Kiran Raj

The Supreme Court of India, Division Bench comprising Justice Bela M. Trivedi and Justice Prasanna B. Varale, set aside a Kerala High Court judgment that had annulled the cancellation of an e-tender for tree felling works in Konni Forest Division. The Supreme Court observed that the tendering authority possesses the discretion to cancel a tender process to safeguard the financial interests of the State, provided there is no mala fide intent. The Court concluded that the Divisional Forest Officer's (DFO) decision to cancel the e-tender citing Covid-19 restrictions and complaints of exclusion was neither arbitrary nor unreasonable.

The matter arose when the Divisional Forest Officer, Konni, issued an order dated 12.10.2020 cancelling the e-tender notification dated 25.05.2020 for final tree felling works in South Kumaramperoor Forest Station. The DFO decided to issue a fresh tender citing grievances from contractors unable to participate due to Covid-19 transportation restrictions.

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Participants of the earlier tender challenged this action, claiming it was arbitrary and illegal. They also contested the Principal Conservator of Forests' circular dated 29.02.2020, which stipulated that A-class contractors who had not participated in tenders during the previous financial year were ineligible for renewal of registration.

Initially, the Single Judge of the Kerala High Court set aside the refusal of registration renewal based on the circular, finding that introducing new conditions after submission deadlines was arbitrary under Article 14 of the Constitution. The Court observed: "Registration or renewal of registration as Contractors is not a fundamental or statutory right" and that the government could manage its contractor panel for administrative convenience.

Subsequently, the petitioners challenged the cancellation of the e-tender dated 12.10.2020. The Single Judge allowed the petitions, setting aside the re-tender notification dated 31.10.2020, stating: "When already the tender proceedings were in place, the DFO ought not have cancelled the same without concrete reasons." The Court ordered that the original tender process be continued.

The Division Bench of the Kerala High Court affirmed the Single Judge's findings, holding that the DFO's cancellation order lacked factual and legal basis.

Aggrieved, the Principal Chief Conservator of Forests and others approached the Supreme Court.

The appellants argued that the DFO was empowered under the tender terms to cancel the tender without assigning reasons. They stressed that no final award had been made, and the technical bid was still under evaluation. Citing the Supreme Court's precedents, they submitted that courts must refrain from interfering in contractual matters absent clear mala fides.

The respondents orally contended that the High Court's findings were well-reasoned and needed no interference.

The Supreme Court examined the legal principles governing judicial review in tender matters.

The Court recorded that the DFO’s order expressly stated: "Some other contractors had complained that they could not participate in the e-tender due to Covid-19 transportation restrictions." Thus, the cancellation aimed to ensure fairness and wider participation.

Relying on Jagdish Mandal vs. State of Orissa and Others, the Court reiterated: "Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made 'lawfully' and not to check whether choice or decision is 'sound'."

Further, the Court stated: "If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out."

On the issue of cancellation powers, the Court noted that Clause 3 of the tender notice explicitly permitted the authority to cancel bids without assigning reasons. Similarly, Clause 27 of the e-Government procurement guidelines confirmed this right.

Addressing the High Court's reasoning, the Supreme Court observed: "The observations by the High Court are contrary to the settled principles of law laid down by the Supreme Court that the Government is the protector of financial resources of the state."

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Regarding public interest, the Court recorded: "The decision taken by the authority is not affecting the public interest, on the contrary it furthers the cause of the public interest and fair play."

The Court concluded that there was no proof of mala fide intentions or favoritism in cancelling the tender and offering a fresh opportunity to all.

The Supreme Court allowed the appeals, setting aside the judgment and order dated 19.01.2021 passed by the High Court of Kerala at Ernakulam in Writ Appeals Nos. 1568 of 2020, 1577 of 2020, and 1589 of 2020.

Advocates Representing the Parties:

For the Petitioners: Mr. Nishe Rajen Shonker, Advocate-on-Record; Mr. Alim Anvar, Advocate

For the Respondents: Mr. Namit Saxena, Advocate-on-Record; Mr. Subhash Chandran K R, Advocate; Mr. Biju P Raman, Advocate-on-Record

Case Title: The Principal Chief Conservator of Forest & Ors. versus Suresh Mathew & Ors.

Neutral Citation: 2025 INSC 569

Case Number: Civil Appeal No(s). of 2025 (@ Special Leave Petition (C) No(s). 12353-12355 of 2021)

Bench: Justice Bela M. Trivedi and Justice Prasanna B. Varale

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