Case Note & Summary
The case involves multiple writ petitions filed by various contractors challenging the cancellation of a tender issued by the Tamil Nadu Water Supply and Drainage Board (TWAD) for the execution of water supply projects. The petitioners, including P.S. Ramasamy, M/s S.R. Constructions, and S.K. Selvakumar, were successful bidders in the tender process. The TWAD Board cancelled the tender citing alleged irregularities and non-compliance with tender conditions. The petitioners contended that the cancellation was arbitrary, without any show cause notice or opportunity of hearing, and that they had complied with all conditions. The court examined the tender documents and found that the conditions relied upon by the Board were not part of the original tender or were not communicated to the bidders. The court held that the cancellation violated principles of natural justice as the petitioners were not heard before the adverse decision. The court also held that tender conditions must be strictly construed and that the Board's action was arbitrary and violative of Article 14. The court allowed the writ petitions, set aside the cancellation, and directed the Board to proceed with the tender process in accordance with law.
Headnote
A) Administrative Law - Principles of Natural Justice - Audi Alteram Partem - Cancellation of Tender Without Notice - The court held that cancellation of a tender without prior notice and opportunity of hearing to the successful bidders is arbitrary and violative of natural justice, as the bidders had a legitimate expectation that the tender would be processed in accordance with the terms. (Paras 15-20) B) Contract Law - Tender Conditions - Strict Construction - Interpretation of Clauses - The court held that tender conditions must be strictly construed and that the authority cannot rely on a clause that was not part of the original tender or was not communicated to the bidders. (Paras 21-25) C) Administrative Law - Legitimate Expectation - Tender Process - The court held that successful bidders have a legitimate expectation that the tender will be finalized unless there is a valid reason, and that cancellation without hearing defeats such expectation. (Paras 26-30) D) Constitutional Law - Article 14 - Arbitrariness - The court held that cancellation of a tender without any valid reason or without following the procedure amounts to arbitrary action violative of Article 14 of the Constitution of India. (Paras 31-35)
Issue of Consideration
Whether the cancellation of a tender by the Tamil Nadu Water Supply and Drainage Board (TWAD) without issuing a show cause notice or providing an opportunity of hearing to the successful bidders is violative of principles of natural justice and whether the tender conditions were correctly interpreted.
Final Decision
The court allowed the writ petitions, set aside the cancellation order, and directed the TWAD Board to proceed with the tender process in accordance with law, after giving due opportunity to the petitioners.
Law Points
- Principles of natural justice
- audi alteram partem
- strict construction of tender conditions
- cancellation of tender without notice
- legitimate expectation
- proportionality in administrative action
