Highest bidder has no vested right to have tender awarded in his favour – Supreme Court
In a recent judgment, the Hon’ble Supreme Court has held that it is a settled law that the highest bidder has no vested right to have the tender allotted in his favour.
ABCAUS Case Law Citation:
4330 (2024) (11) abcaus.in SC
In the instant case, the Petitioner was a Development Authority who issued an advertisement inviting bids for leasing out land. Pursuant to Notice Inviting Tender (NIT) three bids were received amongst which the bid of respondent was the highest.
The Tender Committee while it was finalizing the bids noticed that in respect of the land in question, a property tax demand was outstanding and the same was not taken into account while fixing the base price and, therefore, the Tender Committee arrived at a conclusion not to accept any of the bids and to issue a fresh tender with increased reserve price. Accordingly, the bid of respondent was rejected and the earnest money was also refunded.
After a fresh NIT was issued, a writ petition was filed by the respondent before the Hon’ble High Court inter alia, challenging resolution passed by the Board rejecting the bid as well as being aggrieved by the issuance of fresh NIT.
The respondent did not participate in the subsequent NIT. Before the High Court he stated that his bid could have been cancelled as he was the highest bidder. It was further stated that he was ready to negotiate in the matter and the bid had been cancelled without assigning any reason.
The Single Judge held that the petitioner trust was not entitled to any relief as no contract was executed at any point of time nor any letter of allotment was issued in its favour. The Single Judge also held that the highest bidder does not acquire any vested right to have the auction concluded in his favour.
However, on further appeal by the respondent, the Division Bench of the High Court allowed the writ appeal directing the Petitioner to allot the plot to respondent in case he is ready to pay the new reserved price of the land in question.
The Hon’ble Supreme Court observed that while dealing with the similar issue of annulment of tender process, it had held that while exercising power of judicial review, the Court does not sit as an appellate Court over the decision of the government but merely reviews the manner in which the decision was made. In the instant case, the Division Bench should not have interfered in the matter and could not have gone to the extent of fixing the base price/modifying the offer.
The Hon’ble Supreme Court held that the High Court had virtually passed an order sitting in appeal over the decision of the government in absence of any mala fide exercise of power, the judgment passed by the Division Bench of the High Court deserved to be set aside and was, accordingly set aside.
The Hon’ble Supreme Court noted that in another case again dealing with the cancellation of a bid of the highest bidder while examining the question whether there being no concluded contract in the absence of acceptance of bid and issuance of allotment letter, the suit could be said to be maintainable for the declaratory relief and mandatory injunction sought by the plaintiff. It was held that it is a settled law that the highest bidder has no vested right to have the auction concluded in his favour. The Government or its authority could validly retain power to accept or reject the highest bid in the interest of public revenue. We are of the considered opinion that there was no right acquired and no vested right accrued in favour of the plaintiff merely because his bid amount was highest and had deposited earnest money.
The Hon’ble Supreme Court opined that in the absence of allotment letter and acceptance of highest bid, no relief could have been granted in favour of respondent as there was no concluded contract in the matter and the decision taken by the Tender Evaluation Committee to generate more revenues could not have been interfered with in the manner and method as had been done by the Division Bench of the High Court. The bidder had no right in the matter of bid except of fair treatment and cannot insist for further negotiation as had been done in the present case.
Further, the terms and conditions of NIT, empowered the Authority to accept or reject any or all bids. In the present case, the bid was rejected for valid and cogent reasons and, therefore, the order passed by the Division Bench of the High Court was set aside
The appeal was disposed off accordingly.
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