M/S Piyush Construction vs. South Eastern Coalfields Limited

Facts

The petitioner, M/s Piyush Construction, participated in an e-tender process initiated by South Eastern Coalfields Limited (SECL) on March 25, 2025, for construction of a cement concrete road. The petitioner was declared the lowest bidder (L-1) with a bid of Rs. 1,25,77,137.64 (exclusive of GST). Subsequently, the respondents, citing administrative grounds and a legal issue concerning the petitioner's financial turnover certificate (which reflected business activities prior to the firm's incorporation on October 3, 2023), resolved to cancel the tender process on February 4, 2026. A fresh Notice Inviting Tender (NIT) was issued on February 19, 2026. The petitioner challenged the cancellation decision and the fresh NIT, alleging arbitrariness, mala fides, and violation of natural justice, seeking the award of the work order in their favour.

Held

The Court held that a bidder does not acquire any vested or indefeasible right merely by being declared L-1. The award of a public contract is governed by principles of fairness, transparency, and public interest, and judicial review in contractual matters is limited to examining the decision-making process for arbitrariness, mala fides, or violation of statutory provisions, as per established Supreme Court precedents like Tata Cellular v. Union of India. The Court found that the cancellation was based on a reconsideration of eligibility criteria, specifically the validity of the turnover certificate for a period prior to the firm's incorporation. The employer is the best judge of its requirements and eligibility standards. The Court noted that the petitioner failed to provide cogent material to substantiate allegations of mala fides or illegal demands. The Court also held that cancellation of a tender before acceptance does not entail civil consequences requiring a pre-decisional hearing, as no vested right had accrued. Therefore, in the absence of demonstrable arbitrariness, mala fides, or statutory violation, the Court found no ground to interfere with the administrative decision.

Key Issues

1. Whether the respondent authorities were justified in cancelling the tender process after the petitioner was declared L-1, and issuing a fresh Notice Inviting Tender (NIT), in light of the petitioner's contention that the cancellation was arbitrary, mala fide, and in violation of the NIT terms and principles of natural justice? Petitioner's arguments: The petitioner argued that once declared L-1 after technical scrutiny and opening of the price bid, their eligibility was conclusively determined. They contended that the same turnover certificate, previously accepted, could not be questioned later without misrepresentation or concealment. The petitioner also argued that the Tender Committee lacked the statutory authority to review its earlier decision and that the cancellation was based on unsubstantiated allegations of an illegal demand and administrative impropriety. They relied on the principle that a bidder acquires a right upon being declared L-1. Respondents' arguments: The respondents justified the cancellation on administrative grounds and in exercise of their discretion under the tender conditions. They argued that no vested right accrues to a bidder merely by being declared L-1, and the employer retains the authority to cancel the tender in public interest before a work order is issued. They contended that judicial review in tender matters is confined to the decision-making process, not the decision itself, and that the petitioner failed to provide cogent material to substantiate allegations of mala fides. They also argued that retendering does not inherently cause prejudice.