Patna High Court
PSR EnterprisesversusThe State of Bihar
- Decided
- Disposal
- DISMISSED
Holding
The cancellation of the tender and issuance of a fresh tender were lawful as they were exercised under the expressly reserved Clause 39 of the NIT, and no vested right existed for the petitioner.
Summary
The petitioner, PSR Enterprises, challenged the cancellation of NIT No.3/25-26 and the issuance of a fresh tender for a drainage project, alleging the cancellation was illegal and unreasonable after it had been declared the lowest bidder. The respondent authorities relied on Clause 39 of the NIT, which expressly reserved the right to cancel the tender without assigning any reason. The petitioner argued that the cancellation violated principles of fairness, while the respondents contended that the bidder is bound by the terms accepted at the outset. The Court examined the contractual nature of the tender process and cited the Supreme Court’s decision in State of Jharkhand & Ors. v. CWE‑SOMA Consortium, emphasizing that a tendering authority retains discretion to reject any bid, including the lowest, until a contract is formally awarded. Concluding that the petitioner had no vested right and that the cancellation was within the contractual clause, the Court dismissed the writ petition.
Issues considered
- Whether the High Court can intervene to quash the cancellation of a tender and the issuance of a fresh tender when the tender documents contain a clause reserving the authority to cancel.
- Whether the petitioner, as the lowest bidder, acquired any vested right to the contract that would prevent cancellation.
- Whether the cancellation of the tender was illegal, unreasonable, or mala fide.
Subjects
- tender cancellation
- public procurement
- administrative discretion
- contractual clause
- lowest bidder
- writ jurisdiction
- unreasonableness
Judgment
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.1530 of 2026
======================================================
PSR Enterprises under the proprietorship of Ashok Prasad Pankaj @ Ashok
Prasad, aged about 66 year (M), S/o Late Ramlagan Prasad, R/o Birpur, Main
Road, near Cinema Hall, Thana-Birpur, District-Supaul.
... ... Petitioner/s
Versus
1. The State of Bihar through Secretary Town Development and House
Department, Bihar, Patna.
2. The Secretary Town Development and House Department, Bihar, Patna.
3. The Chief Engineer, Water Supply Drainage and Sevarage North Bhar, Sub
Division, Bihar, Patna.
4. Md. Rajjan Shamim, The Superintendent Engineer, Town Development
Anchal-Kosi, Saharsa.
5. Executive Engineer, Town Development Sub Division-Madhepura, Supaul,
Madhepura.
6. The Town Executive Officer, Nagar Panchayat Virrpur, Supaul.
... ... Respondent/s
======================================================
Appearance :
For the Petitioner/s : Mrs. Sweta Priya, Advocate
For the State : Mr. P.K. Verma AAG-3
Mr. Saroj Kumar Sharma, AC to AAG-3
======================================================
CORAM: HONOURABLE MR. JUSTICE SUDHIR SINGH
and
HONOURABLE MR. JUSTICE RAJESH KUMAR VERMA
ORAL ORDER
(Per: HONOURABLE MR. JUSTICE SUDHIR SINGH)
2 12-02-2026 Heard learned counsel for the parties.
2. The present writ application has been filed for the
following reliefs:
“That this writ application is being filed
for Issuance of appropriate writ for quashing the
letter dated 25.9.2025 issued by the respondent
authority whereby the NIT no.3/26-26 has been
cancelled with a direction to proceed further and
also for quashing the consequential re-tender
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notice dt. 1.12.25 NIT No.9/25-26 issued by the
respondent authority.
And
For issuance of a writ of mandamus
directing the respondents to proceed with the
earlier tender process from the stage prior to the
illegal cancellation and to Restrain the respondents
from finalizing the re-tender pending disposal of
the writ petition.
And
Further also for any other other relief(s)
as this Hon’ble Court may deem fit in the interest of
justice.”
3. The brief facts of the case are that the respondent
authority issued a Notice Inviting Tender (hereinafter referred to
as the ‘NIT’) No. 3/25-26 for construction of drainage system
from Hanuman Temple to the house of Ashok Singh in ward
no.6 in Birpur Nagar Panchayat, wherein, the petitioner was
found technically qualified. Thereafter, the financial bid was
opened and, the petitioner emerged as L-1 (lowest bidder)
having quoted 0.5% below. Subsequently, the respondent
authority invoked “darwarta/negotiation clause” and called the
petitioner for negotiation. It was alleged that, under the guise of
negotiation, the petitioner was pressurised to enhance the quoted
rate from 0.5% to 16.5%. Despite being under no legal
obligation, the petitioner, voluntarily agreed to enhance the
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quoted rate from 0.5% to 1%. The respondent authority,
however, refused to consider the said offer and decided that if
the petitioner was not willing to work at the rate of 16.5%, a
fresh tender process would be initiated. Thereafter, the
respondent authority proceeded to cancel the first tender and
issued a fresh tender for the same work. Being aggrieved by the
aforesaid action of the respondent authority, the petitioner has
preferred the present writ application before this Court.
4. Learned counsel for the petitioner submits that
cancellation of the tender and issuance of a fresh re-tender after
disclosure of financial bids is illegal. It was further submitted
that petitioner agreed to enhance the rate from 0.5% to 1%, but
respondent authority refused to consider the said offer and
decided that if the petitioner is not ready to work at the rate of
16.5% then fresh process may be initiated. Such action of
respondent authority is liable to be set aside on the ground of
unreasonableness, because the petitioner was found fully
technically qualified.
5. Learned counsels for the respondent submit that the
respondent authority had expressly reserved the right to cancel
the tender without assigning any reason, as stipulated in the
NIT. It is a settled principle of law that a bidder who participates
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in the tender process after accepting the terms and conditions
thereof is bound by the same. In the present case, the action of
the respondent authority in canceling the tender and issuing a
fresh tender is strictly in consonance with the terms of the NIT.
6. The limited question that arises for consideration is,
whether, in the facts and circumstances of the present case, any
interference is warranted by this Court, in exercise of its writ
jurisdiction.
7. It is not in dispute that the petitioner participated in
the tender process with full knowledge and acceptance of the
terms and conditions including Clause 39 of the NIT. The
petitioner, cannot, at a belated stage, be permitted to challenge
the cancellation of the tender or the issuance of a fresh tender
merely because the decision has gone against him. Clause 39 of
the NIT, annexed as Annexure- P/1, expressly reserved the right
of the competent authority to cancel the tender, in whole or in
part. Clause 39 of the NIT is extracted hereinbelow:
“39. सकम izk धधकार को धबना कोई कारण बताये
धनधवदा के सभी/धकनही कायोरं को या धकसी कायर के
धकनही अं श को रदद् करने का अधधकार सु रधकत रहे गा।
इसके धलए धकसी भी izdkj का कोई दावा मानय नहीं
होगा।
8. It is pertinent to take note of the decision of
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Hon’ble supreme Court in the case of State of Jharkhand &
Ors. vs. CWE-SOMA Consortium, reported in (2016) 14 SCC
172, wherein it was observed:-
“13. In case of a tender, there is no
obligation on the part of the person issuing tender
notice to accept any of the tenders or even the
lowest tender. After a tender is called for and on
seeing the rates or the status of the contractors who
have given tenders that there is no competition, the
person issuing tender may decide not to enter into
any contract and thereby cancel the tender. It is well
settled that so long as the bid has not been
accepted, the highest bidder acquires no vested
right to have the auction concluded in his favour….
23. The right to refuse the lowest or any
other tender is always available to the Government.
In the case in hand, the respondent has neither
pleaded nor established mala fide exercise of power
by the appellant. While so, the decision of the
Tender Committee ought not to have been interfered
with by the High Court. In our considered view, the
High Court erred in sitting in appeal over the
decision of the appellant to cancel the tender and
float a fresh tender. Equally, the High Court was not
right in going into the financial implication of a
fresh tender.”
9. In the present case, considering the clear
stipulation contained in Clause 39 of the NIT and the
discussions made above, this Court is of the view that the issue
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before us for consideration is to be answered in the negative.
The respondent authority acted in accordance with the said
clause while cancelling the NIT and issuing a fresh tender. The
said clause was part of the tender conditions and was well
within the knowledge of the petitioner at the time of
participation in the tender process. Having accepted the terms
and conditions of the NIT, the petitioner is bound thereby.
Consequently, no ground is made out for interference by this
Court.
10. Accordingly, the present writ application stands
dismissed.
11. Pending application(s), if any, shall stand
disposed of.
(Sudhir Singh, J)
(Rajesh Kumar Verma, J)
Anushka/-
U
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