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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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