Case Note & Summary
The petitioner, SecLink Technologies Corporation, a company incorporated in Seychelles and lead member of a consortium, challenged the cancellation of a tender for redevelopment of Dharavi Notified Area (the project) by the Government of Maharashtra (GoM). The earlier tender was floated on 28 November 2018 for selection of a Lead Partner. The petitioner was declared the highest qualified bidder with a bid of Rs.7200 crores, while respondent No.3 (Adani Properties Pvt. Ltd.) bid Rs.4529 crores. However, the Committee of Secretaries (CoS) in its meeting on 27 August 2020 decided to cancel the tender, which was affirmed by the Cabinet on 29 October 2020. A fresh tender was floated with modified terms, and respondent No.3 was selected as the highest bidder. The petitioner challenged the cancellation, the fresh tender, and the award of the contract to respondent No.3. The court framed the issue as whether the cancellation was arbitrary and whether the petitioner had a vested right. The court held that the State's decision to cancel the tender was a policy decision based on changed circumstances, including issues with railway land and the need for a more comprehensive development model. The court found no arbitrariness or mala fides. It further held that a bidder has no vested right to the award of a contract until it is actually awarded, and the petitioner's legitimate expectation was not enforceable against public interest. The court dismissed the petition, upholding the cancellation and the fresh tender process.
Headnote
A) Constitutional Law - Judicial Review of Policy Decisions - Cancellation of Tender - The court examined the scope of judicial review under Article 226 of the Constitution of India in matters of cancellation of tender by the State. Held that the decision to cancel a tender is a policy decision and the court will not interfere unless it is arbitrary, mala fide, or contrary to public interest. The State has the right to cancel a tender if it is in public interest, especially when there are changed circumstances or irregularities. (Paras 1-8, 9-13)
B) Contract Law - Vested Right and Legitimate Expectation - Tender Process - The court considered whether a bidder acquires a vested right to the award of a contract upon being declared the highest bidder. Held that no vested right accrues until the contract is actually awarded. A bidder may have a legitimate expectation, but that expectation must yield to public interest and policy decisions of the State. The petitioner's claim of legitimate expectation was not sustainable as the cancellation was based on valid reasons. (Paras 13-15)
C) Administrative Law - Committee of Secretaries (CoS) - Decision-Making Process - The court analyzed the role of the CoS in the tender process and the validity of its decision to cancel the tender. Held that the CoS, as a high-powered committee, is competent to take policy decisions regarding the project, and its decision to cancel the tender and re-tender was within its authority and not vitiated by any procedural irregularity. (Paras 10-12)
Issue of Consideration
Whether the decision of the Government of Maharashtra to cancel the earlier tender process for redevelopment of Dharavi and to initiate a fresh tender process is arbitrary, illegal, and violative of Article 14 of the Constitution of India, and whether the petitioner has any vested right or legitimate expectation to be awarded the contract.
Final Decision
The Bombay High Court dismissed the writ petition, upholding the cancellation of the earlier tender and the subsequent fresh tender process. The court held that the State's decision was a policy decision not amenable to judicial review unless arbitrary, and that the petitioner had no vested right to the contract.
Law Points
- Policy decision
- cancellation of tender
- re-tender
- judicial review
- Article 226
- vested right
- legitimate expectation
- public interest
- transparency
- non-arbitrariness
Case Details
2024 LawText (BOM) (12) 205
Writ Petition No.4823 of 2022
DEVENDRA KUMAR UPADHYAYA, CJ., AMIT BORKAR, J.
Dr. Virendra Tulzapurkar, Senior Advocate with Mr. Mandar Soman, Mr. Suraj Iyer, Mr. Devendar Ailawadi, Mr. Jenil Shah, Mr. Abhishek Karnik i/b. Ganesh & Co. for the petitioner; Dr. Milind Sathe, Senior Advocate with Ms. Jyoti Chavan, Additional Government Pleader, Mr. Atul Vanarse, AGP, Mr. Bhushan Deshmukh and Mr. Aditya Mhase for respondent Nos.1 and 2 - State; Mr. Ravindra Kadam, Senior Advocate with Mr. Vikram Nankani, Senior Advocate, Mr. Zal Andhyarujina, Senior Advocate with Mr. Rohan Kadam, Mr. Karan Bhide, Ms. Rati Patni, Ms. Kathleen Lobo and Mr. Vikrant Dere i/b. Wadia Ghandy & Co. for respondent No.3 – Adani Properties Pvt. Ltd.
SecLink Technologies Corporation
The State of Maharashtra & Ors.
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India challenging the cancellation of a tender and the subsequent fresh tender process for the redevelopment of Dharavi Notified Area.
Remedy Sought
The petitioner sought quashing of the decision of the Committee of Secretaries dated 27 August 2020, the Cabinet resolution dated 29 October 2020, the Government Resolution dated 5 November 2020 cancelling the tender, the letter dated 11 November 2020 informing cancellation, the Government Resolution dated 28 September 2022 approving fresh tender documents, the decisions of CoS and Cabinet dated 15 December 2022 and 22 December 2022 selecting respondent No.3, the Government Resolution dated 13 July 2023 appointing respondent No.3, and the Letter of Award dated 17 July 2023 issued to respondent No.3.
Filing Reason
The petitioner, being the highest bidder in the earlier tender, alleged that the cancellation of the tender and the fresh tender process were arbitrary, mala fide, and violative of Article 14 of the Constitution.
Previous Decisions
The earlier tender was cancelled by the CoS on 27 August 2020, affirmed by the Cabinet on 29 October 2020, and a fresh tender was floated. The petitioner had not challenged the cancellation earlier and participated in the fresh tender process.
Issues
Whether the decision to cancel the earlier tender and initiate a fresh tender process is arbitrary and violative of Article 14 of the Constitution?
Whether the petitioner has a vested right or legitimate expectation to be awarded the contract based on being the highest bidder in the earlier tender?
Submissions/Arguments
The petitioner argued that the cancellation was arbitrary and mala fide, as the petitioner was the highest qualified bidder and the cancellation was without any valid reason. The petitioner also argued that the fresh tender was tailored to favor respondent No.3.
The respondents argued that the cancellation was a policy decision based on changed circumstances, including issues with railway land and the need for a more comprehensive development model. They contended that the petitioner had no vested right and that the decision was in public interest.
Ratio Decidendi
The State has the right to cancel a tender and re-tender if it is in public interest, and such a policy decision is not subject to judicial review unless it is arbitrary, mala fide, or contrary to law. A bidder does not acquire a vested right to the award of a contract until the contract is actually awarded, and any legitimate expectation must yield to public interest.
Judgment Excerpts
The petitioner challenges the impugned decision of cancellation of earlier tender process initiated for development of the project and also initiation of process of re-tender which has culminated in issuance of the LoA in favour of respondent No.3 for development of the project.
Committee of Secretaries (CoS) agreed to the tender process as explained and noted that the SecLink led Consortium is the highest qualified bidder.
Procedural History
The earlier tender was floated on 28 November 2018. The petitioner was declared the highest qualified bidder on 30 January 2019. The CoS on 27 August 2020 decided to cancel the tender, affirmed by the Cabinet on 29 October 2020. A Government Resolution dated 5 November 2020 cancelled the tender and directed fresh tender. A fresh tender was floated, and respondent No.3 was selected as the highest bidder on 15 December 2022, approved by the Cabinet on 22 December 2022. A Government Resolution dated 13 July 2023 appointed respondent No.3, and a Letter of Award was issued on 17 July 2023. The petitioner filed the writ petition challenging these decisions.
Acts & Sections
- Constitution of India: Article 226, Article 14
