Tender cancellation without recorded reasons to favour a disqualified bidder is arbitrary and unlawful.

The petitioner, an electrical contractor, challenged the Dewas Municipal Corporation’s cancellation of a tender for temporary lighting arrangements for 2026–27 and its simultaneous issuance of a fresh tender for the same work

Only the petitioner and respondent no. 5 had participated in the original tender.

The petitioner objected that respondent no. 5 had not supplied the required turnover statements for the preceding three financial years and had submitted a Shops and Establishment registration certificate whose details could not be verified on the government portal.

A Labour Inspector’s report confirmed that respondent no. 5’s registration details were unavailable on that portal

The Corporation cancelled the tender, recording “retender” on the online portal, and issued a fresh tender that retained the same work and conditions but specified the relevant financial years

The petitioner sought to have the cancellation and fresh tender set aside and the original process resumed

1. Whether the Corporation’s cancellation of the original tender, without recording reasons and in the circumstances of the case, was arbitrary, mala fide, or intended to favour respondent no. 5

2. Whether the Corporation was required under the original tender conditions to treat respondent no. 5’s bid as non-responsive and proceed with the petitioner’s financial bid

Under Article 226, judicial review of tender decisions is limited but available where the authority acts arbitrarily, irrationally, in bad faith, or contrary to public interest; courts do not intervene merely to reassess a commercial decision.

Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517, requires the court to consider whether the decision was mala fide or so arbitrary that no responsible authority could have reached it, and whether public interest is affected

Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216, recognises the State’s latitude in tender matters, subject to fairness, reasonableness, and absence of malice or misuse of power

Under the original tender’s Clause 19.1, bids lacking required documents were to be treated as non-responsive; Clause 19.5 required reasons to be recorded for cancellation

Article 14’s requirement of non-arbitrary State action informed the Court’s application of those principles

The Court found that respondent no. 5 had not submitted the required turnover statements and that the Labour Inspector had reported that his registration details were unavailable on the government portal; under Clause 19.1, the Corporation should therefore have treated his bid as non-responsive

Instead, it left the process pending, cancelled the tender without recording a reason beyond “retender,” and issued a fresh tender that added the precise financial years relevant to respondent no. 5’s deficiency

Considering that sequence, the Court rejected the Corporation’s general assertion that the retender was intended to broaden participation and held that the action was arbitrary and intended to favour respondent no. 5, satisfying the grounds for interference identified in Jagdish Mandal and Michigan Rubber

The Corporation was directed to open the petitioner’s financial bid and decide the matter under the original tender conditions within 30 days of receiving the order; it was also directed to pay the petitioner costs of ₹10,000