Case Background
The Bihar Medical Services and Infrastructure Corporation Limited (BMSICL) issued Notice Inviting Tender (NIT) No. BMSICL/Infra/25/2019 on 17.07.2019. The work was for construction of a 191-bedded hospital in the campus of Amar Shaheed Jagdev Prasad Hospital, Jehanabad. The last date for submission of bids was 27.08.2019.
The technical bids were opened much later, on 11.05.2020. Two bidders were found technically responsive and successful: the joint venture of M/s B. Rai Construction Company and INSCPL (JV), and R.S. Agrawal Infratech Pvt. Ltd. These two then moved to the next stage.
The financial bids were opened on 09.12.2020. The joint venture of M/s B. Rai Construction Company and INSCPL was declared L-1, that is, the lowest bidder. R.S. Agrawal Infratech Pvt. Ltd. was the second-lowest bidder.
Before BMSICL could issue a Letter of Acceptance (LoA) in favour of the lowest bidder, a complaint was received. The complaint alleged that one of the joint venture partners, M/s B. Rai Construction Company, was under an order of debarment from entering into contracts. It was claimed that, because of this debarment, the joint venture was disqualified from participating in the tender.
Acting on this complaint, BMSICL issued a show-cause notice on 22.12.2020 to M/s B. Rai Construction Company. The company replied on 23.12.2020. It stated that the debarment order passed by the Executive Engineer, Building Division, Sasaram, had been uploaded on the Department’s website only on 18.03.2020, so the company had no prior knowledge of the debarment when it submitted the bid.
According to the writ petition, the work of State Polytechnic College, Dehri-on-Sone had earlier been awarded to M/s B. Rai Construction Company. The company claimed to have completed and handed over the work to the Executive Engineer long back. However, on 03.07.2019, the Executive Engineer passed an order debarring the company from future contracts till completion of construction of that college building.
The joint venture alleged that this debarment order was never communicated. After learning about its upload on 18.03.2020, the company applied to the Chief Engineer (North), Building Construction Department, seeking release from debarment and objecting to the order as being without notice and contrary to the Bihar Contractor Registration Rules, 2007.
On these facts, the joint venture filed Civil Writ Jurisdiction Case No. 8134 of 2021 before the Patna High Court. It asked for a direction to BMSICL to issue the LoA in its favour and to award the hospital construction contract to it, treating it as the lowest bidder under the original NIT.
While this writ was pending, a fresh twist came. On 20.07.2021, the Chief General Manager (P), BMSICL issued a corrigendum cancelling the tender itself, stating only that “The tender is hereby cancelled due to unavoidable reason.”
The joint venture then filed an amendment application (I.A. No. 2 of 2021), which the Court allowed on 10.09.2021. By this, the petitioner also challenged the cancellation notice. Around the same time, BMSICL issued a fresh NIT, No. BMSICL/Infra/19/2021, for the same hospital project. The joint venture filed another amendment application (I.A. No. 3 of 2021), also allowed on 10.09.2021, to challenge this fresh tender as well.
Separately, R.S. Agrawal Infratech Pvt. Ltd. filed Civil Writ Jurisdiction Case No. 12949 of 2021. It sought cancellation of the L-1 tender of the joint venture and award of work to itself as L-2, on the ground that the joint venture was under debarment on the date of submission of tender and had concealed this fact. It also challenged both the cancellation of the original NIT and the issuance of the re-tender, claiming that as the second-lowest bidder it should get the work once the first bidder was disqualified.
R.S. Agrawal Infratech Pvt. Ltd. was permitted to intervene in the joint venture’s case and was impleaded there as respondent no. 7.
What the Court Examined and Decided
The Patna High Court, speaking through Hon’ble Mr. Justice Chakradhari Sharan Singh (with Hon’ble Mr. Justice Madhuresh Prasad agreeing), first dealt with the maintainability of the writ filed by the second-lowest bidder, i.e., R.S. Agrawal Infratech Pvt. Ltd.
The Court noted that respondent no. 7 had participated in the fresh tender process issued under NIT No. BMSICL/Infra/19/2021. In the Court’s view, once respondent no. 7 chose to participate in the re-tender, it could not challenge either the earlier cancellation of the original NIT or the new tender notice. On this admitted fact alone, the Court held that C.W.J.C. No. 12949 of 2021 was not maintainable and dismissed it.
The Court then turned to the main challenge of the joint venture in C.W.J.C. No. 8134 of 2021. The petitioner there wanted three things: issuance of the LoA under the original NIT; quashing of the order cancelling that NIT; and quashing of the fresh NIT.
One crucial admitted fact was that the other joint venture partner, INSCPL, had its own history of debarment. INSCPL had been debarred by the Bihar State Building Construction Corporation from 17.11.2018 to 11.06.2019. There was another debarment against INSCPL from 26.05.2017 to 25.05.2018 under Memo No. 7975 dated 05.09.2017, issued by the Building Construction Department, Government of Bihar. According to the petitioner, this latter debarment was withdrawn by Memo No. 577 dated 16.01.2019.
The joint venture argued that, since these debarments were not in force on the date of the tender or bid submission, disclosing them was not mandatory. It relied on Clause 4.8 of the Instructions to Bidders (ITB) and other NIT provisions, and claimed it genuinely did not mention the old debarments of INSCPL in its bid.
The joint venture also argued that the complaint by respondent no. 7 focused only on the alleged debarment of M/s B. Rai Construction Company. That debarment order was said to have been uploaded on the website only on 18.03.2020, after bid submission. Therefore, according to the petitioner, non-disclosure of that debarment could not be used to cancel the entire tender.
Senior counsel for the petitioner, Mr. Y.V. Giri, contended that the authority ought to have limited itself only to what was raised in respondent no. 7’s complaint. He stressed that the debarment order against M/s B. Rai Construction Company was itself illegal, as no opportunity of hearing was given, allegedly breaching the Bihar Contractor Registration Rules, 2007.
He also attacked the cancellation notice as arbitrary for not mentioning reasons, and relied upon Supreme Court judgments such as Oryx Fisheries (P) Ltd. v. Union of India and Kranti Associates (P) Ltd. v. Masood Ahmed Khan to argue that administrative decisions affecting rights should contain reasons and follow principles of natural justice.
On the other hand, senior counsel for BMSICL, Mr. Lalit Kishore, submitted that the joint venture had no legal right to insist on award of the contract. Tenderers only have a right to fair consideration, not a right to get the contract. He argued that BMSICL took a conscious decision to cancel the tender in view of the overall circumstances, which was an administrative decision.
He further contended that an administrative decision to cancel a tender does not necessarily require reasons to be recorded in the cancellation notice itself. Given the limited scope of judicial review under Article 226 of the Constitution in tender matters, the Court should not interfere.
The Court then examined the bidding documents. Bidders were required to submit an affidavit in a prescribed form. In that affidavit, the bidder had to certify, among other things, that its firm had not been debarred or blacklisted and had not abandoned any work in any government department in India, and that no contract awarded to it had been rescinded during the last five years before the bid date.
The joint venture did not dispute that it had failed to disclose the debarment of INSCPL from 17.11.2018 to 11.06.2019. The earlier debarment from 26.05.2017 to 25.05.2018, though later withdrawn, was also not mentioned.
Clause 4.8 of the ITB, part of the NIT, stated that even if bidders met the basic qualifying criteria, they could still be disqualified if they made misleading or false representations in the forms, statements and attachments submitted in proof of qualification requirements; or had a record of poor performance such as abandoning works, not properly completing contracts, inordinate delays, litigation history, or financial failures; or had quoted unreasonably high prices in previous bids for the same work without rational justification.
The Court held that the joint venture was under an obligation to disclose correct facts in the affidavit. The argument that non-disclosure of debarment of INSCPL within the last five years did not attract disqualification, or was not required, was rejected.
The Court found that the information sought in the affidavit was clearly relevant for assessing the capability of a contractor to execute the work. Debarments in the recent past directly related to reliability and performance.
However, the Court pointed out that BMSICL had not, in fact, disqualified the joint venture alone. Instead, it chose to cancel the entire tender process and call for a re-tender. The petitioner had not shown any bias, malice, arbitrariness, irregularity or unreasonableness in this decision.
In reaching this conclusion, the Patna High Court relied on settled Supreme Court law on the limited judicial review of tender decisions. It referred in particular to the recent decision in Uflex Ltd. v. Government of Tamil Nadu and Others, (2022) 1 SCC 165. There, the Supreme Court had surveyed earlier cases like Jagdish Mandal v. State of Orissa, Michigan Rubber (India) Ltd. v. State of Karnataka, Caretel Infotech Ltd. v. Hindustan Petroleum Corpn. Ltd., and Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd.
The Supreme Court has held that, while government tendering must be transparent and open to challenge, courts should not lightly interfere. Tender evaluation and contract award are governed by commercial prudence. Principles of equity and natural justice take a back seat where commercial decisions are involved, except in cases of clear arbitrariness or mala fides.
The Uflex judgment, quoted by the Patna High Court, reminded that unsuccessful tenderers can always seek damages in a civil court. It warned against routine writ petitions based on “imaginary grievances, wounded pride and business rivalry” which try to turn minor technical or procedural issues into major grounds of challenge.
The Patna High Court also referred to observations in Caretel Infotech Ltd. v. Hindustan Petroleum Corpn. Ltd. where the Supreme Court had remarked that the “window” of judicial review in tender matters has been opened too wide, leading to almost every tender being challenged and thereby delaying public projects.
Applying these principles, the Patna High Court concluded that cancellation of the NIT was a purely administrative decision. It did not determine rights in a quasi-judicial manner, and therefore did not require detailed reasons in the cancellation notice.
Since the decision was not shown to be arbitrary or irrational in the Wednesbury sense, and given the admitted non-disclosure of past debarments, the Court held that no interference under Article 226 was warranted.
Accordingly, both writ petitions were dismissed, without costs. The cancellation of the original tender and the issuance of the fresh NIT remained undisturbed.
Why This Judgment Matters
This decision has practical importance for contractors and government departments alike.
First, it underlines that bidders must fully and honestly disclose any past debarments or blacklisting, even if those orders are no longer in force. Courts are likely to view non-disclosure as serious, because it goes to the contractor’s reliability.
Second, it confirms that a tendering authority like BMSICL can cancel an entire tender process and go for re-tender if it considers it appropriate in the overall circumstances. Courts will not lightly interfere with such administrative decisions, especially where no mala fides or clear arbitrariness is shown.
Third, unsuccessful bidders who participate in a re-tender cannot later turn around and challenge the very re-tender or the earlier cancellation. Participation signifies acceptance of the process.
For ordinary contractors working on government projects in Bihar, this judgment from the Patna High Court serves as a warning: hiding past disciplinary actions can backfire, and expecting the court to force the government to award a contract is unrealistic.
Legal Issues and Answers
- Issue: Can a bidder who participates in a fresh tender challenge cancellation of the original tender and the re-tender notice?
Answer: No. The Patna High Court held that once the bidder participated in the re-tender process, it could not maintain a writ challenging either the cancellation of the original NIT or the new tender notice. - Issue: Was the cancellation of the original NIT and decision to re-tender arbitrary or illegal, especially when the lowest bidder had not disclosed past debarments?
Answer: No. The Court found that the joint venture had an obligation to disclose past debarments. The decision of BMSICL to cancel the tender and call for re-tender was an administrative one, not shown to be arbitrary, biased or unreasonable, and therefore not open to interference in judicial review. - Issue: Does an administrative decision cancelling a tender require detailed reasons in the cancellation notice?
Answer: Not in this case. The Court held that cancellation of the NIT was a purely administrative act not determining rights in a quasi-judicial manner, so recording detailed reasons in the order itself was not necessary, especially in the absence of shown mala fides.
Cases Cited by the Court
- Uflex Ltd. v. Government of Tamil Nadu and Others, (2022) 1 SCC 165
- Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517 (referred to in Uflex)
- Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216
- Caretel Infotech Ltd. v. Hindustan Petroleum Corpn. Ltd., (2019) 14 SCC 81
- Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016) 16 SCC 818
- Oryx Fisheries (P) Ltd. v. Union of India, (2010) 13 SCC 427 (cited by petitioner)
- Kranti Associates (P) Ltd. v. Masood Ahmed Khan, (2010) 9 SCC 496 (cited by petitioner)
Case Details
Case Number: Civil Writ Jurisdiction Case No. 8134 of 2021; Civil Writ Jurisdiction Case No. 12949 of 2021
Case Title: M/s B. Rai Construction Company and INSCPL (JV) v. The State of Bihar & Ors; R.S. Agrawal Infratech Pvt. Ltd. v. The State of Bihar & Ors
Citation: 2022 (1) PLJR 925
Coram: Hon’ble Mr. Justice Chakradhari Sharan Singh; Hon’ble Mr. Justice Madhuresh Prasad
Advocates (in CWJC No. 8134 of 2021):
- For the Petitioner: Mr. Y.V. Giri, Senior Advocate; Mr. Shivendra Prasad, Advocate; Mr. Pranav Kumar, Advocate; Ms. Shrishti Singh, Advocate; Mr. Sumit Kumar Jha, Advocate
- For the Respondent State: Mr. Vikash Kumar, S.C.-11
- For the Respondent BMSICL: Mr. Lalit Kishore, Senior Advocate
- For Respondent No. 7: Mr. Ranjeet Kumar, Advocate
Advocates (in CWJC No. 12949 of 2021):
- For the Petitioner: Mr. Ranjeet Kumar, Advocate
- For the Respondent State: Mr. Vikash Kumar, S.C.-11
- For the Respondent BMSICL: Mr. Lalit Kishore, Senior Advocate
- For Respondent No. 5: Mr. Y.V. Giri, Senior Advocate; Mr. Shivendra Prasad, Advocate; Mr. Pranav Kumar, Advocate; Ms. Shrishti Singh, Advocate; Mr. Sumit Kumar Jha, Advocate
Nature of the Case: Writ petitions under Article 226 of the Constitution of India challenging cancellation of tender, claim for award of contract to lowest and second-lowest bidders, and challenge to re-tender.
Date of Judgment: 17.01.2022
Link to Judgment: Patna High Court Judgment in CWJC No. 8134 of 2021 with CWJC No. 12949 of 2021
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