Simplified Explanation of the Judgment

In a case concerning a public works contract, the Patna High Court dismissed a writ petition filed by a private construction firm that had challenged the cancellation of a tender for the development of a temple in Vaishali district. The petitioner had claimed to be the sole successful bidder in response to a Notice Inviting Tender (NIT) issued by the Bihar State Tourism Development Corporation (BSTDC) for the construction work of Baba Ganinath Temple, with a project value of ₹7.62 crores.

The controversy began when BSTDC canceled the initial tender dated 31 July 2019, despite the petitioner’s financial bid being opened and allegedly found to be the lowest (L1). The petitioner had also expressed willingness to extend the bid validity period, which was set to expire on 30 January 2020. However, the bid validity was never officially extended by the authorities.

Subsequently, on 7 July 2020, the BSTDC decided to cancel the previous tender and initiate a fresh one after revising the cost estimate using a new Schedule of Rates (SOR). This move was based on a 2016 Finance Department notification requiring re-tendering if only a single bid is received.

The petitioner challenged this decision, arguing that:

• Once the financial bid was opened, the confidentiality of the process was compromised.
• The cancellation lacked valid reasoning.
• A fresh tender would increase project costs due to inflation, causing loss to both the petitioner and the public exchequer.

In contrast, the State and BSTDC contended that:

• The decision to cancel was driven by updated government policy.
• A revised SOR was necessary to ensure quality and fair pricing.
• The lapse in bid validity alone justified starting afresh.
• Re-tendering based on a new SOR eliminates the prejudice caused by disclosure of the petitioner’s financial bid.

After reviewing submissions and case law, the Court upheld the cancellation and re-tender decision, citing the policy requirement for multiple bids to ensure competition and public interest. The Court emphasized that opening a financial bid based on an outdated SOR, followed by re-tendering on a new SOR, does not prejudice the petitioner’s right to participate again.

The Court also clarified that judicial review in contract matters is limited. It will not interfere unless the decision is arbitrary or violates principles of fairness and transparency. Since the fresh process was driven by policy, revised rates, and public interest, no interference was warranted.

Significance or Implication of the Judgment

This judgment underscores the importance of competition and transparency in public procurement processes. It reaffirms that government authorities have the discretion to cancel tenders—even after opening financial bids—if only a single bid is received or if rates have become outdated.

For the government, it validates the Finance Department’s policy that mandates re-tendering in case of a single bidder, thus preventing potential monopolies and inflated costs. For contractors, the judgment serves as a reminder that participating in a tender does not automatically entitle them to work orders, especially if policy or public interest dictates otherwise.

The ruling also highlights that courts will not entertain contractual grievances unless there is a clear violation of law, arbitrariness, or bad faith. It strengthens the legal framework protecting public expenditure and ensuring quality in infrastructure development.

Legal Issue(s) Decided and the Court’s Decision with reasoning

• Whether cancellation of the tender process after opening a single financial bid was arbitrary or unfair?
  • Decision: No. The cancellation was in line with policy under a 2016 Finance Department notification requiring re-tendering in case of a single bid.
• Does the opening of the petitioner’s financial bid invalidate the re-tender process?
  • Decision: No. The financial bid was based on an outdated SOR, and the fresh tender would be issued under a revised SOR, eliminating any prejudice.
• Whether judicial review under Article 226 is justified in such contract-related matters?
  • Decision: No interference warranted. The Court reiterated that judicial review is limited in contractual matters and the state’s discretion must be respected when exercised reasonably and in public interest.

Judgments Referred by Parties

• M/s Parmar Enterprises v. State of Bihar & Ors., CWJC No. 8025 of 2016
• M/s Technofab Engineering Ltd. v. Bihar State Power (Holding) Company Ltd., CWJC No. 6293 of 2013

Judgments Relied Upon or Cited by Court

• Tata Cellular v. Union of India, (1994) 6 SCC 651
• Raunaq International Ltd. v. I.V.R. Construction Ltd., (1999) 1 SCC 492
• Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517
• Siemens Aktiengeselischaft & Siemens Ltd. v. DMRC Ltd., (2014) 11 SCC 288

Case Title

M/s B. N. Enterprises v. The State of Bihar & Ors.

Case Number

CWJC No. 7054 of 2020

Citation(s)

2021(1)PLJR 135

Coram and Names of Judges

Hon’ble Mr. Justice Madhuresh Prasad

Names of Advocates and who they appeared for

• Mr. Prabhat Ranjan, Advocate (for the petitioner)
• Mr. Ajit Kumar, GA-9 (for the State)
• Mr. Abhimanyu, Advocate (for the Corporation)

Link to Judgment

https://patnahighcourt.gov.in/viewjudgment/MTUjNzA1NCMyMDIwIzEjTg==-QMDi0Ml9nrE=

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