In a significant judgment delivered on April 25, 2025, the Supreme Court of India upheld the government’s right to cancel and reissue tenders, stating that judicial intervention in tender-related matters should be minimal. The court emphasized that judicial review should only occur in cases of mala fide actions or blatant arbitrariness. This ruling clarifies the scope of judicial oversight in matters involving public tenders and reinforces the autonomy of government agencies in managing public procurement processes.
Case Overview: The Dispute Over Tender Cancellation
The case in question, The Principal Chief Conservator of Forest & Ors. v. Suresh Mathew & Ors., revolved around a dispute concerning the cancellation of an e-tender for tree-felling works in the Konni Forest Division in Kerala. The tender, initially issued on May 25, 2020, was cancelled due to the impact of COVID-19 restrictions, which prevented certain contractors from participating in the bidding process. The Kerala Forest Department issued a fresh tender on October 31, 2020, to allow contractors who could not participate previously to compete in the bidding process.
Several contractors, who were aggrieved by the cancellation, approached the Kerala High Court, arguing that the cancellation was arbitrary and deprived them of a fair chance. They claimed that the decision to call for a fresh tender was unjustified and that the original tender should proceed. The Single Judge Bench and later the Division Bench of the Kerala High Court ruled in favor of the contractors, ordering the Forest Department to proceed with the original tender.
However, the Forest Department challenged the High Court’s decision, and the matter was escalated to the Supreme Court, which ultimately overruled the High Court’s interference with the tender process.
Supreme Court’s Observations on Tender Cancellation
The Supreme Court, in its judgment authored by Justice Prasanna B. Varale, reaffirmed the legal position that government authorities have the discretion to cancel tenders and reissue them, especially when it is in the public interest or to safeguard financial resources. The Court stressed that judicial interference in such matters must be restricted to exceptional cases, where the decision is made in bad faith or involves irrationality.
The bench, which also included Justice Bela M. Trivedi, placed reliance on the landmark case of Jagdish Mandal vs. State of Orissa & Ors. (2007), which established that judicial intervention is warranted only when the decision to cancel or modify a tender is made with mala fide intentions, is arbitrary, or is aimed at favoring a particular party.
Judicial Review: Limits on Governmental Autonomy
In its ruling, the Supreme Court made it clear that the Kerala High Court had erred in its judgment by interfering with the government’s decision to cancel the tender and call for a fresh one. The Court highlighted that the government, as the custodian of state resources, has the responsibility to protect public financial interests. This includes the right to cancel tenders if it believes that doing so will ultimately benefit the state or improve the fairness of the procurement process.
The Court also rejected the High Court’s observation that the fresh tender process should not have been initiated solely to secure the best possible price for the government. The Supreme Court pointed out that the objective of tendering processes is not limited to obtaining the best price but also to ensure fairness, transparency, and a level playing field for all participants. By offering a fresh opportunity to all interested contractors, the government was, in fact, furthering the cause of public interest and fair play.
The Importance of Fairness in Tendering Processes
The Supreme Court’s judgment also emphasized the importance of fairness in the tendering process. It recognized that contractors who were unable to participate due to the COVID-19 pandemic should not be disadvantaged because of circumstances beyond their control. By issuing a fresh tender, the Kerala Forest Department aimed to ensure that all eligible contractors had an equal opportunity to compete, which the Court deemed a valid and justifiable action.
The ruling underscores the notion that public procurement is not only about securing the lowest bid but also about maintaining integrity and ensuring that all interested parties have a fair chance to compete. This is especially critical in situations where external factors, such as a global pandemic, have hindered equal participation.
Reaffirming the Government’s Right to Manage Its Resources
The Court’s decision further reinforces the notion that the government must have the discretion to manage public resources effectively. Whether it is the cancellation of tenders or the initiation of a new process, the government’s actions should be governed by the principle of safeguarding public interests. This includes acting in a manner that promotes transparency, accountability, and fairness in all public procurement activities.
The ruling also highlights the limited role of the judiciary in such matters. While courts are empowered to review administrative decisions, their role is not to micromanage or second-guess decisions made by government agencies. Judicial review should only be exercised when the decision is manifestly arbitrary or biased, which was not the case in this situation.
Conclusion: A Landmark Ruling on Tendering Process and Judicial Oversight
The Supreme Court’s decision in The Principal Chief Conservator of Forest & Ors. v. Suresh Mathew & Ors. is a significant one in the realm of public procurement law. By setting aside the Kerala High Court’s judgment, the Supreme Court has made it clear that the government has the right to cancel tenders and initiate fresh processes if it is deemed necessary to protect public resources or ensure fairness in the bidding process. The judgment serves as a reminder that judicial intervention in such matters should be sparing and limited to cases of genuine arbitrariness or malfeasance.
This case reinforces the importance of judicial restraint and highlights the government’s responsibility to ensure that public procurement remains transparent, competitive, and in the best interests of the public. As a result, this ruling will undoubtedly influence future decisions involving public tenders, particularly when issues of fairness and public interest are at stake.
Case Citation:
The Principal Chief Conservator of Forest & Ors. v. Suresh Mathew & Ors., 2025 LiveLaw (SC) 482
