As per case facts, the Petitioner, an L-2 bidder, sought the award of a tender for a nationally important rail project after the L-1 bidder withdrew its offer. The Respondent ...
No Acts & Articles mentioned in this case
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CWP-3866-2025 (O&M)
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CWP-3866-2025 (O&M)
Date of Decision: September 09, 2025
M/s Patel Infrastructure Limited and another ..... Petitioners
Versus
Haryana Rail Infrastructure Development Corporation Limited and
another ..... Respondents
CORAM:- HON'BLE MRS. JUSTICE LISA GILL
HON'BLE MRS. JUSTICE MEENAKSHI I. MEHTA
Present: Mr. Sanjay Kaushal, Senior Advocate with
Mr. Kanwal Goyal, Advocate,
Ms. Shruti Jain, Advocate and
Ms. Sheena Dahiya, Advocate for the petitioners.
Mr. Ankur Mittal, Advocate with
Mr. Shivendra Swaroop, Advocate and
Ms. Kushaldeep Kaur, Advocate for respondent No. 1.
****
LISA GILL, J.
1. Prayer in this writ petition is for directing respondents particularly
respondent No. 1 to finalise and award Tender No. HORC/HRIDC/C-5/2023
dated 03.11.2023 and tender ID No. TID:2023_HBC_327530_1 in favour of
present most advantageous tenderer i.e. petitioner No. 1 in accordance with
terms and conditions of tender in a time bound manner. It is further prayed that
respondent No. 1 be restrained from cancelling/annulling or in any manner
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CWP-3866-2025 (O&M)
abandoning the tender process emanating from above said tender or from
awarding tender to any other bidder during pendency of this writ petition.
2. Brief facts as pleaded are that petitioner No. 1 is a company
incorporated under Companies Act, 1956 and is engaged in business of
construction of projects in respect to roads, highways, buildings, bridges and
other civil construction. Petitioner No. 2 is a shareholder and Director of
petitioner No. 1. Respondent No. 2 i.e. Haryana Orbital Rail Corporation
Limited incorporated under Companies Act, 2013 is a Special Purpose Vehicle
(SPV) for the purpose of Haryana Orbital Rail Corridor Project (HORC)
spanning from Palwal to Sonipat via Sohna, Manesar and Kharkhoda for
facilitation of diversion of freight traffic not meant for Delhi region for
developing multimodal hubs in National Capital Region of Haryana. Total
length of project is approximately 140 kms and 95 kms of the alignment runs
parallel to KM expressway.
3. Respondent No. 1 – Haryana Rail Infrastructure Development
Corporation Limited is a State joint venture with 51% of share of Haryana
Government and 49% share of Ministry of Railways. Respondent No. 1 is the
implementing agency for HORC project which is the semi-high speed new (BG)
line from Palwal to Sonipat. Asian Infrastructure Investment Bank (AIIB) is the
funding Agency of the project in question. Respondent No. 1 being the
implementing Agency issued tender dated 03.11.2023 bearing No.
HORC/HRIDC/C-5/2023 for the project in question consisting of work of
‘Contract Package C-5’ which was published on E-Procurement Portal of
Government of Haryana on 08.11.2023. DNIT was issued for composite contract
package in connection with new BG double railway line of HORC project
between Prithla and Dhulawat for:
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CWP-3866-2025 (O&M)
i) Design and construction of Civil Works (Earthwork, Bridges,
Stations and Retaining Walls) from km -2.296 to km12.00
&km18.00 to km 20.942;
ii) Design & Construction of viaduct from km 20.942 to km 24.844;
iii) Design & Construction of Ballastless track from km 20.842 to
km 24.844; and
iv) Design, Supply, Installation, Testing & Commissioning of
General Electrical Services from km -2.296 to km 12.00 and km
18.00 to km 24.844.
4. Final tender document was issued vide corrigendum No.2 dated
03.01.2024. Ten (10) bidders including petitioner No.1 participated in the tender
process. Technical bids were opened on 31.01.2024 and out of ten (10) bidders,
nine (9) including the petitioner were found responsive.
5. Financial bids were opened on 08.04.2024 and one M/s Dilip
Buildcom Limited emerged as lowest bidder (L-1) and petitioner No. 1 was L-2.
Thereafter, Financial Part Evaluation Report prepared by General Consultant
alongwith HRIDC, HOD Committee report was submitted to AIIB for No
Objection Letter on 01.05.2024. No Objection Letter to tender document was
issued by AIIB on 08.05.2024. Acceptance from Haryana Orbital Rail
Corporation Limited by Board was obtained on 30.05.2024 and decision of
Board was sent for perusal of Chief Minister of Haryana. Bid and tender
securities submitted by bidders were initially valid up to 29.07.2024 and
26.08.2024.
6. As tender could not be finalised, respondent No. 1 vide
communication dated 23.07.2024 requested bidders to extend the period of
validity of tender. It is the case of respondents that process got stalled due to
coming in force of Model Code of Conduct on account of declaration of
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CWP-3866-2025 (O&M)
Parliamentary elections. Eight (08) out of nine (09) bidders including L-1 and
petitioner extended validity of bids upto 27.09.2024. However, L-1 on
29.08.2024 submitted notice of withdrawal of its tender prior to its earlier
extended validity period i.e. 27.09.2024. Vide letter dated 31.08.2024, L-1 was
informed by the respondent that withdrawal of tender at this stage would result
in forfeiture of tender security and L-1 was further informed via letter dated
22.09.2024 that request for withdrawal submitted by it on 29.08.2024 may be
withdrawn. However, L-1 vide communication dated 09.09.2024 (via e-mail at
8.04 p.m.) confirmed their request for withdrawal submitted on 29.08.2024.
Vide its communication dated 09.09.2024 (via e-mail at 6.17 p.m.), petitioner
No. 1 notified respondent No. 1 that it came to their notice that L-1 had refused
to extend validity of tender upto 27.09.2024. Thus, petitioner No. 1 being the
most advantageous tenderer, as defined in Clause 42 of Instructions to Tenderers
(ITT) should be awarded the work. However, no response was received. Tender
Security validity was again extended by petitioner No. 1 up to 25.10.2024.
Petitioner No. 1 was again asked by respondent to extend bid validity upto
30.12.2024 on the ground of some more time being taken for finalisation of
tender. Tender security validity was then extended upto 27.01.2025 as reflected
in communication dated 20.12.2024 by petitioner No. 1. Bid validity was
ultimately extended upto 31.03.2025 by petitioner No.1. As the matter was not
being finalised, present writ petition was filed in February, 2025.
7. Notice of motion was issued in this writ petition on 11.02.2025 by
Co-ordinate Bench and parties were directed to maintain status quo, as it existed,
on the said date.
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CWP-3866-2025 (O&M)
8. As per reply filed on behalf of respondents, it was due to
enforcement of Model Code of Conduct that award of contract could not be
finalised uptill 29.07.2024. It was submitted for perusal of Chief Minister of
Haryana on 23.07.2024. Anticipating delay in finalisation, extension of validity
of tender bid and security was sought in terms of clause 18.2 of ITT, which reads
as under:-
“18.2. In exceptional circumstances, prior to the expiration of the
Tender validity period, the Employer may request Tenderers to
extend the period of validity of their Tenders. The request and the
responses shall be made in writing. If a Tender Security is requested
in accordance with ITT 19, it shall also be extended for a
corresponding period. A Tenderer may refuse the request without
forfeiting its Tender security. A Tenderer granting the request shall
not be required or permitted to modify its Tender, except as
provided in ITT 18.3.”
9. It was submitted that after extension of validity of tender bid to
27.09.2024, notice of withdrawal of tender by L-1 i.e. M/s Dilip Buildcom
Limited was received on 29.08.2024 via e-mail. L-1 was informed vide
communication dated 31.08.2024 that withdrawal of tender at this stage would
result in forfeiture of tender security and vide communication dated 02.09.2024,
L-1 was advised to withdraw letter dated 29.08.2024. This was met with
response i.e. e-mail dated 09.09.2024 at 8.04 p.m. from L-1, confirming their
request for withdrawal dated 29.08.2024. In this eventuality, bank guarantee
deposited by L-1 was encashed by respondent on 17.09.2024. Petitioner No. 1
on 09.09.2024 itself sent an e-mail at 6.17 p.m. to respondent No. 1 seeking
award of work to it, being the next most advantageous tenderer. It was further
stated that since contract awarding process was abruptly disrupted and halted,
finalisation of tender would necessarily take time, therefore, seven (07)
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CWP-3866-2025 (O&M)
remaining bidders were requested on 19.09.2024 to extend the validity. Six
tenderers including petitioner No. 1 extended validity of their tender upto
30.12.2024. It was further stated that upon receiving confirmation from
tenderers regarding extension of validity of their tender, General Consultant was
advised for revaluation of remaining valid offers of the tenders as per conditions
of tender. General Consultant submitted Financial Part Revaluation Report to
respondent No. 1 on 23.11.2024. As validity of tenders was up to 30.12.2024,
third extension was requested by respondent No. 1 vide communication dated
17.12.2024 uptill 31.03.2025 and extension of validity of tender security upto
28.04.2025. In response thereto, five tenderers extended validity of their tender
security up to 31.03.2025 and only three (03) tenderers including petitioner No.
1 further submitted extended validity of tender security upto 28.04.2025. It is
stated in the short reply filed on behalf of respondent No. 1 that during pendency
of Financial Part Revaluation Process, petitioner again submitted a request to
respondent No. 1 and funding Agency i.e. AIIB to award contract in its favour in
contravention of sub clause 26.1 of Section I of ITT and that writ petition, it is
claimed, was premature as Financial Part Revaluation Process was still not
concluded and was pending approval of funding Agency. Persistent
correspondence by petitioner to influence tendering process is stated to be in
contravention of sub Clause 26.2 of Section I of ITT, which provides that any
attempt by a tenderer to influence the employer in evaluation of tenders or
contract award decisions may result in rejection of its tender. It is further stated
in said reply that employer in terms of sub clause 43.1 of Section I of ITT has a
right to accept or reject any or all tenders.
10. CM-8358-CWP-2025 was filed by respondent No. 1 on 23.05.2025
seeking vacation of interim order dated 11.02.2025 on the premise that
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CWP-3866-2025 (O&M)
respondents were unable to take any decision in the matter in view of interim
order, thus, leading to delay in the entire process.
11. CM-11938-CWP-2025 was filed for placing on record additional
facts and annexures with respect to Haryana Orbital Rail Corridor project. It is
stated therein that the matter remained pending and owing to withdrawal of
tender by L-1, entire process was materially effected as the entire project is
being funded through AIIB having huge financial implications. No decision
could be taken in haste and at the same time utmost transparency is required to
be maintained. Award of contract of such nature involving high stakes to L2/L3
bidders shall not only result in financial loss by way of higher contract price but
will also vitiate the integrity of tendering process and may set a precedent for
bidders participating in future tenders to indulge in unethical and collusive
practice.
12. It is asserted that petitioner No. 1, even though claiming to be the
most advantageous bidder, still presents a difference of Rs.56.33 crores in the
bid submitted by it and L-1. Reference is made to communication dated
03.03.2007 from Central Vigilance Commission whereby directives for re-
tendering have been issued in case of withdrawal of offer by L-1. Said
instructions have been incorporated in Manual of Procurement of Works issued
by Department of Expenditure, Ministry of Finance. Validity of the tender
expired on 31.07.2025 and thereafter no further extension has been called from
any bidder including petitioner, who however, on its own has submitted letter
extending validity upto 30.09.2025. No Objection Letter for annulment of tender
has already been issued by AIIB.
13. Learned senior counsel for petitioner vehemently argued that once
the bid was withdrawn by L-1 on 29.08.2024, it was incumbent upon
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CWP-3866-2025 (O&M)
respondent-authorities to have awarded the contract to petitioner No.1. Various
extensions were sought and given by petitioners regarding bid validity but still
respondents in a malafide manner did not award the contract to petitioners. It is
pointed out that respondents have raised incorrect pleas of collusion and such
allegations are proved to be incorrect by withdrawal of notice of blacklisting of
L-1. CWP-5783-2025 filed by L-1 was thereafter withdrawn on 07.04.2025.
14. Learned senior counsel for petitioners relies upon judgement of
Hon'ble the Supreme Court in Subodh Kumar Singh Rathour Vs. Chief
Executive Officer and others, 2024 SCC OnLine SC 1682 to submit that in
the present matter there is a clear cut violation of Article 14 of Constitution of
India. It is submitted that there is no question of any breach of the
confidentiality clause. It is, thus, prayed that this writ petition be allowed as
prayed for.
15. Learned counsel for respondents while refuting the arguments led
on behalf of petitioners submits that project in question is of national
importance. At the initial stage due to Model Code of Conduct being enforced
on account of Parliamentary Election, bid could not be finalized. Reference is
made to subsequent events, including submission of withdrawal of tender by L-
1. It is submitted that after extending the bid validity till 27.09.2024 by L-1,
notice of withdrawal was submitted on 29.08.2024 by L-1. Unfolding of events
as detailed in foregoing paras and stand of respondents in the short reply filed on
their behalf and subsequent applications as narrated in foregoing paras was
reiterated by learned counsel for respondents. It was stated that due to interim
order dated 04.03.2025 granted by Coordinate Bench, the matter could not be
finalized. Ultimately No Objection Letter for annulment of tender was issued by
AIIB but no action can be taken due to said interim order.
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CWP-3866-2025 (O&M)
16. After arguments had been concluded by learned counsel for
respondents, learned senior counsel for petitioners submitted that at that juncture
he has instructions to state that bid of L-1 can be matched by petitioner No.1.
Learned counsel for respondents, however, submitted that such an offer at this
belated stage, is clearly unacceptable, for it is a matter of record that stand of
respondents at the time of filing of short reply dated 02.04.2025 was clear
inasmuch as it was stated that present writ petition is premature as tender could
not be finalised on account of interim order. No such offer was ever made by
petitioner at that stage or even thereafter when application for vacation of
interim order was filed. Interim order afforded in February, 2025 was enjoyed by
petitioners till date. Dismissal of writ petition is sought.
17. We heard learned counsel for parties at length and have carefully
perused the file.
18. Issuance of tender dated 03.11.2023 and participation of bidders
which include petitioner No. 1 and L-1 i.e. M/s Dilip Buildcom Limited as has
been detailed in foregoing parties, is a matter of record. It is further a matter of
record that various extensions of tender validity were sought by respondent No.
1 from bidders. Eight (08) out of nine (09) bidders including L-1 and petitioner
extended validity of their bids upto 27.09.2024. M/s Dilip Buildcom Limited –
L-1 in response to request dated 23.07.2024 had extended validity of bid upto
22.09.2024. However, it submitted its notice of withdrawal on 29.08.2024. L-1
was informed that withdrawal of tender at this stage would result in forfeiture of
tender security. Vide communication dated 02.09.2024 L-1 was again advised
that in case letter dated 29.08.2024 for withdrawal is not revoked, it shall be
treated as withdrawal of offer in connection with ITT 19.3 and shall result in
forfeiture of tender security in accordance with ITT 19.7 of Section I. It is
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CWP-3866-2025 (O&M)
specifically stated in short reply dated 02.04.2025 that L-1 vide communication
dated 09.09.2024 through e-mail sent at 8.04 p.m. affirmed withdrawal of their
tender and on the same day i.e. 09.09.2024, petitioner No. 1 sent an e-mail at
6.17 p.m. requesting respondent No. 1 to process the matter for award of work to
it as the next most advantageous tenderer.
19. Proceedings against L-1 culminated in forfeiture of its bank
guarantee. Order dated 24.02.2025 was passed by respondent No. 1 blacklisting
L-1 i.e. M/s Dilip Buildcom Limited. CWP-5783-2025 was filed by L-1
challenging order of blacklisting. CWP-5783-2025 was ultimately disposed of in
view of statement made by learned counsel for respondent – HRIDC to the
extent that order of blacklisting L-1 had been withdrawn.
20. Learned counsel for petitioner has tried to build the foundation of
petitioner’s case on the basis of repeated extensions of tender, bid and security
being sought and given by present petitioners to urge that petitioner No. 1 is
entitled for allotment of work in question being the most advantageous tenderer.
However, in our considered opinion, this fact by itself cannot be a reason to
direct awarding of contract to petitioner No. 1.
21. At this stage, it is to be noted that work in the tender admittedly
forms part of Orbital Rail Corridor Regional Plan of National Capital Region
Planning Boards’ for developing economic growth corridor in NCR. It is
doubtlessly an infrastructural project of national importance. Complete project
alignment of HORC is 126 kms new BG electrified double line fit for double
stack with total sanctioned cost of Rs. 5617 crores. HORC shall integrate with
following railway lines:
i) Mumabi - Delhi line
ii) Delhi - Amritsar Line
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CWP-3866-2025 (O&M)
iii) Delhi - Ahemdabad line
iv) Delhi - Rohtak line
v) Garhi Harsaru- Farukhnagar line
22. It is the specific case of respondents and not denied by petitioners
that out of total stretch of 120 kms, work is in progress for 41 kms including
construction of tunnel. Section from Farukhnagar to Patli is targeted for
commissioning in June 2026. Out of 9.4 kms tunnel stretch of more than 3.5
kms is stated to have been completed. Section of 10 Km from Patli to Manesar,
providing direct railway connectivity to the Maruti plant at Manesar was
inaugurated on 17.06.2025. It was specifically stated by learned counsel for
respondent that section for which present tender was issued, is significant and
crucial for facilitating timely completion of entire HORC project and that
construction of 3.9 km long and 26 m high viaduct is a challenging engineering
feature in HORC project with proposed construction period of three years.
Specific roadblock has been created at crucial initial segment of Rail Corridor as
was pointed out from site plan of HORC attached with CM-11938-CWP-2025.
In the present case, as of now petitioner No. 1 is the only tenderer/bidder left in
fray. In the meanwhile, respondent has received no objection letter for
annulment of tender from AIIB. Fresh evaluation of work has admittedly been
carried.
23. At this stage, it is useful to refer to Circular No. 4/3/07 issued by
Central Vigilance Commission, Government of India on 03.03.2007 which
provides for re-tender in case L-1 backs out. Relevant part of said circular reads
as under:-
“(i) As post tender negotiations could often be a source of
corruption, it is directed that there should be no post-tender
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CWP-3866-2025 (O&M)
negotiations with L-1. except in certain exceptional situations. Such
exceptional situations would include, procurement of proprietary
items, Items with limited sources of supply and items where there is
suspicion of a cartel formation. The justification and details of such
negotiations should be duly recorded and documented without any
loss of time.
(ii) In cases where a decision is taken to go for re-tendering due to
the unreasonableness of the quoted rates, but the requirements are
urgent and a re-tender for the entire requirement would delay the
availability of the item, thus jeopardizing the essential operations,
maintenance and safety, negotiations would be permitted with L-1
bidder(s) for the supply of a bare minimum quantity. The balance
quantity should, however, be procured expeditiously through a re-
tender, following the normal tendering process.
(iii) Negotiations should not be allowed to be misused as a tool for
bargaining with L-1 with dubious intentions or lead to delays in
decision-making. Convincing reasons must be recorded by the
authority recommending negotiations. Competent authority should
exercise due diligence while accepting a tender or ordering
negotiations or calling for a re-tender and a definite timeframe
should be indicated so that the time taken for according requisite
approvals for the entire process of award of tenders does not exceed
one month from the date of submission of recommendations. In
cases where the proposal is to be approved at higher levels, a
maximum of 15 days should be assigned for clearance at each level.
In no case should the overall timeframe exceed the validity period
of the tender and it should be ensured that tenders are invariably
finalised within their validity period.
xxx xxx xxx
2. It is reiterated that in case L-1 backs-out, there should be a
re-tender.”
24. Subsequent to issuance of said circular, amendment was carried out
in the Manual for Procurement of Goods, 2017 and Manual for Procurement of
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CWP-3866-2025 (O&M)
Works, 2019 to the extent that in case the bidder whose bid has been found to be
the lowest evaluated bid withdraws or whose bid has been accepted but it fails to
sign the procurement contract as may be required, the procuring entity can re-
tender.
25. In the given facts and circumstances, we do not find any ground to
direct allotment of work in favour of petitioner No. 1 exclusively or restrain
respondents from re-tendering the work in question.
26. Reference by learned senior counsel for petitioners to judgment of
Hon’ble the Supreme Court in the case of Subodh Kumar (supra) is of no avail
to petitioners as this decision is not applicable in the given factual matrix
because in Subodh Kumar’s (supra) matter, LOI had been issued to petitioner
therein and contract was cancelled on the premise that financial terms of said
contract were less favourable over a period of time. Hon’ble the Supreme Court
in Subodh Kumar’s case (supra) has held as under:-
“115. What can be discerned from the above is that this
Court has consistently underscored that any decision to terminate a
contract must be grounded in a real and palpable public interest,
duly supported by cogent materials and circumstances in order to
ensure that State actions are fair, transparent, and accountable.
Public interest cannot be used as a pretext to arbitrarily terminate
contracts and there must be a clear and demonstrable ramification
or detriment on the public interest to justify any such action.
116. Considerations of public interest should not be
narrowly confined to financial aspects. The courts must have a
more holistic understanding of public interest wherever the fairness
of public authorities is in question, giving due regard to the broader
implications of such action on the stability of contractual
obligations. Merely because the financial terms of a contract are
less favourable over a period of time does not justify its
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termination. Such decisions must be based on a careful
consideration of all relevant factors, including the potential harm to
the integrity and sanctity of contractual relationships. The larger
interest of upholding contracts cannot be discarded in the name of
monetary gain labelled as public interest.
xxx xxx xxx
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.”
27. It is, thus, apparent that in case of Subodh Kumar (supra) contract
in favour of petitioner therein had been cancelled on the ground that higher
licence fee may be fetched. It was in this factual matrix it was held by Hon’ble
the Supreme Court that action of cancelling said tender was unjustified
especially when respondent therein had failed to demonstrate as to how there
was a technical fault in the tender or that potential interested bidders did not
participate and the premise that cancellation of tender was carried out to float
separate tenders, one for maintenance work and licencing advertisement rights
to ensure expertise in each field, did not find favour.
28. The present factual matrix is entirely different as has been
discussed in the foregoing paras. The contract in question has not been executed
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in favour of petitioner No.1 or any other. Gainful reference at this stage can be
made to judgment of Hon’ble the Supreme Court in The Principal Chief
Conservator of Forest & Ors. Versus Suresh Mathew & Ors. 2025 AIR
Supreme Court 2118, wherein earlier judgments of Hon’ble the Supreme Court
in Tata Cellular v. Union of India (1994) 6 SCC 651, M/s Michigan Rubber
(I) Ltd. v. State of Karnataka, (2012) 8 SCC 21, Jagdish Mandal v. State of
Orissa, (2007) 14 SCC 517 and State of Orissa v. Harinarayan Jaiswal AIR
1972 SC 1816 have been reiterated. It was held as under:-
“16. The question of scope of judicial review in the cases of
award of contracts has already been dealt with by the Hon'ble
Supreme Court in the case of Jagdish Mandal v. State of Orissa
and others (2007) 14 SCC 517 wherein the Court observed as
under:
"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 bonafide 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
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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) Weather 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 licenses, dealerships and franchises) stand on a
different footing as they may require a higher degree of
fairness in action."
We are of the opinion that the High Court has committed a gross
error while observing the facts in the case of Jagdish Mandal
(supra) were entirely different in regard to a defective tender
submitted by a participant.
17. In the case of State of Orissa and others v. Harinarayan
Jaiswal and others AIR 1972 SC 1816, in relation to excise
revenue, the Supreme Court observed as under:
"13. ... The Government is the guardian of the finances of the
State. It is expected to protect the financial interest of the
State. Hence quite naturally, the Legislature has empowered
the Government to see that there is no leakage in its revenue.
It is for the Government to decide whether the price offered
in an auction sale is adequate. While accepting or rejecting a
bid, it is merely performing an executive function. The
correctness of its conclusion is not open to judicial review.
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We fail to see how the plea of contravention of Article 19 (1)
(g) and Article 14 can arise in these cases..."
18. The law regarding government contracts or auctions and the
nature and scope of its judicial review is well settled. In the case of
M/s Michigan Rubber (I) Ltd. v. State of Karnataka and ors.
(2012) 8 SCC 216, the Supreme Court observed 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."
29. Learned counsel for petitioners was unable to point out any
arbitrariness or capricious exercise of power by the State in this matter or
anything to indicate that action of the respondent was not fair, transparent or
accountable. Furthermore, offer made by learned counsel for petitioners after
18
CWP-3866-2025 (O&M)
completion of arguments by learned counsel for respondents does not in any
manner compel us to issue a specific direction to respondents to accept the same.
It is a matter of record that such an offer, at no stage, had earlier been given by
petitioner No. 1. It is indeed upto respondent to accept or reject the same and
especially keeping in view the fact that tender validity has come to an end.
Tender in question was issued in November, 2023. Respondent is well within its
rights to have whole the situation revaluated and take necessary steps as may be
required and called for in the given factual situation.
30. No other argument was addressed.
31. Keeping in view the facts and circumstances as above, we do not
find any ground whatsoever to cause interference in this matter in exercise of
jurisdiction under Article 226 of Constitution of India.
32. Writ petition is, accordingly, dismissed.
(LISA GILL)
JUDGE
(MEENAKSHI I. MEHTA)
September 09, 2025 JUDGE
Rts
Whether speaking/reasoned: Yes/No
Whether reportable: Yes/No
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