M/S.Integral Trading And Logistics vs. The Board Of Trustees Of Visakhapatnam Port Authority

Held

The Court held that the cancellation of the tender process and annulment of the appellant's L1 bid were not illegal or arbitrary. Regarding Issue 1, the Court found that Clause 5.6.4 of the CVC guidelines does not mandatorily require the tendering authority to issue notice and call for explanation before assessing the capability of the lowest bidder. If sufficient material is available to the tendering authority, no clarification is needed. The technical committee's analysis of prices, the significant variation in royalty percentages quoted by bidders, and the fact that a similar work was recently awarded for 25% royalty, provided sufficient material to conclude that the appellant's bid of 0.01% royalty was "abnormally low". Clause 44 of the bid document clearly empowers the tendering authority to reject any bid before the award of the contract. The Court reiterated the principle that mere participation in a bidding process and emerging as the L1 bidder does not confer a vested right to seek confirmation of the contract. The Court found no procedural impropriety or arbitrariness in the decision-making process, citing Supreme Court judgments in Jagdish Mandal and State of Punjab v. Mehar Din, which emphasize that judicial review in tender matters is to prevent arbitrariness, not to assess the soundness of a decision, especially when the decision is bona fide and in public interest. The decision to invite fresh tenders was seen as affording an equal opportunity to all bidders. Therefore, the appeals were dismissed.

Facts

The appellant, M/s. Integral Trading and Logistics, participated in tenders floated by the Visakhapatnam Port Authority for operation and maintenance of terminals. The appellant emerged as the L1 bidder in three tenders by quoting 0.01% royalty per metric tonne. The Port Authority, by proceedings dated February 19, 2026, annulled the bidding process and cancelled the tenders, citing the appellant's bid as "abnormally low". Subsequently, fresh tenders were issued on February 25, 2026. The appellant challenged the cancellation, arguing it was arbitrary and without notice, and sought the award of the contract. The Port Authority contended that Clause 44 of the bid document allowed them to reject any bid before award, and the technical committee recommended annulment due to the abnormally low price. The learned Single Judge dismissed the writ petitions, holding that mere participation and being the L1 bidder does not confer a vested right until the contract is awarded.

Key Issues

1. Whether the cancellation of the tender process and annulment of the appellant's L1 bid, without prior notice or opportunity for clarification, constitutes procedural impropriety and arbitrariness, violating principles of natural justice, particularly in light of Clause 5.6.4 of the CVC guidelines? - Petitioner's Argument: The cancellation was illegal and arbitrary as it was done without providing prior notice or calling for clarification from the appellant regarding its capacity to deliver the contract at the offered price. Reliance was placed on CVC guidelines (Clause 5.6.4) which suggest giving the bidder an opportunity to explain their price. The appellant argued that its existing infrastructure justified the low bid. - Respondent's Argument: Clause 44 of the bid document reserved the right to accept or reject any bid before award. The price quoted by the appellant was "abnormally low" compared to other bidders (L2, L3, L4 quoting 19.96%, 30%, and 34.95% respectively), and the technical committee recommended annulment. The respondent also noted that fresh tenders included a reserve price to avoid such anomalies, and the appellant participated in these fresh bids quoting higher royalties (22% to 27%). Reliance was placed on Supreme Court judgments.