Supreme Court Overturns Kerala High Court Judgment on Forest Tender Cancellation

The Supreme Court of India recently delivered a significant judgment in the case of The Principal Chief Conservator of Forest & Ors. versus Suresh Mathew & Ors., setting aside the Kerala High Court’s decision that had quashed the cancellation and re-tendering of a forest contract. The case revolved around the cancellation of an e-tender for tree felling works in the Konni Forest Division, Kerala, and the subsequent legal battle over the fairness and legality of the re-tendering process.

The dispute began when the Divisional Forest Officer (DFO), Konni, cancelled an e-tender notification dated May 25, 2020, for tree felling works and decided to float a fresh tender. The respondents, who were participants in the original tender, challenged this cancellation, arguing that it was arbitrary and illegal. The Kerala High Court, in its judgment dated January 19, 2021, upheld the decision of the Single Judge, who had set aside the cancellation order, stating that the reasons provided for the cancellation were baseless and lacked factual foundation.

The Supreme Court, however, took a different view. Justices Bela M. Trivedi and Prasanna B. Varale, in their judgment dated April 25, 2025, emphasized the limited scope of judicial review in contractual matters, particularly those involving government tenders. The Court referred to several precedents, including Jagdish Mandal vs. State of Orissa and Tata Cellular vs. Union of India, to underscore that courts should not interfere in tender processes unless there is clear evidence of mala fide intentions or arbitrariness.

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The Court noted that the DFO’s decision to cancel the tender was based on valid grounds, including complaints from contractors who could not participate due to COVID-19 restrictions. The judgment stated, “The Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State.” The Court further observed that the High Court had erred in substituting its own judgment for that of the administrative authority, especially when there was no evidence of mala fide or arbitrariness.

The Supreme Court also highlighted the importance of allowing administrative authorities the freedom to make decisions in public interest. It quoted from M/s Michigan Rubber (I) Ltd. vs. State of Karnataka, stating, “If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities.” The Court concluded that the DFO’s decision to re-tender was a bona fide attempt to ensure fair competition and protect public interest, and thus, the High Court’s interference was unwarranted.

In its final order, the Supreme Court allowed the appeals filed by the Principal Chief Conservator of Forest and set aside the High Court’s judgment. The Court reiterated that judicial review in contractual matters should be exercised with restraint, and only in cases where the administrative action is patently arbitrary or mala fide. This judgment serves as a reminder of the delicate balance between judicial oversight and administrative discretion in government contracts.

Petitioner Name: The Principal Chief Conservator of Forest & Ors..
Respondent Name: Suresh Mathew & Ors..
Judgment By: Justice Bela M. Trivedi, Justice Prasanna B. Varale.
Place Of Incident: Konni Forest Division, Kerala.
Judgment Date: 25-04-2025.
Result: allowed.

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