Lowest Or Sole Bidder Has No Vested Right To Contract Until Letter Of Acceptance Is Issued: Patna High Court
The Patna High Court has held that merely emerging as the lowest or sole successful bidder does not give a bidder a vested right to the contract. Such a right does not arise until the competent authority accepts the bid and communicates its acceptance.
A Division Bench of Acting Chief Justice Sudhir Singh and Justice Rajesh Kumar Verma said that until then, a bidder only has a right to fair and non-arbitrary consideration of its bid.
The Court was hearing a petition concerning a tender floated by the Bihar Urban Infrastructure Development Corporation Limited (BUIDCo) for construction of a Storm Water Drainage System at Bodh Gaya. The petitioner had first participated in a tender issued in October 2023 and emerged as the sole bidder. That tender was cancelled. BUIDCo then issued a fresh tender in December 2023, in which the petitioner again remained the sole bidder.
This time, the petitioner was found technically qualified and its financial bid was also opened and recommended. The Tender Committee decided to place the matter before the Board of Directors. Before the Board could take a decision, however, BUIDCo cancelled the tender citing “unavoidable circumstances”.
The petitioner challenged that cancellation before the High Court. In December 2024, BUIDCo told the Court that the matter would be placed before its Board of Directors. The Court accordingly directed the Board to consider the matter and pass a speaking order. The Board subsequently decided not to accept the petitioner's bid and ordered a fresh tender. Among the reasons cited was that the administrative approval for the project contemplated operation and maintenance for five years, but this requirement had not been included in the tender documents. The Board also took note of the fact that there was only one bidder.
The petitioner argued that once it had been found technically qualified and its financial bid had been recommended, its bid could not have been rejected on grounds which were not part of the tender conditions. It also argued that it could not be made to suffer for BUIDCo's failure to include the five-year operation and maintenance requirement in the tender itself.
The High Court rejected the challenge. It noted that while the petitioner had been found technically qualified and its financial bid had been opened, no Letter of Acceptance had ever been issued. Nor was any work order issued or agreement executed. The Bench observed:
“It is a settled principle of law that participation in a tender process, even as the lowest or sole bidder, does not by itself create a vested or enforceable right to obtain the contract. The State or its instrumentalities are under no legal obligation to accept any bid merely because it is the only bid received or because the bidder has been found technically and financially responsive. The right of a bidder is confined to a fair, transparent and non-arbitrary consideration of its bid.”
The Court further held that until the competent authority accepts a bid and communicates that acceptance, the bidder has no right to demand the contract. In the absence of a Letter of Acceptance, work order or concluded contract, the petitioner had acquired no enforceable legal right.
The Court also upheld BUIDCo's decision to cancel the tender. It found that the five-year operation and maintenance component formed part of the administrative approval but had been left out of the tender documents. Whether that component was necessary was a technical and administrative matter for the employer to decide.
It added that an employer can cancel a tender if it finds that the tender conditions suffer from a material defect or do not reflect its actual requirements. A bidder cannot insist that the authority proceed with a defective tender simply because it has emerged as the sole successful bidder.
Finding no mala fides, favouritism or arbitrariness in the Board's decision, the High Court refused to interfere with the cancellation and the decision to issue a fresh tender.
Case Title: Amit Kumar-Alok Kumar, Patna (JV) v. Bihar Urban Infrastructure Development Corporation Ltd.
Case Number: Civil Writ Jurisdiction Case No. 16046 of 2025
Appearance: Mr. Ramakant Sharma, Senior Advocate, with Mr. Manish Sahay, Mr. Anil Kumar Sinha, Mr. Siddharth Aditya, Mr. Amrit Kirti and Mr. Aman Raj for the Petitioner; Mr. Lalit Kishore, Senior Advocate, with Mr. R.K. Prayadarshi, Mr. Ayush Kumar and Mr. Kanishka Shankar for the Respondents.
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