Justice Bela M Trivedi, Justice Prasanna B Varale, Supreme Court
Supreme Court: Govt. Has Every Right To Cancel & Call For Fresh Tender If It Protects Financial Interests Of The State
|The Supreme Court set aside the decision of the Kerala High Court, which set aside the re-tender notification issued by the Divisional Forest Officer.
The Supreme Court held that since the Government is the protector of financial resources of the state, it thus has every right to cancel and call for fresh tender if it is in the nature of protecting the financial interests of the State.
The Court set aside the decision of the Kerala High Court, which set aside the re-tender notification issued by the Divisional Forest Officer ( DFO). The Court pointed out that the e-Government procurement notice inviting tender for works explicitly stated that the tender inviting authority or other sanctioning authority reserved the right to reject any tender or all the tenders without assigning any reason.
A Bench of Justice Bela M Trivedi and Justice Prasanna B Varale held, “The Division Bench of the High Court, which upheld the judgment of the Ld. Single Judge, was of the opinion that merely because there was a likelihood of the rates being lowered if successive tenders are invited, the same cannot be a justifiable ground at all for cancellation of the contract since it would lead to a situation of an unending tender inviting procedure. However, we are of the opinion that the said observations by the High Court are contrary to the settled principles of law laid down by the Supreme Court that the Government is the protector of financial resources of the state and thus, it has every right to cancel and call for fresh tender if it is in the nature of protecting the financial interests of the State.”
AOR Nishe Rajen Shonker appeared for the Appellants, while AOR Namit Saxena represented the Respondents.
Brief Facts
The Order issued by the DFO cancelled an earlier e-tender notification for final tree felling works in a specific forest area, and decided to float a tender afresh. The Respondents had participated in the earlier e-tender notification. They contended that the decision to retender the work, after cancelling the initial tender, was arbitrary and illegal.
The Respondents challenged the non-renewal and were initially granted interim directions permitting them to participate in the e-tender. Ultimately, the High Court allowed their Petition, setting aside the Orders that had declined to renew their registration.
However, the DFO then cancelled the e-tender and floated fresh tenders. This decision was challenged, and the High Court set aside the retender notification, directing the authorities to proceed with the earlier e-tender.
The Respondent filed a Writ Appeal before a Division Bench of the High Court, which dismissed the Appeal and upheld the Single Bench’s Order.
Court’s Reasoning
The Supreme Court stated, “It is noteworthy that the order dated 12.10.2020 is an order issued by the DFO who is the competent authority. The setting aside of this order of the DFO by the Ld. Single Judge is erroneous since it does not record any finding that the order of the DFO is mala fide. We are of the opinion that the order of DFO would give an equal opportunity to all the bidders and thus, there would be a fair play between them, ultimately benefitting the Government.”
The Court referred to its decision in M/s Michigan Rubber (I) Ltd. v. State of Karnataka (2012), wherein it was held that “In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of the tendering authority is found to be malicious and a misuse of its statutory powers, interference by courts is not warranted.”
The Bench pointed out that “It is thus clear that the DFO, being the tendering authority, found that some contractors could not participate due to Covid restrictions and thus, proceeded to retender the work. The respondents, being still allowed to participate, were not prejudiced by the retender.”
“At the cost of repetition, we may state that the decision of the authority is giving a fresh opportunity to all interested bidders to compete with each other in the process of the fresh selection. In our opinion, the decision taken by the authority is not affecting the public interest, on the contrary it furthers the cause of the public interest and fair play,” the Bench held.
Consequently, the Court ordered, “For reasons stated above, the present appeals deserves to be allowed and are allowed accordingly. The judgment and order dated 19.01.2021 passed by the High Cout of Kerala at Ernakulam in writ appeals nos. 1568 of 2020, 1577 of 2020 and 1589 of 2020 is set aside.”
Accordingly, the Supreme Court allowed the Appeal.
Cause Title: The Principal Chief Conservator of Forest & Ors. v. Suresh Mathew & Ors. (Neutral Citation: 2025 INSC 569)
Appearance:
Appellants: AOR Nishe Rajen Shonker; Advocate Alim Anvar
Respondents: AOR Namit Saxena and Biju P Raman; Advocate Subhash Chandran K R