Orissa High Court: B.P. Routray J. dismissed the petition on the ground that cancellation of the tender cannot be said to have attracted the doctrine of lis pendens.

The facts of the case are such that the petitioners are registered small scale industrial units who participated in the tender process for Fabrication, Supply, Transportation and Erection of hydro-mechanical gate works under Opposite Party 5, i.e. the Executive Engineer, Mechanical Division, Bhubaneswar. The petitioners became the successful bidders but due to delay in finalizing the tender process the petitioner filed a petition which was disposed off directing opposite party to consider the same which was eventually rejected as they were found defective and the discrepancies regarding “Structure and Organization”, “Plant and Equipment” and “Performance record” are noticed during re-scrutinization. Aggrieved by the same, instant petition was jointly filed challenging the cancellation of Tender Call Notice invited through e-Tender by the Executive Engineer, Mechanical Division, Bhubaneswar.

Counsel for the petitioners submitted that when the writ petitions filed by the Petitioners in praying for finalizing the tender are pending adjudication, the order of cancellation passed by the Executive Engineer under Annexure-1 is erroneous and hit by the principles of lis pendens. It was also submitted that when the Petitioners have been selected as successful bidders, the unilateral action of the Opposite Parties in cancelling the tender without giving any opportunity of hearing to the Petitioners is illegal, arbitrary and not sustainable in the eye of law.

Counsel for the respondents submitted that that mere acceptance of the bid of the Petitioners by the Executive Engineer without approval of the higher authorities, i.e., the Superintending Engineer and Chief Engineer does not create any right in their favour for execution of the work and the authority reserves the right to reject any order or all of the bids even without assigning any reason. It was further submitted that upon re-verification of the bids at the level of Superintending Engineer and Chief Engineer since the error was noticed in evaluation of bids, the same needs to be rectified by taking a conscious decision in cancelling the tender process and thus no illegality is involved in the same.

The Court relied on judgment Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517, and observed:

“22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made “lawfully” and not to check whether choice or decision is “sound”. 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 power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succor to thousands and millions and may increase the project cost manifold.”

The Court observed that the facts are clear that the tender process was not finalized and no agreement of execution of work has been issued. The bid documents offered by the Petitioners has been accepted at the level of Executive Engineer which is subject to further approval by the Superintending Engineer and Chief Engineer and while undergoing such stage of approval at the higher level due to revelation of defects and discrepancies, the tender was cancelled. Therefore, there was no creation of right accrued in favour of the Petitioners to execute the work for which the Tender Call Notice was issued. Since no such right can be construed which can be said to have accrued in favour of the Petitioners, the cancellation of the tender process in entirety in no way affects the Petitioners and thus, nothing can be said to have changed by such cancellation.

The Court thus held that “no merit is found to warrant interference in the action of the Opposite Parties in cancelling of the e-Tender under Annexure-1 and as such, we do not incline to interfere with the same.”

In view of the above, petition was dismissed.[Ashirbad Industries v. State of Odisha, 2021 SCC OnLine Ori 132, decided on 18-02-2021]

Arunima Bose, Editorial Assistant has put this story together.

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