Case Note & Summary
The petitioners, M/s. Aditya Enterprises and Mahaavir Superstructures Pvt. Ltd., filed writ petitions challenging the decision of the City and Industrial Development Corporation of Maharashtra Ltd. (CIDCO) to cancel the tender process in which they were declared the highest bidders for the lease of residential/commercial plots. CIDCO had floated a tender on 3 May 2022 for 23 plots. The petitioners submitted bids and were declared highest bidders for respective plots. However, without any communication, CIDCO refunded the Earnest Money Deposit (EMD) to the petitioners, effectively canceling the tender. The petitioners sought directions to CIDCO to accept their bids and issue allotment letters. The court examined whether CIDCO's action was arbitrary. It noted that CIDCO did not issue any show-cause notice or provide reasons for cancellation. The court held that the decision to cancel the tender without assigning reasons and without hearing the petitioners was arbitrary and violative of Article 14 of the Constitution. The court also observed that the petitioners had a legitimate expectation that their bids would be accepted. Consequently, the court allowed the petitions and directed CIDCO to issue allotment letters to the petitioners within four weeks.
Headnote
A) Constitutional Law - Article 14 - Arbitrariness - Cancellation of Tender - CIDCO cancelled tender process after petitioners were declared highest bidders without any communication or reasons - Held that the decision was arbitrary and violative of Article 14 as no reasons were recorded and no opportunity of hearing was given (Paras 10-12). B) Administrative Law - Legitimate Expectation - Highest Bidder - Petitioners had a legitimate expectation that their bids would be accepted after being declared highest - Held that CIDCO's action defeated this legitimate expectation without justification (Paras 13-14). C) Contract Law - Tender - Cancellation - CIDCO's decision to cancel tender was based on alleged irregularities but no evidence was produced - Held that cancellation without valid grounds is unsustainable (Paras 15-16).
Issue of Consideration
Whether CIDCO's decision to cancel the tender process after declaring the petitioners as highest bidders, without assigning any reasons and without affording them an opportunity of hearing, is arbitrary and violative of Article 14 of the Constitution of India.
Final Decision
The court allowed the writ petitions and directed CIDCO to issue allotment letters to the petitioners in respect of the plots for which they were declared highest bidders within four weeks.
Law Points
- Arbitrariness in cancellation of tender
- Legitimate expectation of highest bidder
- Duty to assign reasons
- Right to be heard before cancellation
- Article 14 of the Constitution of India
