Patna High Court
Avian Infrastructure and Energy Pvt. Ltd.versusThe State of Bihar
- Decided
- Disposal
- DISPOSED
Holding
The Court set aside the impugned orders cancelling the tender and agreements as they were arbitrary, unreasoned, and violative of natural justice.
Summary
Avian Infrastructure and Energy Pvt. Ltd. was awarded a government tender for the Mukhyamantri Gramin Peyjal Nishchay Yojna, executed agreements and began work. Following a complaint by a third‑party, Aman Anand, the State of Bihar cancelled the tender and annulled the agreements through office orders dated 13‑09‑2025, without giving any notice or hearing to the petitioner. The petitioner contended that the cancellation was arbitrary, lacked reasons, and violated natural justice. The High Court examined whether a tender already awarded and contracts executed could be set aside solely on a stranger's complaint without due process. Finding the orders cryptic, unreasoned, and violative of the audi alteram partem principle, the Court held that the cancellation was unlawful and set aside the impugned orders, allowing the writ application.
Issues considered
- Whether the respondent authorities were justified in cancelling the awarded tender and annulling the executed agreements on the basis of a complaint made by a third‑party stranger to the tender process.
- Whether the impugned orders complied with the principles of natural justice, including the requirement of recording reasons and providing a hearing.
Subjects
- tender cancellation
- natural justice
- audi alteram partem
- reasoned order
- contract annulment
- public procurement
- writ of certiorari
Judgment
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.15495 of 2025
======================================================
Avian Infrastructure and Energy Pvt. Ltd. Through its Director Ankit Kumar,
Male- aged about 38 years, Son of Umesh Kumar Singh, House No.- 4, Road
No.-11, Patel Nagar, P.S.- Rajiv Nagar, District- Patna, Bihar.
... ... Petitioner/s
Versus
1. The State of Bihar through the Secretary, Public Health Engineering
Department, Govt. of Bihar, Patna.
2. The Engineer-in-Chief cum Special Secretary, Public Health Engineering
Department, Govt. of Bihar, Patna.
3. The Chief Engineer, Public Health Engineering Department, Bihar.
4. The Superintending Engineer, Public Health Engineering Department,
Purnea.
5. The Executive Engineer, Public Health Engineering Department, Araria
Division, Araria.
... ... Respondent/s
======================================================
Appearance :
For the Petitioner/s : Mr. Naresh Dikshit, Adv.
Ms. Shruti Singh, Adv.
Mr. Utkarsh Pathak, Adv.
For the Respondent/s : Mr. P.K. Shahi, AG
======================================================
CORAM: HONOURABLE MR. JUSTICE SUDHIR SINGH
and
HONOURABLE MR. JUSTICE SHAILENDRA SINGH
ORAL ORDER
(Per: HONOURABLE MR. JUSTICE SUDHIR SINGH)
3 19-03-2026 Heard learned counsel for the parties.
2. The present writ application has been filed for the
following relief(s) :
"i. For issuance of an appropriate writ
in the nature of Certiorari for quashing and
setting aside the impugned office order bearing
no. 184 and 185 having memo no. 1811 and 1812
respectively dated 13.09.2025 (Annexure-P/5
series) issued by the Respondent no. 5 whereby
the agreements dated 20.08.2025 bearing Group
no.1, SBD-01/2025-26, and Group no.2, SBD-
02/2025-26, respectively executed with the
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Petitioner's company following the tender
awarded, has been cancelled and annulled.
ii. For issuance of an appropriate
writ, order or direction in the nature of
Certiorari, for quashing and setting aside the
impugned Notice / Letter dated 12.09.2025
(Annexure-P/6) issued by the impugned
Departmental Tender Committee, whereby the
tender already awarded to the Petitioner has
been cancelled, despite the fact that the
agreement had been executed and the Petitioner
had already commenced the work.
iii. For holding and declaring that the
Agreements executed with the Petitioner pursuant
to LOAs via Memo Nos. 1652 and 1653 dated
12.08.2025 are valid, subsisting and binding
upon the Respondents.
iv. For any other relief/reliefs for
which the petitioner is entitled in the facts and
circumstances of the instant case."
3. The brief facts of the case are that the petitioner, a
commercial entity engaged in execution of government
contracts, participated in NIT No. 12/2024-25(LoT)/(SBFe)
dated 28.01.2025 issued by the respondent department for
execution of works under the Mukhyamantri Gramin Peyjal
Nishchay Yojna. Upon due evaluation, the petitioner was
declared the lowest bidder (L-1) and Letters of Acceptance
dated 12.08.2025 were issued in its favour, pursuant to which
formal agreements were executed for multiple groups of work
having a cumulative value exceeding Rs. 120 crores. The
petitioner furnished performance bank guarantees and
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commenced execution of the work after mobilising requisite
resources and incurring substantial expenditure. However, on
the basis of a complaint made by one Aman Anand, the
respondents, vide impugned office orders dated 13.09.2025,
cancelled the entire tender process and annulled the agreements
already executed with the petitioner.
4. The impugned orders are the office orders
dated 13.09.2025 (Annexure P/5 series), whereby the
Agreements executed were cancelled and the Letter dated
12.09.2025 (Annexure- P/6 series) cancelling the awarded
tenders.
5. Learned counsel for the petitioner submits that the
petitioner was declared to be a successful bidder and an
agreement was executed with the Respondent-Department. The
work had also progressed and a huge amount of money was
invested by the petitioner in mobilizing and starting the work in
question. It is further submitted that a complaint was filed by
one Aman Anand on 28.08.2025, who is a third party and had
not even participated in the bid process. In the said complaint,
no allegation was made against the petitioner; at best, there was
some allegation that the tenders of other participants were
wrongly rejected by the Department. It is submitted that the
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persons whose tenders were rejected never approached this
Court and, on the basis of such a vague complaint by a third
party, the impugned order has been passed. It is further
submitted that the impugned order is a cryptic one, as no valid
reason have been assigned therein, and the same has been
passed without giving any opportunity of hearing to the
petitioner, inasmuch as neither any notice nor any show cause
was issued, thus being in contravention to the principles of
natural justice.
6. Learned counsel for the State, while referring to the
counter affidavit, has not disputed the fact that the impugned
action was taken pursuant to the complaint made by the said
Aman Anand, and the said stand is reflected in the counter
affidavit as well.
7. The limited issue that arises for consideration
before this Court is that whether the respondent authorities were
justified in cancelling the tender and annulling concluded
agreements on the basis of a complaint made by a third party,
who was a stranger to the tender process as well as the contract.
8. Upon hearing learned counsel for the parties and on
perusal of the materials on record, this Court finds that it is not
in dispute that the petitioner was declared the lowest bidder (L-
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1) pursuant to a due tender process, and Letters of Acceptance
were issued in its favour, followed by execution of formal
agreements between the parties. It is further evident from the
record that the petitioner had furnished the requisite
performance bank guarantees and had also commenced
execution of the work. Thus, the tender process had attained
finality and culminated into a concluded and binding contractual
relationship between the parties, creating vested rights and
corresponding obligations.
9. It further emerges from the record, as also from the
stand taken in the counter affidavit filed on behalf of the State,
that the entire action leading to cancellation of the tender and
annulment of the agreements has been initiated on the basis of a
complaint made by one Aman Anand. It is an admitted position
that the said complainant was neither a participant in the tender
process nor had any contractual relationship with the respondent
authorities in respect of the subject work, and thus was a
complete stranger to both the tender and the contract.
10. In such circumstances, while the respondent
authorities are not restrained of their power to examine
complaints; any action having civil consequences, particularly
one which results in nullifying concluded contracts, must be
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supported by cogent reasons and must adhere to the principles
of fairness and due process.
11. However, upon perusal of the impugned order
dated 13.09.2025, this Court finds that the same is wholly
cryptic and devoid of any reasons, inasmuch as it does not
disclose the basis on which such a drastic decision has been
taken, nor does it indicate any fault attributable to the petitioner.
The Hon’ble Supreme Court in Kranti Associates Pvt. Ltd. v.
Masood Ahmed Khan reported in (2010) 9 SCC 496 has
emphasized that recording of reasons is an essential facet of
natural justice and ensures transparency in decision-making.
The relevant part of the said order reads as follows:
“47. Summarising the above discussion, this Court holds:
(a) In India the judicial trend has always been to record reasons, even in
administrative decisions, if such decisions affect anyone prejudicially.
(b) A quasi-judicial authority must record reasons in support of its
conclusions.
(c) Insistence on recording of reasons is meant to serve the wider principle
of justice that justice must not only be done it must also appear to be done
as well.
(d) Recording of reasons also operates as a valid restraint on any possible
arbitrary exercise of judicial and quasi-judicial or even administrative
power.
(e) Reasons reassure that discretion has been exercised by the decision-
maker on relevant grounds and by disregarding extraneous considerations.
(f) Reasons have virtually become as indispensable a component of a
decision-making process as observing principles of natural justice by
judicial, quasi-judicial and even by administrative bodies.
(g) Reasons facilitate the process of judicial review by superior courts.
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(h) The ongoing judicial trend in all countries committed to rule of law
and constitutional governance is in favour of reasoned decisions based on
relevant facts. This is virtually the lifeblood of judicial decision-making
justifying the principle that reason is the soul of justice.
(i) Judicial or even quasi-judicial opinions these days can be as different
as the judges and authorities who deliver them. All these decisions serve
one common purpose which is to demonstrate by reason that the relevant
factors have been objectively considered. This is important for sustaining
the litigants' faith in the justice delivery system.
(j) Insistence on reason is a requirement for both judicial accountability
and transparency.
(k) If a judge or a quasi-judicial authority is not candid enough about
his/her decision-making process then it is impossible to know whether the
person deciding is faithful to the doctrine of precedent or to principles of
incrementalism.
(l) Reasons in support of decisions must be cogent, clear and succinct. A
pretence of reasons or “rubber-stamp reasons” is not to be equated with a
valid decision-making process.
(m) It cannot be doubted that transparency is the sine qua non of restraint
on abuse of judicial powers. Transparency in decision-making not only
makes the judges and decision-makers less prone to errors but also makes
them subject to broader scrutiny. (See David Shapiro in Defence of
Judicial Candor [(1987) 100 Harvard Law Review 731-37] .)
(n) Since the requirement to record reasons emanates from the broad
doctrine of fairness in decision-making, the said requirement is now
virtually a component of human rights and was considered part of
Strasbourg Jurisprudence. See Ruiz Torija v. Spain [(1994) 19 EHRR 553]
EHRR, at 562 para 29 and Anya v. University of Oxford [2001 EWCA Civ
405 (CA)] , wherein the Court referred to Article 6 of the European
Convention of Human Rights which requires,
“adequate and intelligent reasons must be given for judicial decisions”.
(o) In all common law jurisdictions judgments play a vital role in setting
up precedents for the future. Therefore, for development of law,
requirement of giving reasons for the decision is of the essence and is
virtually a part of “due process”.”
12. Further, it is not in dispute that prior to passing of
the impugned order, no opportunity of hearing was afforded to
the petitioner. Admittedly, neither any show cause notice was
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issued nor any explanation was sought from the petitioner,
despite the fact that the impugned action has serious civil and
financial consequences, including annulment of agreements and
disruption of ongoing work. Such action is in clear violation of
the principles of natural justice, particularly the rule of audi
alteram partem.
13. This Court also finds substance in the submission
advanced on behalf of the petitioner that the persons whose bids
were allegedly rejected during the tender process have not
chosen to assail the same before any forum. It is not the case of
the respondents that any of such unsuccessful bidders have
questioned the tender process or the award of contract in favour
of the petitioner. In such circumstances, the initiation of action
solely on the basis of a complaint made by a third party, who
neither participated in the tender process nor had any direct
grievance arising therefrom, assumes significance.
14. This Court is of the considered view that while the
authorities are not precluded from examining complaints,
especially in public matters, the same cannot form the sole basis
for taking drastic action of cancelling a concluded tender and
annulling subsisting agreements, particularly when the persons
directly affected by the alleged irregularities have themselves
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not raised any challenge. Such action, in absence of independent
application of mind, cogent reasons and adherence to due
process, partakes the character of arbitrariness.
15. In view of the aforesaid discussion, the impugned
office orders dated 13.09.2025 (Annexure-P/5 series) and the
letter dated 12.09.2025 (Annexure-P/6 series), cannot be
sustained in the eyes of law and are, accordingly, set aside.
16. Accordingly, the writ application is allowed.
17. Pending application(s), if any, shall stand disposed
of.
(Sudhir Singh, J)
( Shailendra Singh, J)
annu/Rajesh
U
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