Jharkhand High Court: In a petition challenging the rejection of the petitioner’s bid despite its willingness to match the L-1 rate under Clauses 5.8 and 5.9 of the Notice Inviting Tender (NIT), the Division Bench of M.S. Sonak, C.J., and Rajesh Shankar, J., emphasised that there is no such thing as unfettered discretion in tender process vested in governmental authorities. The Court noted that the respondents had initially informed the petitioner that its bid was accepted but later made a volte face without reasons, which was arbitrary and contrary to the earlier order dated 26 June 2025 directing compliance with Clauses 5.8 and 5.9 of the NIT. Holding that discretion cannot be untrammelled or absolute, the Court quashed the communication dated 10 October 2025 and issued a mandamus requiring that 40 per cent of the work orders be placed with the petitioner, while up to 60 per cent may be obtained from the L-1 bidder.
Background
The dispute arose from a tender for supply of Paneer and Khowa making units. The Tender Evaluation Committee (Committee) adjudged one bidder as L-1 at Rs 94,500 per unit, while another bidder had quoted Rs 95,000. A third bidder failed to attend the demonstration, leaving only two bids for evaluation.
The petitioner communicated willingness to match the L-1 rate on 29 March 2025, followed by repeated reminders. The Committee minutes dated 30 May 2025 recorded that representatives of the Cabinet Secretariat and Vigilance Department opined that Clauses 5.8 and 5.9 should be complied with. On 26 June 2025, the Court directed compliance with these clauses.
Despite this, respondents later issued an e-mail dated 10 October 2025 rejecting the petitioner’s bid. The petitioner contended that this was contrary to the tender conditions and the Court’s earlier order. The respondents argued that the Tender Inviting Authority was the best judge of essential conditions that discretion under Clause 5.8 allowed rejection of bids, and that no person can claim fundamental rights to carry on business.
Analysis
The Court emphasised that Clause 5.8 applies to technically qualified bidders who agree to supply on the L-1 rate, and Clause 5.9 requires giving other technically qualified bidders the opportunity to match the L-1 rate. The Court noted that these clauses must be construed harmoniously, and that the Committee members had fairly opined on compliance with Clauses 5.8 and 5.9 of the NIT, and based upon such opinion, the petitioner was also informed that its bid had been accepted during the financial evaluation by the duly constituted Committee.
The Court highlighted that the respondents had initially informed the petitioner that its bid was accepted but later made a volte face without reasons. The Court observed that arbitrariness was writ large in such an unreasoned reversal, especially when the earlier order dated 26 June 2025 directing compliance had not been challenged.
The Court stressed that there is no question of vesting any unfettered, untrammelled, or unchanneled discretion in the governmental authority, as the discretion must be exercised judiciously, after due application of mind and for the public good, and referred to Sterling Computers Ltd. v. M & N Publications Ltd., (1993) 1 SCC 445 wherein the Supreme Court held that there was nothing paradoxical in imposing legal limits on governmental authorities by the courts even in contractual matters, because the whole conception of unfettered discretion is inappropriate to public authority, which is expected to exercise such powers only for the public good.
Considering the provisions of Clauses 5.8 and 5.9 of the NIT and holding that there is nothing like unfettered discretion vested by these clauses in the respondents, the Court was satisfied that the petitioner deserved to succeed. Still, since no reasons were forthcoming either in the communication dated 10 October 2025 addressed to the petitioner or in the counter-affidavits filed on behalf of the respondents, the Court also perused the files/records to see whether any reasons were discernible from the notings therein.
However, the Court found no reasons discernible from the record or the file notations, and thus, merely on the basis of some presumed unfettered discretion, the respondents appear to have chosen to bypass or deviate from Clauses 5.8 and 5.9 of their own NIT.
Decision:
Accordingly, the Court allowed the petition, quashed the e-mail dated 10 October 2025, and issued a mandamus with no order as to costs, requiring that 40 per cent of the work orders for the supply of Paneer and Khowa making units be placed with the petitioner, while up to 60 per cent may be obtained from the L-1 bidder.
[G.S. Enterprises v. State of Jharkhand, W.P. (C) No. 2914 of 2025, decided on 6-4-2026]
Advocates who appeared in this case:
For the Petitioner: Salona Mittal, Yashdeep Kanhai, Sourav K. Jha, Arya Vardhan Singh, Divya Chaudhary, Advocate
For the Respondents: Piyush Chitresh, AC to AG