The Delhi High Court has said it is not mandatory for the government to award contract to the lowest or highest bidder in a tendering process and had the option of giving the work to some other party instead.
"Normally, the lowest bidder or the highest bidder, the case may be, ought to be awarded the contract. But this is not an absolute rule and the governmental authority can deviate from this and award the contract to someone other than the lowest or highest bidder, a bench comprising justices Badar Durrez Ahmed and Veena Birbal, said.
Emphasising that the decision so made should not be arbitrary and fanciful, the bench said the government authority may decide not to award the contract to the either the lowest bidder or highest bidder or to anyone else and may decide to scrap the tender and/or call for fresh tenders.
The decision came on the petition filed by a firm seeking direction to the DDA to award the contract relating to its project of constructing 50,000 multi-storeyed houses in the next five years in Narela, Rohini, Dwarka or any suitable place in Delhi.
The firm had offered bids following an expression of interest in response to the tender published by the civic body in 2007.
After several rounds of meetings between the civic body and various bidders to reach a consensus about various technical modalities, the DDA in 2009 decided not to award the contract to any of them.
Aggrieved by the decision of DDA not to award the contract and invite fresh tender, the firm approached the court alleging that the decision of the body was arbitrary as no reason was assigned for rejecting the offer.
However, the court while declining the plea of the firm, said that it was not mandatory for the DDA to communicate the reason and the only requirement under the law was the existence of the cause for doing so.
"It is not necessary that the reasons must be communicated to the affected party at the outset, but it is sufficient, if the reasons exist," the court said.
Upholding the decision of the DDA not to award contract to anybody, the court said that the conclusion arrived at was within the power of the civic agency "as is also clear from the recommendation of the CVC".
"The DDA has acted well within its power as there exist reasons, which are clearly discernible from the record, justifying the DDA's decision to reject the firm's bid and to call for fresh bids," the bench said.
