Public Tender Cannot Be Cancelled Arbitrarily After State Approval: Plot for Hospital Must Be Allotted – Bombay High Court

“Mistake of CIDCO Cannot Prejudice a Lawful Bidder; Administrative Delay Is No Excuse for Arbitrary Action”, In a significant judgment Bombay High Court set aside the cancellation of a hospital plot tender and directed the authorities to proceed with allotment to the petitioner, a partnership firm. The Court, speaking through Justice Sandeep V. Marne and Chief Justice Alok Aradhe, ruled:

“For CIDCO’s own mistakes, the petitioner cannot be made to suffer... CIDCO acted arbitrarily in cancelling the auction process even after receipt of approval by the State Government.”

The Court found that the cancellation was based on false grounds of non-receipt of approval and that the second reason—potential for a higher price—was speculative and unfair, especially in light of the public nature of the hospital project.

The petitioner, a registered partnership firm, had bid successfully for Plot No.25, Sector 12, Dronagiri, Navi Mumbai, after CIDCO floated a tender on 2 April 2022 for leasing plots meant for hospital development. The plot was offered under the eligibility criteria expanded by Board Resolution No.12458 (31 July 2021), which included partnership firms among others. This resolution had been forwarded to the State Government for approval.

While CIDCO allotted plots to earlier-eligible entities (like companies and doctors), the bid of the petitioner was put on hold pending government approval. On 8 February 2024, the Chief Minister approved the resolution, but CIDCO claimed to have received this decision only on 16 October 2024 — by which time it had already cancelled the tender on 4 October 2024, citing “administrative reasons” and valuation changes.

On the Ground of Non-Approval

“There is no dispute to the position that the Hon’ble Chief Minister had approved the Board Resolution... on 8 February 2024. Thus, as on 3 September 2024... the proposal was already approved.”

The Court criticised CIDCO’s inaction:

“CIDCO’s head office is located at stone’s throw distance from Mantralaya... CIDCO had already committed the mistake of allowing five additional entities to bid even before the Board Resolution was approved... it was the duty of CIDCO to seek information.”

On the Ground of Price Appreciation

CIDCO argued that the plot value had increased, and in fresh tenders it expected higher returns. The Court rejected this, noting:

“The petitioner had already quoted Rs. 40,211 per sq.mtr, which is higher than the new reserve price of Rs. 35,039 per sq.mtr. Therefore, no loss would be caused to CIDCO.”

Moreover, the Court distinguished CIDCO’s cited precedent:

“The judgment in Hare Krishna Enterprises is clearly distinguishable... that case involved lower bids and evidence of much higher rates. Here, CIDCO’s speculative argument for higher bids cannot hold.”

Requirement of Reasoned Orders

The Court sharply criticised CIDCO for issuing a “cryptic and non-speaking order” on 4 October 2024, calling it a clear violation of administrative law:

“Beyond citing the pretext of ‘administrative reasons’, CIDCO had not communicated to the Petitioner the exact reason why the auction process was being cancelled.”

Citing Kranti Associates, Ravi Yashwant Bhoir, and S.N. Mukherjee, the Court reiterated the principle that reasons must be recorded in administrative decisions, especially when cancelling public tenders.

Public Interest Element: Plot Reserved for Hospital Use

A particularly significant point made by the Court was the public purpose of the land:

“This case does not involve allotment of a plot to a developer for commercial exploitation... the scheme was floated for providing the amenity of a hospital.”

The Court held that CIDCO’s delay had already harmed public interest:

“CIDCO’s mistakes in securing higher price for the plot has resulted in delay in provision of public amenities to nearby residents.”

The Court issued the following orders:

“CIDCO’s decision vide communication dated 4 October 2024 is set aside.”

“CIDCO is directed to issue allotment letter in respect of Plot No.25 in favour of the Petitioner in accordance with its usual procedure.”

Accordingly, the writ petition was allowed, and Rule made absolute.

This ruling stands as a strong reaffirmation of judicial scrutiny over administrative arbitrariness, particularly in matters involving public tenders, healthcare infrastructure, and land allotment. The judgment highlights the duty of public bodies like CIDCO to act responsibly and fairly, especially when public amenities like hospitals are at stake.

“Mistakes of a public body cannot become a weapon against legitimate expectations of private bidders, especially when public interest demands urgency and fairness.”

Date of Decision: 22 August 2025