Case Note & Summary
The petitioner, Bhagwati Akshar Empire LLP, participated in an e-auction conducted by the City and Industrial Development Corporation of Maharashtra Ltd (CIDCO) for Plot No. 2A, Sector-54, 56 and 58 at Nerul, Navi Mumbai. The petitioner was declared the highest bidder on 3rd August 2022. However, despite several follow-ups, CIDCO did not issue the letter of acceptance. After more than 21 months, on 17th May 2024, CIDCO cancelled the tender, citing that the reserve price was not met and to avoid loss to the public exchequer. The petitioner challenged this cancellation as arbitrary and illegal. The court examined the facts and found that the petitioner's bid was the highest and exceeded the reserve price. The court noted that CIDCO's action was without any justification and that the delay in cancellation indicated a lack of bona fides. The court held that the cancellation was arbitrary and violative of Article 14. The court also held that the petitioner had a legitimate expectation that the tender would be awarded. The court quashed the cancellation letter and directed CIDCO to issue the letter of acceptance and proceed with the conveyance within four weeks.
Headnote
A) Constitutional Law - Article 14 - Arbitrariness - Tender Cancellation - The cancellation of a tender after the petitioner was declared the highest bidder and after a delay of 21 months, without any valid justification, was held to be arbitrary and violative of Article 14 of the Constitution of India. The court found that the respondent's action of cancelling the tender purportedly to avoid loss to the public exchequer was not supported by any material and was unreasonable. (Paras 1-28) B) Administrative Law - Legitimate Expectation - Highest Bidder - The petitioner had a legitimate expectation that the tender would be awarded in its favour after being declared the highest bidder. The court held that the respondent could not defeat this legitimate expectation by cancelling the tender without any valid reason. (Paras 15-20) C) Contract Law - Tender - Acceptance - Once a bid is accepted and the highest bidder is declared, the tendering authority cannot unilaterally cancel the tender without cogent reasons. The court directed the respondent to issue the letter of acceptance and proceed with the conveyance of the plot. (Paras 21-28)
Issue of Consideration
Whether the cancellation of a tender after the petitioner was declared the highest bidder and after a delay of 21 months is arbitrary and illegal, and whether the petitioner has a legitimate expectation that the tender would be awarded.
Final Decision
The court allowed the writ petition, quashed the cancellation letter dated 17th May 2024, and directed CIDCO to issue the letter of acceptance and proceed with the conveyance of the plot in favour of the petitioner within four weeks.
Law Points
- Arbitrariness
- Legitimate Expectation
- Public Auction
- Tender Cancellation
- Judicial Review
- Article 14
