A prior higher bid alone cannot justify rejecting competitive bids absent evidence of current undervaluation.

Sahakar and Dhanlaxmi had each operated a sand-mining group under earlier contracts, which they surrendered under Rule 16 of the Madhya Pradesh Sand (Mining, Transportation, Storage and Trading) Rules, 2019, as then in force.

In September 2025, the Madhya Pradesh State Mining Corporation re-tendered the Shahdol and Katni groups.

Sahakar became H1 for Shahdol at ₹48,20,40,000, and Dhanlaxmi became H1 for Katni at ₹54,07,41,111; both bids exceeded their respective reserve prices, and multiple bidders participated in each auction.

The Corporation’s Board rejected the bids and cancelled the tenders, principally because each was substantially lower than the same bidder’s earlier annual bid for the group.

The High Court upheld the cancellation.

During the ensuing proceedings, Rule 16 was amended to restrict a surrendering MDO’s participation in a re-tender of the same group.

1. Whether the Corporation was justified in rejecting the H1 bids and cancelling the Shahdol and Katni auctions principally because the appellants’ bids were lower than their earlier bids for the same groups.

2. If the cancellations were unsustainable, what consequential relief was appropriate in light of the later tender process.

Under Article 14, a State authority’s discretion in awarding public contracts—including its power under tender conditions to reject the highest bid or cancel an auction—must be exercised fairly, non-arbitrarily, and for reasons supported by relevant material.

An H1 bidder has no indefeasible right to an award, and a reserve price does not guarantee acceptance; nevertheless, a rejection must have a rational nexus to the auction and its circumstances.

Applying Ramana Dayaram Shetty v. International Airport Authority of India, Star Enterprises v. City and Industrial Development Corporation of Maharashtra Ltd., Food Corporation of India v. Kamdhenu Cattle Feed Industries, Tata Cellular v. Union of India, and Golden Food Products India v. State of Uttar Pradesh, the Court reiterated that judicial review examines the legality and rationality of the decision-making process, not the commercial merits as such.

Rule 16, as it stood in 2025, permitted surrender but did not disqualify the surrendering MDO from participating in a re-tender or require it to match its earlier bid; the later amendment imposing such a restriction operates prospectively.

The Board could treat the earlier bids as relevant, but their numerical difference from the 2025 bids did not, without more, establish that the fresh bids were inadequate or that the State would suffer a corresponding loss.

The Board cited no contemporaneous valuation or comparable market evidence showing that the earlier prices remained reasonably obtainable in October 2025.

This was particularly significant for Shahdol, where a pre-existing dispute concerned the availability of statutory clearances for the full tendered quantity; for Katni, the earlier bid likewise did not, by itself, establish current market value.

The auctions had proceeded with multiple qualified bidders, and the Board identified no collusion, procedural defect, or other failure of competition.

Because the appellants were eligible under the rules then in force, the later amendment could not retrospectively disqualify them.

The Court therefore held the cancellations unsustainable.

It declined to remand because the completed auctions and the reasons for rejection had already been examined; instead, it ordered restoration of the process, subject to the appellants standing by their bids and completing the tender requirements.

It restored the 2025 tender process, directed the appellants to confirm their unconditional willingness to stand by their respective bids, and required the Corporation to complete the consequential approval and allotment steps upon compliance.

The subsequent tender process was not to continue for Shahdol and Katni, and deposits and bank guarantees submitted in that process were to be returned or released, subject to independent liabilities.

The appeals were allowed, with no order as to costs.