Case Note & Summary
The Government of India envisaged the development of the Delhi-Mumbai Industrial Corridor (DMICDC), a large infrastructure project covering approximately 1483 km and passing through six states, aiming to create 24 smart industrial cities. One of the first planned cities is the Aurangabad Industrial City (AURIC). The petitioner, Sterlite Technologies Limited, participated in a tender process for allotment of land in AURIC. The petitioner submitted its bid, but before the tender was accepted, the respondent No.1 (Aurangabad Industrial Township Limited) decided to cancel the entire tender process. The petitioner challenged this cancellation by filing a writ petition under Article 226 of the Constitution of India. The petitioner argued that it had a legitimate expectation that its bid would be accepted and that the cancellation was arbitrary. The respondents contended that the tender was merely an invitation to treat, that no contract had been concluded, and that the petitioner's bid could be withdrawn at any time before acceptance. The court analyzed the legal position under the Indian Contract Act, 1872, particularly Section 5, which allows revocation of an offer at any time before acceptance. The court held that a tender is an offer and can be withdrawn before acceptance; once withdrawn, no contract exists. The court also held that there is no legitimate expectation in a tender process until acceptance, and that the tendering authority's decision to cancel the tender was not arbitrary. The court dismissed the writ petition, upholding the right of the tenderer to withdraw and the authority's discretion to cancel the process.
Headnote
A) Tender Law - Withdrawal of Tender - Section 5 Indian Contract Act, 1872 - A tender is merely an offer which can be withdrawn at any time before acceptance, and once withdrawn, no contract comes into existence. The tendering authority cannot be compelled to accept a withdrawn bid. (Paras 10-15) B) Tender Law - Legitimate Expectation - No vested right arises from a tender process until acceptance. A bidder cannot claim legitimate expectation that its bid will be accepted or that the process will not be cancelled, especially when the bid has been withdrawn. (Paras 16-20) C) Tender Law - Judicial Review - Courts interfere with tender processes only if there is arbitrariness, mala fides, or violation of statutory provisions. Mere cancellation of tender or withdrawal of bid does not warrant interference. (Paras 21-25)
Issue of Consideration
Whether a tenderer can withdraw its bid before acceptance by the tendering authority, and whether the tendering authority's decision to cancel the tender process is subject to judicial review on grounds of legitimate expectation or arbitrariness.
Final Decision
The writ petition was dismissed. The court held that the tenderer had the right to withdraw its bid before acceptance under Section 5 of the Indian Contract Act, 1872, and that the tendering authority's decision to cancel the tender was not arbitrary. No order as to costs.
Law Points
- Tender law
- Withdrawal of tender before acceptance
- Section 5 Indian Contract Act 1872
- Invitation to treat
- No concluded contract
- Legitimate expectation
- Judicial review of tender process
- Public interest
