No Right Accrues in Favour of Bidders of a Tender Offer Unless Approved by the Higher Authorities: Orissa HC [READ JUDGMENT]

The Orissa High Court recently dismissed the writ petitions filed by participants of a tender offer challenged the action of the Superintending Engineer and Chief Engineer in cancelling the tender.

A Bench consisting of Chief Justice S. Muralidhar and Justice B.P. Routray held that when the tender is yet to be approved by higher authorities, no right accrues in favor of the participants, and they cannot challenge the action of the authorities in cancelling the tender.

Background of the case:

In this case, a joint writ petition was filed by the three petitioners challenging the cancellation of Tender Call invited by the Executive Engineer, Bhubaneswar to execute the Hydro Mechanical Gate works under different Civil Divisions. The petitioners in this case were successful bidders, however, there was a delay in finalizing the tender process. 

The petitioners thereby filed individual petitions before the Court, and in the meantime, the Superintending Engineer and the Chief Engineer passed an order intimating the rejection of tender as the tender documents were found defective and the discrepancies regarding "Structure and Organization", "Plant and Equipment" and "Performance record" were noticed during re-scrutinization.

The petitioner further filed petitions challenging the instructions of the Superintending Engineer and Chief Engineer as well as for a direction to finalize the tender process in favour of the Petitioners. While the matter was pending, another Order was issued by the Executive Engineer cancelling the tender.

Contention of the parties:

The contention of the petitioners was that the order of cancellation passed by the Executive Engineer is erroneous as it is hit by the principles of lis pendens. Further, when the Petitioners have been selected as successful bidders, the unilateral action of the Opposite Parties in cancelling the tender without giving any opportunity of hearing to the Petitioners is illegal and arbitrary. 

On the contrary, Mr. Palit, learned Additional Government Advocate for the State-Opposite Parties contended that mere acceptance of the bid of the Petitioners by the Executive Engineer without approval of the higher authorities, including Superintending Engineer and Chief Engineer does not create any right in their favour for execution of the work. He also said that since no agreement has been executed with the Petitioners, no right of the Petitioners can be said to have been violated by such cancellation.

Court’s judgment:

The Court after hearing both sides held that though the bid was accepted by the Executive Engineer, it is further subject to approval by higher authorities. Unless such approval is given by them, it cannot be said that any right accrues in favour of the petitioners. Therefore, no right of the petitioners has been affected in the instant case.

In the present case, the facts are clear that the tender process was not finalized and no agreement of execution of work has been issued. The bid documents offered by the Petitioners has been accepted at the level of Executive Engineer which is subject to further approval by the Petitioners has been accepted at the level of Executive Engineer which is subject to further approval by the Superintending Engineer and Chief Engineer and while undergoing such stage of approval at the higher level due to revelation of defects and discrepancies, the tender was cancelled. 

Therefore, there was no creation of right accrued in favour of the Petitioners to execute the work for which the Tender Call Notice was issued. Since no such right can be construed which can be said to have accrued in favour of the Petitioners, the cancellation of the tender process in entirety in no way affects the Petitioners and thus, nothing can be said to have changed by such cancellation.

Since by mere acceptance of the bid documents on the part of the Executive Engineer would not create any right in favour of the Petitioners, the cancellation of the tender also cannot be said to have attracted the doctrine of lis pendens.

Therefore, the submissions made by the petitioners were found to be devoid of any merit and hence the Court decided not to interfere with the action of the Opposite Parties in cancelling the tender.

“Since no other intention or mala fide purpose is found from the action of the Opposite Parties in cancelling the tender, we do not find any merit in the submission of the Petitioners to interfere in the action of the Opposite Parties in cancelling the tender,” the court said while dismissing the petition.

[READ JUDGMENT]