Orissa High Court
M/S. Nanda Infra Construction Pvt. Ltd vs State Of Orissa on 18 November, 2024
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C). No.5790 of 2024 and W.P.(C) No.5535 of 2024
M/s. Nanda Infra Construction Pvt. Ltd., represented by its
Managing Director, Dilip Kumar Nanda, S/o- Anukul Nanda, aged
about 56 years, At/College Road, P.O. South Balanda, Dist- Anugul.
...Petitioner
-Versus-
1. State of Orissa, represented by the Secretary, Works
Department, Secretariat, AT- Bhubaneswar, Dist- Khurda
2. Engineer-in-Chief (Civil), Odisha, Nirman Soudha,
Kesharinagar, Unit-V, At/PO- Bhubaneswar-751001, Dist- Khurda
3. Chief Engineer (DPI & ROADS), Odisha, Nirman Soudha,
Kesharinagar, Unit-V, AT/PO- Bhubaneswar- 751001, Dist- Khurda
4. Executive Engineer (Civil), Office of the Engineer-in-Chief
(Civil), Odisha, Nirman Soudha, Kesharinagar, Unit-V, AT/PO-
Bhubaneswar- 751001, Dist- Khurda
5. Financial Advisor-cum-Special Secretary to Govt., Works
Department, Odisha, Nirman Soudha, Kesharinagar, Unit-V, AT/PO-
Bhubaneswar- 751001, Dist- Khurda.
...Opposite Parties
Advocates appeared in these cases:
For the Petitioners : Mr. K.B. Panda, Advocate
For Opposite Parties : Ms. A. Dash
Additional Standing Counsel
W.P.(C) No. 5790 of 2024 Page 1 of 29
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MISS JUSTICE SAVITRI RATHO
JUDGMENT
18.11.2024 Chakradhari Sharan Singh, CJ.
As both the writ applications arise out of the same Invitation for Bids notice and are based on identical facts, filed by the same petitioner, they have been heard together.
2. An Invitation for Bids (in short „IFB‟) notice was issued on 17.08.2023 by the Office of the Engineer-in-Chief (Civil), Odisha for execution of various works including "improvement such as widening and strengthening of double lane to four lane standard of Bhawanipatna/Khariar road from 3/550 KM to 19/000 KM (except 3/930KM to 4/970KM) in the district of Kalahandi under State Plan". The approximate value of the work was 49.97 crores.
3. The petitioner had participated. It qualified along with other participating bidders on technical evaluation, whereafter, financial bids of the technically qualified bidders were opened on 09.11.2023. The petitioner was declared L1. A recommendation was accordingly made by the Office of the Engineer-in-Chief (Civil), Odisha through Letter No.49934 dated 23.11.2023 to the Financial Advisor-cum-Special Secretary to Government, Works Department, Odisha for consideration of approval by the Government in the Works Department as per the W.P.(C) No. 5790 of 2024 Page 2 of 29 requirement in Note-I of paragraph 6.3.15 of the Odisha Public Works Department Code (in short the „OPWD Code‟) (Vol-I).
4. Clause 6.3.15 and Note-I below it of the OPWD Code (Vol-I) reads thus:
"6.3.15. A public works officer may accept a tender for a work up to the amount to which he is authorized to accord technical sanction to estimates provided that any provision in the tender does not infringe any standard rule or order of a higher authority and that no provision involves an uncertain or indefinite liabilities or any condition of an unusual character.
Competent Authority Tender Finalization power:
(a) Administrative Above Rs.10.00 Crores (Where there Department is a post of E.I.C.) Above Rs.7.00 Crores (Where there is no post of E.I.C.)
(b) Engineer-in-Chief Above Rs.7.00 Crores and upto Rs.10.00 Crores
(c) Chief Engineer Above Rs.4.00 Crores and upto Rs.7.00 Crores
(d) Superintending Above Rs.1.00 Crores and upto Engineer Rs.4.00 Crores
(e) Executive Engineer Upto Rs.1.00 Crore Note-I. The Department/Wings where there is post of Engineer-
in-Chief tenders for works above Rs.7.00 crores should be referred to the Administrative Department who will refer it to a Committee consisting of Secretary of the Admn. Deptt. Secy. of the F. Deptt. Secy. of the Law Department and Chief Engineer concerned. The Financial Adviser or Assistant Financial Adviser W.P.(C) No. 5790 of 2024 Page 3 of 29 of the Department will act as Member Secretary of the Committee. Secretary of the Finance Department and Secretary of Law Deptt. may send their representative not below the rank of Deputy Secretary of the respective Departments, if they so desire. In case, the members of the Committee comes to a unanimous decision. Such recommendation of the Committee should be communicated to the Chief Engineer after obtaining orders of the Govt. in Administrative Department. In case the members express divergent views on any point, final decision in the Administrative Deptt. be taken after obtaining orders of Government."
5. Admittedly, before the petitioner‟s bid was accepted in accordance with Note-I, reproduced hereinabove, under the instructions of the Government in the Works Department, a notice was issued on 01.03.2024 by the Office of the Engineer-in-Chief (Civil) cancelling the IFB for the work in question. The said cancellation of IFB is under challenge in the present writ petition filed under Article 226 of the Constitution of India.
6. The petitioner is also seeking a direction to the opposite parties to award the tender to the petitioner, based on the fact that the petitioner has been declared L1.
7. A counter affidavit has been filed on behalf of the State-opposite parties wherein, it has been stated, inter alia, that the Government in the Works Department had requested to re-examine and submit a report regarding the condition of the road for which tender was invited W.P.(C) No. 5790 of 2024 Page 4 of 29 as the said road was earlier developed under World Bank Assisted Odisha State Road Projects. Upon re-examination and during the visit of the departmental Principal Secretary, Engineer-in-Chief (Civil), Odisha and other officials, it was decided to take up four lane work of the total length after availability of encumbrance free land. Accordingly, a proposal was made to cancel the IFB whereafter, the IFB was cancelled.
8. In response to the said stand in the counter affidavit, the petitioner has filed a rejoinder assailing the action of cancellation of IFB notice on the ground that the decision to cancel it has been taken behind his back. Further, the reason assigned in the counter affidavit for cancellation of tender is not reflected in the order cancelling tender notice.
9. Mr. K.B. Panda, learned counsel appearing on behalf of the petitioner has relied on the Supreme Court‟s decisions in case of Mohinder Singh Gill v. The Chief Election Commissioner: AIR 1978 SC 851 and Commissioner of Police, Bombay v. Gordhandas Bhanji:
AIR 1952 SC 16. He has argued that the validity of the impugned order must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. He has submitted that public orders, publicly made in exercise of a statutory authority, cannot be construed in the light of explanation subsequently given by an officer making the order of what he meant, or of what was in his mind, or what he intended to do.W.P.(C) No. 5790 of 2024 Page 5 of 29
10. He has heavily relied on the following decisions of this Court in support of his arguments:
(i) M/s. Shree Ganesh Construction v. State of Odisha:
2016 (II) OLR 237;
(ii) Gangadhar Jena v. State of Odisha: 2017 (II) ILR-
CUT 763;
(iii) Sampad Samal v. State of Odisha; AIR 2017 ORISSA 33;
(iv) M/s. Sical Logistics Ltd. v. Mahanadi Coalfields Limited: 2017 (II) ILR- CUT 1035;
(v) Order dated 01.05.2024 passed in W.P.(C) No.1309 of 2024 (M/s. Mackintosh Burn Ltd., Kolkata v. State of Odisha and others); and
(vi) Order dated 24.06.2024 passed in W.P.(C) No.334 of 2024 (M/s. Bansal Infraprojects Pvt. Ltd., Bolangir v. State of Odisha and others).
11. In the case of M/s. Shree Ganesh Construction (supra), the division Bench relying on the decisions in case of Mohinder Singh Gill (supra) and Bhikhubhai Vithlabhai Patel v. State of Gujarat:
(2008) 4 SCC 144, interfered with an order cancelling the tender for work on the ground that the order was unreasoned and the opposite parties could not justify their action by giving explanation by way of affidavit. It has been opined in case of M/s. Shree Ganesh W.P.(C) No. 5790 of 2024 Page 6 of 29 Construction (supra) that the law laid down in case of Air India Limited v. Cochin International Airport Ltd: (2000) 2 SCC 17 and Maa Binda Express Carrier v. North-East Frontier Railway: (2014) 3 SCC 760 was not applicable in the facts of that case.
12. An SLP, preferred against the decision rendered in case of M/s. Shree Ganesh Construction (supra), came to be dismissed in limine by the Supreme Court by an order dated 01.12.2017 passed in SLP(C) No.D41354/2016.
13. In case of Gangadhar Jena (supra), the Division Bench of this Court interfered with the cancellation of tender call notice relying again on the observation made by the Supreme Court in case of Mohinder Singh Gill (supra) and Gordhandas Bhanji (supra) as well as the decision of the division Bench in case of M/s. Shree Ganesh Construction (supra). The division Bench also held that cancellation of the tender notice was consequent upon an enquiry in which the petitioner of that case was not given an opportunity of hearing, no action could have been taken on the basis of such enquiry report, the Division Bench held. Paragraph 19 of the said decision reads thus:
"19. In M/s. Shree Ganesh Construction (supra), this Court has already held that the cancellation of tender having been made by a cryptic order, the subsequent explanation given by way of filing counter affidavit is not permissible in law. As no reason was assigned in the impugned order, the same was quashed. In view of the law laid down in Mohinder Singh Gill (supra) and Commissioner of Police, Bombay (supra), this question no more remains res integra. Since by a cryptic order the cancellation of tender has been done, even if the W.P.(C) No. 5790 of 2024 Page 7 of 29 reason has been explained by filing subsequent affidavit which is not permissible in law, the same cannot sustain in the eye of law."
14. The Division Bench, in the case of Gangadhar Jena (supra), has further held that the law laid down by the Supreme Court in case of State of Jharkhand v. CWE-Soma Consortium: AIR 2016 SC 3366 and the division Bench decision of this Court in case of Chandra Sekhar Swain v. State of Odisha: 2017 (I) OLR 666 had no application.
15. In M/s. Sical Logistics Ltd. (supra), the division Bench, again relying on the Supreme Court‟s decisions in case of Mohinder Singh Gill (supra), Gordhandas Bhanji (supra) and Bhikhubhai Vithlabhai Patel (supra), held in paragraph 14 as under:
"14. In view of the aforesaid facts and circumstances, this Court is of the considered view that by way of subsequent explanation given in the counter affidavit the communications dated 17.03.2017 in Annexures-5 and 6 cancelling the tender in question without assigning any reason cannot sustain in the eye of law. More so, in view of the Central Vigilance Commission guidelines dated 24.03.2005, the tender accepting authority is not free to take any decision in an arbitrary manner and is bound to record clear and logical reasons for any such action of rejection/recall of tenders on the file. In view of such position, in absence of any reason communicated to the petitioner, the order so passed in Annexures-5 and 6 dated 17.03.2017 cannot sustain."
16. The division Bench distinguished the decisions rendered by the Supreme Court in the case of State of Uttar Pradesh v. AL Faheem W.P.(C) No. 5790 of 2024 Page 8 of 29 Meetex Private Ltd: (2016) 4 SCC 716, Maa Binda Express Carrier (supra), South Delhi Municipal Corporation v. Ravinder Kumar:
(2015) 15 SCC 545, State of Assam v. Susrita Holdings Private Limited: (2014) 11 SCC 192 and Rajasthan Housing Board v. G.S. Investments: (2007) 1 SCC 477. The division Bench also distinguished the law discussed by the Supreme Court in case of CWE-
Soma Consortium (supra) while deciding the scope of judicial review in the matter of cancellation of tender notice, on facts, and allowed the writ petition by quashing the order of cancellation of tender and the notice for retender.
17. In the case of M/s. Mackintosh Burn Ltd., Kolkata (supra), the division Bench, placing reliance on the decision in M/s. Shree Ganesh Construction (supra), M/s. Sical Logistics Ltd. (supra) and Sampad Samal (supra), has held in paragraph 13 as under:
"13. In view of such position, no third party interest can be created because of the fact that no leave was obtained from this Court to award the work in favour of any third party, pursuant to the second tender call notice issued by the authority. As such, the interim order is very clear that the process of bid, so far as the work in question is concerned, may continue, but the same shall be subject to final outcome of the writ petition. In such view of the matter, since the order of cancellation has been passed by the tendering authority without giving opportunity of hearing to the petitioner, the second tender call notice issued under Annexure-1, so far it relates to the work under item no.49, as well as the orders of cancellation under Annexures-9 and 10 cannot be sustained in the eye of law and the same are liable to be quashed and are hereby quashed. Needless to say, the recommendation made by the W.P.(C) No. 5790 of 2024 Page 9 of 29 tendering authority to approve the tender submitted by the petitioner, pursuant to 1st tender call notice, should be accepted as expeditiously as possible, preferably within a period of three weeks from today."
(Emphasis supplied)
18. Again in the case of M/s. Bansal Infraprojects Pvt. Ltd. (supra), placing reliance on the decision in M/s. Shree Ganesh Construction (supra), M/s. Sical Logistics Ltd. (supra) and Sampad Samal (supra), the division Bench has held in paragraph 12 as under:
"12. In such view of the matter, since the order of cancellation has been passed by the tendering authority without giving opportunity of hearing to the petitioner, the second tender call notice issued under Annexure-1, so far it relates to the work under item no.13, as well as the orders of cancellation under Annexures-10 and 11 cannot be sustained in the eye of law and the same are liable to be quashed and are hereby quashed. Needless to say, the recommendation made by the tendering authority to approve the tender submitted by the petitioner, pursuant to 1st tender call notice, should be accepted as expeditiously as possible, preferably within a period of three weeks from today."
19. It is worthwhile mentioning that the division Bench, in the case of Sampad Samal (supra), while testing the legality of cancellation of the tender call notice, construed Clause 17 of the tender documents read with Clause 10 of the terms and conditions of the tender paper, applying the rules of statutory interpretation and interfered with the order of cancellation of tender on the ground that the said order did not disclose any proper and adequate ground. After quashing the order of W.P.(C) No. 5790 of 2024 Page 10 of 29 cancellation of tender, the Division Bench directed to award the contract to the petitioner of that case.
20. Ms. A. Dash, learned Additional Standing Counsel (ASC), appearing on behalf of the opposite party-State has submitted that no right can be said to have accrued in favour of the petitioner, much less an enforceable right on the sole ground that it was found to be the L1 bidder. In such circumstance, there was no question of giving any notice or opportunity of hearing to the petitioner for which cancellation of the IFB notice does not breach the principles of natural justice.
21. She has submitted that so long as the bid has not been accepted, the highest/lowest bidder does not acquire any vested right to have the auction confirmed in its favour. She has placed reliance on the Supreme Court‟s decisions in case of AL Faheem Meetex Private Ltd (supra), Jagdish Mandal v. State of Odisha: (2007) 14 SCC 517, Laxmikant v. Satyawan: (1996) 4 SCC 208, G.S. Investments (supra), U.P. Avas Evam Vikas Parishad v. Om Prakash Sharma: (2013) 5 SCC 182 and M/s. Master Marine Services Pvt. Ltd. v. Metcalfe & Hodgkinson Pvt. Ltd.: (2005) 6 SCC 138. She has heavily relied on the Supreme Court‟s decision in the case of CWE-Soma Consortium (supra) (2016) 14 SCC 172 and has argued that in the present case, Clause 32 of the Detailed Tender Call Notice (DTCN) in question clearly states that the authority reserves the right to reject any of the bids received, without any reasons thereof whatsoever. Similar clause has been held to be valid in the case of CWE-Soma Consortium (supra). She has also argued that the decision to cancel the tender W.P.(C) No. 5790 of 2024 Page 11 of 29 process was in no way discriminatory nor mala fide and therefore, the impugned decision of cancellation of the IFB notice does not require any interference.
22. She has relied on the Supreme Court‟s decision in case of Maa Binda (supra) and Rishi Kiran Logistics P. Ltd v. Board of Trustees of Kandla Port Trust: (2015) 13 SCC 233. She has argued that the principle laid down in Mohinder Singh Gill (supra) and Gordhandas Bhanji (supra) has been wrongly applied by the division Bench of this Court in case of M/s. Shree Ganesh Construction (supra) and other division Bench decisions relied on by learned counsel for the petitioner.
23. It is apparent from the line of decisions relied on by learned counsel appearing for the petitioner that the first decision of the Division Bench in the case of M/s. Shree Ganesh Construction (supra) has been followed in rest of the five cases. Referring mainly to the enunciation of law in the case of Mohinder Singh Gill (supra), Gordhandas Bhanji (supra), Bhikhubhai Vithlabhai Patel (supra) and Shree Ganesh Construction (supra), the Division Bench with the order cancelling the tender notice in the case of Shree Ganesh Construction (supra) on the ground of the same being cryptic, and further it was impermissible to explain the reasons in a subsequent affidavit. We are conscious of the fact that by an order in limine, the Supreme Court dismissed the SLP preferred against the judgment in the case of Sri Ganesh Construction (supra). The said decision in the W.P.(C) No. 5790 of 2024 Page 12 of 29 case of Sri Ganesh Construction (supra) has been followed in all other decisions relied on by learned counsel for the petitioner.
24. We are of the opinion that legal questions of seminal significance have arisen based on the submissions advanced on behalf of the petitioner and learned Additional Standing Counsel for the State, in the present case touching application of principles of natural justice.
25. We prima facie find substance in the submissions advanced by learned Ms. A. Dash, learned Additional Standing Counsel on behalf of the State that observations by the Supreme Court in the case of Mohinder Singh Gill (supra) and Gordhandas Bhanji (supra) do not apply in the matter of cancellation of tender notice before the contract is awarded. In paragraphs 7 and 8 of Shree Ganesh Construction (supra), the Division Bench has opined thus:
"7. In the counter affidavit filed, the reasons have been assigned, which are not available in the impugned order of cancellation filed before this Court in Annexure-4 dated 5.2.2016. More so, while cancelling the tender, the principles of natural justice have not been complied with. It is well settled principle of law laid down by the Apex Court in Mohinder Singh Gill and another v. The Chief Election Commissioner, New Delhi and others, AIR 1978 SC 851 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."W.P.(C) No. 5790 of 2024 Page 13 of 29
8. In Commissioner of Police, Bombay v. Gordhandas Bhanji, AIR 1952 SC 16, the Apex Court held as follows:
"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."
Similar view has also been taken in Bhikhubhai Vithlabhai Patel and others v. State of Gujarat and another, (2008) 4 SCC 144."
26. Indisputably, the order of cancellation of tender had not been passed by a statutory functionary in exercise of statutory authority. In the case of Mohinder Singh Gill (supra) the Election Commission of India, a statutory body, had cancelled the entire poll of a parliamentary constituency in the State of Punjab and Haryana with a direction to have a fresh poll for the poll constituency. A writ petition was filed before the High Court of Punjab and Haryana High Court against the said decision of the Election Commission. The said High Court dismissed the writ petition in view of the embargo under Article 329(b) of the Constitution of India but made certain observations. Meanwhile, pursuant to the Commission‟s direction, a repoll was held and a candidate was declared elected. An election petition was also filed by the writ petitioner. In the writ proceeding the Election Commission had W.P.(C) No. 5790 of 2024 Page 14 of 29 filed a counter affidavit stating that after taking into account the circumstances and the information including the oral representation of the appellant before the Supreme Court, the order cancelling the poll in the said Parliamentary Constituency was passed. As has been noted, the High Court held that it had no jurisdiction to entertain the writ petition. "The High Court nevertheless proceeded to enter verdicts on merits of all the issues virtually exercising even the entire jurisdiction, which exclusively belonged to the Election Tribunal". (See Mohinder Singh Gill (supra), paragraph 6).
27. After having noticed the fact that repoll was held and respondent No.3 in that case won the election, the Supreme Court noted in the case of Mohinder Singh Gill (supra) in paragraph 7 as under:
"7. x x x Of course, if the Commission's order for re- poll fails in law, the second electoral exercise has to be dismissed as a stultifying futility. Two things fall to be mentioned at this stage, but, in passing, it may be stated that the third respondent had complained to the Chief Election Commissioner that the assistant returning officer of Fazilka segment had declined the request for recount unreasonably and that an order for re-poll of the Fazilka assembly part should be made 'after giving personal hearing'. Meanwhile, runs the request of the third respondent: 'direct the returning officer to withhold declaration of result of 13 Ferozepore Parliament constituency'. We do not stop to make inference from this document but refer to it as a material factor which may be considered by the tribunal which eventually has to decided the factual controversy."
28. After having stated as above, the Supreme Court in Mohinder Singh Gill (supra) laid down in paragraph-8 as under:
W.P.(C) No. 5790 of 2024 Page 15 of 29"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."
29. In the case of Mohinder Singh Gill (supra), the Supreme Court concluded in paragraph 92 as under:
"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."
30. In the concurring judgment, Justice Goswami, J. for himself and Shingal, J. laid down in paragraph 126 as under:
"126. In view of our conclusion that the High Court had no jurisdiction to entertain the writ application W.P.(C) No. 5790 of 2024 Page 16 of 29 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."
31. We find it difficult to accept the view taken by the Division Benches in all the decisions that the aforesaid observations made in paragraph 8 in the case of Mohinder Singh Gill (supra) is applicable to an administrative order passed by a tendering authority cancelling the tender notice before award of the contract at the instance of one of the bidders claiming to be the highest/lowest bidder as the case may be. This for the reason that the highest or lowest bidder does not have any vested right to have the auction/contract/bid confirmed in his favour.
32. In the case of U.P. Avas Evam Vikas Parishad and Others Vs. Om Prakash Sharma reported in (2013) 5 SCC 182, the Supreme Court framed specific question in paragraph 25(b), which reads as under:
"25. With reference to the aforesaid rival factual and legal contentions urged on behalf of the parties, the W.P.(C) No. 5790 of 2024 Page 17 of 29 following points would arise for consideration of this Court:
xxx xxx xxx
(b) Whether there is any vested right upon the plaintiff/bidder until the bid is accepted by the competent authority in relation to the property in question? Merely because the plaintiff is the highest bidder by depositing 20% of the bid amount without there being approval of the same by the competent authority and it amounts to a concluded contract in relation to the plot in question ?
xxx xxx xxx
33. After noticing the Supreme Court‟s decision in the case of Meerut Development Authority Vs. Association of Management Studies reported in (2009) 6 SCC 171 and Rajasthan Housing Board Vs. G.S. Investment reported in (2007) 1 SCC 477, the Supreme Court ruled in no uncertain terms that in absence of acceptance of bid offered by the plaintiff, there was no concluded contract. It would be beneficial to reproduce the observations made by the Supreme Court in Meerut Development Authority (supra), in paragraphs 27 and 29 read thus:
"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.
xxx xxx xxx W.P.(C) No. 5790 of 2024 Page 18 of 29
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."
34. In the case of Rajasthan Housing Board (supra), the Supreme Court has observed in paragraph-9 as under:
"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."
35. In Laxmikant and others v. Satyawan and others reported in (1996) 4 SCC 208, the Supreme Court, noticing one of the conditions of auction 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", held as under, as no confirmation letter was found to have been issued:
"4. xxx xxx xxx W.P.(C) No. 5790 of 2024 Page 19 of 29 The conditions of the auction clearly conceived and contemplated that the acceptance of the highest bid by the Board of Trustees was a must and the Trust reserved the right to itself to reject the highest or any bid. This Court has examined the right of the highest bidder at public auctions in the cases of Trilochan Mishra v. State of Orissa [(1971)3SCC153], 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] . It has been repeatedly pointed out that 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. In the present case no right had accrued to the respondent either on the basis of the statutory provision under Rule 4(3) or under the conditions of the sale which had been notified before the public auction was held."
36. Further, the Supreme Court in case of M/s. Cwe-Soma Consortium (supra), after noticing the decisions in case of Laxmikant (supra), Rajasthan Housing Board (supra) and U. P. Avas Evam Vikas Parishad v. Om Prakash Sharma reported in (2013) 5 SCC 182, has held in no uncertain terms as under:-
"...........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." (See paragraph 13) W.P.(C) No. 5790 of 2024 Page 20 of 29
37. In case of Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd., reported in (2005) 6 SCC 138, the Supreme Court has laid down in paragraph 12 as under:-
"12. After an exhaustive consideration of a large number of decisions and standard books on administrative law, the Court enunciated the principle that the modern trend points to judicial restraint in administrative action. The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. 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. The Government must have freedom of contract. In other words, 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 principles of reasonableness but also must be free from arbitrariness not affected by bias or actuated by mala fides. It was also pointed out that quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. (See para 113 of the Report, SCC para 94.)"
38. In Tata Cellular v. Union of India reported in (1994) 6 SCC 651, the Supreme Court has held, inter alia, that 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 but must be free from arbitrariness not W.P.(C) No. 5790 of 2024 Page 21 of 29 affected by bias or actuated by mala fides. Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.
39. In Air India Ltd. v. Cochin International Airport Ltd. reported in (2000) 2 SCC 617, the Supreme Court has observed in paragraph 7 as under:-
"7. ...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."
(emphasis supplied)
40. In Assn. of Registration Plates v. Union of India reported in (2005) 1 SCC 679, the Supreme Court has held in paragraph 43 as under:-
"43. ... Article 14 of the Constitution prohibits the Government from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly and in public interest in awarding contract. At the same time, no person can claim a fundamental right to carry on business with the Government. All that he can claim is that in competing for the contract, he should not be unfairly treated and discriminated, to the detriment of public interest."
41. In B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. reported in (2006) 11 SCC 548, it has been held as under:-
W.P.(C) No. 5790 of 2024 Page 22 of 29"56. It may be true that a contract need not be given to the lowest tenderer but it is equally true that the employer is the best judge therefor; the same ordinarily being within its domain, court's interference in such matter should be minimal. The High Court's jurisdiction in such matters being limited in a case of this nature, the Court should normally exercise judicial restraint unless illegality or arbitrariness on the part of the employer is apparent on the face of the record."
42. Noticing the aforesaid decisions, the Supreme Court, in the case of Jagdish Mandal v. State of Orissa reported in (2007) 14 SCC 517, reiterating its opinion on the scope of judicial review in the matters relating to tenders or award of contracts, has held in paragraph 22 of as under:-
"22. ......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 W.P.(C) No. 5790 of 2024 Page 23 of 29 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."
43. In the case of State of U.P. v. Al Faheem Meetex (P) Ltd., reported in (2016) 4 SCC 716, the Supreme Court has clearly held that since there was no acceptance of bid by the competent authority, no right (much less enforceable right) accrued to the bidder. In such a situation, there was no question of giving any prior notice or opportunity of hearing to the said bidder.
W.P.(C) No. 5790 of 2024 Page 24 of 2944. It is noteworthy that the Division Bench in M/s. Bansal Infraprojects Pvt. Ltd (supra) has noticed the Supreme Court‟s decision in case of State of Uttar Pradesh v. Sudhir Kumar Singh, reported in (2021) 19 SCC 706 to take a view that the principles of natural justice is required to be followed before cancellation of a tender call notice.
45. Sudhir Kumar Singh (supra) is a case where the agreement was already entered into between the U.P. State Warehousing Corporation and the contractor for execution of work under the tender, which had begun and continued for a period of one year. Thereafter, based on two complaints, an ex parte enquiry was conducted leading to cancellation of the tenders and initiation of disciplinary proceedings against certain employees of the Corporation. It was in that background that the Supreme Court made the observation in paragraph 26, which has been quoted by the Division Bench of this Court in case of M/s. Bansal Infraprojects Pvt. Ltd (supra). Further, in the background of the said facts, the Supreme Court in Sudhir Kumar Singh (supra) has held in paragraph 43 as under:-
"43. Judged by the touchstone of these tests, it is clear that Respondent 1 has been completely in the dark so far as the cancellation of the award of tender in his favour is concerned, the audi alteram partem rule having been breached in its entirety. As has been correctly argued by Shri Rakesh Dwivedi, prejudice has indeed been caused to his client, not only from the fact that one year of the contract period has been taken away, but also that, if the impugned High Court judgment [Sudhir Kumar Singh v. State of U.P., 2019 SCC OnLine All 5798] is to be set aside today, his W.P.(C) No. 5790 of 2024 Page 25 of 29 client will be debarred from bidding for any of the Corporation's tenders for a period of three years."
46. After having noticed the Supreme Court‟s decisions as noted above, we are in respectful disagreement with the opinions recorded by the Division Benches of this Court in the cases of Shree Ganesh Construction (supra), Gangadhar Jena (supra), Sampad Samal (supra), Sical Logistics Ltd (supra), Mackintosh Burn Ltd., Kolkata (supra) and Bansal Infraprojects Pvt. Ltd., Bolangir (supra) mainly on the following points:-
i. The observations made by the Supreme Court in paragraph 8 of the Mohinder Singh Gill (supra) do not apply to a purely administrative decision cancelling a notice inviting tender by an authority taken before the decision making process for award of tender is over, with the acceptance of the bid of a successful bidder by a competent authority leading to inter-parte mutual contractual obligations, unless such decision takes away any vested right of a party.
ii. There is no necessity of giving an opportunity of hearing or a prior notice before cancellation of tender notice to the highest/lowest bidder or any other successful bidder as such bidder does not acquire any vested right to have the auction confirmed in his favour on that basis alone;
iii. The decision rendered by the Supreme Court in the case of Sudhir Kumar Singh (supra) on the point of W.P.(C) No. 5790 of 2024 Page 26 of 29 compliance of principles of natural justice is not applicable when a tender notice is cancelled prior to confirmation of the tender/auction in favour of a bidder;
iv. In any case, even if the Court interferes with the decision of the competent authority to cancel the tender notice, exercising power of judicial review, ordinarily it should not direct the authority to approve the tender submitted by a successful bidder, in view of the law laid down by the Supreme Court;
47. As has been noted above, an SLP preferred against the Division Bench decision in case of M/s. Shree Ganesh Construction (supra) has been dismissed by the Supreme Court in limine, with the following order dated 01.12.2017 passed in Special Leave to Appeal (C) No.(s) D41354/2016:-
"Heard.
Delay condoned.
The special leave petition is dismissed. Pending applications, if any, shall stand disposed of."
It is a well settled principle of law that dismissal of an SLP in limine implies that the case before the Supreme Court was not considered worthy of examination for a reason, which may be other than the merits of the case. Such in limine dismissal at the threshold does not constitute any declaration of law or a binding precedent under Article 141 of the Constitution. [See (2019) 6 SCC 270 Para 9.24, State of Orissa v. Dhirendra Sundar Das] W.P.(C) No. 5790 of 2024 Page 27 of 29
48. Accordingly, recording our disagreement with the views of the Division Bench decisions of this court as noted above, we deem it proper to refer the following questions of law for an authoritative pronouncement by a Full Bench of this court:-
i. Whether the observations made by the Supreme Court in paragraph-8 of Mohinder Singh Gill (supra) 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 W.P.(C) No. 5790 of 2024 Page 28 of 29 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?
49. Let these matters be placed before the Chief Justice for placing the matter before a Full Bench for an authoritative pronouncement on the aforementioned legal issues.
(Chakradhari Sharan Singh) Chief Justice (Savitri Ratho) Judge SK Jena/Secy.
Signature Not Verified Digitally Signed Signed by: SANJAY KUMAR JENA Designation: SECRETARY Reason: AuthenticationLocation: High Court of Orissa, Cuttack.
Date: 26-Nov-2024 20:04:12 W.P.(C) No. 5790 of 2024 Page 29 of 29