STATE OF JHARKHAND & ORS. versus M/S CWE-SOMA CONSORTIUM

Citation: [2016] 4 S.C.R. 157 · Decided: 12-07-2016 · Supreme Court of India · Bench: T.S. THAKUR · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2016] 4 S.C.R. 157 
STATE OF JHARKHAND & ORS. 
v. 
MIS CWE-SOMA CONSORTIUM 
(Civil Appeal No. 6125of2016) 
JULY12,2016 
[T. S. THAKUR, CJI AND R. BANUMATHI, JJ.) 
Government contracts - Notice inviting tender (NIT) for 
construction of dam as per Standard Bidding Documents (SBD) -
Pre-bid meeting - Participation by ten bidders - Thereafter, only 
three bidders left - Respondent found responsive and other two 
found unresponsive - Cancellation of tender by the tender Committee 
as per the Central Vigilance Commission Guidelines, and decision 
taken for retender to make tender process more competitive -
Challenge to, by the respondent - High Court allowed the writ 
petition holding that there existed competition as three companies 
participated and respondent turned out to be single bidder and re-
tendering would lead to increase in value of tender, causing loss to 
State exchequer - On appeal, held: Right to refuse the lowest or 
any other tender is always available to the government - While 
exercising judicial review in the matter of government contracts, 
the primary concern of the court is to see whether there is any 
infirmity in the decision-making process or whether it is vitiated by 
ma/a fide, unreasonableness or arbitrariness - In terms of the clause 
24 of NIT and clause 32.1 of SBD, though the Government has the 
right to cancel the tender without assigning any reason, the 
appellant-State assigned cogent and acceptable reason of lack of 
adequate competition to cancel the tender and invite a fresh tender 
- In view of lack of real competition, the State found it advisable 
not to proceed with the tender with only one re~ponsive bid available 
before it and invited a fresh tender and the decision of the appellant 
did not suffer from any arbitrariness or unreasonableness - High 
Court did not keep in view the said clauses and right of the 
government to cancel the tender - High Court was not justified to 
sit in judgment over the decision of tender Committee and substitute 
its opinion - Thus, the order passed by the High Court is set aside. 
Allowing the appeal, the Court 
HELD: 1.1 In case of a tender, there is no obligation on the 
part of the person issuing tender notice to accept any of the 
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SUPREME COURT REPORTS 
[2016] 4 S.C.R. 
tenders or even the lowest tender. After a tender is called for 
and on seeing the rates or the status of the contractors who have 
given tenders that there is no competition, the person issuing 
tender may decide not to enter into any contract and thereby 
cancel the tender. So long as the bid has not been accepted, the 
highest bidder acquires no vested right to have the auction 
concluded in his favour. The appellant-state was well within its 
rights to reject the bid without assigning any reason thereof. In 
terms of the clause 24 of NIT and clause 32.1 of SBD, though 
Government has the right to cancel the tender without assigning 
any reason, appellant-state did assign a cogent and acceptable 
reason of lack of adequate competition to cancel the tender and 
invite a fresh tender. The High Court, did not keep in view the 
said clauses and right of the government to cancel the tender. 
[Paras 12, 13] [164-F, H; 165-C] 
1.2 The State derives its power to enter into a contract under 
Article 298 of the Constitution oflndia and has the right to decide 
whether to enter into a contract with a person or not subject only 
to the requirement of reasonableness under Article 14 of the 
Constitution of India. In the instant case, in view of lack of real 
competition, the State found it advisable not to proceed with the 
tender with only one responsive bid available before it. When 
there was only one tenderer, in order to make the tender more 
competitive, the tender committee decided to cancel the tender 
and invited a fresh tender and the decision of the appellant did 
not suffer from any arbit.rariness or unreasonableness. [Para 14) 
[165-D-E] 
1.3 In the pre-bid meeting held on 24.03.2014, ten tenderers 
have participated. After conclusion of the pre-bid meeting on 
24.03.2014, as a result of stringent conditions prescribed in clause 
4.5(A)(a) and 4.5(A)(c), only three tenderers could participate in 
the bidding process and submit their bids. Upon scrutiny two 
were found non-responsive. The High Court erred in presuming 
that there was adequate competition. In order to make the tender 
more competitive, tender commit

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