LI Network
Published on: November 22, 2023 at 17:15 IST
The Supreme Court affirmed the state’s prerogative to annul a tender process, specifically focusing on Rule 9 of the Mineral (Auction) Rules, 2015.
The Court, comprising Justices Sanjiv Khanna and SVN Bhatti, addressed an appeal by the State of Jharkhand against a Jharkhand High Court decision that directed the continuation of a second round of auction.
The dispute originated from a tender notice issued on October 25, 2019, inviting bids for a mining lease for bauxite mineral. The Technical Evaluation Committee recommended annulling the auction due to non-compliance by Sociedade De Fomento Industrial Private Limited, the respondent.
In response, the appellants issued a notification for a second auction attempt on January 28, 2020, but only received one expression of interest from the respondent. The state decided to annul both tenders, leading to a legal battle.
The Supreme Court, delving into Rule 9(10), highlighted that when the total number of technically qualified bidders is less than three, the first auction attempt shall be annulled. Rule 9(9) stipulates that the auction process proceeds to the second round only with three or more technically qualified bidders.
The Court emphasized the state’s awareness of the commercial value of natural resources and stressed the need for statutory rules governing the bidding process.
It cautioned against the judiciary substituting executive discretion and asserted that the annulment of a tender arises when the required number of technically qualified bidders is less than three.
Referring to Sub-Rule (9) of Rule 9, the Court clarified that for the auction to proceed to the next stage, there must be a minimum of three qualified bidders. If less than three qualified bidders are present, Sub-Rule (10) mandates the annulment of the first attempt.
The Court concluded that the authorities could either annul the first round or proceed with a de novo auction. In the absence of a responsive bid in the first attempt, the court noted challenges in objectively evaluating the tender, particularly with only one response in the second attempt.
Citing precedents, the Court emphasized the limited scope of judicial review in tender matters, allowing interference only in cases of malafide intent, arbitrariness, or impact on public interest.
In its ruling, the Supreme Court allowed the appeal, setting aside the division bench’s judgment and affirming the state’s right to annul the tender process.
Case Title: State of Jharkhand v. SOCIEDADE DE FOMENTO INDUSTRIAL PVT. LTD
