Subodh Kakkar And Another vs. Union Of INDIA And Ors.

Held

The Court held that the award of a contract is essentially a commercial transaction, and the State or its instrumentalities are open to not accept any offer, even if it is the highest or lowest. While such decisions are generally not amenable to judicial review, the Court can examine the decision-making process for mala fides, unreasonableness, and arbitrariness. In this case, the petitioners had not placed any material to show their bid was accepted, meaning no concluded contract was formed, and thus no vested right had accrued to them. The Court found that the objections raised by the respondents regarding the petitioners' offered premises, including issues with entry/exit points, readiness for occupation as per Condition No. 20, issues with the Power of Attorney, belated CLU process, notice from Nagar Council, and ongoing construction on the second floor, were not irrelevant. The Court found no patent infirmity in the withdrawal of the tender and the initiation of re-tendering. Regarding mala fides, the Court found the allegations to be vague and bald, with no material to substantiate a nexus between respondent No. 3 and respondent No. 4. The Court also found that Condition No. 12 in the subsequent tender notice was similar to the original Condition No. 20, refuting the petitioners' claim of favouritism. Therefore, the Court concluded that the petitioners failed to establish mala fide exercise of power and found no merit in the writ petition.

Facts

The petitioners submitted a bid in response to a tender notice dated May 17, 2017, issued by the Principal Commissioner, Central Excise and Service Tax Commissionerate, Ludhiana, for hiring office accommodation for GST Divisions and Range Offices in Ferozepur. The petitioners' technical bid qualified, and they submitted a financial bid, claiming it was the most competitive. However, the tender was withdrawn by an order dated December 5, 2017, and a re-tendering process was initiated on April 20, 2018. The petitioners challenged the withdrawal of the tender and the re-tendering process, alleging it was unjust, discriminatory, against natural justice, and motivated by mala fides to favour a private respondent. They argued their lowest bid was not accepted, contrary to tender conditions.

Key Issues

1. Whether the withdrawal of the tender dated May 17, 2017, and the initiation of a re-tendering process on April 20, 2018, by the respondents was vitiated by arbitrariness, unreasonableness, or mala fides, thereby violating the principles of natural justice and the petitioners' right to a fair process, as argued by the petitioners. 2. Whether the petitioners had acquired a vested right in the tender process, preventing its withdrawal, as contended by the petitioners. Contentions of the Petitioners: The petitioners argued that the withdrawal of the tender and non-acceptance of their lowest financial bid was unjust, discriminatory, and against the principles of natural justice. They alleged mala fides, stating the tender was withdrawn at the behest of respondent No. 3 to allot it to respondent No. 4 for illegal gains. They further argued that the deletion of Condition No. 20 (requiring the building to be ready for occupation) in the subsequent tender notice was done to favour respondent No. 4. Contentions of the Revenue/State: The respondents did not explicitly present arguments in the judgment, but their actions (withdrawal of tender and re-tendering) and the objections raised against the petitioners' premises formed the basis of their defense.