Case Note & Summary
The Bombay High Court, in a writ petition under Article 226 of the Constitution of India, examined the challenge by a petitioner-firm against the decision of the City and Industrial Development Corporation of Maharashtra Limited (CIDCO) to cancel the petitioner's bid for Plot No. 8, Sector 23, CBD Belapur. CIDCO had issued an advertisement for e-tender and e-auction for lease of plots, and the petitioner submitted the highest bid of Rs. 89,813 per square meter, which was 38.57% above the base price. Despite being the highest bidder, CIDCO cancelled the bid citing 'administrative reasons' and refunded the earnest money deposit. The petitioner argued that the decision was arbitrary and lacked transparency, especially since the rate quoted was significantly higher than the base price. CIDCO contended that the bid was abysmally low compared to nearby plots and that commercial considerations justified rejection. However, the court noted discrepancies in CIDCO's affidavits, including a chart that incorrectly stated the bid amount and land use, and CIDCO's admission of inadvertent errors. The court also observed that CIDCO did not refer the petitioner's bid to an expert agency, unlike other plots, and took inconsistent stands. The court held that while a highest bidder has no absolute right to acceptance, the rejection must be based on relevant considerations and not be arbitrary. Finding that CIDCO's decision was uninformed and based on incorrect data, the court quashed the cancellation and directed CIDCO to reconsider the petitioner's bid in accordance with law within four weeks.
Headnote
A) Constitutional Law - Article 226 - Judicial Review of State Action - Arbitrariness - State instrumentality's decision to cancel highest bid in tender must be based on relevant considerations and not be arbitrary or uninformed - Held that CIDCO's decision was arbitrary as it relied on incorrect data and took inconsistent stands (Paras 13-18). B) Contract Law - Tender - Acceptance of Bid - Highest Bidder - No absolute right - A highest bidder has no vested right to have its bid accepted; the tendering authority may reject the highest bid for valid commercial reasons based on relevant considerations - Held that rejection must be for valid reasons and not arbitrary (Paras 14-15). C) Administrative Law - Reasoned Decision - Non-Application of Mind - Inconsistent Stands - Public authority taking inconsistent stands in affidavits and relying on erroneous data demonstrates non-application of mind and arbitrariness - Held that such decision cannot be sustained (Paras 8-11, 17-18).
Issue of Consideration
Whether the decision of CIDCO to cancel the bid of the petitioner-firm (the highest bidder) for Plot No. 8, Sector 23, CBD Belapur, communicated via letter dated 25th November 2022, is based on relevant considerations and is not arbitrary.
Final Decision
The Bombay High Court quashed the impugned decision of CIDCO dated 25th November 2022 cancelling the petitioner's bid and directed CIDCO to reconsider the petitioner's bid in accordance with law within a period of four weeks from the date of the order.
Law Points
- State instrumentality must act non-arbitrarily and transparently
- Highest bidder has no absolute right to acceptance
- Commercial considerations permit rejection of highest bid for valid reasons
- Decision must be based on relevant considerations and not be uninformed
- Inconsistent stands by public authority indicate arbitrariness
