In a recent ruling, the Supreme Court upheld the state’s prerogative to annul a tender process, particularly emphasizing adherence to Rule 9 of the Mineral (Auction) Rules, 2015. The court, comprising Justices Sanjiv Khanna and SVN Bhatti, examined an appeal filed by the State of Jharkhand, challenging a Jharkhand High Court decision that directed the state to proceed with the second round of an auction despite technical irregularities.
The legal dispute originated from a tender notice issued in 2019 for the allocation and grant of a mining lease for bauxite mineral in Lodhapat, Jobhipat, and Hethilodha blocks. The Technical Evaluation Committee recommended the annulment of the auction after finding that Sociedade De Fomento Industrial Private Limited (Respondent) had submitted a physical bid, contrary to the electronic submission requirement.
Despite issuing a notification for a second attempt at the auction in 2020, only one bid was received from the Respondent. The state then decided to annul both the initial and subsequent tenders. The Respondent, in turn, sought a court order to proceed with the second round, leading to a series of legal proceedings.
The Supreme Court, emphasizing the significance of Rule 9(10), clarified that if the total number of technically qualified bidders is fewer than three, the first auction attempt must be annulled. Rule 9(9) stipulates that the auction process can only proceed to the second round with three or more technically qualified bidders.
The court underscored the importance of adhering strictly to statutory rules governing the bid cum e-auction process. It recognized the state’s responsibility to act in the public interest while granting mining leases and cautioned against the judiciary replacing executive discretion.
In this case, where no responsive bid was received in the first attempt and only one bid in the second attempt, the court concluded that the state was justified in annulling the tender process. The ruling highlighted the limited scope of judicial review in tender or contractual matters, emphasizing factors such as mala fide intentions, arbitrariness, and impact on public interest.
The Supreme Court allowed the appeal, setting aside the High Court’s judgment and affirming the state’s authority to annul tenders with less than three technically qualified bidders.
Case Reference: State of Jharkhand v. SOCIEDADE DE FOMENTO INDUSTRIAL PVT. LTD
