An L-1 bidder acquires no enforceable right before issuance of a work order or contract.

The petitioner participated in a tender issued under the Mukhya Mantri Gram Sampark Yojana for construction and six years’ routine maintenance of rural roads and bridges. His bid was technically qualified on 4 December 2025 and he was declared the lowest bidder (L-1) on 12 December 2025.

Although no Letter of Acceptance, work order, or agreement was issued, the petitioner alleged that he commenced work pursuant to oral instructions of the Executive Engineer and incurred approximately ₹1,07,19,196 in expenditure. The tender was subsequently cancelled by communication dated 30 April 2026. The petitioner sought quashing of the cancellation, reimbursement of the alleged expenditure, and restraint against issuance of fresh tenders.

The respondents contended that being declared L-1 did not create an enforceable right, that no contract had been concluded, and that the tender conditions authorised cancellation before award of the contract.

Whether a bidder declared L-1, but in whose favour no Letter of Acceptance, work order, or agreement was issued or executed, acquired an enforceable right to challenge cancellation of the tender?

Whether the respondents’ cancellation of the tender, before award of the contract and pursuant to Clause 33 of the Notice Inviting Tender, was arbitrary, mala fide, discriminatory, or otherwise amenable to interference under Article 226 of the Constitution?

Whether the petitioner was entitled to reimbursement for expenditure allegedly incurred on the basis of oral instructions despite the absence of a formal contractual or work authorisation?

The Court held that participation in a tender or emergence as the L-1 bidder does not, by itself, confer a vested or enforceable right to insist upon award of the contract; a binding contractual relationship arises only upon acceptance in the manner prescribed by the tender conditions and conclusion of the contract.

Relying on Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216, the Court reiterated that judicial review of tender decisions is limited and that interference is justified only where the decision is mala fide, arbitrary, irrational, discriminatory, or contrary to public interest.

The Court further applied Clause 33 of the NIT, which expressly reserved the authority’s right to accept or reject any bid and to cancel the bidding process or reject all bids at any time before award of the contract without assigning reasons.

In the absence of a formal authorisation or concluded agreement, alleged oral instructions could not create an enforceable contractual right against the State.

The Court found that, although the petitioner was technically qualified and declared L-1, no Letter of Acceptance, work order, or agreement had been issued or executed; consequently, no concluded contract came into existence.

Under Clause 33 of the NIT, the respondents retained the power to cancel the tender before award of the contract. Applying the restricted standard of judicial review in tender matters, the Court observed that the petitioner had not established mala fides, arbitrariness, discrimination, or any other legal infirmity in the cancellation decision.

The alleged expenditure incurred pursuant to oral instructions could not overcome the absence of formal contractual authorisation and therefore did not give rise to an enforceable claim against the State.

The writ petition was accordingly disposed of, without granting the reliefs sought for quashing the cancellation, reimbursement, or restraint against fresh tenders. Any pending interlocutory applications were also disposed of.