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The State of Jharkhand vs Sociedade De Fomento Industrial Pvt. Ltd.

Civil Appeal · 2023 INSC 1010Decided 20 Nov 2023
Civil Appeal No. 7495 of 2023
Sanjiv Khanna · S.V.N. Bhatti

Background

The State of Jharkhand invited tenders in October 2019 to auction bauxite mining blocks, but the respondent company failed to upload its technical bid on the required online portal (though it submitted a physical copy), leading a tender evaluation committee to treat the first attempt as having received no valid bid and recommend annulment. A second tender notice was issued in January 2020 with the same terms, this time the respondent was the sole bidder and was found technically qualified, but the State ultimately decided to annul this attempt too and call for a fresh auction, reasoning that proceeding with a single bidder would cause revenue loss to the public exchequer. The respondent's writ petition challenging this was dismissed by a Single Judge but allowed by a Division Bench of the Jharkhand High Court, which held the State was statutorily bound to consider the respondent's bid; the State then appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that since no technically qualified bidder existed at all in the first auction attempt (the respondent's bid was invalid for want of proper electronic submission), that attempt could not be treated as a valid "first attempt" for the purposes of the statutory second-attempt/reserve-price mechanism under Rule 9 of the Mineral (Auction) Rules, 2015. Because there was no initial price offer from any technically qualified bidder to serve as a reserve price, the State could not be compelled to process the respondent's lone bid under the rule the Division Bench relied on. Applying the well-settled limited scope of judicial review in tender/contract matters (a court should ask only whether the decision was mala fide, arbitrary/irrational, or against public interest), the Court found the State's decision to annul and re-tender was neither mala fide nor arbitrary but aimed at protecting public revenue, so it set aside the High Court's Division Bench judgment and allowed the State's appeal, with no order as to costs.

Lesson Learnt

Courts exercise very limited judicial review over government tender and auction decisions. They will not second-guess a bona fide, public-interest-driven administrative decision merely because a rejected bidder feels statutorily entitled to a particular outcome, especially where the underlying technical/procedural requirements for a valid bid were never actually met.

Official source (sci.gov.in)View Judgment (PDF)

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