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Judgment
Per: Hon'ble Shri Justice Sanjeev Sachdeva, Chief Justice
Petitioners have filed the subject petitions impugning communication dated 05.12.2025 whereby the tender inviting authority had decided to nullify the tender process that was initiated with the Notice Inviting Tender (NIT) dated 18.09.2025.
The contentions of the petitioners primarily are that petitioners were the highest bidders for the respective blocks of sand mines which were tendered in different districts and despite petitioners being the highest bidders, the tender process has been canceled without assigning any reason.
Learned Senior Counsel for the petitioners contend that since the petitioners were the highest bidders, there is no justification to arbitrarily nullify the tender process.
In W.P. No.1880 of 2026 when the petition was listed on 20th January 2026, respondents were directed to file a brief reply disclosing the reasons behind cancellation of the entire tender process along with the necessary note sheets. Reply has been filed by the respondents in W.P. No. 1880 of 2026 and same reply has been adopted in W.P. No. 48901 of 2025. Learned Advocate General appearing for the State submits that since the tender process for both the blocks was nullified by the same decision, common reply is relied upon.
For the purposes of expedition, reference may be had to the reply submitted in W.P. No. 1880 of 2026. Though the reply raises a preliminary objection with regard to maintainability of the petitions, we are considering primarily the reasons recorded in the reply for passing of the impugned order nullifying the tender process.
This relevant portion reads as under :
(PART B):- REASONS FOR PASSING OF THE IMPUGNED ORDER
i.That against the NIT floated 18.09.2022, the petitioner (M/s Dhanshri Merchandise Private Limited) has filed W.P. No. 49937/2025 who has participated for group Katni while petitioner (Sahakar Global Limited) has filed W.P. No.48901/2025 who has participated for the group Shahdol. That it is observed that earlier also the similar tender is being issued for tender quantity of 2000000 of group Katni,wherein the reserve price was 500000000, wherein the petitioner Dhanlakshmi Merchandise Private Limited has quoted the highest price and the rate quoted by him is 323.883 rupees per cubic meter and in the current tender proceedings the petitioner (Dhanlakshmi Merchandise Private Limited) has quoted a price of Rs. 540741111 @ 270.371 rupees per cubic meter. Thus, now, being an H1 bidder, he has quoted fewer prices than the previous bid. Similarly, for the group Shahdol earlier, the petitioner (Sahakar Global Limited) has quoted 391.151 rupees per cubic meter in the previous tender and in the current tender, the petitioner (Sahakar Global Limited) has coded 273.886 rupees per cubic meter. If being a HI price the petitioner (Shahkar Global in W.P. No. 48901/2025) has earlier quoted 688425999 in previous bid of the tender and in present tender he has quoted 482040000, thus eventually, from the previous tender, both the petitioners like Shahdol and Katni Group has quoted much less than the previous tender. Thus, the tendering authority, while evaluating the tender process after participation by all the bidders have observed that these successful bidders are also the successful bidders of the previous round, and they have quoted much higher price being a HI bidder in earlier tender. ii. That after declaring the H1 bidder or the successful bidder in the previous tender, these petitioners have surrendered their group, which resulted into fresh auction /present NIT dated 18.09.2025 and now the same persons have quoted less amount thus being a H1 bidder of previous tender. Thus by surrendering the tender / contract now they become again the HI bidder with much less amount. In these circumstances, the loss to the public exchequer cannot be ruled out. iii. That the board of the Mining Corporation on 19.11.2025 has evaluated these aspects of awarding the contract and when such an aspect is being pointed out before the Managing Committee then they decided to cancel the tender process of Katni and Shahdol which resulted into passing of the impugned order Annexure P/2 (dated 05.12.2025). That, the original copy of the board meeting will be produced by the answering respondent at the time of hearing of the matter.
iv.That, in these circumstances, it can be safely concluded that the impugned order of cancellation is being passed by the Mining Corporation in view of larger public interest. Primarily it can also be safely concluded that by awarding the contract the petitioner (those who have earlier awarded the contract and after surrendering now the same persons are getting the contract in much lower price) may result into loss to the public exchequer. In these circumstances, the decision is being taken in a larger public interest which deserves to be upheld by this Hon’ble Court.
v.That it is respectfully submitted that the conditions of awarding the contract, surrendering the same by successful bidder, and no major penalties / consequence is being provided under the Sand Mining Rules of 2019. In these circumstances, the State Government is in active consideration to impose serious conditions to deal with such situation. In these circumstances, the State Government is in process of amending Madhya Pradesh Sand (Mining, Transportation, Storage and Trading) Rule, 2019 within a short period of time. The matter has already been processed at an appropriate level and is at the level of final stages of approval of the notification.
vi.That it is respectfully submitted that now for surrendering of a group by any successful bidder for re-auction, the loss suffered to the government will be recovered from the earlier contractor who has surrendered the group. Further he will be further debarred to participate for that group for three years, and the losses accrued to the government for such action recovery can be made and the certain strict measures which are proposed in the amendment of 2019. Thus, if the Corporation wanted for waiting for new rules to be notified, and / or in the amended rules, if the corporation is intended to hold the fresh auction, then the same can be said to be a valid reason for cancellation of the tender vide Annexure P/2.
vii.That, it is respectfully submit that the contractors those who are playing with the Sand Rules of 2019 (in absence of strict provisions therein) now in future will be bound by the new rules if the contract is being floated afresh by the corporation under the new / amended rules. In these circumstances, the authorities if taken the decision to cancel the tender then the same cannot be said to be unjust in any manner whatsoever. In these circumstances, the discretion of the Corporation deserves to be upheld by this Hon’ble Court."
The rationale given by the respondents for nullifying the tender process is that a similar tender was floated earlier in which both the petitioners were the successful bidders in the respective blocks and the contract was entered into with them. In the earlier tender process, petitioner in W.P. No. 1880 of 2026 had quoted a rate of Rs. 323.883 per cubic meter. However, in the subject tender, the rate quoted is much lower i.e. Rs. 270.371 per cubic meter. In W.P. No. 48901 of 2025 the petitioner had quoted a rate of Rs. 391.157 per cubic meter in the previous tender and in the current tender has quoted a rate of Rs. 273.886 per cubic meter which is much lower. Respondents have also noticed that both the petitioners had surrendered their respective mines and participated in the subsequent tenders quoting much lower rates. The tender inviting authority was of the view that in these circumstances, a substantial loss to the public exchequer could not be ruled out.
We note that in the case of Petitioner Dhanlaxmi Merchandise Private Limited, the quoted rate is Rs. 53.512 per cubic meter less than the earlier quoted rate per cubic meter, i.e. 16.52% lower than the earlier quoted rate. The tendered quantity is 2000000 cubic meter which translates into a loss of over Rs. 10.70 Crores.
Insofar as Petitioner Sahakar Global Limited is concerned, the earlier rate quoted was 391.151 rupees per cubic meter and the rate quoted in the present current tender is 273.886 which is 117.265 rupees lower than the earlier quoted rate i.e. 29.97% lower that the earlier quoted rate. The tendered quantity is 17,60,000 cubic meters which last translates to a loss of over 20.63 crores to the public exchequer.
Keeping these facts in mind a conscious decision was taken by the Board on 19.11.2025 to nullify the tender process. Copy of the minutes of the Board dated 19.11.2025 have been produced before us, same are taken on record. The same has also been shown to learned counsels appearing for the petitioners. We note that prior to nullifying the process and intimation being sent by communication dated 05.12.2025, the Board took a conscious decision in noticing the above facts and circumstances on 19.11.2025 to nullify the tender process.
The counter affidavit filed by the respondents states that a conscious decision was taken by the Board in larger public interest to nullify the tender process. Further the counter also states that in the earlier tenders and in the Sand Mining Rules, 2019 there were insufficient penal clauses for surrender of mines, which resulted in a situation like the present, where the successful allottee surrenders the mines and then participates in the subsequent tenders and secures the same mines at a much lower rate thereby causing loss to the exchequer. Thus, a decision was taken by the State to also amend the Sand Mining Rules to impose serious conditions which deal with imposition of penalties and adverse consequences for surrender of mines without any valid reason. We are informed that the rules have now been amended and learned Advocate General submits that any subsequent notice inviting tender which is issued would be in accordance with the amended rules.
One of the submissions raised by learned Senior Counsel for the petitioners is that petitioners were constrained to surrender the mines which were allotted to the petitioners in the earlier process on account of the fact that the respondents were unable to provide the mines which were promised and the mines provided were lesser in quantity.
It may be noticed that Petitioner, M/s Sahakar Global Limited had earlier filed a petition before this Court being W.P. No. 15714 of 2025 contending that they were not granted the promised mines. An interim order dated 09.05.2025 was passed in the said petition permitting the petitioner to pay the amount only as per the actual quantity extracted from the mines out of the available quantity for which environmental clearance had been received. Certain other allottees had also filed similar petitions which were disposed of subject to outcome of SLP (Civil) No.15027-15035/2025 pending before the Supreme Court.
The issue arising in the present cases are as to whether the tender inviting authority could have nullified the entire tender process. Reliance placed by learned Senior Counsel for the petitioners on the judgment of the Supreme Court in Golden Food Products India versus State of Uttar Pradesh (2026 SCC Online SC24) to contend that the tender process cannot be nullified arbitrarily, whimsically or irrationally and mere expectation of a higher bid in a subsequent auction cannot be a reason to cancel an auction held in accordance with law, is misplaced. Said judgment does not further the case of the petitioners for the reasons that the Supreme Court in the same judgment further clarified that an auction process has a sanctity attached to it and only for viral valid reasons, the highest bid can be disregarded in an auction. This implies that for valid reasons the auction process can be nullified.
In the present case, as noticed hereinabove, the tender inviting authority took a conscious decision on 19.11.2025 keeping in view the facts and circumstances of the case particularly the fact that in an earlier tender, same petitioners had participated for the same block of mines and quoted much higher per cubic meter rate, and thereafter, surrendered the mines and participated in the second process and quoted much lesser rate and secured the same block of mines at a much lesser rate thereby causing a substantial loss to the exchequer. In our opinion, a reasonable view has been taken by the respondents which does not warrant any interference.
We may further note that the subject Notice Inviting Tender provides for right to nullify the bids in Clauses 6.6.3 and 26 which read as under;
By Clause 6.6.3, right has been reserved by the tender inviting authority to nullify the tender process without assigning any reason. Similarly, in Clause 26 the tender inviting authority reserved the right to reject any bid without assigning any reason.
Though in the instant case, respondents had reserved the right to nullify the tender process without assigning any reason, the tender inviting authority for valid reasons as noticed by us hereinabove has decided to nullify the entire tender process.
Reference may be had to the judgment of a Coordinate Bench this Court in W.P. No. 22902 of 2025 (Rajbahadur Yadav versus State of Madhya Pradesh) to which one of us (Sanjeev Sachdeva, C.J.) was a party. In the said case, reliance was placed on the judgment of the Supreme Court i n Haryana Urban Development Authority and others vs. Orchid Infrastructure Developers Private Limited, (2017) 4 SCC 243 wherein the Supreme Court has held that the highest bidder has no vested right to have the auction concluded in his favour. The Government or its authority could validly retain power to accept or reject the highest bid in the interest of public revenue.
In Rajbahadhur Yadav's case (supra) it has been held that as there is no concluded contract till the bid was accepted, the authority had the right to reject even the highest bid. The bidder participating in the tender process has no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by him and the authority has the right not to even accept the highest bid and also the right to nullify the entire tender process.
We are of the view that the decision taken by the respondents in nullifying the entire tender process, in the facts and circumstances of the present case, is a reasonable one and does not warrant any interference.
In view of the above, we find no merits in the petitions. The Petitions are accordingly dismissed.
At this juncture, learned Senior Counsels for the petitioners submit that dismissal of the present petitions should not amount to an embargo on the petitioners participating in the fresh NIT invited by the respondents. This submission is without prejudice to their rights and contentions.
It is clarified that it would be open to the petitioners to participate in the fresh Notice Inviting Tender, if otherwise eligible in terms of the applicable rules and the Notice Inviting Tender.