Orissa HC Quashes Canal Tender Cancellation Over 31.17%-Below-Estimate Bid, Orders Fresh Review After Bidder Wasn’t Asked To Explain Price

The petitioner was found to be the L-1 bidder for irrigation work under Work Sl. No. 05, quoting 31.17% below the estimated cost.

Following scrutiny, the Project Level Tender Committee recommended cancellation of all seven tenders, including the petitioner’s, on the basis that the bids were abnormally low and commercially unviable.

The tender was cancelled on 13 October 2026, and a fresh e-procurement notice for the same work was issued on 15 October 2026.

The petitioner challenged the cancellation, contending that she had not been given an opportunity to explain the quoted rate or demonstrate her capacity to perform the work.

The Works Department Office Memorandum dated 3 January 2026 provides that a bid is not abnormally low merely because it falls below a specified percentage of the estimate; the Procuring Entity must assess the bid price in combination with other elements and may seek written clarification and price analysis.

Rejection on grounds of non-viability is contemplated where, after evaluating that material, the bidder has substantially failed to demonstrate the capability to perform at the offered price.

The applicable DTCN provisions, including Clauses 26, 25(f) and 25(9)(vi), do not authorise arbitrary action or displace the governing instructions.

Judicial review of tender decisions is limited: courts ordinarily do not substitute their commercial assessment for that of the tendering authority, but may intervene where the decision-making process is materially flawed or arbitrary, having regard to public interest. The Court relied on Tata Motors Ltd. v. BEST, Air India Ltd. v. Cochin International Airport Ltd. and Jagdish Mandal v. State of Orissa.

The Court did not question the authority’s concern about the substantially low quotation or undertake its own assessment of commercial viability.

However, the record did not show that the petitioner had been asked to explain her price or that the Committee had evaluated her capability under the sequential process prescribed by the Office Memorandum.

The bid’s 31.17% deviation below the estimate, without that assessment, was insufficient to establish non-viability.

Clause 26 did not cure this defect because the cancellation was challenged on the substantive grounds recorded by the Committee, which had to comply with the governing instructions.

Although the petitioner’s L-1 status did not confer an indefeasible right to the contract, the cancellation process was not sustainable.

It remitted the matter for fresh consideration of the petitioner’s bid under Clause VI of the Office Memorandum and the applicable tender conditions, after giving her an opportunity to provide an explanation and supporting price analysis.

The reconsideration must be undertaken by an authority or committee other than one chaired by Opposite Party No. 3 and completed as expeditiously as possible, preferably within four weeks of communication of the order.

The Court expressed no view on ultimate commercial viability and left the competent authority free to decide the bid in accordance with law.

The writ petition was allowed.