J&K High Court Upholds Cancellation of ₹161 Crore RDSS Tender LoI Against Blacklisted Bidder

Justice Sanjay Parihar dismissed a writ petition by M/s SPBL Energy, finding JPDCL justified in cancelling the Letter of Intent after the L-1 bidder's blacklisting history surfaced during the award process.

The High Court of Jammu & Kashmir and Ladakh, at Jammu, has dismissed a writ petition filed by M/s SPBL Energy Pvt. Ltd. challenging the cancellation of a Letter of Intent (LoI) issued to it for a ₹161.23 crore infrastructure contract under the Revamped Distribution Sector Scheme (RDSS) in Electric Division Kathua. Justice Sanjay Parihar, sitting singly, held that the Jammu Power Development Corporation Limited (JPDCL) was fully justified in withdrawing the LoI once credible material emerged showing the petitioner had been blacklisted by another electricity distribution authority — a fact the petitioner had initially failed to disclose. The court also permitted JPDCL to proceed with re-tendering and clarified that the petitioner may participate if it subsequently satisfies the eligibility criteria.

The Tender and the Complaint

JPDCL issued e-Tender No. CE/PJ/JPDCL/RDSS/LR/ED-KATHUA/07 (PKG-06) dated 27 July 2022 for the development of distribution infrastructure in Sub-Divisions Hiranagar and Kathua under the RDSS. The work involved bifurcation of long feeders, reconductoring, augmentation and replacement of distribution transformers, replacement of worn-out wooden poles, barbed wires and stranded conductors, and installation of capacitor banks at 66/11 KV and 33/11 KV substations.

M/s SPBL Energy participated and emerged as the lowest (L-1) bidder. While the finalisation process was underway, one Mr. Rajeev Talreja, described in the petition as a former associate of the petitioner, lodged a complaint alleging that SPBL Energy had already been blacklisted for financial irregularities.

JPDCL convened a meeting on 16 November 2022 where both the petitioner's representative and the complainant were heard. At that stage, the corporation found the allegations regarding blacklisting by Uttar Pradesh Jal Nigam not clearly established and directed the petitioner to furnish an affidavit undertaking that if any document was found forged or any adverse order came to light, the LoI would stand cancelled ab initio. The petitioner furnished that affidavit.

The Blacklisting That Arrived Two Days Later

Two days after the 16 November 2022 meeting, on 18 November 2022, Dakshin Anchal Vidyut Vitran Nigam Limited (DVVNL), Agra, passed a fresh blacklisting order against SPBL Energy. The order held the petitioner guilty of furnishing forged bank guarantees worth ₹11.55 crore. This fresh order followed a direction by the Allahabad High Court, which had earlier on 31 May 2022 quashed a previous DVVNL blacklisting on procedural grounds and remitted the matter for reconsideration.

On 24 November 2022, JPDCL informed the petitioner that the complainant had again brought the fresh blacklisting to its notice and called upon SPBL Energy to explain its position. The petitioner pointed to a communication dated 6 December 2021 from Punjab & Sind Bank confirming no outstanding dues, and also informed JPDCL that the fresh DVVNL order had been stayed by the Uttar Pradesh Lokayukta on 12 December 2022.

JPDCL was not persuaded. By communication No. CE/PJ/6870-74 dated 3 February 2023, it cancelled the tender process, citing a legal opinion from the Department of Law, Justice and Parliamentary Affairs and the directions of competent higher authorities.

Petitioner's Case Before the High Court

SPBL Energy filed WP (C) No. 357/2023, represented by Senior Advocate Mr. Sunil Sethi with Mr. Ankesh Chandel. The petitioner pressed three principal arguments.

First, the cancellation order was a non-speaking order that disclosed no reasons, rendering it arbitrary and vitiated by mala fide exercise of power. Second, after the meeting of 16 November 2022 and the submission of the affidavit, the petitioner had a legitimate expectation of the LoI being converted into a Letter of Allotment; the subsequent cancellation without a further hearing violated the principles of natural justice. Third, internal file notings and deliberations that led to the impugned order had not been produced before the court, reflecting an opaque decision-making process.

Relying on Tata Cellular v. Union of India, (1994) 6 SCC 651, the petitioner argued that administrative action remains amenable to judicial review on grounds of illegality, irrationality, unreasonableness, and procedural impropriety. The petitioner also invoked 2024 SCC Online SC 1682, where the Supreme Court had found a cancellation to be a textbook case of arbitrary exercise of power based on extraneous considerations.

On the blacklisting itself, the petitioner contended that the Punjab & Sind Bank's no-objection certificate showed nothing was outstanding, and that the DVVNL order of 18 November 2022 had in any event been stayed by the Lokayukta.

JPDCL's Defence

Senior Advocate Mr. Amit Gupta, appearing for JPDCL with Mr. Sumit Moza, argued that SPBL Energy had approached the court without clean hands. The petitioner had, while submitting its bid, sworn an affidavit declaring that it was not blacklisted — a declaration that was false in light of the seven-year blacklisting imposed by Construction and Design Services, Uttar Pradesh Jal Nigam Ltd., Lucknow, which ran from 2017 to 2024 for failure to complete allotted work on time.

On the DVVNL blacklisting, the respondents submitted that the Lokayukta's stay order was without jurisdiction. The NIT expressly reserved the right to reject any or all bids and to cancel the bidding process at any stage without assigning reasons. A Letter of Intent, the respondents argued, is only an offer; a contract, and the rights attached to it, arises only upon formal acceptance. No indefeasible right accrued merely because SPBL Energy was the L-1 bidder.

On public interest, JPDCL pointed out that the contract was valued at approximately ₹161.23 crore and was directed at strengthening electricity infrastructure in rural Kathua. Entrusting such a contract to a company with a contested blacklisting history would undermine the integrity of the public procurement process.

How the Court Reasoned

Justice Parihar surveyed recent Supreme Court authority on judicial review in tender matters before turning to the facts. The court noted the principle established in Tata Cellular and affirmed repeatedly since: judicial review in contractual matters is confined to testing administrative action on the touchstone of illegality, irrationality, mala fides, and procedural impropriety. A writ court should not impose its decision over that of the tendering authority unless something very gross or palpable is demonstrated.

The court drew on the Supreme Court's observations in 2023 Legal Eagle (SC) 589, where interference at an advanced stage of a tender process was declined on public interest grounds, and on Siemens Public Communication Networks Pvt. Ltd. v. Union of India, (2008) 16 SCC 215, which held that principles of equity and natural justice “stay at a distance” when the decision is bona fide and in public interest.

On the 2024 SCC Online SC 1682 judgment invoked by the petitioner, the court drew a distinction. In that case, file notings themselves revealed uncertainty in the decision-making — the expression “may cancel the work order” appeared without any reason connecting a policy change to the specific contract. Here, by contrast, the cancellation was grounded in the concrete, repeatedly verified fact of the petitioner's blacklisting by DVVNL after a court-directed reconsideration, combined with the petitioner's failure to make full disclosure.

Justice Parihar also distinguished Subodh Kumar Singh Rathore v. Chief Executive Officer & Others, relied upon by the petitioner. In that matter the Supreme Court found the cancellation attributable neither to technical deficiency nor to any genuine policy decision; here the record showed that JPDCL acted on tangible material and followed a discernible process.

On the question of opportunity to be heard, the court found that JPDCL had in fact afforded the petitioner repeated chances to clarify its position: the 16 November 2022 meeting, the direction to submit an undertaking affidavit, the 24 November 2022 communication flagging the fresh DVVNL order, and the subsequent correspondence. The petitioner's response — relying on a Punjab & Sind Bank communication dated 6 December 2021, which pre-dated the fresh blacklisting order of 18 November 2022 — did not dispel the doubts raised. The Lokayukta stay question and the underlying validity of the DVVNL blacklisting were, the court held, matters for separate proceedings and outside the scope of this writ.

On the unreasoned-order argument, the court held that the departmental correspondence preceding the impugned cancellation reflected repeated efforts to secure clarification. Viewed in the context of the entire decision-making process, the cancellation could not be characterised as wholly without reason.

On legitimate expectation, the court applied State of Himachal Pradesh v. M/s OASYS Cybernetics Pvt. Ltd., 2025 INSC 1355, where the Supreme Court held that the doctrine cannot be invoked where the State, acting in public interest, cancels a Letter of Intent after following a fair and discernible process. The LoI here was, at best, an offer conditional upon the petitioner satisfying all eligibility conditions. No concluded contract existed. The petitioner's declared L-1 status created no enforceable right.

The court also noted that after cancelling the LoI, the respondents chose to re-tender the work rather than award it to the second-highest bidder. This conduct, the court observed, demonstrated that the purpose was to secure the most suitable bidder for a project of public importance — not to confer advantage on any other participant. Consequently, the cancellation did not violate Article 14 of the Constitution.

Outcome

Justice Sanjay Parihar dismissed WP (C) No. 357/2023 as devoid of merit. All interim directions were vacated. JPDCL was granted liberty to proceed with the re-tendering process in accordance with law. The court clarified that if SPBL Energy is subsequently exonerated and otherwise satisfies the eligibility criteria, it may participate in the fresh tender subject to the applicable terms and conditions. The order was marked as speaking and reportable.