Tender Terms and Conditions: Not Absolute, Cancellation Allowed in Public Interest: Telangana High Court Cancelled Tender for Redevelopment of Modern Abattoir Facility

High Court of Telangana, presided over by Justice N.V. Shravan Kumar, issued a common order in the case of Mohammed Saleem vs. The State of Telangana (W.P. No. 18543 of 2024). The case addressed the legality of the cancellation of a tender for the redevelopment of the Modern Abattoir Facility (MAF) at Chengicherla on a Redevelopment, Operate, Maintain, and Transfer (ROMT) basis.

The petitioner, Mohammed Saleem, challenged the cancellation of the tender for the redevelopment of the MAF facility, which he claimed violated Article 14 of the Constitution and was arbitrary. However, the Court found that the tender conditions explicitly reserved the right of the state to cancel the tender without assigning any reason. This provision is in line with judicial precedents that grant the government flexibility in managing public contracts.

The Telangana Sheep and Goat Development Cooperative Federation Limited (TSSGDCFL) had floated a tender on September 1, 2023, for the redevelopment of the MAF at Chengicherla on a ROMT basis in the Public-Private Partnership (PPP) mode. The estimated project value was Rs. 25 crore. The petitioner, an existing Operations and Maintenance (O&M) Agency, claimed the Right of First Refusal (ROFR) and contended that the tender cancellation was unfair and violated prior tender norms.

Following the bid process, the petitioner’s bid was found to be technically qualified, and his financial bid, which offered an annual license fee of Rs. 2.60 crore, was the highest. However, the tender was later canceled by the TSSGDCFL, citing a lack of competition and the onerous nature of certain conditions in the tender that deterred other potential bidders.

Onerous Tender Conditions: One of the key contentions was that the requirement for bidders to have 12 years of O&M experience in modern abattoir facilities was too restrictive and may have discouraged competition. The Court noted that such conditions were within the state’s discretion to ensure capable bidders but also considered the state’s prerogative to revise these conditions to encourage broader participation.

No Enforceable Right Until Letter of Intent (LoI): The Court underscored that the petitioner had not been issued a Letter of Intent (LoI) and thus had no enforceable right over the tender. As the tender conditions reserved the right to cancel at any stage, the petitioner’s claims of unfair treatment were rejected.

Public Interest and Competition: The Telangana High Court upheld the state’s argument that the tender cancellation aimed to ensure greater competition and was in the best interest of the public exchequer. The Court reiterated that Clause 8.1 of the tender allowed the state to reject all bids and annul the process without incurring liability to the bidders.

The Court dismissed the writ petition, holding that the TSSGDCFL acted within its rights under the Request for Proposal (RFP) to cancel the tender. The petitioner’s technical qualification and bid submission did not confer any vested right, as no LoI was issued. The decision to cancel and reissue the tender, with potentially revised terms to promote fair competition, was deemed a legitimate exercise of the state’s discretion.

Date of Decision: October 3, 2024