Deepa Ray vs State Of Odisha & Ors.

Chittaranjan Dash, J.

Heard learned counsel for the parties.

The challenge in the present Writ Petition is to the cancellation of the tender in respect of Work Sl. No. 05, published on 13.10.2026 pursuant to the proceedings of the Project Level Tender Committee (PLTC) dated 12.10.2026, and the consequential fresh E-Procurement Notice No. CCE-PIP-BML-13/2026-27 dated 15.10.2026, insofar as it relates to the same work.

The Petitioner assails the impugned cancellation primarily on the ground that, although she was adjudged as the L-1 bidder, having quoted a rate 31.17% below the estimated cost of the tender, the authority cancelled the tender without properly examining her quotation and her capacity to execute the work and without affording him an opportunity to explain the viability of the quoted rate in terms of the applicable tender conditions.

It is alleged that the authority cancelled the tender solely on the ground of “administrative reasons”, purportedly in exercise of the power conferred under Clause 26 of the Detailed Tender Call Notice (DTCN).

The background facts of the case are that the Petitioner participated in E-Procurement Notice No. CCE-PIP-BML-08/2026-27 in respect of Work Sl. No. 05, relating to the work of providing trough wall lining, renovation of structures, desilting and re-sectioning of the canal between RD 0.000 km and RD 3.980 km of Mangipalli Minor, RD 0.000 km and RD 1.065 km of Mangipalli S/M-4, and RD 0.000 km and RD 1.045 km of Mangipalli S/M-V. The Petitioner submitted her bid on 10.09.2026. Upon evaluation of the bids on 01.10.2026, the Petitioner was found to be the L-1 bidder, having quoted a rate 31.17% below the estimated cost of the tender.

It is the Petitioner’s case that the authority thereafter undertook an analysis and scrutiny of the quoted rates through the Project Level Tender Committee constituted for the purpose. At its meeting held on 12.10.2026, the Committee considered various factors, including site accessibility, movement of construction equipment, transportation of materials, quality requirements and the nature of the irrigation works. The Committee recommended cancellation of the existing tenders in respect of all seven works, including the work in question, on the ground that the quoted rates were abnormally low and commercially unviable.

Learned counsel appearing for the Petitioner submits that the impugned cancellation is founded on an erroneous and unfounded assumption regarding the viability of the quoted rate. It is further contended that the Petitioner was not afforded any opportunity to explain how he could execute the work at the quoted rate or to demonstrate her financial and technical capability to do so. Instead, the authority unilaterally concluded that the quoted rate was abnormally low and rendered the execution of the work unviable. Learned counsel further submits that the mere fact that the Petitioner had quoted a rate substantially below the estimated cost could not, by itself, constitute a valid ground for cancellation of the tender, particularly in the absence of a reasoned decision arrived at after affording the Petitioner an opportunity to explain the basis of her quotation.

Per contra, learned Additional Government Advocate submits that the impugned decision was preceded by detailed scrutiny by the duly constituted Departmental Technical Committee, which found that the rate quoted by the Petitioner for execution of the work under Sl. No. 05 was not practically viable. It is further contended that Clause 26 of the DTCN does not fetter the authority’s power to cancel the tender without assigning reasons. Accordingly, the Opposite Parties seek dismissal of the Writ Petition, contending that the decision was taken in accordance with the Office Memorandum dated 03.01.2026 and falls within the domain of the tendering authority.

Before proceeding to examine the rival submissions on the merits, it would be apposite to bear in mind the settled principles governing judicial review in matters relating to tenders and award of contracts. In Tata Motors Limited vs. The Brihan Mumbai Electric Supply & Transport Undertaking (BEST) and Others, reported in 2023 SCC OnLine SC 671, the Hon’ble Supreme Court has reiterated that a writ Court should ordinarily refrain from substituting its own decision for that of the Tendering Authority unless something gross or palpable is shown. The relevant paragraphs are reproduced below:

Keeping the aforesaid parameters in view, we may first advert to Office Memorandum No. 07764600022025/173/W dated 03.01.2026, issued by the Works Department, Government of Odisha, which governs the scrutiny of low bids in the present case. The said Office Memorandum is significant inasmuch as it consciously dispensed with the earlier provision prescribing a threshold negative-bid cap of 14.99% under Appendix IX, Clause 36 of the OPWD Code, Volume II. In its place, a graded mechanism for imposing Additional Performance Security in respect of low bids was introduced. The Office Memorandum further clarifies that it would not be advisable to prescribe any normative percentage below the estimated cost which, by itself, would result in a bid being treated as abnormally low.

The significance of the aforesaid amendment cannot be lost sight of. Under the revised mechanism, a bid does not become liable for rejection or cancellation merely because the quoted rate falls below a particular percentage of the estimated cost. The Office Memorandum defines an abnormally low bid as one in which the bid price, “in combination with other elements of the Bid”, appears so low as to raise material concerns regarding the bidder’s capability to perform the contract at the offered price. In such a situation, the Procuring Entity may seek written clarification from the bidder, including a detailed price analysis in relation to the scope of work, the schedule, resource mobilisation, allocation of risks and responsibilities, and other requirements of the bid document.

More importantly, the Office Memorandum does not contemplate rejection merely upon the formation of an initial apprehension regarding the viability of a bid. It provides that, after evaluating the price analysis, if the Procuring Entity determines that the bidder has substantially failed to demonstrate her capability to deliver the contract at the offered price, the bid may be rejected. Thus, the scheme envisages a sequential exercise: a low quotation may trigger scrutiny; the bidder may thereafter be required to substantiate the basis of the quotation; and the explanation and price analysis furnished by the bidder are required to be evaluated before a conclusion is reached as to whether the bidder has substantially failed to establish her capability to perform the contract at the quoted price.

In the present case, therefore, the mere fact that the Petitioner had quoted a rate 31.17% below the estimated cost could not, by itself, furnish a valid basis for cancellation of the tender and initiation of a fresh tender process. The record does not disclose that the Petitioner was afforded an opportunity to explain the basis of her quotation or to demonstrate her capability to execute the work at the quoted rate. It is in the context of the specific requirement under the Office Memorandum that the reasons recorded by the Departmental Technical Committee and the consequential decision to cancel the tender are required to be examined.

We are conscious of the fact that the tendering authority is not necessarily required to seek clarification from a bidder in every case. However, where the decision to reject a bid is founded on the bidder’s alleged inability to execute the work at the quoted rate, the authority must undertake an objective assessment in accordance with the applicable tender conditions and the governing instructions. In the present case, the proceedings of the PLTC do not disclose that the Petitioner was called upon to explain how he proposed to execute the work at the quoted rate. Nor do they disclose any adequate assessment demonstrating why the quoted rate would render the execution of the work unviable, particularly when no explanation had been sought from the Petitioner in that regard. The conclusion regarding the viability of the quoted rate, therefore, appears to have been reached without the requisite examination contemplated under the Office Memorandum.

Needless to mention, even where Clause 26 of the DTCN reserves the authority’s power to reject or cancel a tender without assigning reasons, such a provision does not confer an unrestricted power to act arbitrarily or without reference to relevant material. The Petitioner challenges the decision on the basis of the reasons underlying the impugned cancellation, including those recorded in the proceedings of the Departmental Technical Committee, and not merely on the ground that the published cancellation notice does not contain detailed reasons. Where the recorded basis for cancellation is the alleged unviability of the quoted rate, Clause 26 must be applied consistently with Clauses 25(f) and 25(9)(vi) of the DTCN, as applicable, and the relevant instructions issued by the Works Department.

The tendering authority subsequently issued E-Procurement Notice No. CCE-PIP-BML-13/2026-27 dated 15.10.2026, inviting fresh bids for the same work relating to Mangipalli Minor under Sl. No. 05, at the same approximate estimated cost of ₹244.39 lakh. In the absence of a demonstrable evaluation of the Petitioner’s capability in accordance with the applicable procedure, the consequential decision to initiate a fresh tender process is not sustainable. We fail to understand how the Departmental Technical Committee could, without seeking an explanation from the Petitioner, arrive at a unilateral conclusion that the rate quoted by him was abnormally low and rendered the execution of the work unviable, particularly when the DTCN does not prescribe any minimum percentage below the estimated cost as the threshold for acceptance of a bid. The impugned decision does not disclose adequate consideration of the Petitioner’s potential and capability to execute the work at the offered price. The conclusion that the Petitioner lacked such capability, without the requisite evaluation, is arbitrary and cannot be sustained in the eye of law.

What, therefore, emerges from the aforesaid discussion is that the concern expressed by the Department regarding the substantially low quotation was not, in itself, misplaced. The infirmity lies in the manner in which that concern was converted into a conclusion regarding the non-viability of the bid. Clause VI of the Office Memorandum dated 03.01.2026 requires an evaluation of the price analysis furnished by the bidder and contemplates rejection only where, upon such evaluation, the bidder has substantially failed to demonstrate her capability to perform the contract at the offered price.

We make it clear that this Court is not undertaking its own commercial assessment of the Petitioner’s quotation. Whether the price offered by a bidder is commercially viable and whether the tendering authority should ultimately accept the bid are matters within the domain of the competent authority. Our interference is warranted only because the material on record does not disclose a sufficiently reasoned evaluation of the Petitioner’s capability in terms of the specific test prescribed under Clause VI of the Office Memorandum. The decision, therefore, cannot be sustained merely on the ground that the Petitioner’s quotation was substantially below the departmental estimate.

For the reasons aforesaid, we are of the considered view that the decision to cancel the tender in respect of the work in question cannot be sustained. The decision does not demonstrate the requisite evaluation contemplated under Clause VI of the Office Memorandum dated 03.01.2026 and, consequently, the conclusion that the Petitioner had failed to establish her capability to execute the work at the quoted price is not borne out by the material on record. We, however, make it clear that merely because the Petitioner was found to be the L-1 bidder, he does not acquire an indefeasible right to the award of the contract. The competent authority is required to take a decision in accordance with the governing tender conditions and the Office Memorandum dated 03.01.2026. Our conclusion is confined to the legality of the decision-making process leading to the cancellation of the tender.

Accordingly, the decision dated 13.10.2026 cancelling the tender in respect of Work Sl. No. 05 is hereby quashed. Consequently, the subsequent E-Procurement Notice No. CCE-PIP-BML-13/2026-27 dated 15.10.2026, insofar as it relates to the same work, is also set aside. The matter is remitted to the competent authority for fresh consideration of the Petitioner’s bid in accordance with Clause VI of the Office Memorandum dated 03.01.2026 and the applicable tender conditions, after affording the Petitioner an opportunity to furnish her explanation and supporting price analysis. Such exercise shall be undertaken by an authority or committee other than one chaired by Opposite Party No. 3 and shall be completed as expeditiously as possible, preferably within four weeks from the date of communication of this order.

It is clarified that we have expressed no opinion on the ultimate commercial viability of the Petitioner’s bid. The competent authority shall be at liberty to take an appropriate decision in accordance with law, the applicable tender conditions and the Office Memorandum dated 03.01.2026.

The Writ Petition is accordingly allowed.