L-1 Status Confers No Vested Right: Madhya Pradesh HC

The Hon’ble High Court of Madhya Pradesh, in the case of M/s Kaveri Infra Projects Pvt. Ltd. v. State of Madhya Pradesh & Ors., (2025:MPHC-IND:37497), decided on December 18, 2025, reiterated the settled principle that an L-1 bidder does not acquire a vested right to award of contract and that courts will exercise restraint in interfering with tender decisions taken by expert committees, unless the decision-making process is shown to be arbitrary, discriminatory, or vitiated by mala fides.

The dispute arose from a large-scale water supply infrastructure tender issued under the AMRUT 2.0 scheme for Indore city. The petitioner was declared technically qualified and emerged as the lowest bidder, having quoted a rate approximately 16.92% above the probable cost of the project. While the employer recommended acceptance of the bid, the State Level Technical Committee (SLTC), an expert body constituted under the AMRUT 2.0 guidelines, cancelled the tender on the grounds of inadequate competition, only two financial bids were received out of the four participating bidders, with higher-than-expected bid values. The SLTC directed issuance of a fresh tender to ensure wider participation and improved price discovery.

Challenging the decision, the petitioner alleged arbitrariness and discrimination, contending that bids quoted above the estimated cost had been accepted in other towns under similar schemes. The State, however, justified the decision by pointing to the SLTC’s authority to approve or reject bids, the tender condition reserving the right to annul the bidding process prior to award, and the absence of any allegation of mala fides.

The High Court held that the decision to cancel the tender was taken by a duly constituted expert committee after considering relevant factors such as competition levels and pricing, and did not suffer from arbitrariness or discrimination. The Court emphasised that judicial review in tender matters is confined to examining the legality and fairness of the decision-making process and does not extend to re-evaluating commercial or technical considerations.

The Court dismissed the writ petition, reaffirming that courts will not interfere with bona fide tender cancellations undertaken in public interest, and clarified that unsuccessful bidders remain free to participate in a fresh tender process where the original tender has been annulled.