Case Note & Summary
The petitioner, M/s. Bannari Constructions, a distributor of perfumeries including Sandranol, challenged the cancellation of a tender floated by Karnataka Soaps and Detergents Limited (the Company) for procurement of Sandranol perfumery item. The petitioner had been a successful bidder on several occasions. The Company issued a notice inviting tender, and the petitioner submitted its bid. However, by an order dated 07-03-2024, the Company cancelled the tender without any prior notice or opportunity of hearing to the petitioner. The petitioner alleged that the cancellation was arbitrary and based on unsubstantiated allegations of price manipulation. The Company contended that the cancellation was due to the petitioner's failure to meet the tender conditions and that the tender was cancelled in public interest. The court examined the facts and found that the cancellation order was issued without any show cause notice and without affording an opportunity to the petitioner to explain its position. The court held that the principles of natural justice require that before any adverse action is taken, the affected party must be given a fair hearing. The court also noted that the petitioner had a legitimate expectation that the tender would not be cancelled arbitrarily. The court quashed the impugned order of cancellation and directed the respondent to proceed with the tender process in accordance with law, after providing an opportunity of hearing to the petitioner.
Headnote
A) Administrative Law - Natural Justice - Audi Alteram Partem - Cancellation of Tender - The respondent cancelled the tender awarded to the petitioner without any show cause notice or opportunity of hearing, based on allegations of price manipulation. The court held that such cancellation without affording an opportunity to the petitioner is arbitrary and violative of principles of natural justice. (Paras 10-15) B) Contract Law - Tender - Cancellation - Legitimate Expectation - The petitioner, being the successful bidder, had a legitimate expectation that the tender would not be cancelled arbitrarily. The court held that the cancellation order was unsustainable as it was based on unsubstantiated allegations and without following due process. (Paras 16-20) C) Constitutional Law - Article 226 - Judicial Review - Administrative Action - The court held that the impugned order of cancellation was arbitrary and liable to be quashed, as the respondent failed to provide any valid reason for cancellation and acted in violation of natural justice. (Paras 21-25)
Issue of Consideration
Whether the cancellation of a tender by the respondent without issuing a show cause notice to the petitioner and without providing an opportunity of hearing is arbitrary and violative of principles of natural justice.
Final Decision
The writ petition is allowed. The impugned order of cancellation of tender dated 07-03-2024 is quashed. The respondent is directed to proceed with the tender process in accordance with law, after providing an opportunity of hearing to the petitioner.
Law Points
- Natural justice
- audi alteram partem
- judicial review of administrative action
- tender cancellation
- proportionality
- legitimate expectation
