Facts of the Case

The dispute arose from a tender invited through notice dated 22.04.2022 for construction of an R.C.C. minor bridge, approach and protection work at Shahbad, Rampur–Bazpur Road (SH-144), Km. 75, District Rampur. The estimated cost of the work was ₹540 lakh, excluding GST.

Two technical bids were admitted: one submitted by the petitioners and the other by M/s A.M. Builders. On 25.09.2022, the petitioners’ financial bid was opened and found to be the lowest. The petitioners had quoted a rate 2.50% above the departmental estimate, whereas the other bidder had quoted 8.94% above the estimate.

On 26.09.2022, the petitioners received a communication from the office of the fourth respondent requiring them to intimate, by 30.09.2022, how much they could reduce their quoted price. In response, by communication dated 27.09.2022, the petitioners reduced their bid from 2.50% above the departmental estimate to 2% above the departmental estimate.

According to the petitioners, the website upload reflected that their bid had been declared successful. However, on 29.09.2022, they received a communication dated 26.09.2022 stating that the tender proceedings had been scrapped because the bids were at rates higher than the departmental estimates.

The petitioners challenged the communication/order dated 26.09.2022 and sought quashing of the same, along with acceptance of their lowest bid for the concerned work project.

Issues Involved

The principal issues before the Court were whether the tendering authority could scrap the tender process even though the petitioners’ financial bid was the lowest; whether cancellation of the tender process was arbitrary when, on the same date, the petitioners had been granted time up to 30.09.2022 to submit a revised lower rate; whether being the lowest bidder created an enforceable right in favour of the petitioners to obtain acceptance of their bid; and whether the High Court, in exercise of writ jurisdiction under Article 226, could compel the department to accept the petitioners’ bid merely because it was the lowest.

Petitioners’ Arguments

The petitioners contended that there was no justification for passing the order dated 26.09.2022 scrapping the tender proceedings when, through another communication of the same date, they had been granted an opportunity to submit a revised lower rate by 30.09.2022.

It was argued that the procedure adopted by the respondents was arbitrary on the face of the record because the tender process had allegedly been scrapped even before expiry of the period granted for submission of a revised proposal.

The petitioners further contended that the order dated 26.09.2022 reflected non-application of mind to the contemporaneous communication inviting them to reduce their bid. They relied upon the fact that their financial bid was the lowest and that they had further reduced it from 2.50% above the departmental estimate to 2% above the estimate.

Respondents’ Arguments

The judgment does not record a detailed separate set of submissions on behalf of the respondents. However, the position emerging from the impugned communication and the record was that the tender proceedings had been scrapped because the bids were higher than the departmental estimates.

The Court also noted that there was no document on record demonstrating that the petitioners’ lowest bid had actually been accepted by the department. Thus, although the petitioners’ technical bid was responsive and their financial bid was the lowest, the bid remained above the departmental estimate.

Court Order / Findings

The Allahabad High Court declined to entertain the writ petition and dismissed it.

The Court recorded the following material findings:

  1. No document established acceptance of the petitioners’ bid. The Court found nothing on record to suggest that the petitioners’ bid had been accepted merely because it was the lowest.
  2. Lowest bid remained above the departmental estimate. Although the petitioners’ technical bid was responsive and their financial bid was the lowest, it was 2.50% above the departmental estimate. Even after revision, according to the petitioners’ own case, the bid remained 2% above the departmental estimate.
  3. The department cannot be forced to accept the lowest tender. The Court expressly held that it is well settled that the department cannot be compelled to accept a tender merely because it is the lowest.
  4. Premature scrapping argument did not justify compelling acceptance. The Court observed that the argument concerning scrapping of the tender process before the date fixed for receipt of the revised proposal might appear attractive. However, the decisive consideration was that even the revised bid remained above the departmental estimate.
  5. Writ jurisdiction cannot be used to compel award of the tender merely on L-1 status. The Court held that it could not, by issuance of a writ, force the department to accept the petitioners’ bid merely because it was the lowest.

Accordingly, the writ petition was dismissed without prejudice to the petitioners’ right to participate in the fresh tender process as and when floated.

Important Clarification

The judgment makes an important distinction between being the lowest bidder (L-1) and having an accepted bid. A bidder does not acquire an enforceable right to award of a government contract merely because its bid is the lowest.

Further, where the lowest bid itself exceeds the departmental estimate, the tendering authority cannot be compelled through writ proceedings to accept such bid. Even a technically responsive bid and L-1 status do not, by themselves, establish acceptance of the tender or create an absolute right to the contract.

The Court’s order also clarifies that dismissal of the writ petition did not bar the petitioners from participating in any fresh tender process subsequently floated for the work.

Section / Constitutional Provision Involved

Article 226 of the Constitution of India – The petition invoked the writ jurisdiction of the High Court to challenge the communication/order scrapping the tender process and to seek acceptance of the petitioners’ lowest bid.

The case concerns judicial review in public tender matters, particularly the limits of writ jurisdiction where a bidder seeks to compel a government department to accept an L-1 bid that remains above the departmental estimate.

Link to download the order -
https://www.mytaxexpert.co.in/uploads/1783318920_1253compressed.pdf

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