Govt being protector of financial resources, has every right to call for fresh tender: Supreme Court

New Delhi: The Supreme Court has said that the government is the protector of the financial resources of the State and it has every right to cancel and call for fresh tenders if it is in the nature of protecting the financial interests.

Setting aside the Kerala High Court's 2021 directive which quashed an order to issue a retender for felling of trees, a bench of Justices Bela M Trivedi and Prasanna B Varale said the decision taken by the authorities cannot be termed as a mala fide decision or one to favour someone.

"The decision of the authority is giving a fresh opportunity to all interested bidders to compete with each other in the process of the fresh selection. In our opinion, 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," Justice Varale wrote in a 17-page judgment on April 25, 2025 on behalf of the bench.

Allowing appeals filed by the Principal Chief Conservator of Forest and others, the court said, the tendering authority found that some contractors could not participate due to Covid restrictions and thus, proceeded to retender the work on October 31, 2020. The respondents, who approached the High Court, being still allowed to participate, were not prejudiced by the decision, it said.

The court held setting aside of this order of the Divisional Forest Officer by the High Court's single judge was erroneous since it did not record any finding that the order of the authority was mala fide.

"We are of the opinion that the order of DFO would give an equal opportunity to all the bidders and thus, there would be a fair play between them, ultimately benefitting the government," the court held.

The court opined that the Kerala High Court's division bench observations, while upholding the single judge's order, were contrary to the settled principles of law laid down by the Supreme Court.

The division bench had said that merely because there was a likelihood of the rates being lowered if successive tenders are invited, the same cannot be a justifiable ground at all for cancellation of the contract, since it would lead to a situation of an unending tender inviting procedure.

Referring to 'Jagdish Mandal Vs State of Orissa and Others' (2007), the bench pointed out that the apex court, then dealing with the scope of judicial review in the cases of award of contracts, had held that evaluating tenders and awarding contracts are essentially commercial functions.

"Principles of equity and natural justice stay at a distance. If the decision relating to the award of contract is bona fide and is in public interest, courts will not, in the exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out," the bench quoted the previous decision.

In the case, the Divisional Forest Officer, Konni, issued an order on October 12, 2020, cancelling an earlier e-tender notification of May 25, 2020, for final tree felling works of 1954 Nellidappara in South Kumaramperoor Forest Station under Konni Range in Konni Forest Division. The officer floated a tender afresh on October 31, 2020, leading to the instant litigation.

Going through the factual matrix, the bench also noted that the order of the DFO revealed that the e-tender notice contained provisions by which the bidding authority reserved the right to modify, or cancel any or all bids without assigning any reason.

The notice inviting tender for works also put it in explicit items that the authority reserved the right to reject any tender or all the tenders without assigning any reason, the bench pointed out.