The MCD had initially invited tenders for the allotment of surface parking sites on a monthly license fee basis, with an option to extend the contract for an additional period. The petitioner, in response to the Notice Inviting Tender (NIT) No. AC/RPC/MCD/2024/D-906 issued on July 11, 2024, had submitted a complete bid for the Shamshan Ghat parking site. The tender invited E-bids for a three-year contract, extendable for two more years.

Upon submission, the MCD carried out a technical evaluation of the bids. On July 26, 2024, the petitioner was asked to provide clarifications on certain documents, which were submitted by July 27, 2024. Despite these efforts, the MCD decided to cancel the tender and issued a communication on August 22, 2024, citing a lack of sufficient bidders. This decision was challenged by the petitioner in the Delhi High Court through a writ petition filed in September 2024, seeking to quash the cancellation and revive the tender process.

The petitioner contended that the cancellation of the tender was unjustified, arguing that the MCD had the discretion to award the contract even if there was only one bidder, as stipulated in Clause 10(iii) of the tender's terms. This clause clearly stated that the parking contract may be awarded to the highest bidder, even in the case of a single valid bidder. The petitioner claimed that the MCD was legally obligated to complete the tender process with them as the sole bidder, and that canceling the tender was not a reasonable or legal action.

Furthermore, the petitioner asserted that the MCD's rejection of their bid was arbitrary and contrary to the conditions outlined in the NIT. They argued that there was no requirement to cancel the tender simply because the competition was limited to a single bidder.

The MCD, on the other hand, defended its decision to revoke the tender. The MCD emphasized that a fresh tender was issued on August 30, 2024, and that the petitioner was free to participate in the new bidding process. The MCD cited public interest as the primary reason for the cancellation. The argument was that when only one bid is received, it undermines the competitiveness of the process, which could lead to suboptimal pricing and service delivery. Therefore, the MCD contended that canceling the tender and inviting fresh bids was in the public interest and aligned with the goal of ensuring greater participation in the bidding process.

The MCD also argued that the decision to cancel the tender was not arbitrary but was made to increase competition, improve revenue generation, and avoid monopolistic control over the parking site.

The Delhi High Court, after hearing both parties, referred to the Supreme Court's judgment in the case of State of Jharkhand & Ors. v. CWE-SOMA Consortium (2016), where it was established that the government or any tendering authority has the discretion to cancel a tender in case only one bidder is left, in order to promote greater competition. The Court highlighted that public authorities have the right to cancel tenders if there is a lack of adequate competition, with the goal of ensuring fairness and transparency in the process.

The Court also referred to the Supreme Court's ruling in Tata Cellular v. Union of India (1994), which emphasized that the government has the discretion to reject a tender, provided that the decision is not arbitrary or biased. In this case, the Court concluded that the MCD's decision to cancel the tender and re-issue it was not unreasonable or in violation of the principles of fairness.

The Court further noted that the petitioner was not precluded from participating in the new tender process and that the MCD had clarified that the petitioner could submit a bid for the parking site under the new tender.

In response to the petitioner's argument regarding the lack of reasons in the rejection of their representation, the Court referred to the Supreme Court's decision in Silppi Constructions Contractors v. Union of India (2020), which held that the government is not obligated to provide detailed reasons when rejecting a tender, as these decisions are administrative in nature.

The Delhi High Court dismissed the petition, affirming the MCD's decision to cancel the tender and issue a new one. The Court held that the MCD's actions were justified in the interest of promoting competition and ensuring the efficient allocation of public resources. The petitioner was free to participate in the re-tendering process, and the decision to cancel the original tender did not violate any legal or contractual provisions.

This ruling underscores the discretion of tendering authorities to cancel contracts in situations where only one bidder remains, as long as the decision is made in good faith and in the public interest. The judgment reinforces the importance of fostering competition to ensure transparency and fairness in public procurement.

Public interest can justify the cancellation of a tender when there is insufficient competition.

The government's discretion to cancel a tender is upheld as long as the decision is not arbitrary or biased.

Tender authorities are not obligated to provide detailed reasons for rejecting bids in administrative decisions, as per Silppi Constructions Contractors (2020).