A) ABSTRACT / HEADNOTE

This judgment focuses on the scope of judicial review in tender cancellations under writ jurisdiction. It examines the distinction between contractual disputes and public law issues, emphasizing fairness, transparency, and adherence to Article 14 of the Constitution. The Supreme Court invalidated the cancellation of a tender for underpass maintenance, highlighting the arbitrary, capricious, and mala fide actions by the state. The judgment underscores the interplay of administrative discretion and judicial oversight in public-private partnerships, ensuring non-discriminatory governance and adherence to the principles of natural justice.

Keywords: Judicial review, Contract/tender disputes, Public-private partnership, Article 14, Arbitrariness.

B) CASE DETAILS

i) Judgment Cause Title:
Subodh Kumar Singh Rathour v. The Chief Executive Officer & Ors.

ii) Case Number:
Civil Appeal No. 6741 of 2024

iii) Judgment Date:
July 9, 2024

iv) Court:
Supreme Court of India

v) Quorum:
Dr. Dhananjaya Y. Chandrachud, CJI, J.B. Pardiwala, and Manoj Misra, JJ.

vi) Author:
Justice J.B. Pardiwala

vii) Citation:
[2024] 7 S.C.R. 532; 2024 INSC 486

viii) Legal Provisions Involved:

• Article 14, Constitution of India
• Principles of Natural Justice
• Administrative Law principles

ix) Judgments Overruled by the Case (if any):
No direct overruling; however, earlier narrow interpretations of judicial review in contractual matters are clarified.

x) Case is Related to which Law Subjects:
Constitutional Law, Administrative Law, Public Procurement Law, and Contract Law.

C) INTRODUCTION AND BACKGROUND OF JUDGMENT

The case arose from the cancellation of a tender awarded to the appellant for maintaining two underpasses under a public-private partnership. The Kolkata Metropolitan Development Authority (KMDA) terminated the contract citing “technical faults” and alleged policy changes. The High Court upheld this action, finding no public law element warranting writ jurisdiction. Aggrieved, the appellant approached the Supreme Court.

D) FACTS OF THE CASE

1. KMDA floated a tender in May 2022 for underpass maintenance coupled with advertisement rights.
2. The appellant submitted the highest bid and was awarded the contract in June 2022.
3. After work began, the state handed over the underpasses’ maintenance to Kolkata Municipal Corporation (KMC) in December 2022, retaining advertisement revenue rights.
4. KMDA issued a stop-work notice in January 2023, followed by a tender cancellation citing technical faults.
5. The High Court dismissed the appellant’s writ petition and appeal, leading to the present Supreme Court challenge.

E) LEGAL ISSUES RAISED

1. Scope of Judicial Review in Contractual Matters:

   • Can state actions in contractual matters be reviewed under writ jurisdiction?
   • Distinction between private and public law elements in contracts.

2. Validity of the Tender Cancellation:

   • Was the cancellation arbitrary, capricious, and violative of Article 14?
   • Role of internal file notings in judicial review.

F) PETITIONER/APPELLANT’S ARGUMENTS

1. Mala Fide Action:
   The cancellation stemmed from ministerial influence, evidenced by internal file notings.

2. Violation of Contractual Terms:
   The tender conditions provided for termination only under specific breaches, which were absent.

3. Continuing Revenue Rights:
   KMDA retained advertisement revenue rights, undermining the “policy change” justification.

4. Public Law Element:
   The state’s actions impacted public interest, making the writ jurisdiction applicable.

5. Non-Application of Mind:
   Cancellation lacked valid reasons and was contrary to fairness and reasonableness principles.

G) RESPONDENT’S ARGUMENTS

1. Private Law Dispute:
   The dispute stemmed from a contractual arrangement, excluding writ jurisdiction.

2. Administrative Exigencies:
   Policy changes and technical faults justified the cancellation to protect public interest.

3. Tender Ambiguities:
   Ambiguities in the tender deterred bidders, necessitating cancellation for better terms.

4. No Right on Internal Notings:
   File notings were deliberative and not binding decisions.

H) JUDGMENT

a. Ratio Decidendi:
The Court held that state actions, even in contractual matters, must adhere to fairness, reasonableness, and Article 14. The cancellation, driven by mala fide ministerial influence, was arbitrary and capricious.

b. Obiter Dicta:
The sanctity of tenders is paramount. Arbitrary cancellations harm public confidence and participation in public procurement processes.

c. Guidelines (if any):

1. Contracts involving public law elements are subject to judicial review.
2. Internal deliberations (file notings) are admissible for assessing administrative malice or arbitrariness.
3. Public interest must be demonstrable, not speculative, to justify tender cancellations.

I) CONCLUSION & COMMENTS

The judgment reinforces judicial oversight in state actions involving public contracts. It balances administrative discretion with accountability, ensuring governance aligned with constitutional principles. It also underscores the judiciary’s role in protecting public-private partnership stability.

J) REFERENCES

a. Important Cases Referred:

1. Radhakrishna Agarwal v. State of Bihar (1977) 3 SCC 457
2. Mahabir Auto Stores v. Indian Oil Corporation (1990) 3 SCC 752
3. Tata Cellular v. Union of India (1994) 6 SCC 651
4. Shrilekha Vidyarthi v. State of UP (1991) 1 SCC 212

b. Important Statutes Referred:

1. Constitution of India – Article 14