Case Background
The Health Department of the State of Bihar has adopted a policy to outsource services necessary for running government hospitals. These include sanitation, cleaning, lighting and laundry.
The petitioner is a registered welfare society. According to its pleadings, it had successfully participated in a tender and was awarded work relating to sanitation of several health facilities in Kaimur (Bhabhua) district. These facilities included Sadar Hospital, Bhabhua, Referral Hospitals at Mohania, Ramgarh and Aghaura, and Primary Health Centres at Bhabhua, Chainpur, Chand, Kudra, Durgavati, Rampur, Bhagwanpur and Nuwao.
The work order in favour of the petitioner was issued on 02.09.2020. Thereafter, an agreement was signed between the petitioner society and the Civil Surgeon-cum-Member Secretary, District Health Society, Kaimur. The agreement clearly mentioned that its term was for one year.
At the same time, the agreement stated that if the performance of the contractor was satisfactory, the District Magistrate-cum-Chairman, District Health Society, could extend the contract period for a maximum of three years. This could be done on the recommendation of the Secretary, District Health Society.
The petitioner claimed that during the contract period, its work was found to be satisfactory and that certificates to this effect were issued by different authorities. Despite this, the District Health Society published a fresh notice inviting tender dated 01.10.2021, which was uploaded on its web portal on 06.10.2021, for the very same sanitation work.
Feeling aggrieved, the petitioner approached the Patna High Court in Civil Writ Jurisdiction Case No. 18205 of 2021. It sought quashing of the fresh tender notice and a direction to extend its contract for the further period contemplated in the agreement.
What the Court Examined and Decided
The Division Bench, consisting of Hon’ble Mr. Justice Chakradhari Sharan Singh and Hon’ble Mr. Justice Madhuresh Prasad, heard the matter and delivered an oral judgment on 23.11.2021.
The petitioner’s main argument was that the State Government itself had decided that if an outsourced agency under public-private partnership performed satisfactorily for one year, its contract could be extended for three years. This decision was said to be contained in a Health Department letter dated 27.05.2010 addressed to all Civil Surgeons.
Through a supplementary affidavit, the petitioner placed this letter on record. The communication stated that, in order to improve hospital services under public-private partnership, agencies should be encouraged to invest in better technology and management, such as wipers, automatic cleaning machines, silent generators and washing machines.
The letter also recorded that introduction of such technologies is capital intensive. Therefore, the State decided that if the work of any such agency was found satisfactory for one year, the “next period” of that agency could be extended for three years so that the agency would not face difficulty in recovering the cost of equipment and providing better facilities.
The petitioner argued that this departmental decision formed the basis of the clause in its agreement permitting extension of the contract. It also relied on certificates from Medical Officers and Managers to show that its performance had been assessed as satisfactory.
Learned Senior Counsel for the petitioner referred to another Health Department communication dated 04.10.2012 to the Civil Surgeon, Motihari, which reiterated the earlier decision of 27.05.2010. He contended that these communications were in the nature of guidelines binding on government functionaries.
To support this, he relied on the Supreme Court judgment in Narendra Kumar Maheshwari v. Union of India & Ors., 1990 (Supp) SCC 440. Based on paragraph 107 of that decision, he submitted that non-statutory and administrative guidelines of the Government were binding on its officers. Therefore, the District Health Society was obliged to extend the petitioner’s contract by three years instead of issuing a fresh tender.
On the basis of the pleadings and submissions, the Patna High Court framed three questions for decision:
(i) Whether the Health Department’s communication dated 04.10.2012 (reaffirming the 27.05.2010 decision) amounted to mandatory guidelines requiring the authority to extend the contract period whenever the work of an outsourced agency was found satisfactory.
(ii) Whether the stipulation in the agreement dated 03.12.2020 conferred any enforceable legal right on the petitioner for extension of its work, capable of being enforced under Article 226 of the Constitution of India.
(iii) Whether, even otherwise, the petitioner had made out a case for extension of work on the strength of the letter dated 27.05.2010.
The Court first carefully analysed the contents of the 27.05.2010 letter. It noted that the central purpose of this State Government decision was to allow authorities to extend outsourced contracts so that equipment purchased and investments made by agencies could be optimally utilized.
The decision was taken keeping in mind that adoption of better technology and management in hospitals requires heavy capital investment. By permitting extension for three years after the first year, the Government wanted to make such public-private partnerships more sustainable.
However, when the Court examined the petitioner’s writ petition, it found no assertion about what specific investments the petitioner had made, or what kind of equipment it had installed in the concerned hospitals and primary health centres. There was no pleading on these vital aspects.
In the Court’s view, without pleadings about its capital investments or equipment, the petitioner could not claim relief based on the 27.05.2010 communication. The entire rationale of that policy was to support agencies that had made substantial investments which needed time to be recovered and utilised.
The Court then considered the nature of the 27.05.2010 letter itself. It held that the communication did not operate as a binding guideline. Instead, it merely enabled or permitted the competent authorities to extend the period of contract under public-private partnership mode when they found it appropriate.
Importantly, the letter did not cast any legal obligation on authorities to extend the contract period even when the work of an agency was satisfactory. It was a discretionary enabling decision, not a mandatory direction.
At the same time, the Bench observed that where an agency had in fact made substantial investment and installed equipment and technology for better management and efficient execution of the work, the competent authority ought to consider extension of the contract, provided the work was not unsatisfactory. This would serve the public interest recognized in the Government’s decision. Nevertheless, the Court emphasised that the executive is always free to take whatever decision it considers to best serve public interest.
In light of this conclusion—that the 27.05.2010 letter was not a binding guideline—the Supreme Court decision in Narendra Kumar Maheshwari (relied upon by the petitioner) was found to be irrelevant to the case.
The Bench further held that even assuming, for argument’s sake, that the 27.05.2010 communication was in the nature of a guideline, it would still not be enforceable in writ jurisdiction. For this, the Court relied on paragraph 106 of Narendra Kumar Maheshwari, which it reproduced in full.
That paragraph explained that non-statutory guidelines are ordinarily not enforceable in court. They may give rise to concepts like legitimate expectation or promissory estoppel in some situations, but they do not by themselves have the force of law. Authorities can depart from such guidelines where proper exercise of discretion so warrants.
Turning to the petitioner’s conduct, the Court examined Annexure-6 to the writ petition. This document showed that on 09.08.2021 the petitioner had approached the Civil Surgeon-cum-Member Secretary, District Health Society, Kaimur, seeking extension of the contract on the strength of certain certificates issued in March, April and June 2021.
However, even in this representation, the petitioner did not mention any investments, installation of equipment or other infrastructure it had put in place for executing the sanitation work. There was also no plea about the kind of prejudice it would suffer due to non-extension of the contract.
In the absence of such claims and supporting pleadings, the Court held that the petitioner had failed to make out a case for extension of its work as envisaged under the 27.05.2010 Government letter or under the contract clause.
Consequently, the High Court concluded that there was no legal right in favour of the petitioner to compel renewal of the contract through a writ petition. The authority was within its power to issue a fresh tender after expiry of the one-year term.
On these findings, the writ application was dismissed on merits. An interlocutory application filed in the same matter was also disposed of. The Court additionally directed the petitioner to remove the defects pointed out by the Registry within six weeks, which is a procedural formality not affecting the outcome on merits.
Why This Judgment Matters
This judgment has practical importance for contractors and NGOs working with government departments, especially in Bihar’s health sector.
First, it makes clear that a clause in a contract allowing extension of its term does not, by itself, give a guaranteed right to renewal. Extension remains a matter of discretion for the competent authority, unless there is a clear legal or statutory right shown.
Second, the Patna High Court underlined that internal government letters or policy decisions, like the Health Department’s 27.05.2010 communication on public-private partnerships, are normally enabling in nature. They allow authorities to act but do not force them to extend contracts, even when performance is satisfactory.
Third, where a policy is based on the idea of protecting heavy investments or equipment, a contractor who wants to rely on that policy must clearly plead and prove such investments. General claims of good performance or appreciation certificates may not be sufficient.
For service providers engaged in sanitation, lighting or other outsourced hospital services, this judgment signals that renewal cannot be demanded as a matter of right. Fresh tenders after the contractual period are legally permissible, unless specific rights are created by law which are not shown here.
Legal Issues and Answers
-
Issue: Does the Health Department letter dated 27.05.2010 (reiterated on 04.10.2012) create a mandatory obligation on authorities to extend outsourced hospital contracts where work is satisfactory?
Answer: No. The Patna High Court held that the letter merely permits authorities to extend contracts; it does not bind them to do so even if performance is satisfactory. -
Issue: Does the extension clause in the 03.12.2020 agreement give the contractor a legally enforceable right to renewal under Article 226 of the Constitution?
Answer: No. The clause only allows possible extension at the discretion of the District Magistrate-cum-Chairman, District Health Society, on recommendation of the Secretary. It does not create an enforceable right to extension. -
Issue: Has the petitioner shown enough grounds, based on the 27.05.2010 letter, to claim extension of its sanitation work contract?
Answer: No. The Court found that the petitioner had not pleaded any specific investments or equipment installations, which were central to the policy rationale. Hence, it failed to make out a case for extension.
Cases Cited by the Court
- The Court discussed Narendra Kumar Maheshwari v. Union of India & Ors., 1990 (Supp) SCC 440, particularly paragraph 106, to clarify that non-statutory guidelines are generally not enforceable in writ jurisdiction.
- Within that discussion, the Supreme Court decision itself had referred to several other cases, but the Patna High Court did not independently rely on them beyond quoting the Supreme Court’s summary.
Case Details
Case Number: Civil Writ Jurisdiction Case No. 18205 of 2021
Case Title: Indradeo Singh Seva Sansthan through its Secretary Rajgaurav v. The State of Bihar & Ors.
Citation: 2022(1) PLJR 387
Court: High Court of Judicature at Patna
Coram: Hon’ble Mr. Justice Chakradhari Sharan Singh and Hon’ble Mr. Justice Madhuresh Prasad
Date of Judgment: 23.11.2021
Advocates:
For the Petitioner: Mr. Y.C. Verma, Senior Advocate; Mr. Ram Kumar Singh, Advocate
For the State/Respondents: Mr. Mujtabaul Haque, GP-12; Mr. Manish Kumar, AC to GP-12
Natures of the Case: Writ petition under Article 226 of the Constitution of India challenging a notice inviting tender and seeking extension of an outsourced sanitation contract.
Link to the Judgment: Click here to read the full judgment of the Patna High Court
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