A Division Bench of Justice Sudhir Singh and Justice Shailendra Singh was hearing a writ petition filed seeking, inter alia, quashing of Memo No. 2259 dated 29.12.2017 issued by the District Manager, Bihar State Food and Civil Supplies Corporation (BSFC), Kaimur, whereby the petitioner's agreement for doorstep delivery of food grains was cancelled, the petitioner was blacklisted for three years, and the security deposit and bank guarantee were forfeited.

The dispute arose out of a tender notice dated 05.02.2016 issued by the respondent-Corporation inviting applications for appointment of Transporting and Handling Agents for doorstep delivery of food grains across various districts of Bihar, including Kaimur.

The petitioner participated in the tender process and, after scrutiny by the District Transport Committee and the Head Office Transporting Committee, was declared eligible. Thereafter, vide letter dated 16.07.2016, the District Manager, Kaimur was directed to appoint the petitioner as Transporting Agent till 31.03.2019. Pursuant thereto, an agreement was executed and the petitioner commenced work.

However, after about one year, a show cause notice dated 10.10.2017 was issued alleging submission of a false affidavit and violation of Clause 9(iii)(d) of the tender conditions. The petitioner denied the allegations and contended that no such clause formed part of the original NIT dated 05.02.2016. Subsequently, vide Memo dated 29.12.2017 issued pursuant to Memo No. 13056 dated 23.12.2017 of the Managing Director, the agreement was cancelled, the security amount and bank guarantee were forfeited, and the petitioner was blacklisted for three years.

Before the High Court, counsel for the petitioner argued that the petitioner had been selected after full verification by the competent authorities and had been performing contractual duties without any allegation of misappropriation. It was further submitted that the allegation regarding violation of Clause 9(iii)(d) was wholly misconceived since no such clause existed in the original NIT.

The petitioner also pointed out that while the show cause notice referred to Clause 9(iii)(d), the final impugned order referred to violation of Clause 9.6, thereby demonstrating contradiction and inconsistency in the stand of the respondents. The petitioner further contended that he was neither a fair price shop license holder nor owner of any rice mill and therefore there had been no suppression of facts.

Opposing the petition, the respondents argued that the petitioner had submitted a false affidavit and violated tender conditions, following which the Managing Director, BSFC had terminated the agreement, forfeited the security amount and bank guarantee, and blacklisted the petitioner. The Court framed the principal issue as:

“Whether the employer can pass an order of cancellation, forfeiture and blacklisting by going beyond the terms and conditions of the tender notice.”

After examining the record, the Court found that although the respondents had relied upon alleged violation of Clause 9(iii)(d), they failed to produce any material demonstrating that such clause actually formed part of the original tender conditions. The Court further noted that while passing the final order, the respondents themselves shifted the basis of allegation from Clause 9(iii)(d) to Clause 9.6.

The Bench observed:

“Such inconsistency further strengthens the petitioner's case that the impugned action has not been founded upon the original terms and conditions of the tender notice.”

Reiterating settled principles governing public tenders, the Court observed:

“In matters of public tender, the State and its instrumentalities are bound to act strictly in accordance with the terms and conditions stipulated in the Notice Inviting Tender and cannot deviate therefrom in an arbitrary or selective manner.”

The Court relied upon the Supreme Court judgment in Ramana Dayaram Shetty v. International Airport Authority of India (1979) 3 SCC 489, observing that the State is rigorously bound by the standards it prescribes and cannot relax or ignore eligibility conditions arbitrarily. The Bench further observed:

“The Supreme Court has further consistently held that a bidder cannot be disqualified or penalized on the basis of a condition which did not form part of the tender document.”

The Court explained that every participant in a tender process is entitled to know with certainty the exact conditions governing the tender, and any deviation would render the process arbitrary and violative of Article 14 of the Constitution. Holding that the impugned action suffered from arbitrariness, the Court answered the issue in favour of the petitioner and quashed Memo No. 2259 dated 29.12.2017 and Memo No. 13056 dated 23.12.2017.

Case Title: Sanjay Kumar Jaiswal v. The Bihar State Food and Civil Supply Corporation Ltd. and Ors.

Case Number: Civil Writ Jurisdiction Case No. 1630 of 2018.

Appearance: Mr. Amrendra Narayan Rai for the Petitioner. Mr. Shailendra Kumar Singh for the Respondents.