Case Note & Summary
The appellant, M/s Ramalingam Construction Company Pvt. Ltd. (RCCL), was a member of a consortium with M/s MP24 Construction Company Pvt. Ltd. (MP24) as the lead member. The consortium participated in a tender issued by the Karnataka Road Development Corporation Ltd. (KRDCL) for a road project. After evaluation, the consortium was declared the lowest bidder (L-1). However, before the contract was awarded, the State Government issued an order dated 13.08.2025 cancelling the tender. RCCL challenged this cancellation by filing a writ petition (W.P. No. 24912 of 2025), which was dismissed by a learned Single Judge on 09.12.2025. The Single Judge's order incorporated the reasons from a common order disposing of connected petitions (W.P. No. 25668 of 2025). Aggrieved, RCCL filed the present writ appeal under Section 4 of the Karnataka High Court Act. The legal issues were whether the State had the right to cancel the tender after the bidder was declared L-1, and whether the cancellation was arbitrary or mala fide. The appellant argued that the cancellation was arbitrary and that a vested right had accrued upon being declared L-1. The respondents contended that the State has the prerogative to cancel a tender at any stage before contract award, and the decision was taken in public interest. The court analyzed the principles governing tender cancellations, noting that no vested right accrues to a bidder until the contract is executed. The court held that the State's decision to cancel the tender was not arbitrary or mala fide, and that the consortium agreement did not bind the procuring entity. The court dismissed the appeal, upholding the Single Judge's order and the cancellation of the tender.
Headnote
A) Tender Law - Cancellation of Tender - Government's Prerogative - The State retains the right to cancel a tender at any stage prior to the execution of a contract, provided the decision is not arbitrary or mala fide. No vested right accrues to a bidder merely upon being declared the lowest bidder. (Paras 10-15) B) Tender Law - Consortium Agreement - Binding Effect - A consortium agreement between bidders does not bind the procuring entity, which is entitled to evaluate bids based on the tender conditions. The procuring entity is not required to accept a bid merely because it is the lowest. (Paras 16-18) C) Tender Law - Judicial Review - Scope - The court's interference in tender matters is limited to cases of arbitrariness, mala fides, or violation of statutory provisions. The decision to cancel a tender must be tested on the anvil of Wednesbury reasonableness. (Paras 19-22)
Issue of Consideration
Whether the State Government has the right to cancel a tender after the bidder has been declared the lowest bidder but before the contract is awarded, and whether such cancellation is arbitrary or mala fide.
Final Decision
The writ appeal is dismissed. The impugned order dated 09.12.2025 in W.P. No. 24912 of 2025 is upheld, and the Government Order dated 13.08.2025 cancelling the tender is sustained.
Law Points
- Tender cancellation before contract award
- No vested right in bidder
- Government's prerogative to cancel tender
- Judicial review limited to arbitrariness or mala fides
- Consortium agreement not binding on procuring entity
