Back
Once Bid Validity Extension Invoked, Tender Cannot Be Cancelled Citing Original Expiry:
In a ruling that reinforces procedural consistency in public contracts, the has quashed the cancellation of a tender for a major water supply project, holding that once a tendering authority invokes the contractual clause for extending bid validity and secures the bidders’ consent, it cannot later justify scrapping the tender by pointing to the expiry of the original validity period.
A Division Bench of Acting Chief Justice Sudhir Singh and Justice Ranjan Kumar Jha set aside an email cancellation and the consequent re‑tender issued by the , in December 2025. The court directed the authorities to take a fresh decision strictly in accordance with the tender documents.
The Tussle Over an Elusive Water Works Contract
The dispute arose from a tender floated by the , under the Har Ghar Nal Jal Nischay Yojana – a scheme to design, build, supply, test and commission piped water supply on a turnkey basis. , a consortium of two construction firms, submitted its bid and was declared technically qualified. When the financial bids were opened, the JV emerged as the .
The tender process, however, could not be concluded within the original 180‑day bid validity period prescribed under (SBD). The Executive Engineer therefore invoked Clause 15.2 of the SBD and sought an extension. The petitioner twice gave its unconditional consent. Even as the proposal for formal extension was pending before higher authorities, the JV received a cryptic email on intimating that the tender had been cancelled. Within days, a fresh notice inviting tenders was published for the same work.
Aggrieved, the joint venture rushed to the High Court, arguing that the cancellation was arbitrary and illegal because no reason had been supplied and the department had itself triggered the extension mechanism.
The State’s Two-Faced Stand
Before the court, the public health engineering department took a starkly different position. It contended that under Clause 15.1 of the SBD , bids remained valid only for 180 days and, once that period lapsed without a concluded contract, no further action could lawfully be taken. The authorities added that the Model Code of Conduct enforced during the Bihar Legislative Assembly elections had delayed the process, and they had no option but to cancel the tender. Reliance was also placed on , which reserved the right to accept, reject or cancel any tender without assigning reasons.
The petitioner’s counsel countered that the department itself had twice invoked Clause 15.2 , obtained the bidders’ consent and processed the file for extension. Having consciously adopted that route, the respondents could not now retreat behind the original expiry clause.
What the Contract Says
The judgment zeroes in on Clauses 15.1 and 15.2 of the SBD. Clause 15.1 stipulates a 180‑day bid validity period; Clause 15.2 empowers the employer, in exceptional circumstances, to request an extension and requires the bidders’ written consent.
The Bench observed:
“ Once the respondents themselves proceeded under Clause 15.2 by seeking extension of the bid validity and obtaining the consent of the bidders, a question naturally arises as to whether they could thereafter justify the cancellation solely on the ground that the bid validity had expired under Clause 15.1. The respondents cannot, on the one hand, invoke the machinery contemplated under Clause 15.2 and call upon the bidders to extend the validity of their bids and, on the other hand, rely upon the very expiry of the original bid validity under Clause 15.1 as the basis to sustain the cancellation. Such a course of action is inconsistent with the scheme of the SBD. ”
The court noted that although no formal order of extension had eventually been issued, the respondents themselves had initiated the Clause 15.2 procedure and acted upon it by processing the proposal. That conduct could not be brushed aside.
Precedents and Principles
Drawing on well‑settled law, the High Court reiterated that a mere reservation of power to cancel without assigning reasons does not immunise the decision from . Citing Tata Cellular v. Union of India [(1994) 6 SCC 651], it held that the decision‑making process must be ; the court can interfere if it finds .
The Bench also relied on West Bengal State Electricity Board v. Patel Engineering Co. Ltd. [(2001) 2 SCC 451], which underlines that conditions of a tender must be strictly complied with and that any relaxation or waiver in favour of one bidder invites suspicion of favouritism. In the present case, the court found that the department’s justification for cancellation was incompatible with the procedure it had itself adopted.
“Such a Course of Action is Inconsistent”
In the operative part of the judgment, the court recorded:
“ While the respondents undoubtedly possessed the power under Clause 24 of the NIT to cancel the tender, the justification now sought to be advanced for exercise of such power is incompatible with the course adopted by them under . The decision‑making process, therefore, cannot be said to be consistent with the governing tender conditions and, to that extent, warrants interference in exercise of the of this Court. ”
A Second Chance, Not a Blank Cheque
Consequently, the impugned communication cancelling Tender ID No. 89096 was quashed, along with the subsequent re‑tender. The matter was remitted to the competent authority to take a fresh decision – strictly in accordance with the SBD and the NIT – and to pass a if it chooses to proceed further.
The ruling does not guarantee the contract to the joint venture; the authority retains the discretion to cancel the tender for valid reasons. But it sends a clear signal: state instrumentalities cannot within the same tender process. When a department opts for an extension mechanism and obtains the bidders’ consent, it must walk that path to its logical end or explain why it cannot.
For contractors and public authorities alike, the judgment underscores that procedural consistency is not a dry formality but the bedrock of fair administrative action.
