that the State or the
authority which can be held to be State within the meaning of Article 12
of the Constitution is not bound to accept the highest tender or bid. The
acceptance of the highest bid is subject to the conditions of holding the
public auction and the right of the highest bidder has to be examined in
context with the different conditions under which such auction has been
held.
31. In the cases of Laxmikant v. Satyawan, (1996) 4 SCC 208 ;
Meerut Development Authority v. Assn. of Management Studies,
(2009) 6 SCC 171; Rajasthan Housing Board v. G.S. Investments,
(2007) 1 SCC 477; U.P. Avas EvamVikasParishad v. Om Prakash
Sharma, (2013) 5 SCC 182, it has been held that until the bid of the
bidder is accepted and the agreement has been entered into, there accrues
no vested right upon the bidder to challenge the cancellation of the
tender.
32. Nothing has been placed on record by the petitioner that any
express or implied promise was made by the opposite parties No 1 to 3
to award the contract to it. Admittedly, no contract had been executed
with the petitioner. In the absence of any promise or written
communication, we find no merit in the submission of the learned
counsel that it had a legitimate expectation to be awarded the tender,
which has been violated. It is the settled position of law which is
apparent from the decisions referred to above that the State exercises
independence while entering into the contracts and it cannot be expected
that the State shall act in an expected pattern. In view of the facts of the
case and the decisions of the Supreme Court referred to above, the
doctrine of legitimate expectation will have no applicability to the facts
of the present case.
33. As has been observed in the cases of Jagdish Mandal (supra),
Al Faheem Meetex (P) Ltd (supra), and a catena of decisions of the
Supreme Court and the larger Bench decision of this Court in Nanda
Infra (supra ), some of which have been referred by us in this judgment,
that no right accrues to the highest bidder in the absence of an LoI or a
contract in its favour. So there is no requirement to afford it an
opportunity of hearing before cancellation of the tender / IFB ,
34. Further it can be inferred from the records placed before this
court that the second tender has resulted into saving of Rs.
21,98,51,300/- which is beneficial in the larger public interest and
relying on the judgment of Rishi Kiran Logistics (P) Ltd. v. Kandla Port
Trust, (2015) 13 SCC 233, we find no reason to interfere with the
decision of SAIL to cancel the first tender ( IFB) or float the new tender.
35. It is an admitted fact that the petitioner has participated in the
fresh tender dated 13.02.2024 for the same work as the cancelled tender.
As decided in case of Murgesan (supra), the conduct of the petitioner
amounts to "approbate and reprobate" or "blow hot and cold". First by
challenging the cancellation of the first tender and issuance of the fresh
tender dt. 13.02.2024 and then going forward and participating in the
said fresh tender dt.13.02.2024, and this also amounts to "waiver and
acquiescence".
CONCLUSION
36. We are of the view that the petitioner cannot be allowed to
challenge the cancellation of the tender and issuance of fresh tender on
one hand and participate in the fresh tender on the other. By choosing to
participate in the second tender it has acquiesced to the decision of the
Opposite Parties and has waived its right to challenge the validity of the
issuance of the said fresh tender.
37. We are also of the view that even if the petitioner was the L1
bidder, since LoA had not been issued its favour or any contract
executed with it, there was no necessity to hear the petitioner before
cancellation of the tender/IFB or floating of the new tender / IFB in
respect of the same work.
38. Absence of reasons in the order cancelling the tender / IFB
furnishing of reasons subsequently in the affidavit is not a ground
for interfering with the decision as has been held by us in the case of
Nanda Infrastructure (supra).
39. For the above discussed reasons, we are of the view that the
claim of the petitioner has no substance.
40. As we find no merit in the writ petition, it is dismissed, but
without any order as regards costs.
41. Interim orders stand vacated.
......................
(Savitri Ratho)
Judge
Chief Justice
I agree .
.......................
(Chakradhari Sharan Singh)
Chief Justice
Signature Not
Orissa High Verified
Court, Cuttack.
Digitally Signed th
Dated 17 January, 2025.
Signed by: SUBHALAXMI PRIYADARSHANI
SAHOO
S.K. Jena/ Secy/ Subalaxmi/Jr. Steno.
Reason: Authentication
Location: Orissa High Court, Cuttack
Date: 20-Jan-2025 20:04:54
