Orissa High Court
M/S. Nanda Infra Construction Pvt. Ltd vs State Of Orissa on 15 January, 2025
Author: Savitri Ratho
Bench: Savitri Ratho
AFR IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No.5790 of 2024 & W.P.(C) No. 5535 of 2024
In Both Writ Applications
M/s. Nanda Infra Construction Pvt. Ltd.,
represented by its Managing Director, Dilip
Kumar Nanda, S/o- Anukul Nanda, aged
about 56 years, At/College Road, P.O. South
Balanda, Dist- Anugul .... Petitioner
-versus-
1. State of Orissa, represented by the
Secretary, Works Department, Secretariat,
AT- Bhubaneswar, Dist- Khurda
2. Engineer-in-Chief (Civil), Odisha,
Nirman Soudha, Kesharinagar, Unit-V,
At/PO- Bhubaneswar-751001, Dist- Khurda
3. Chief Engineer (DPI & ROADS),
Odisha, Nirman Soudha, Kesharinagar, Unit-
V, AT/PO- Bhubaneswar- 751001, Dist-
Khurda
4. Executive Engineer (Civil), Office of
the Engineer-in-Chief (Civil), Odisha,
Nirman Soudha, Kesharinagar, Unit-V,
AT/PO- Bhubaneswar- 751001, Dist- Khurda
5. Financial Advisor-cum-Special
Secretary to Govt., Works Department,
Odisha, Nirman Soudha, Kesharinagar, Unit-
V, AT/PO- Bhubaneswar- 751001, Dist-
Khurda. .... Opposite Parties
Page 1 of 41
For the Petitioner : Mr. K.B. Panda, Advocate and Mr
Shounak Kumar Panda
For Opposite Parties : Mr. Pitambar Acharya, Advocate General
with Ms. A. Dash
Additional Standing Counsel
CORAM:
HON'BLE THE CHIEF JUSTICE
HON' BLE MS JUSTICE SAVITRI RATHO
HON'BLE MR JUSTICE SIBO SANKAR MISHRA
JUDGMENT
15.01.2025
Savitri Ratho, J. For an authoritative pronouncement, the following
questions had been referred to larger Bench on 18.11.2024 by a Division
Bench of this Court in these two writ applications:
“i.) Whether the observations made by the Supreme
Court in paragraph-8 of the decision in Mohinder Singh Gill
vs The Chief Election Officer: AIR 1978 SC 851 has
application to test the correctness of a purely administrative
order by an authority, which is State within the meaning of
Article-12 of the Constitution of India, cancelling a tender
process before acceptance of the bid of a tenderer?
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 2 of 41
ii.) Whether there is any requirement of giving an
opportunity of hearing or prior notice to the highest / lowest
bidder, before cancellation of tender notice keeping in mind
the settled legal position that such bidder does not acquire
any vested right to have the auction confirmed in his favour
on that basis alone?
iii.) Whether the Supreme Court decision in case of Sudhir
Kumar Singh (supra) on the point of compliance of principles
of natural justice is applicable when a tender process is
cancelled prior to confirmation of tender / auction in favour
of a bidder?
iv.) Whether the Division Bench in case of M/s. Bansal
Infraprojects Pvt. Ltd (supra) has correctly applied the
Supreme Court’s decision in case of Sudhir Kumar Singh
(supra)?
v.) Whether it is permissible for the High Court exercising
power of judicial review under Article 226 of the Constitution
of India to direct the State or its instrumentalities to accept
the bid of the lowest/highest bidder, upon interfering with the
order of cancellation of tender on the ground of violation of
principles of natural justice or such order not being a
reasoned one?”
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 3 of 41
2. The petitioner in both these writ applications challenged the notice
dated 01.03.2024 issued by the opposite party No 2 – Engineer in Chief
(Civil) Odisha, cancelling the Invitation for Bids ( in short “IFB”) dated
in respect of two works, issued by the opposite party No. 2 on 17.08.2023
for execution of various works and has prayed for a direction that the two
works in which the petitioner has been declared as L1 ( lowest ) bidder, be
awarded in its favour.
BRIEF FACTS
3. For execution of various works including “improvement such as
widening and strengthening of double lane to four lane standard of
Bhawanipatna / Khariar road from 3/550 KM to 19/000 KM (except
3/930KM to 4/970KM) in the district of Kalahandi under State Plan”, the
petitioner had participated in the Bids and had qualified along with other
bidders in the technical qualification. When the financial bids were opened
on 09.11.2023 , the petitioner was declared L1 bidder in respect of two
works. A recommendation was made by the Office of the Engineer-in-Chief
(Civil), Odisha on 23.11.2023 to the Financial Advisor-cum-Special
Secretary to Government, Works Department, Odisha for consideration of
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 4 of 41
approval by the Government in the Works Department as per the
requirement in Note-I of paragraph 6.3.15 of the Odisha Public Works
Department Code (in short the ‘OPWD Code’) (Vol-I). But by notice dated
01.03.2024, the IFB in respect of both the works were cancelled.
4. The petitioner challenged the cancellation notices dated 01.03.2024,
in these two writ applications , primarily on two grounds:
i) Opportunity of hearing was not afforded to it before cancelling the
IFB for the two works; and
ii) The grounds of cancellation were not reflected in the order of
cancellation the IFB for the two works.
5. While hearing these cases on 17.11.2024, a Division Bench of this
Court after perusing the decisions of the Supreme Court relied on by the
parties and a few other decisions , had recorded its disagreement with the
decisions of this Court in Shree Ganesh Construction , Gangadhar Jena,
Sampad Samal , Sical Logistics Ltd , Mackintosh Burn Ltd., Kolkata
and Bansal Infraprojects Pvt. Ltd., Bolangir , relied on by the learned
counsel for the petitioner , for which it referred the questions mentioned in
paragraph 1 of this judgment to a larger Bench , after observing as
follows:-
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 5 of 41
” i.) The observations made by the Supreme Court in
paragraph 8 of the Mohinder Singh Gill (supra) do not
apply to a purely administrative decision cancelling a notice
inviting tender by an authority taken before the decision
making process for award of tender is over, with the
acceptance of the bid of a successful bidder by a competent
authority leading to inter-parte mutual contractual
obligations, unless such decision takes away any vested right
of a party.
ii.) There is no necessity of giving an opportunity of
hearing or a prior notice before cancellation of tender notice
to the highest/lowest bidder or any other successful bidder as
such bidder does not acquire any vested right to have the
auction confirmed in his favour on that basis alone;
iii.) The decision rendered by the Supreme Court in the
case of Sudhir Kumar Singh (supra) on the point of
compliance of principles of natural justice is not applicable
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 6 of 41
when a tender notice is cancelled prior to confirmation of thetender/auction in favour of a bidder;
iv.) In any case, even if the Court interferes with the
decision of the competent authority to cancel the tender
notice, exercising power of judicial review, ordinarily it
should not direct the authority to approve the tender
submitted by a successful bidder, in view of the law laid
down by the Supreme Court;”
SUBMISSIONS
6. We have heard Mr. K.B. Panda learned counsel for the petitioner
and Mr. Pitambar Acharya learned Advocate General along with Ms.
Aishwariya Dash learned Additional Counsel .
PETITIONER
7. Mr.K.B. Panda learned counsel for the petitioner has fairly admitted
that no direction could have been issued by this Court in exercising power
/ discretion under Article – 226 of the Constitution of India to award the
tender /accept the bid of any particular bidder but has urged that the
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 7 of 41
petitioner being the L1 bidder and its cases having been recommended , it
should have been heard before the IFB was cancelled. On account of
violation of the principles of natural justice, the orders of cancellation are
liable for interference. He has also submitted that the order of cancellation
is liable for interference as no reasons have been mentioned in the order.
The explanation offered in the counter affidavit subsequently cannot be
accepted as valid reasons in view of the authoritative pronouncement of
the Supreme Court in the case of Mohinder Sngh Gill (supra) which has
been relied upon in a number of decisions of this Court starting with
Ganesh Construction (supra).
7.1. In support of his submission that opportunity of hearing was not
given before cancelling the IFB for the two works in which the petitioner
had been declared as L1 bidder , Mr. K.B. Panda, learned counsel for the
petitioner has relied on the following decisions:
i) M/s. Shree Ganesh Construction v. State of Odisha: 2016
(II) OLR 237;
(ii) Gangadhar Jena v. State of Odisha: 2017 (II) ILR-CUT
763;
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 8 of 41
(iii) Sampad Samal v. State of Odisha; AIR 2017 ORISSA
33;
(iv) M/s. Sical Logistics Ltd. v. Mahanadi Coalfields Limited:
2017 (II) ILR- CUT 1035;
(v) Order dated 01.05.2024 passed in W.P.(C) No.1309 of
2024 (M/s. Mackintosh Burn Ltd., Kolkata v. State of Odisha
and others);
(vi) Order dated 24.06.2024 passed in W.P.(C) No.334 of 2024
(M/s. Bansal Infraprojects Pvt. Ltd., Bolangir v. State of
Odisha and others).;and
(2021) 19 SCC 706 .
7.2. In support of his submission that the order of cancellation is liable
for interference as being bereft of reasons and reasons furnished
subsequently cannot be considered , Mr K.B. Panda , learned counsel
had relied on the following decisions of the Supreme Court : –
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 9 of 41
i) Mohinder Singh Gill vrs. The Chief Election Commissioner:
(1978) 1 SCC 405 : AIR 1978 SC 851; and
ii) Commissioner of Police, Bombay v. Gordhandas Bhanji: AIR
1952 SC 16.
iii) State of Punjab vs Bandeep Singh and others (2016) 1 SCC
724
iv) The D.F.O , South Kheri vs Ram Sanehi Singh : AIR 1973
SC 205 : ( 1971 ) 3 SCC 864 .
OPPOSITE PARTIES
8. Mr Pitambar Acharya , learned Advocate General appearing for
the opposite parties had submitted that Government in the Works
Department had requested to re-examine and submit a report regarding the
condition of the road for which IFB had been published as the road in
question had earlier been developed under World Bank Assisted Odisha
State Road Projects. Upon re-examination and during the visit of the
Principal Secretary, Engineer-in-Chief (Civil), Odisha and other officials,
it was decided to take up four lane work of the total length after
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 10 of 41
availability of encumbrance free land. Accordingly, a proposal was made
to cancel the IFB and the IFB was consequently cancelled.
8.1 He has submitted that as no enforceable right had accrued in favour
of the petitioner even though it was the L1 bidder, it was not necessary to
grant an opportunity of hearing to it, before cancelling the IFB for the
work. In support of such submission, he relied on the decisions of the
Supreme Court in the cases of :-
i) Laxmikant v. Satyawan: (1996) 4 SCC 208,
ii) M/s. Master Marine Services Pvt. Ltd. v. Metcalfe &
Hodgkinson Pvt. Ltd.: (2005) 6 SCC 138
iii) Rajasthan Housing Board And Another vs G.S.
Investments And Another : 2007 (1) SCC 477
iv) Jagdish Mandal v. State of Odisha: (2007) 14 SCC 517,
(2013) 5 SCC 182,
vi) Maa Binda Express Carrier And Anr vs Northeast
Frontier Railway And Ors: 2014 (3) SCC 760W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 11 of 41
vii) Rishi Kiran Logistics P. Ltd v. Board of Trustees of
Kandla Port Trust: (2015) 13 SCC 233 ,
viii) State of U.P. vs AL Faheem Meetex Private Ltd : (2016)
4 SCC 716
(2016) 14 SCC 172,
8.2 The learned Advocate General has submitted that the principle
laid down in the case of Mohinder Singh Gill (supra) and Gordhandas
Bhanji (supra) had been wrongly applied by the Division Bench of this
Court in case of M/s. Shree Ganesh Construction (supra) , Sical
Logistics ( supra) and other Division Bench decisions of this Court relied
on by learned counsel for the petitioner as the order of cancellation is a
purely administrative order .
8.3 Relying on the decision of Maa Binda (supra) and Rishi Kiran
Logistics ( supra) , he has submitted that the law has been settled by the
Supreme Court in a catena of judgments that reasons are not necessary to
be mentioned in the order and the bidder was not required to be heard ,
where no enforceable right had accrued in its favour . He has submitted
that in the case of Bandeep Singh , the successful bidder had made
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 12 of 41
deposit of part of the bid money and in the case of Ram Sanehi Singh ,
pursuant to order and sanction of the authorities , the bidder had cut and
removed part of the timber .
8.4 Mr. Pitambar Acharya, learned Advocate General has further
submitted that the power of judicial review in tender matters is restricted
as the court cannot substitute its decision with that of experts and should
normally not interfere with a decision either awarding a contract or
cancelling a tender unless the decision is arbitrary or smacks of malafides.
The connected files / notesheets can be looked into by the Court , if the
situation demands. He has also submitted that in the absence of a
concluded contract , no right accrues on any bidder even if his / her / its
bid is the lowest or highest as the case may be . Therefore there is no
necessity of hearing such bidder before cancellation of a tender / IFB. He
has finally submitted that the decision in the case of Mohinder Singh
Gill ( supra) will not be applicable to all administrative decisions / or
orders of the State .
ANALYSIS
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 13 of 41
9. The law declared by the Supreme Court is binding on all the Courts
but keeping in mind the ratio decidendi of a decision . The Supreme Court
itself has cautioned the High Courts in a number of cases that its judgments
and the law declared should not be applied mechanically but after due
examination of the facts and circumstances of the case. In the case of Delhi
Administration (Now NCT of Delhi) v. Manohar Lal, (2002)7 SCC 222,
the Supreme Court has held as under:-
“5. We have carefully considered the submissions of the learned counsel
appearing on either side.Apparently, the learned Judge in the High
Court was merely swayed by considerations of judicial comity and
propriety and failed to see that merely because this Court has issued
directions in some other cases, to deal with the fact situation in those
other cases, in the purported exercise of its undoubted inherent and
plenary powers to do complete justice, keeping aside even technicalities,
the High Court, exercising statutory powers under the criminal laws of
the land, could not afford to assume to itself the powers or jurisdiction
to do the same or similar things. The High Court and all other courts in
the country were no doubt ordained to follow and apply the law
declared by this Court, but that does not absolve them of the obligation
and responsibility to find out the ratio of the decision and ascertain the
law, if any, so declared from a careful reading of the decision
concerned and only thereafter proceed to apply it appropriately, to the
cases before them…..”
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 14 of 41
10. In the case of Bhavnagar University vs Palitana Sugar Mills Pvt Ltd :
, the Supre Court has held as follows :
“A decision, as is well-known, is an authority for which it is decided and
not what can logically be deduced therefrom. It is also well-settled that a
little difference in facts or additional facts may make a lot of difference in
the precedential value of a decision. [See Smt. Ram Rakhi v. Union of
India & Ors. [AIR 2002 Delhi 458], Delhi Administration (NCT of Delhi)
v. Manoharlal [AIR 2002 SC 3088], Haryana Financial Corporation and
Anr. v. M/s Jagdamba Oil Mills & Anr. [JT 2002 (1) SC 482] and Dr.
Nalini Mahajan etc. v. Director of Income Tax (Investigation) & Ors.
[(2002) 257 ITR 123].
11. In the case of ICICI Bank & Anr. v. Municipal Corporation of
Greater Bombay & Ors.: (2005)6 SCC 404 , the Supreme Court relied
upon the decision in Paisner v. Goodrich, (1955)2 All ER 530, (All ER at
p.332 H-1) and observations of Lord Denning held as under :-
“The ratio and effect of the judgment is required to be ascertained with
reference to the question of law as decided by the Court. The ratio of the
judgment or the principle upon which the question before the Court is
decided is alone binding as a precedent. The decision of the Supreme
Court upon a question of law is considered to be a binding precedent, and
this must be ascertained and determined by analyzing all the material factsW.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 15 of 41
and issues involved in the case. In the matter of Paisner versus Goodrich
(1955) 2 All ER 330,332, Lord Denning in his Judgment has held:
“When the judges of this Court give a decision on the
interpretation of an Act of Parliament, the decision itself is binding
on them and their successors: see Cull v. IRC, (1939)3 All ER 761,
Morelle Ltd. v. Wakeling, (1955)1 All ER 708. But the words which
the judges use in giving the decision are not binding. This is often a
very fine distinction, because the decision can only be expressed in
words. Nevertheless, it is a real distinction which will best be
appreciated by remembering that, when interpreting a statute, the
sole function of the court is to apply the words of the statute to a
given situation. Once a decision has been reached on that situation,
the doctrine of precedent requires us to aply the statute in the same
way in any similar situation; but not in a different situation.
Wherever a new situation emerges, not covered by previous
decisions, the courts must be governed by the statute and not by the
wordsw of the judges.””
12. In the case of R.L. Jain (D) By Lrs. v. DDA & Others: (2004)4
SCC 79, the Supreme Court has held that that:-
” a decision is an authority for what it actually decides. What is of the
essence in a decision is its ratio and not every observation found therein
nor what logically follows from the various observations made therein”.
Necessity of recording reasons in the order / Furnishing reasons
subsequently .
13. In the case of Commissioner of Police, Bombay v. Gordhandas
Bhanji, AIR 1952 SC 16, the Apex Court held as follows:
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 16 of 41
“Public orders publicly made, in exercise of a statutory
authority cannot be construed in the light of explanations
subsequently given by the officer making the order of what he
meant, or of what was in his mind, or what he intended to do.
Public orders made by public authorities are meant to have
public effect and are intended to affect the acting and conduct of
those to whom they are addressed and must be construed
objectively with reference to the language used in the order
itself. Orders are not like old wine becoming better as they grow
older.”
Similar view has also been taken in Bhikhubhai
Vithlabhai Patel and others v. State of Gujarat and another,
(2008) 4 SCC 144.”
14. In the case of Mohinder Singh Gill (supra), the Election
Commission of India had cancelled the entire poll of a parliamentary
constituency in the State of Punjab and Haryana with a direction to have a
fresh poll for the poll constituency. The writ petition was filed before the
High Court of Punjab and Haryana and was dismissed referring to the
embargo under Article 329(b) of the Constitution of India. Pursuant to the
Commission’s direction, a repoll was held and a candidate was declared
elected. An election petition was also filed by the petitioner and in the writ
petition, the Election Commission had filed a counter affidavit stating that
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 17 of 41
the order of cancellation of polling was passed after taking into account the
circumstances and the information including the oral representation of the
appellant before the Supreme Court. The High Court had dismissed the
writ petition holding that it had no jurisdiction to entertain the same.
15. The Supreme Court in paragraph 7 and 8 of its order after having
noticed that pursuant to the repoll, the respondent no.3 had won the
election, held that High Court had no jurisdiction to entertain the writ
application under Article 226 of the Constitution of India , and further held
as follows:
“7. x x x Of course, if the Commission’s order for re-poll fails in
law, the second electoral exercise has to be dismissed as a
stultifying futility. Two things fall to be mentioned at this stage,
but, in passing, it may be stated that the third respondent had
complained to the Chief Election Commissioner that the assistant
returning officer of Fazilka segment had declined the request for
recount unreasonably and that an order for re-poll of the Fazilka
assembly part should be made ‘after giving personal hearing’.
Meanwhile, runs the request of the third respondent: ‘direct the
returning officer to withhold declaration of result of 13
Ferozepore Parliament constituency’. We do not stop to make
inference from this document but refer to it as a material factorW.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 18 of 41
which may be considered by the tribunal which eventually has to
decided the factual controversy.”
“8. The second equally relevant matter is that when a statutory
functionary makes an order based on certain grounds, its validity
must be judged by the reasons so mentioned and cannot be
supplemented by fresh reasons in the shape of affidavit or
otherwise. Otherwise, an order bad in the beginning may, by the
time it comes to court on account of a challenge, get validated by
additional grounds later brought out. We may here draw
attention to the observations of Bose J. In Gordhandas Bhanji
(AIR 1952 SC 16) (at p. 18):
“Public orders publicly made, in exercise of a statutory
authority cannot be construed in the light of explanations
subsequently given by the officer making the order of what
he meant, or of what was in his mind, or what he intended
to do. Public orders made by public authorities are meant
to have public effect and are intended to affect the acting
and conduct of those to whom they are addressed and must
be construed objectively with reference to the language
used in the order itself”.
Orders are not like old wine becoming better as they grow
older.”
16. At paragraph 93 of its judgment , the Supreme Court has concluded
as under:-
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 19 of 41
“93. In sum, a pragmatic modus vivendi between the
Commission’s paramount constitutional responsibility vis a vis
elections and the rule of law vibrant with fair acting by every
authority and remedy for every right breached, is reached.”
17. At paragraph 127 of the concurring judgment by Goswami,
J. and Shingal, J. , it has been held as follows :
“127. In view of our conclusion that the High Court had no
jurisdiction to entertain the writ application under Art. 226 of the
Constitution, it will not be correct for us, in an appeal against the
order of the High Court in that proceeding, to enter into any
other controversy, on the merits, either on law or on facts, and to
pronounce finally on the same. The pre-eminent position
conferred by the Constitution on this Court under Art. 141 of the
Constitution does not envisage that this Court should lay down
the law, in an appeal like this, on any matter which is required to
be decided by the election court on a full trial of the election
petition, without the benefit of the opinion of the Punjab and
Haryana High Court which has the exclusive jurisdiction under
Sec. 80A of the Act to try the election petition. Moreover, a
statutory right to appeal to this Court has been provided under S.
116A, on any question, whether of law or fact, from every order
made by the High Court in the dispute.”
18. From a careful perusal of the judgment in Mohinder Singh Gill
( supra ) , we are satisfied that the observations in paragraph 8 of the
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 20 of 41
judgment are not applicable to an administrative order passed by a
tendering authority cancelling the tender notice , when contract has not been
awarded to any of the bidders whether highest / lowest as in the absence
of a contract , no vested right accrues in favour of the highest / lowest
bidder before the auction / contract / bid is confirmed in his / her / its
favour.
19. The Division Bench decision of this Court in the case of M/s. Bansal
Infraprojects Pvt. Ltd (supra) has noticed the Supreme Court’s decision in
case of State of Uttar Pradesh v. Sudhir Kumar Singh, reported in (2021)
19 SCC 706 in order to arrive at a conclusion that the principles of natural
justice are required to be followed before cancellation of a tender call
notice .
20. In the case of Sudhir Kumar Singh (supra), the agreement had been
entered into between the U.P. State Warehousing Corporation and the
contractor for execution of work under the tender. He had started work and
after about one year , on the basis of two complaints , an ex parte enquiry
was conducted and the tender was cancelled and disciplinary proceedings
initiated against certain employees of the Corporation. The observations in
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 21 of 41
paragraph 26 were made in this background and it has been quoted by the
Division Bench of this Court in case of M/s. Bansal Infraprojects Pvt. Ltd
(supra). In the same case , the Supreme Court has held at paragraph 43 of
its judgment as follows:-
“43. Judged by the touchstone of these tests, it is clear that Respondent 1
has been completely in the dark so far as the cancellation of the award of
tender in his favour is concerned, the audi alteram partem rule having
been breached in its entirety. As has been correctly argued by Shri
Rakesh Dwivedi, prejudice has indeed been caused to his client, not only
from the fact that one year of the contract period has been taken away,
but also that, if the impugned High Court judgment [Sudhir Kumar
Singh v. State of U.P., 2019 SCC OnLine All 5798] is to be set aside
today, his client will be debarred from bidding for any of the
Corporation’s tenders for a period of three years.”
21. In the case of Shree Ganesh Construction (supra) a Division
Bench of this Court relying on paragraph 8 of the decision in Mohinder
Singh Gill ( supra) and Gordhandas Bhanji has held that that the
decisions in Ma Binda Express (supra) and Air India Ltd (supra) would
not be applicable. The relevant paragraphs of the judgment are extracted
below:- .
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 22 of 41
“7. In the counter affidavit filed, the reasons have been assigned,
which are not available in the impugned order of cancellation filed
before this Court in Annexure-4 dated 5.2.2016. More so, while
cancelling the tender, the principles of natural justice have not been
complied with. It is well settled principle of law laid down by the
Apex Court in Mohinder Singh Gill and another v. The Chief
Election Commissioner, New Delhi and others, AIR 1978 SC 851
that:
“When a statutory functionary makes an order based
on certain grounds, its validity must be judged by the
reasons so mentioned and cannot be supplemented
by fresh reasons in the shape of affidavit or
otherwise. Otherwise an order bad in the beginning
may by the time it comes to Court on account of a
challenge, get validated by additional grounds later
brought out.””
8. In Commissioner of Police, Bombay v. Gordhandas Bhanji, AIR
1952 SC 16, the Apex Court held as follows :
“Public orders publicly made, in exercise of a statutory authority
cannot be construed in the light of explanations subsequently
given by the officer making the order of what he meant, or of
what was in his mind, or what he intended to do. Public orders
made by public authorities are meant to have public effect and
are intended to affect the acting and conduct of those to whom
they are addressed and must be construed objectively with
reference to the language used in the order itself. Orders are not
like old wine becoming better as they grow older.”
Similar view has also been taken in Bhikhubhai Vithlabhai
Patel and others v. State of Gujarat and another, (2008)4 SCC 144″
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 23 of 41
9. In view of the law laid down by the Apex Court mentioned supra and
looking at the impugned order in Annexure- 4, a conclusion can be
drawn that by a cryptic order the cancellation of tender has been
made, which has been explained by filing subsequent affidavit, the
same is not permissible under law.
10. Relying on Air India Ltd. (supra), learned counsel for the State
has urged that in exercise of judicial review, the Court cannot
interfere with the decision, but it can interfere with the decision-
making process on grounds of mala fides, unreasonableness or
arbitrariness and Court should exercise its discretionary power with
great caution and only in furtherance of overwhelming public interest.
11. In Maa Binda Express Carrier(supra), it is held that submission of
a bid/ tender in response to a notice inviting tenders is only an offer
which State or its agencies are under no obligation to accept and
bidders participating in the tender process cannot insist that their
bids/ tenders should be accepted simply because a bid is the highest or
lowest.
12. None of the judgments referred to by the learned Addl. Govt.
Advocate for the State is applicable to the present context.”
22. The decision of the Division Bench in the case of M/s. Shree Ganesh
Construction (supra) has been followed in the other five cases of this
Court by relying on the decision in the case of Mohinder Singh Gill
(supra), Gordhandas Bhanji (supra), Bhikhubhai Vithlabhai Patel
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 24 of 41
(supra) and Shree Ganesh Construction (supra), the Division Bench has
interfered with the order cancelling the tender notice in the case of Shree
Ganesh Construction (supra) on the ground that the same is cryptic, and it
was impermissible to explain the reasons in a subsequent affidavit. The
Supreme Court has dismissed the SLP preferred against the judgment in the
case of Sri Ganesh Construction (supra) in limine, and the decision in the
case of Sri Ganesh Construction (supra) has been followed in all other
decisions relied on by learned counsel for the petitioner.
23 In the case of Bandeep Singh ( supra) , as per the terms of the
auction notice , the successful bidders had deposited the EMD as well as
25% of the bid money and the balance amount after approval of the bid by
the Government . The Chairman cum M.D of the Corporation had
recommended for approval of the bids , but the Director Industries directed
for re-auction noting that the bids were marginally higher than the reserve
price . The relevant portion the judgment is extracted below: –
“8. In the impugned Judgment, the High Court has rightly concluded
that no sustainable justification and rationalization was recorded in
writing at the relevant time for ordering the re-auction of only the two
subject properties. However, we should not be understood to have opinedW.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 25 of 41
that the Government is bound in every case to accept the highest bid
above the reserve price. Needless to say, the presence of cartelization or
“pooling” could be a reason for the cancellation of an auction process.
In addition, a challenge on the ground that the property has fetched too
low a bid when compared to the prevailing market price, would also be
valid and permissible provided this approach has been uniformly
adhered to. In the case at hand, however, while the latter was ostensibly
the reason behind the decision for conducting a fresh auction, no
evidence has been placed on the record to support this contention. The
highest bids, marginally above the reserve price, have been accepted in
the self-same auction. The factual scenario before us is clearly within the
mischief which was frowned upon in Mohinder Singh Gill. We therefore
uphold the impugned Judgment for all the reasons contained therein. The
assailed action of the Appellant is not substantiated in the noting, which
ought at least to have been conveyed to the Respondents.”
24. In the case of Ram Sanehi Singh ( supra) , a contract for cutting
timber was cancelled on the ground that they were cut after the allotted .
The timber cut by the respondent were seized by the forest authorities and
the timber which had already been cut and removed by him within the
season with the sanction of the authorities, was directed to be treated to
have been cut after the allotted season . While setting aside the order of the
DFO , the Supreme Court held as under :-
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 26 of 41
5. It is unnecessary to consider whether the order of the Divisional
Forest Officer is made on “irrelevant grounds” because it is clear that
before passing the order the Divisional Forest Officer did not call for any
explanation of the respondent, and gave him no hearing before passing
the order. It is averred in Paragraph-22(i) of the petition that the
“cancellation order is in violation of the principles of natural justice
having been done at a very late stage without affording any opportunity
to the petitioner (respondent) to say anything against the action
canceling his tallies”. To that averment, no reply was made by the forest
authorities against whom the petition was filed. Granting that the order
was administrative and not quasi-judicial, the order had still to be made
in a manner consonant with the rules of natural justice when it affected
the respondent’s rights to property. This Court in the case of State of
Orissa v. Dr. (Miss) Binapani Dei held in dealing with an administrative
order that “the rule that a party to whose prejudice the order is intended
to be passed is entitled to a hearing applied alike to judicial tribunals
and bodies of persons invested with authority to adjudicate upon matters
involving civil consequences. It is one of the fundamental rules of our
Constitutional setup that every citizen is protected against exercise of
arbitrary authority by the State or its officers”. The Divisional Forest
Officer in the present case set aside the proceeding of a subordinate
authority and passed an order which involved the respondent in
considerable loss. The order involved civil consequences. Without
considering whether the order of the Divisional Forest Officer was
vitiated because of irrelevant considerations, the order must be set aside
on the simple ground that it was passed contrary to the basic rules of
natural justice.”
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 27 of 41
25. From a careful reading of these decisions , it is apparent that where a
right has accrued in favour of a party on account of issue of LoA /
execution of an agreement or contract , it is necessary to hear such bidder
and record reasons in the order of cancellation and communicate the same
to him . But the lowest or highest bidder does not have any right to be heard
and reasons are not necessary to be mentioned in the order before issuance
of LoA or execution of contract .
26. In the case of Tata Cellular v. Union of India reported in (1994) 6
SCC 651, the Supreme Court has held, that the Government must have
freedom of contract and a fair play in the joints is a necessary concomitant
for an administrative body functioning in an administrative sphere or quasi-
administrative sphere but the decision must not only be tested by applying
the Wednesbury principle of reasonableness but must be free from
arbitrariness and bias and not actuated by mala fides. It has also observed
that quashing decisions may impose heavy administrative burden on the
administration and may lead to increase and unbudgeted expenditure.
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 28 of 41
27. In the case of Air India Ltd. v. Cochin International Airport
Ltd. reported in (2000) 2 SCC 617, the Supreme Court has held at
paragraph 7 as follows: :-
“7. …Even when some defect is found in the decision-making process the
court must exercise its discretionary power under Article 226 with great
caution and should exercise it only in furtherance of public interest and
not merely on the making out of a legal point. The court should always
keep the larger public interest in mind in order to decide whether its
intervention is called for or not. Only when it comes to a conclusion that
overwhelming public interest requires interference, the court should
intervene.”
28. In the case of Assn. of Registration Plates v. Union of India
reported in (2005) 1 SCC 679, at paragraph 43 of the judgment , the
Supreme Court has held as follows:-
“43. … Article 14 of the Constitution prohibits the Government from
arbitrarily choosing a contractor at its will and pleasure. It has to act
reasonably, fairly and in public interest in awarding contract. At the
same time, no person can claim a fundamental right to carry on
business with the Government. All that he can claim is that in
competing for the contract, he should not be unfairly treated and
discriminated, to the detriment of public interest.”
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 29 of 41
29 In case of Master Marine Services (P) Ltd. v. Metcalfe &
Hodgkinson (P) Ltd. : (2005) 6 SCC 138, the Supreme Court has held as
follows in paragraph 12 which is quoted below:-
“12. After an exhaustive consideration of a large number of decisions
and standard books on administrative law, the Court enunciated the
principle that the modern trend points to judicial restraint in
administrative action. The court does not sit as a court of appeal but
merely reviews the manner in which the decision was made. The court
does not have the expertise to correct the administrative decision. If a
review of the administrative decision is permitted it will be substituting
its own decision, without the necessary expertise, which itself may be
fallible. The Government must have freedom of contract. In other
words, fair play in the joints is a necessary concomitant for an
administrative body functioning in an administrative sphere or quasi-
administrative sphere. However, the decision must not only be tested by
the application of Wednesbury principles of reasonableness but also
must be free from arbitrariness not affected by bias or actuated by mala
fides. It was also pointed out that quashing decisions may impose heavy
administrative burden on the administration and lead to increased and
unbudgeted expenditure. (See para 113 of the Report, SCC para 94.)”
30. In the case of B.S.N. Joshi & Sons Ltd. v. Nair Coal Services
Ltd. : (2006) 11 SCC 548, the Supreme Court has held as follows:-
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 30 of 41
“56. It may be true that a contract need not be given to the lowest
tenderer but it is equally true that the employer is the best judge
therefor; the same ordinarily being within its domain, court’s
interference in such matter should be minimal. The High Court’s
jurisdiction in such matters being limited in a case of this nature, the
Court should normally exercise judicial restraint unless illegality or
arbitrariness on the part of the employer is apparent on the face of the
record.”
31. In the case of Jagdish Mandal v. State of Orissa reported in (2007)
14 SCC 517, the Supreme Court after referring to a number of its earlier
decisions has held in paragraph 22 as follows:-
“22. ……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,W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 31 of 41
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 succour to thousands and
millions and may increase the project cost manifold. Therefore, a court
before interfering in tender or contractual matters in exercise of power
of judicial review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority
is mala fide or intended to favour someone;
or
Whether the process adopted or decision made is so arbitrary and
irrational that the court can say: “the decision is such that no
responsible authority acting reasonably and in accordance with
relevant law could have reached”;
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no interference
under Article 226. Cases involving blacklisting or imposition of penal
consequences on a tenderer/contractor or distribution of State largesse
(allotment of sites/shops, grant of licences, dealerships and franchises)
stand on a different footing as they may require a higher degree of
fairness in action.”
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 32 of 41
32. In the case of Rajasthan Housing Board vs G.S. Investment :
(2007) 1 SCC 477, the observation of the Supreme Court in paragraph-9,
which is relevant is extracted below:
“9. This being the settled legal position, the respondent acquired no
right to claim that the auction be concluded in its favour and the High
Court clearly erred in entertaining the writ petition and in not only
issuing a direction for consideration of the representation but also
issuing a further direction to the appellant to issue a demand note of the
balance amount. The direction relating to issuance of the demand note
for balance amount virtually amounted to confirmation of the auction in
favour of the respondent which was not the function of the High Court.”
33. In Maa Binda Express Carrier ( supra) , the Supreme Court while
confirming the judgment of the Division Bench dismissing the writ
petition , has held as under :
“8. The scope of judicial review in matters relating to award of contract
by the State and its instrumentalities is settled by a long line of decisions of
this Court. While these decisions clearly recognize that power exercised by
the Government and its instrumentalities in regard to allotment of contract
is subject to judicial review at the instance of an aggrieved party,
submission of a tender in response to a notice inviting such tenders is no
more than making an offer which the State or its agencies are under no
obligation to accept. The bidders participating in the tender process
cannot, therefore, insist that their tenders should be accepted simplyW.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 33 of 41
because a given tender is the highest or lowest depending upon whether
the contract is for sale of public property or for execution of works on
behalf of the Government. All that participating bidders are entitled to is a
fair, equal and non-discriminatory treatment in the matter of evaluation of
their tenders. It is also fairly well-settled that award of a contract is
essentially a commercial transaction which must be determined on the
basis of consideration that are relevant to such commercial decision. This
implies that terms subject to which tenders are invited are not open to the
judicial scrutiny unless it is found that the same have been tailor made to
benefit any particular tenderer or class of tenderers. So also the authority
inviting tenders can enter into negotiations or grant relaxation for bona
fide and cogent reasons provided such relaxation is permissible under the
terms governing the tender process”.
34. In the case of Meerut Development Authority Vs. Association of
Management Studies reported in (2009) 6 SCC 171, the Supreme Court has
observed as follows in paragraphs 27 and 29 of its judgment:
“27. The bidders participating in the tender process have no other right
except the right to equality and fair treatment in the matter of evaluation of
competitive bids offered by interested persons in response to notice inviting
tenders in a transparent manner and free from hidden agenda. One cannot
challenge the terms and conditions of the tender except on the abovestated
ground, the reason being the terms of the invitation to tender are in the
realm of the contract. No bidder is entitled as a matter of right to insist theW.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 34 of 41
authority inviting tenders to enter into further negotiations unless the terms
and conditions of notice so provided for such negotiations.”
“29. The Authority has the right not to accept the highest bid and even to
prefer a tender other than the highest bidder, if there exist good and
sufficient reasons, such as, the highest bid not representing the market
price but there cannot be any doubt that the Authority’s action in accepting
or refusing the bid must be free from arbitrariness or favouritism.”
35. In the case of U.P. Avas Evam Vikas Parishad (supra) , after
noticing its earlier decisions in the cases of Meerut Development Authority
(supra) and Rajasthan Housing Board (supra), the Supreme Court framed a
specific question in paragraph 25(b) and then held that in absence of
acceptance of bid offered by the plaintiff, there was no concluded contract.
The question framed by the Supreme Court is extracted below:
“25. With reference to the aforesaid rival factual and legal contentions
urged on behalf of the parties, the following points would arise for
consideration of this Court:”
” (b) Whether there is any vested right upon the plaintiff/bidder until
the bid is accepted by the competent authority in relation to the
property in question? Merely because the plaintiff is the highest bidder
by depositing 20% of the bid amount without there being approval of
the same by the competent authority and it amounts to a concluded
contract in relation to the plot in question ?”
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 35 of 41
36. In the case of Laxmikant (supra), the Supreme Court found that as
the highest bidder had not made the necessary payments held that as no
confirmation letter was issued , no right had accrued to the bidder either on
the basis of statutory provision under Rule 4 (3) or under the condition of
the sale which had been notified before the public auction was held. The
relevant portion of paragraph 4 of the judgment is quoted below:
“4. …..The conditions of the auction clearly conceived and
contemplated that the acceptance of the highest bid by the Board of
Trustees was a must and the Trust reserved the right to itself to reject
the highest or any bid. This Court has examined the right of the highest
bidder at public auctions in the cases of Trilochan Mishra v. State of
Orissa [(1971)3SCC153], State of Orissa v. Harinarayan
Jaiswal [(1972) 2 SCC 36] , Union of India v. Bhim Sen Walaiti
Ram [(1969) 3 SCC 146 : (1970) 2 SCR 594] and State of
U.P. v. Vijay Bahadur Singh [(1982) 2 SCC 365]. It has been
repeatedly pointed out that State or the authority which can be held to
be State within the meaning of Article 12 of the Constitution is not
bound to accept the highest tender or bid. The acceptance of the highest
bid is subject to the conditions of holding the public auction and the
right of the highest bidder has to be examined in context with the
different conditions under which such auction has been held. In the
present case no right had accrued to the respondent either on the basis
of the statutory provision under Rule 4(3) or under the conditions of the
sale which had been notified before the public auction was held.”
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 36 of 41
37. In the case of M/s. Cwe-Soma Consortium (supra), after noticing
the decisions in case of Laxmikant (supra), Rajasthan Housing Board
(supra) and U. P. Avas Evam Vikas Parishad (supra) ,the Supreme Court
has held as follows:-
“….It is well settled that so long as the bid has not been accepted, the
highest bidder acquires no vested right to have the auction concluded
in his favour.”
38. In the case of State of U.P. v. Al Faheem Meetex (P) Ltd.( supra) ,
the Supreme Court has held that since the bid by the competent authority,
had not been accepted , no right (much less enforceable right) had accrued
to the bidder and in such a situation, there was no question of giving any
prior notice or opportunity of hearing to the said bidder.
39. M/s. Shree Ganesh Construction (supra) has been dismissed by the
Supreme Court in limine. In the case of State of Orissa v. Dhirendra
Sundar Das : (2019) 6 SCC 270 , the Supreme Court has held that in
limine dismissal at the threshold does not constitute any declaration of law
or a binding precedent under Article 141 of the Constitution. The relevant
paragraph of the decision is extracted below: –
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 37 of 41
“It is a well-settled principle of law emerging from a catena of decisions
of this Court, including Supreme Court Employees’ Welfare
Association v. Union of India & Anr. (1989) 1 SCC 187 (paras 22
and 23).and State of Punjab v. Davinder Pal Singh Bhullar (2011)
14 SCC 770 (paras 112 and 113). , that the dismissal of a S.L.P. in
limine simply implies that the case before this Court was not
considered worthy of examination for a reason, which may be other
than the merits of the case. Such in limine dismissal at the threshold
without giving any detailed reasons, does not constitute any
declaration of law or a binding precedent under Article 141 of the
Constitution”.
40. In view of the above discussion and the decisions of the Supreme
Court, we are of the view that the opinions recorded by the Division
Benches of this Court in the case of M/s. Shree Ganesh Construction
(supra), Gangadhar Jena (supra), Sampad Samal (supra), Sical
Logistics Ltd (supra), Mackintosh Burn Ltd., Kolkata (supra) and
Bansal Infraprojects Pvt. Ltd., Bolangir (supra) do not lay down the
correct law.
41. The observations made by the Supreme Court in paragraph-8 of
the decision in Mohinder Singh Gill ( supra) , do not have universal
application to all decisions of the State within the meaning of Article 12
of the Constitution of India. It applies in three circumstances;-
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 38 of 41
i) when a statute requires a statutory authority exercising
statutory power to pass an order .
ii) when such order has the effect of taking away or adversely
affecting a person’s right accrued to him / her / it
iii) if such decision has civil consequences affecting an
individuals’s vested right.
42. It is apparent from a perusal of the judgments in the case of
Bandeep Singh (supra) that the respondent had made deposit of 25% of
the amount as provided in the terms of the auction notice which had
been accepted by the Corporation and in the case of Ram Sanehi Singh ,
he had been allowed to cut and remove the timber after which the order
was passed . The parties were therefore adversely affected hence it was
necessary to hear them before passing the order of cancellation as it
involved civil consequences .
CONCLUSION
43. In view of the above discussion and the decisions of the Supreme
Court referred to above , we answer the questions referred to the Full
Bench as under:-
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 39 of 41
i) While testing the correctness of a purely administrative
order passed by an authority, that is State within the meaning
of Article-12 of the Constitution of India , which does not
essentially require recording of any reason and includes an
order in the nature of cancellation of a tender process / notice
where a bid has not been accepted , the observations made
by the Supreme Court in paragraph-8 of the decision in
Mohinder Singh Gill vs The Chief Election Officer: AIR
1978 SC 851, will not have any application .
ii.) Before cancellation of a tender notice, there is no
requirement of giving an opportunity of hearing or prior
notice to the highest / lowest bidder, as such bidder does not
acquire any vested right to have the auction confirmed in his /
her / its favour on that basis alone.
iii.) When a tender process is cancelled prior to confirmation
of tender / auction in favour of a bidder , the decision of the
Supreme Court in the case of Sudhir Kumar Singh (supra) is
not applicable
iv.) In M/s. Bansal Infraprojects Pvt. Ltd (supra) , the
Division Bench of this Court has not applied the Supreme
Court’s decision in the case of Sudhir Kumar Singh (supra)
correctly.
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 40 of 41
v.) The High Court while exercising the power of judicial
review under Article 226 of the Constitution of India, cannot
direct the State or its instrumentalities to accept the bid of the
lowest / highest bidder by interfering with the order of
cancellation of tender , solely on the ground of violation of
principles of natural justice or on the ground that the order of
is bereft of reasons, except in exceptional circumstances.
…………………
(Savitri Ratho)
Judge
Chief Justice
I agree . ...............
(Chakradhari Sharan Singh)
Chief Justice
S.S. Mishra,J.
I agree .
.................
(S.S. Mishra )
Judge
Oissa High Court, Cuttack.
The 15th day of January , 2025.
S.K. Behera, Senior Stenographer.
Signature Not Verified
Digitally Signed
Signed by: SUKANTA KUMAR BEHERA
Designation: Senior Stenographer
Reason: Authentication
Location: Orissa High Court, Cuttack
Date: 22-Jan-2025 13:56:52
W.P.(C) Nos. 5790 of 2024 and 5535 of 2024 Page 41 of 41
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