Full Judgment Text
2025 INSC 569
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO (s). ____________OF 2025
(@ Special Leave Petition (C) No (s). 12353-12355 of 2021)
The Principal Chief Conservator
of Forest & Ors. Appellant(s)……
VERSUS
Suresh Mathew & Ors. Respondent(s)…….
J U D G M E N T
PRASANNA B. VARALE, J:-
1. Leave granted.
2. The present civil appeals arises out of the common judgement
and order dated 19.01.2021 passed by the Hon’ble High Court of
Signature Not Verified
Digitally signed by
RAVI ARORA
Date: 2025.04.25
14:50:38 IST
Reason:
Kerala at Ernakulam in writ appeals nos. 1568 of 2020, 1577 of
2020 and 1589 of 2020 whereby the High Court of Kerala
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dismissed the Writ Appeals by confirming the judgement passed
by learned Single Judge.
BRIEF FACTS:
3. The factual matrix of the case is that the Divisional Forest
Officer, Konni issued an order dated 12.10.2020 cancelling an
earlier e-tender notification dated 25.05.2020 for final tree felling
works of 1954 Nellidappara in South Kumaramperoor Forest
Station under Konni Range in Konni Forest Division and decided
to float a tender afresh. The writ petitioners were participants in
the earlier e-tender notification dated 25.05.2020 and according to
them, the action of the appellants; to retender the work after
cancelling the earlier tender was an arbitrary and illegal action. In
fact, the Principal Conservator of Forests issued a circular dated
29.02.2020 in regard to the renewal of registration of A class
contractors, wherein it was stipulated that A class registered
contractors, who have not participated in any of the tenders
notified by the Department for timber extraction during the last
financial year, are not eligible to get renewal of the A class
registration.
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4. On the basis of the said circular, the registration of the
petitioners in W.P.(C) Nos. 24075 and 24241 of 2020 were not
renewed. However, the appellants had floated the e-tender dated
25.05.2020 for the work in question. The said petitioners, being
aggrieved by the said action, have approached Hon’ble High Court
by filing W.P.(C) Nos. 11854 and 12389 of 2020 respectively
challenging the aforesaid circular dated 29.02.2020, in which
interim directions were sought to permit them to participate in the
e-tender dated 25.05.2020. Learned Single Judge of the Hon'ble
High Court granted interim orders permitting the said petitioners
to participate in the tender proceedings provisionally. Learned
Single Judge of Hon'ble High Court vide common judgment dated
28.09.2020 allowed the said writ petitions and set aside the
impugned orders declining renewal of registration of the
petitioners. The Court directed the authority to reconsider their
applications for renewal of registration on merits dehors the
circular dated 29.02.2020. The reasons given by the High Court
for allowing the writ petitions have been reproduced as below:
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“… 11 . The rules would indicate that the registering
authority may refuse renewal of registration for reasons
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Rules 6 to 8 of the rules for Registration of Contractors for Working Down Timber Firewood
from Timber Depots (Supply Coupe Contracts).
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stated as (i) to (iv) in Rule 6. The 4th reason namely, "or any
other reason which in the opinion of the registering authority
makes the applicant unsuitable for such registration", need
not be confined to reasons of the nature indicated in Clauses
(i) to(iii)…
…Firstly, the rules of registration of contractors are not
statutory rules but are part of the Kerala Forest Code which
is only a compilation of administrative/executive
instructions…
12. …Registration or renewal of registration as Contractors
is not a fundamental or statutory right. The Government can
very well right-size the panel of registered Contractors for the
purpose of administrative convenience…
14… . Petitioners as registered Contractors do not hold
vested right for renewal of their license…”
However, the Learned Judge allowed the writ petition on the sole
ground that the authorities cannot put a new condition for
consideration of applications after the last date prescribed for
submission of the applications as it would be highly arbitrary
offending Article 14 of the Constitution of India. Thus, it was
observed that the refusal of renewal of registration based on
circular dated 29.02.2020 is illegal and unsustainable.
5. However, vide order dated 12.10.2020, the Divisional Forest
Officer (hereinafter ‘DFO’) cancelled the e-tender dated 25.05.2020
and floated fresh tenders for the same work on 31.10.2020. This
order was further challenged by the Respondent before the High
Court in Writ Petition No. 24241 of 2020.
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6. Vide order dated 16.11.2020, Single Judge of the Hon'ble High
Court allowed the writ petition and set aside the re-tender
notification dated 31.10.2020. The Court observed that the writ
petitioners who had been granted renewal of license should be
treated as qualified to participate in the earlier tender pursuant to
the renewal of their A Class license. Accordingly, the Court directed
the authority to proceed with the e-tender dated 25.05.2020 and
award the work to the eligible tenderer at the earliest. The reasons
given by the High Court have been reproduced as under:
“12. ...One fails to understand as to how a re-tendering
abandoning the existing tender process would not expedite the
re-planting work. If anything, it would only cause further
delay…
13… When already the tender proceedings were in place, the
DFO ought not have cancelled the same without concrete
reasons, ostensibly to beat the model code of conduct.
16… the lowest tenderer has quoted an amount of 12.67%
below the estimated rate, which should be treated as a
reasonably good offer for the respondents. There is no
guarantee that in the re-tendering process tenderers would
quote lesser amounts.
17. There were sufficient participants in the earlier tender
proceedings. There is nothing on record to show that there have
been any serious complaints regarding the e-tender
proceedings initiated earlier. In the earlier tender proceedings,
offers have been received to do the work at lesser than the
estimated rate. Even according to the tendering authority,
expeditious implementation of the project is imperative.”
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7. Aggrieved by the aforementioned order, the Petitioner filed Writ
Appeal before Division Bench of the Hon'ble High Court.
8. The High Court vide its impugned judgment dated
19.01.2021dismissed the writ appeal being devoid of merit and
upheld the order passed by the Learned Single Judge.
9. Aggrieved by the said judgement of the High Court, the
appellant is before us.
CONTENTIONS:
10. The Ld. Counsel for the appellant vehemently submitted that
the judgment of the Hon’ble High Court setting aside the order of
the Petitioner No. 3 as well as the retendering notice dated
31.10.2020 is against the settled principles of law. It was
submitted that the finding of the High Court that the
transportation restrictions cannot affect the tender proceedings on
account of the fact that the e-tender is also against the facts on
record as the bidder has to submit both the e-tender by speed post
or registered post simultaneously within the time limit stipulated
in the notice inviting tender. The Ld. Counsel for the appellant also
submitted that the judgment of the learned Single Judge allowing
the writ petition setting aside the retender without even adverting
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to the fact that the tender has not been finally awarded to any
person and that the technical bid is under process is illegal. The
Ld. Counsel for the appellant further submitted that the finding of
the Ld. Single Judge that the lowest bidder has quoted an amount
of 12.67% below the estimate rate which would be treated as
reasonable for the Respondent and there is no guarantee that in
the retendering process, the tender would cost lesser amount is a
finding without any material on record and the same cannot be
ground for setting aside the bona fide order issued by the
competent authority. It was further submitted that as per
principles laid down by this Hon’ble Court in contractual matters,
the Court should interfere only if the Petitioner proves that there
is malafides on the part of the government authority. The Hon’ble
High Court had failed to appreciate that the DFO, Konni has rightly
exercised the power conferred on him under Clause 3 of the tender
notice read with Clause 20 of e-government procurement notice of
the retender wherein it reserves the right to modify/cancel all bids
without assigning any reason.
11. As the respondents failed to file a counter affidavit despite
sufficient opportunities granted to them and required further time,
this Court via order dated 29.02.2024 declined to grant further
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opportunity to them, as such there is no affidavit in reply by the
respondents. Ld. counsel for the respondents orally argued that
the judgement passed by the Ld. Single Judge of High Court is a
very well-reasoned judgement. The division bench of High Court
has rightly affirmed it on appreciation of evidence and the
appeal/SLP of the appellant needs to be set aside.
ANALYSIS:
12. We have heard Ld. counsel for the Appellant as well as Ld.
Counsel for the Respondent. We have also perused relevant
documents on record and judgment passed by the High Court.
13. The High Court while dismissing the writ appeals observed as
under:
“13. In our considered opinion, on an analysis of the findings
made by the learned single Judge, we see that even though the
expressions 'arbitrary' and 'unreasonable are not employed by
the learned single Judge in the judgment, it is clear that it was
after entering into the requisite findings leading to arbitrariness,
the writ petitions were allowed and the impugned cancellation
order was quashed. We also find force in the argument
advanced by the learned counsel for the writ petitioners that one
of the reasons shown in the cancellation order that there were
complaints from eligible contractors on their failure to participate
in the e-tender is a baseless contention, since it was an e-tender.
In order to substantiate the said contention, there should have
been participation in the e-tendering process by any other
eligible contractors.
14. We also do not find any basis in the arguments of the
learned Special Government Pleader that the bid documents had
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to be submitted physically, in view of the stipulation contained
in the notice inviting tender, and it was not possible due Covid
19 restrictions, for the reason that such a requirement arises
only if any eligible contractor participated in the e-tendering
process. In order to establish as to whether any eligible
contractor participated in the e-tender, no documents were
produced, and if such a situation had arisen, there would have
been substantive documents available with the tender inviting
authority and having not produced any such evidence, it can
only be legally presumed that there were no such incident to
support the stand adopted by the appellants. Therefore, we are
of the clear opinion that the fundamental reason assigned in the
cancellation order that there were complaints from the eligible
contractors expressing their inability to participate in the e-
tender, has no factual and legal foundation and cannot be
sustained under law, and thus it can only be termed as an
arbitrary and illegal act. If there is no conclusive proof for
participation of any other eligible contractors in the e-tendering
process, the contention advanced by the appellants that many
contractors could not participate due to restriction in
transportation facilities is a hollow and baseless argument.
Which thus means, without submitting e-tender, nobody can
submit the tender documents physically before the tender
inviting authorities, which is quite clear and evident from the
notice inviting tender, which specifies that the tender documents
should reach the Department on or before the bid opening time
and date, failing which the bid is liable to be rejected. Therefore,
such a requirement can only be understood as an additional
requirement to the submission of the e-tender by the willing and
eligible contractors.
15. Circumstances being so, the prime reason assigned for the
cancellation of contract as extracted above becomes an
arbitrary, unreasonable and illegal act on the part of the tender
inviting authority. Merely because there is a likelihood of the
rates being lowered, if successive tenders are invited, it cannot
be a justifiable ground at all for cancellation of the contract,
since we are of the firm opinion that, if that is to be taken as a
valid reason, then there would not be any end to the tender
inviting procedure…
… we are at a loss to understand as to how the situation of
emergency pointed out by the appellants could be achieved by
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cancelling the e-tender and inviting fresh tenders, which in our
opinion, undoubtedly protracts and retards and elongates the
finalisation of the proceedings to a future date. To put it
otherwise, the reason so assigned is not at all a conducive and
compatible one to justify the said reasoning of the tender inviting
authority in the order impugned…
17. We have no doubt in our mind that in a writ petition seeking
judicial review, certain restraints have to be followed by the
court, bearing in mind the public interest, the commercial
functions of the Government, the feasibility of the contract and
the viability etc. However, we cannot forget the fact that if there
is any patent arbitrariness in the .matter of cancellation of a
contract and that too after opening the bids submitted by the
participants, a writ court shall step in to undo such arbitrariness
and unreasonableness. ”
14. The factual matrix of this case involve the process of tender
and the power of the tendering authority to cancel the tender is a
legal question.
15. A perusal of the record shows that the order dated 12.10.2020
passed by the DFO categorically states as under:
“Some other contractors had complained that they
could not participate in the e-tender due to Covid-19
transportation restrictions. Their grievances need
proper redressal.”
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
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respondents, being still allowed to participate, were not prejudiced
by the retender.
16. The question of scope of judicial review in the cases of award
of contracts has already been dealt with by the Hon'ble Supreme
Court in the case of Jagdish Mandal vs. State of Orissa and
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Others wherein the Court observed as under:
“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 bonafide 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
2
(2007) 14 SCC 517
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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) Weather 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 licenses, dealerships
and franchises) stand on a different footing as they may
require a higher degree of fairness in action.”
We are of the opinion that the High Court has committed a gross
error while observing the facts in the case of Jagdish Mandal
(supra) were entirely different in regard to a defective tender
submitted by a participant.
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17. In the case of State of Orissa and others vs. Harinarayan
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Jaiswal and others , in relation to excise revenue, the Supreme
Court observed as under:
“13. … The Government is the guardian of the finances of the
State. It is expected to protect the financial interest of the
State. Hence quite naturally, the Legislature has empowered
the Government to see that there is no leakage in its revenue.
It is for the Government to decide whether the price offered
in an auction sale is adequate. While accepting or rejecting a
bid, it is merely performing an executive function. The
correctness of its conclusion is not open to judicial review.
We fail to see how the plea of contravention of Article 19 (1)
(g) and Article 14 can arise in these cases…”
18. The law regarding government contracts or auctions and the
nature and scope of its judicial review is well settled. In the case of
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M/s Michigan Rubber (I) Ltd. vs. State of Karnataka and ors. ,
the Supreme Court observed as under:
“23. From the above decisions, the following principles emerge:
(a) The basic requirement of Article 14 is fairness in action by
the State, and non-arbitrariness in essence and substance is the
heartbeat of fair play. These actions are amenable to the judicial
review only to the extent that the State must act validly for a
discernible reason and not whimsically for any ulterior purpose.
If the State acts within the bounds of reasonableness, it would
be legitimate to take into consideration the national priorities;
(b) Fixation of a value of the tender is entirely within the purview
of the executive and the courts hardly have any role to play in
this process except for striking down such action of the executive
as is proved to be arbitrary or unreasonable. If the Government
3
(AIR 1972 SC 1816)
4
(2012) 8 SCC 216
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acts in conformity with certain healthy standards and norms
such as awarding of contracts by inviting tenders, in those
circumstances, the interference by courts is very limited;
(c) 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;
(d) Certain preconditions or qualifications for tenders have to be
laid down to ensure that the contractor has the capacity and the
resources to successfully execute the work; and
(e) If the State or its instrumentalities act reasonably, fairly and
in public interest in awarding contract, here again, interference
by court is very restrictive since no person can claim a
fundamental right to carry on business with the Government.”
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19. In the case of Tata Cellular vs. Union of India , the Supreme
Court emphasised the need to find a right balance between
administrative discretion to decide the matters on the one hand,
and the need to remedy any unfairness on the other, and observed:
“94. (1) The modern trend points to judicial restraint in
administrative action.
(2) The court does not sit as a court of appeal but merely reviews
the manner in which the decision was made.
(3) 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.
(4) The terms of the invitation to tender cannot be open to judicial
scrutiny because the invitation to tender is in the realm of
contract..
5
(1994) 6 SCC 651
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(5) The Government must have freedom of contract. In other
words, a 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 principle of
reasonableness (including its other facts pointed out above) but
must be free from arbitrariness not affected by bias or actuated
by mala fides.
(6) Quashing decisions may impose heavy administrative burden
on the administration and lead to increased and unbudgeted
expenditure.”
20. 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.
21. A perusal of the order of the DFO reveals that as per clause 3
of the e-tender notice in English, the bidding authority reserves
the right to modify/ cancel, any all bids without assigning any
reason. Clause 27 of e-Government procurement notice inviting
tender for works puts it in explicit items that the tender inviting
authority or other sanctioning authority reserves the right to reject
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any tender or all the tenders without assigning any reason
therefore.
22. 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.
23. We may state here that if our observations are seen qua the
touchstone of questions framed by this Court in the judgment of
Jagdish Mandal (supra) the answer would be in negative,
therefore the decision taken by the authorities cannot be termed
as a mala fide decision or a decision to favour someone. At the
cost of repetition, we may state that the decision of the authority
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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.
24. 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.
..................................J.
[BELA M. TRIVEDI]
..................................J.
[PRASANNA B. VARALE]
NEW DELHI;
APRIL 25, 2025.
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