Supreme Court: Second highest bidder can get contract only if auction valid

Written by fe Bureau | New Delhi | Updated: Oct 16 2014, 07:29am hrs
The Supreme Court (SC) has held that the second highest bidder in a competitive-bidding process can be awarded the contract if the top bidder is disqualified or the bid is cancelled, but not if the

selection process is vitiated due to political considerations or patronage or

other extraneous consi-


The judgment came on an appeal filed by Indian Oil Corporation (IOC) challenging a Pune High Court order that ruled that the next empanelled candidate is entitled to an automatic allotment. The SC said that in the case challenged by IOC involving the appointment of dealers for superior kerosene oil and light diesel oil the bid itself had been found to have been vitiated.

The SC bench headed by Justice Madan Lokur said, If an individual selection is cancelled on merits, such as lack of eligibility or erroneous calculation of marks that is cancellation for reasons other than political considerations or patronage or other extraneous considerations, then the entire selection process would not be vitiated.

IOC had in July 2000 advertised for the appointment of dealers.

However, it had to cancel all allotments for dealerships after allegations that the allotments were not made on merit, but on account of political considerations. These cancellations led to a spate of petitions filed all over the country and the cases were finally transferred from various high courts to the apex court, which appointed a committee of two retired judges to examine the 413 allotments.

Following the cancellation of the allotment of the highest bidder, the second highest bidder moved the HC seeking allotment for the dealership.

While the HC ruled in her favour, the Supreme Court accepted the IOCs stand that when the allotment of a dealership is cancelled due to an illegality in award of the dealership, then the entire selection process is vitiated.