Tender Accepting Authorities cannot arbitrarily discharge technically responsive L-1 bids without recording reasons.

The Railway authorities issued a Notice Inviting Bid dated 11.12.2025 for construction work under a two-bid system.

The petitioner participated along with five other bidders. Its technical bid was found responsive and its financial bid was the lowest, making it L-1 at 18.20% below the estimated value.

The Tender Committee recommended acceptance of the petitioner’s bid for approximately Rs. 1,07,53,20,857.71.

However, the Tender Accepting Authority decided to discharge the tender and proceed with re-tendering by communications dated 17.04.2026 and 12.05.2026, without assigning reasons.

The petitioner challenged the decision under Article 226 of the Constitution, contending that the decision was arbitrary, unreasonable, and contrary to the Tender Committee’s finding that it possessed sufficient experience in mountainous regions.

The Railways defended the decision, arguing that the Tender Accepting Authority was the final decision-maker and that the petitioner lacked sufficient specialised experience for the work.

Whether the Tender Accepting Authority’s decision to discharge the tender and order re-tendering, despite the petitioner being technically responsive, L-1, and recommended by the Tender Committee, was arbitrary, unreasonable, and legally unsustainable

Whether the Court could exercise judicial review under Article 226 over the Tender Accepting Authority’s decision in the absence of alleged mala fides, particularly where the decision was asserted to be in public interest

Whether the subsequently issued guidelines dated 13.03.2026 could affect a tender initiated on 11.12.2025

The Court applied Article 226 of the Constitution and the settled principles governing judicial review of State action in contractual and tender matters.

Although the owner or tendering authority is ordinarily the best judge of the tender conditions and courts exercise restraint in reviewing contractual decisions, such decisions must remain fair, transparent, reasonable, and free from arbitrariness.

The Court relied on Golden Food Products India v. State of Uttar Pradesh, 2026 SCC OnLine SC 24, for the principle that cancellation of an auction or tender on irrelevant considerations or merely in expectation of a better future offer is impermissible.

It also relied on Subodh Kumar Singh Rathour v. Chief Executive Officer & Ors., (2024) 15 SCC 461, for the requirement that tender-allocation decisions must be free from arbitrariness and unreasonableness.

The Court recognised that the absence of personal mala fides does not preclude interference where the decision constitutes malice in law.

It further held that the 13.03.2026 guidelines operated prospectively and could not govern the tender initiated on 11.12.2025.

The Court found that the petitioner’s technical bid had been accepted as responsive and that it had emerged as L-1 in the financial evaluation.

The Tender Committee had examined the petitioner’s qualifications and specifically concluded that its work in the Bairabi–Sairang section in Mizoram demonstrated sufficient experience in mountainous regions.

Although the Tender Accepting Authority was not bound mechanically by the Committee’s recommendation, its decision to discharge the tender and order re-tendering had to be supported by relevant reasons and satisfy standards of fairness and reasonableness.

The Authority’s decision contained no reasons and did not reasonably address the Tender Committee’s findings.

The Court therefore held that the decision was not logical, transparent, or justified merely because the final authority possessed the power to decide.

The later guidelines could not retrospectively alter the applicable tender requirements.

Accordingly, the decision was characterised as malice in law and was amenable to judicial review.

Both decisions were set aside.

The writ petition was allowed, and the Railway authorities were directed to take consequential action pursuant to the Tender Committee’s recommendation in favour of the petitioner and allot the work to it in accordance with law.

No order as to costs was made.