Pendency of criminal FIR justifies cancellation of tender despite interim stay and absence of specific disqualification clause.

The petitioner, declared the highest bidder (H1) for a tender involving the operation and maintenance of a swimming pool in Shujalpur, challenged an order dated 07.05.2026 which canceled their bid.

Following a third-party objection, the respondent authority issued a show-cause notice alleging ineligibility due to recent registrations, doubtful experience certificates, and a pending criminal case.

The petitioner replied, stating the criminal case arose from a civil property dispute and was stayed by the High Court.

Despite the explanation, the respondent passed the impugned order rejecting the bid primarily due to the pending criminal proceedings.

1. Whether the cancellation of a tender based on the pendency of a criminal case, despite an interim stay on the criminal proceedings, is arbitrary or perverse under Article 226

2. Whether the High Court should exercise its extraordinary jurisdiction to interfere in a contractual dispute involving the bidding process

In contractual disputes and bidding processes, the High Court’s jurisdiction under Article 226 is limited and should be exercised with restraint to avoid disturbing commercial operations or economic policies.

The pendency of an FIR is a substantive fact unless the proceedings are quashed, and administrative authorities possess the discretion to evaluate the suitability of a bidder provided the principles of natural justice are followed.

The court reasoned that although the petitioner was the highest bidder and had obtained an interim stay in the criminal matter, the FIR remained valid and unquashed.

The court found that the respondent authority adhered to the principles of natural justice by issuing a notice and considering the petitioner’s reply before reaching a decision.

The court determined that the authority acted within its bounds of discretion by concluding that a pending criminal case was a substantive ground for disqualification.

It noted that the decision was neither arbitrary nor mala fide, as the authority had evaluated the objections objectively in the interest of the contract's integrity.

The petition was dismissed, with the court declining to exercise its extraordinary jurisdiction because the authority had passed a reasoned order and exercised its discretion appropriately based on the materials on record.