### Cancellation of tender and imposition of stringent eligibility criteria in public interest is not arbitrary.

In brief

The question

Whether the decision of the respondents to cancel the initial tender process was arbitrary, illegal, or contrary to Article 14 of the Constitution.

The court held

The court answered both issues in favor of the State, holding that the cancellation of the earlier NIT was legal and the issuance of the second NIT was within the state's competence and reasonableness.

It also directed

The petitions were dismissed, and the interim stay was vacated, allowing the respondents to proceed with the NIT dated 20.02.2025.

01Facts

The Government of Madhya Pradesh introduced "C.M. Rise Schools" to provide high-quality education and transport facilities for students in remote areas.

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An initial Notice Inviting Tender (NIT) was issued on 14.03.2024 for school bus services.

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Although 58 applicants, including the petitioners, were found eligible in technical and financial bids, the respondents cancelled the process on 25.09.2024.

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The state argued that out of 533 required routes, applicants only bid for 98 profitable/shorter routes, leaving 435 routes unallocated.

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A second NIT was issued on 20.02.2025, introducing more stringent conditions, including the requirement for bidders to be incorporated companies with three years of experience.

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The petitioners challenged the cancellation of the first NIT and the restrictive conditions of the second NIT as arbitrary and designed to favor specific entities.

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02Issues

i.Whether the decision of the respondents to cancel the initial tender process was arbitrary, illegal, or contrary to Article 14 of the Constitution.

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ii.Whether the incorporation of stringent eligibility criteria in the second NIT (3 years experience and corporate status) was reasonable and in the public interest.

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03Law Applied

The court primarily applied the principles of judicial review in contractual matters as established in *Tata Cellular v. Union of India*, which mandates that while the government has "fair play in the joints," its decisions must be free from arbitrariness and bias.

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It further relied on *Jagdish Mandal v. State of Orissa*, which holds that if a decision relating to the award of a contract is bona fide and in the public interest, courts should not interfere even if there is a procedural aberration.

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The doctrine of "legal certainty" and the "level playing field" from *Reliance Energy Ltd. v. Maharashtra State Road Development Corpn. Ltd.* were also considered to ensure norms are clear and non-discriminatory.

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04Reasoning

The court found that the cancellation of the first NIT was not arbitrary but necessitated by a "holistic approach" to ensure all students were served.

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The fact that 435 routes remained unallocated because vendors only selected "favourite" shorter routes meant that students on those routes would be denied transportation, defeating the project's core purpose.

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Regarding the new stringent conditions, the court reasoned that requiring three years of experience and corporate incorporation aligned with Central Motor Vehicles Rules and ensured financial stability, safety, and reliability for school-going children.

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The court determined that the respondents acted in the larger public interest to prevent the exclusion of students in remote areas, which outweighed the private interests of the petitioners.

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