A Division Bench comprising Justice Anil Kumar Sinha and Justice Vikash Kumar dismissed an intra-court appeal filed by the State of Bihar challenging the Single Judge's order dated May 18, 2018, directing payment of Rs.5 lakh to the writ petitioner, Kamakshi Minakshi Construction Private Limited.

The dispute arose from a tender floated by the Rural Works Department, Bihar. The respondent was initially found technically eligible on January 30, 2017, and subsequently declared the lowest bidder (L-1) on February 3, 2017. However, following a complaint by a Member of the Legislative Assembly (MLA), an enquiry was conducted. The Tender Committee subsequently disqualified the L-1 and L-2 bidders on the ground that the stamp papers used for executing their affidavits had not been issued in the names of the persons making the affidavits.

The tender was cancelled, and a fresh tender process was initiated, pursuant to which the work was awarded to another contractor. The respondent challenged its exclusion before the High Court. Upon reconsideration of the matter following an earlier remand, the Single Judge found the disqualification arbitrary. However, as approximately 80% of the work had already been completed by the subsequent contractor, the Court declined to disturb the ongoing work and instead awarded Rs.5 lakh as compensation.

Challenging this direction, the State argued that merely being declared L-1 did not create a concluded contract or any vested right to the work. It further contended that the respondent had chosen not to participate in the fresh tender despite being given the opportunity.

Rejecting these submissions, the Division Bench noted that the requirement concerning purchase of stamp paper did not form part of the NIT. When specifically questioned, the State's counsel admitted that no such condition existed. The Court observed:

“…The said ground had no basis in the tender conditions. More importantly when the Court specifically enquired from the State authority as to whether there was any such condition in the NIT, learned counsel appearing for the State fairly submitted that there was none. In absence of such a stipulation in the NIT, the respondent-writ petitioner could not have been declared ineligible on such trivial ground…”

The Bench held that the Single Judge had rightly avoided interfering with the subsequent tender, since doing so would disrupt an ongoing public work that was already 80% complete. It further clarified:

“We therefore find that the learned Single Judge has neither interfered with a concluded contract nor awarded contractual damages. The relief has been moulded after balancing the established illegality in the original tender process at the behest of an MLA against the subsequent progress of public work…”

Holding that the authorities' action was intrinsically arbitrary and that the compensation awarded was not illegal in the circumstances, the High Court dismissed the State's appeal and upheld the award of Rs.5 lakh.

Appearance:

For the Appellant/s: Mr. Pratik Kumar Sinha, AC to GA-5; Mr. Saurav Kumar, Adv.; Mr. Rakesh Kumar Ranjan, Adv.

For the Respondent/s: Mr. Ashish Kumar Lal, Adv.