No Binding Contract in Tender Participation, Process Cancellable Before Acceptance Letter Is Issued: J&K High Court
Upholding the cancellation of a controversial sheep/goat procurement tender by the Sheep Husbandry Department, the Jammu and Kashmir and Ladakh High Court has ruled that merely by participating in the tender, no right is created in favour of the bidder and the tenderer cannot be precluded from its option to cancel the tendering process on any grounds.A bench of Justice Sindhu Sharma has...
Upholding the cancellation of a controversial sheep/goat procurement tender by the Sheep Husbandry Department, the Jammu and Kashmir and Ladakh High Court has ruled that merely by participating in the tender, no right is created in favour of the bidder and the tenderer cannot be precluded from its option to cancel the tendering process on any grounds.
A bench of Justice Sindhu Sharma has further clarified that the tendering process, thus, can be cancelled at any stage before finalisation and issuance of a letter of acceptance as there was no concluded contract between the parties.
The case involved petitioners Ghulam Qadir Bhat and another challenging the cancellation of e-NITs (electronic-Notice Inviting Tenders) by the Chairman of the State Level Purchase Committee, Sheep Husbandry Department, Jammu and Kashmir. The e-NITs were issued for the supply of Livestock (Sheep/Goat) from states with similar agro-climatic conditions for the Integrated Sheep Development Scheme.
The petitioners contended that they had completed all necessary formalities, participated in the tendering process, and were declared as L-1 (lowest bidders) in both e-NITs. However, despite the lapse of time, the respondents did not finalise the tendering process, prompting the petitioners to approach the High Court through a writ petition.
Dismantling the petitioners' arguments the court emphasized the crucial point that despite being L-1, the petitioners lacked a binding contract with the department. The tender process, merely an invitation to offer, remained unfinalized and subject to the department's discretion.
“..tender is only an invitation to offer and the other party makes an offer pursuant to the invitation to offer, as such, it is not obligatory to the authority issuing tender to accept the offer and no right is created on the basis of merely being L-1. Thus, the respondents were well within their right to cancel the tender before the acceptance was made. A right would only be arisen when a contract comes into existence”, the court explained.
The court acknowledged the department's genuine concerns about protecting the genetic integrity of J&K sheep. Take note of the minutes of departmental meetings, presented as evidence, which revealed anxieties about diluting the local breed with potentially inferior animals from neighboring states Justice Sharma deemed these concerns as valid justifications for the cancellation, prioritizing public interest over individual gain.
The court reiterated the limited scope of judicial intervention in contractual matters. Absent any mala fide intention or procedural irregularity, the department's right to cancel the tender before finalization stands unchallenged, the bench underscored.
In light of these observations, the court dismissed the plea.
Case Title: Ghulam Qadir Bhat and another V/s U.T of J&K and others
Citation: 2023 LiveLaw (JKL) 330