Patna HC Quashes Tender Cancellation After Department Invoked Bid Extension Clause Then Relied on Expiry to Cancel

The Patna High Court set aside the cancellation of a piped water supply tender, holding that the Public Health Engineering Department could not invoke the bid validity extension mechanism under Clause 15.2 of the Standard Bidding Document and then rely on expiry of the original validity period under Clause 15.1 to justify cancellation.

A Division Bench of the Patna High Court, comprising Acting Chief Justice Sudhir Singh and Justice Ranjan Kumar Jha, allowed a writ petition filed by J & S Joint Venture, a contractor that had emerged as the lowest (L-1) bidder for piped water supply works under the Har Ghar Nal Jal Nischay Yojana in Aurangabad district. The petition challenged the abrupt cancellation of Tender ID No. 89096 through an e-mail dated 02.12.2025 — without any stated reason — and the simultaneous issuance of a fresh retender. The court found that the Public Health Engineering Department (PHED), having twice invoked Clause 15.2 of the Standard Bidding Document to seek extension of bid validity and having obtained the petitioner's unconditional consent, could not later defend the cancellation by pointing to expiry of the original 180-day validity under Clause 15.1. Both the cancellation and the retender notification were quashed, and the matter was remitted for a fresh, reasoned decision.

The Tender Process and How It Unravelled

The petitioner, J & S Joint Venture (JV), is a combination of M/s Maa Jagdamba Construction and M/s S.K. Construction, with its office at Shri Krishna Nagar, Aurangabad, Bihar. It participated in a tender initiated by the Public Health Engineering Division, Aurangabad, under NIT No. 15/2024-25 (LoT/PRD) dated 17.01.2025. The tender covered the design, construction, supply of materials, testing and commissioning of piped water supply schemes under the Har Ghar Nal Jal scheme on a turnkey basis.

The petitioner submitted its bid within the prescribed time. On 09.08.2025, the Executive Engineer wrote to all participating bidders requesting an extension of bid validity in accordance with Clause 15.2 of the Standard Bidding Document. The petitioner consented, extending validity to 18.09.2025. On 12.09.2025, the Technical Evaluation Committee, vide Memo No. 1399, declared the petitioner technically qualified. Upon opening of the financial bids, the petitioner was found to be the L-1 bidder.

The process did not conclude within the extended period. By Letter No. 3052 dated 03.10.2025, the Executive Engineer again sought the petitioner's consent for a further extension of bid validity. The petitioner gave its unconditional consent on the same day, agreeing to execute the work at the quoted rates. The Executive Engineer forwarded this to higher authorities by Letter No. 3073 dated 06.10.2025. The Chief Engineer recommended the extension by Letter No. 1717 dated 01.12.2025.

One day later, on 02.12.2025, the petitioner received an e-mail stating that Tender ID No. 89096 had been cancelled. No formal letter was issued; no reason was given. On the same date, the PHED published Re-Tender NIT No. 04/2025-26 (LoT/PRD). The petitioner challenged both actions before the Patna High Court.

The Legal Contest: Clause 15.1 Against Clause 15.2

Counsel for the petitioner, Mr. Prafull Chandra Jha, argued that the cancellation was arbitrary and illegal. Once the petitioner had been declared technically qualified and had emerged as L-1, the respondents could not cancel the tender without assigning any reason. He further contended that the Executive Engineer lacked authority to cancel the tender after financial bids had been opened and the petitioner had been declared the successful bidder, making the action dehors the governing procedure and without jurisdiction.

Counsel for the respondents, Mr. Sajid Salim Khan, defended the cancellation on two grounds. First, under Clause 15.1 of the Standard Bidding Document, bids are valid for 180 days from the deadline for submission; once that period expired, no further action could lawfully be taken. Second, under Clause 30.1 of the SBD, notification of award and execution of the agreement must be completed within the bid validity period. Since the Model Code of Conduct enforced during the Bihar Legislative Assembly Elections had prevented finalisation within the validity period, the Executive Engineer had no choice but to cancel. The respondents also relied on Clause 24 of NIT No. 15/2024-25, which reserved the tendering authority's right to extend, accept or reject the tender without assigning reasons.

The petitioner's rebuttal focused squarely on the interplay between the two clauses. Clause 15.2 exists precisely because Clause 15.1's 180-day period may prove insufficient. The respondents themselves invoked Clause 15.2 not once but twice, obtained written consents from bidders each time, and forwarded the proposal for extension up the chain of authority. Having consciously set that mechanism in motion, they could not turn around and use Clause 15.1's original expiry as a shield for the cancellation.

The Court's Reasoning on Bid Validity

The bench framed two specific issues: whether the respondents could justify cancellation on the ground of Clause 15.1 expiry after having invoked the Clause 15.2 extension mechanism, and whether the decision to cancel Tender ID No. 89096 and issue a fresh tender was legally sustainable.

On the first issue, the court set out the text of both clauses. Clause 15.1 fixes the initial validity period at 180 days. Clause 15.2 provides that, in exceptional circumstances, prior to expiry of the original time limit, the employer may request bidders to extend validity for a specified additional period, and a bidder agreeing to the request may not modify his bid. The court read the clauses conjunctively: Clause 15.2 is the designated mechanism for extension when the 180-day window proves inadequate.

The court found it undisputed that the respondents had invoked Clause 15.2 twice and that the petitioner had furnished unconditional consent on both occasions. What the respondents had not done was bring any material on record showing that a formal order extending the bid validity had actually been issued by the competent authority. The court acknowledged this gap but declined to let the absence of a formal order assist the respondents. The admitted position was that the Clause 15.2 process had been consciously initiated, consents had been obtained, and the proposal had been processed upward. The respondents had not explained why that process was not carried to its conclusion.

The bench observed that the cancellation communication of 02.12.2025 “does not disclose any reason whatsoever for such cancellation.” The justification based on Clause 15.1 surfaced only during the hearing. Having activated Clause 15.2 and acted upon the consents obtained, the respondents could not simultaneously rely on the original expiry under Clause 15.1 to sustain the cancellation. The court described this as “prima facie inconsistent with the scheme of the SBD.”

The bench placed reliance on the Supreme Court's decision in West Bengal State Electricity Board v. Patel Engineering Co. Ltd., (2001) 2 SCC 451, which emphasised that the conditions of a tender document must be adhered to strictly by all parties, including the tendering authority, and that relaxation or waiver outside the rules impairs transparency and creates room for arbitrariness.

Whether the Cancellation Was Legally Sustainable

On the second issue, the court acknowledged the settled position that an L-1 bidder does not acquire an indefeasible right to demand award of the contract, and that a tendering authority has the power to cancel a tender and invite fresh bids if circumstances warrant. However, that power must be exercised fairly, transparently and non-arbitrarily, and is subject to judicial review.

The bench drew on Tata Cellular v. Union of India, (1994) 6 SCC 651, for the proposition that while courts do not sit in appeal over commercial decisions made by tendering authorities, they will intervene where the decision-making process is arbitrary, irrational, mala fide or in breach of the prescribed procedure.

The respondents' reliance on Clause 24 of the NIT — the general reservation to accept, reject or cancel without assigning reasons — did not advance their case. The court accepted that such a clause exists and is valid. But even a contractual power to cancel without reasons cannot be exercised in a manner inconsistent with other governing conditions of the same tender document. Having proceeded under Clause 15.2, the respondents could not turn to Clause 15.1 alone as the basis for cancellation without first accounting for the course they had themselves chosen.

The absence of any explanation for why the Clause 15.2 process was not completed, combined with the absence of any reason in the cancellation communication itself, meant that the decision-making process was not consistent with the governing tender conditions. To that extent, the court held, it warranted interference in the exercise of writ jurisdiction.

The court also noted that by an interim order dated 07.04.2026, the operation of Re-Tender NIT No. 04/2025-26 had already been stayed. No substantive progress had therefore been made under the retender.

Order

The Division Bench allowed the writ petition. The impugned communication dated 02.12.2025 cancelling Tender ID No. 89096 was quashed. Re-Tender NIT No. 04/2025-26 (LoT/PRD) dated 02.12.2025 was also quashed as a consequential action.

The matter was remitted to the competent authority to take a fresh decision on Tender ID No. 89096, strictly in accordance with the terms and conditions of the Standard Bidding Document and the Notice Inviting Tender, keeping in view the court's observations. The authority was left free to pass an appropriate reasoned decision in accordance with law.

Pending applications were disposed of. The judgment was authored by Acting Chief Justice Sudhir Singh; Justice Ranjan Kumar Jha concurred.