Tender Can't Be Cancelled Citing Expiry Of Bid Validity After Invoking Extension Clause: Patna High Court
The Patna High Court has held that once a tendering authority invokes the contractual mechanism for extension of bid validity and obtains the bidders' consent, it cannot subsequently justify cancellation of the tender solely on the ground that the original bid validity period expired. The Court held that such a course is inconsistent with the scheme of the Standard Bidding Document (SBD).
A Division Bench of Acting Chief Justice Sudhir Singh and Justice Ranjan Kumar Jha quashed the cancellation of a tender and the consequential re-tender floated by the Public Health Engineering Department, Bihar.
The petitioner, J & S Joint Venture, had participated in a tender for design, construction, supply of materials, testing and commissioning of piped water supply schemes under the Har Ghar Nal Jal scheme. After being declared technically qualified, the petitioner emerged as the lowest (L-1) bidder. As the tender process could not be concluded within the original bid validity period, the Executive Engineer twice sought the petitioner's consent for extension of bid validity, which the petitioner furnished unconditionally. While the proposal for extension was pending before the competent authority, the petitioner received an email cancelling the tender, following which a fresh tender was issued.
The petitioner argued that after having declared it the lowest bidder and repeatedly seeking extension of bid validity, the respondents could not cancel the tender without assigning any reason. The State, on the other hand, contended that under Clause 15.1 of the Standard Bidding Document, bids remained valid only for 180 days and since that period had expired before the tender process concluded, the authorities had no option but to cancel the tender. It was also submitted that the Model Code of Conduct during the Bihar Assembly elections prevented timely finalisation of the tender process.
The Court framed the principal issue as whether, after invoking Clause 15.2 of the SBD and obtaining the bidders' consent for extension of bid validity, the respondents could still justify cancellation by relying upon expiry of bid validity under Clause 15.1. Answering the issue against the State, the Bench observed:
“Once the respondents themselves proceeded under Clause 15.2 by seeking extension of the bid validity and obtaining the consent of the bidders, a question naturally arises as to whether they could thereafter justify the cancellation solely on the ground that the bid validity had expired under Clause 15.1. The respondents cannot, on the one hand, invoke the machinery contemplated under Clause 15.2 and call upon the bidders to extend the validity of their bids and, on the other hand, rely upon the very expiry of the original bid validity under Clause 15.1 as the basis to sustain the cancellation. Such a course of action is prima facie inconsistent with the scheme of the SBD.”
The Court also noted that although no formal order extending the bid validity had ultimately been passed, the respondents themselves had consciously initiated the process under Clause 15.2, obtained the bidders' consent and processed the proposal for extension. Those admitted facts, the Court held, could not be ignored while defending the cancellation.
The Bench further reiterated that while a lowest bidder does not acquire an indefeasible right to be awarded the contract and the authority retains the power to cancel a tender, such power remains subject to judicial review and must be exercised fairly, consistently and in accordance with the tender conditions. Even a contractual clause permitting cancellation without assigning reasons cannot justify an action that is inconsistent with the procedure adopted by the authority itself.
Holding that the respondents' justification for cancellation was incompatible with the course they had adopted under Clause 15.2, the Court quashed both the cancellation of Tender ID No. 89096 and the consequential re-tender. The matter was remitted to the competent authority to take a fresh, reasoned decision in accordance with the Standard Bidding Document and the Notice Inviting Tender.
Case Title: J and S Joint Venture (JV) v. State of Bihar and Ors.
Case Number: Civil Writ Jurisdiction Case No. 20099 of 2025.
Appearance: Mr. Prafull Chandra Jha, Mr. Avinash Chandra, Mr. Keshav Kumar Jha and Mr. Rahul Kumar appeared for the Petitioner. Mr. Sajid Salim Khan, Mr. S. Mushtaque and Mr. Yasir Ashraf appeared for the Respondents.