Being Highest Bidder Doesn’t Create a Right to Contract: Delhi HC Dismisses Writ by Sahakar Global Challenging Cancellation of ₹864 Cr Toll Collection Tender

“At best, the petitioner had a hope — not a right — that the award would follow. No Letter of Award was issued. No contract was concluded. There is no enforceable legal right” – In a decisive ruling that reasserts the supremacy of public interest in tender matters, the Delhi High Court on April 8, 2025, dismissed the writ petition filed by Sahakar Global Limited JV, challenging the Municipal Corporation of Delhi’s decision to cancel a toll tax tender worth ₹864 crore, even after Sahakar was declared the highest bidder (H-1).

Delivering a sharp and authoritative verdict, the division bench led by Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela declared that “merely being the H-1 bidder does not create a right to demand the contract.” The Court held that MCD acted well within its discretion, especially since the cancellation was in pursuit of a potentially higher revenue for the public exchequer.

“We are of the opinion that no justiciable right has accrued to the petitioner merely on the basis of being declared H-1 in the tender. The MCD was well within its rights to revisit the tender in the larger public interest,” the Court ruled.

“Government Is Not Bound to Accept the Highest Bidder — Larger Revenue Interest Justifies Retendering”: HC Declares Procurement Decisions Are Policy Matters
The High Court’s judgment relied on multiple Supreme Court precedents to reiterate a powerful legal principle — public bodies are not legally bound to award tenders to the highest or lowest bidder unless a contract is concluded. Citing the doctrine laid down in Subodh Kumar Singh Rathour v. CEO and other judgments, the Court clarified that “courts will not interfere in administrative decisions unless they are arbitrary or mala fide.”

Refusing to accept Sahakar Global’s claim of legitimate expectation, the Court made it clear that “an expectation without a concluded contract is not enforceable.” The Court noted that no Letter of Award had been issued, no agreement signed, and hence there was no frustration of any contractual right.

“There is no vested or indefeasible right in the H-1 bidder to claim a Letter of Award. The government is not a helpless spectator once a price is quoted. It has the right — and duty — to secure better terms if feasible,” the Court stated.

“Speculation Is Not Arbitrary When Backed by Fiscal Prudence”: Court Accepts MCD’s Plan to Re-Tender for ₹1000 Cr Goal
The MCD had informed the Court that it expected a better offer exceeding ₹1000 crore through a fresh tendering process and that the earlier offer by Sahakar of ₹864 crore might no longer reflect true market value. The Court accepted this as a plausible and rational ground for cancellation.
“The action of the MCD was neither whimsical nor malicious. It was based on a considered view that a better deal for public revenue could be achieved,” the bench noted.
It further held that administrative delay or internal complications such as the absence of a Standing Committee do not convert a discretionary process into a binding commitment.
“Writ Petition Cannot Enforce an Unborn Contract”: HC Distinguishes Between Policy Review and Contractual Breach
Rejecting the petitioner’s argument that the cancellation amounted to a breach of legitimate expectation, the Court emphasized that the writ jurisdiction under Article 226 is not meant to enforce speculative claims in commercial tenders, especially when no contract had been concluded.
“The existence of a contract is the foundation for any claim of promissory estoppel or expectation. In the present case, neither is satisfied,” the Court ruled.
Referring to the legal principles laid down in Tata Cellular and Raunaq International, the Court reinforced that judicial review of tender decisions must remain deferential, unless a manifest illegality or abuse is shown.
“No Mala Fide, No Arbitrariness — Re-Tendering Is Legal and Sensible”: HC Greenlights MCD’s Decision to Withdraw and Relaunch Tender
Sahakar had also challenged MCD’s six-month interim arrangement with the previous operator as a mala fide move to favour a rival party. The Court rejected this assertion, stating that the stop-gap arrangement was a practical necessity and that no exclusive right had accrued to the petitioner.
“The MCD acted to avoid disruption in public services. The continuation of toll operations was essential. Interim contracts cannot be equated with manipulation,” the Court observed.
“No Contract, No Breach — Just Better Judgment”: Delhi High Court’s Verdict Backs Fiscal Responsibility Over Legal Fiction
Summing up its verdict, the Delhi High Court reminded all commercial participants in public tenders that bidding is not the same as bagging.
“There can be no judicial compulsion to force the State into a contract it has chosen not to execute,” the Court declared.
The ruling not only reinforces government discretion in procurement but also signals that policy choices driven by public interest and revenue optimization will not be second-guessed by constitutional courts, unless mala fides are glaringly evident.

Date of Decision: April 8, 2025