'State Cannot Exercise Unfettered Discretion In Tender Matters Or Deviate From Notice Conditions Without Reasons': Jharkhand High Court

The Jharkhand High Court has held that the State cannot exercise unfettered discretion in tender matters or deviate from conditions of the Notice Inviting Tender without assigning reasons. The Court observed that even where discretion exists, it must be exercised judiciously with due application of mind and cannot justify an unreasoned departure from prescribed tender conditions.A division bench of Chief Justice M.S. Sonak and Justice Rajesh Shankar was hearing a writ petition filed seeking a direction to accept its bid for the supply of Paneer and khowa-making units. The petitioner had participated in the tender process and, after being declared technically qualified, matched the L1 rate quoted by respondent No.3 in terms of Clauses 5.8 and 5.9 of the NIT. The petitioner relied on communications and minutes of the Tender Evaluation Committee indicating that such clauses were to be complied with and that its bid had been accepted during financial evaluation. However, despite this, the authorities later issued an email dated 10.10.2025 rejecting the petitioner's bid without assigning reasons.The Court examined Clauses 5.8 and 5.9 of the NIT and held that they required extending an opportunity to other technically qualified bidders to match the L1 rate and, upon such matching, allocation of work in the prescribed proportion. It rejected the interpretation of the State that these clauses conferred unfettered discretion to ignore such matching bidders.The Court observed that even if discretion is available to the State, it cannot be absolute or unregulated. It noted that in a system governed by the rule of law, public authorities are required to act fairly and for the public good, and cannot take arbitrary decisions without reasons.“The contention that the 1st and 2nd respondents have unfettered discretion in empanelling other technically qualified bidders who agree to supply at the L 1 rate is quite misconceived. In a setup like ours, where the rule of law is supreme, there is no question of vesting any unfettered, untrammelled, or unchanneled discretion in the governmental authority. The discretion must be exercised judiciously, after a due application of mind and for the public good,” the Court observed. Hence, the Court observed that the Tender Evaluation Committee had itself opined in favour of compliance with Clauses 5.8 and 5.9, and the petitioner had been informed that its bid was accepted. It held that the subsequent rejection of the petitioner's bid by email dated 10.10.2025, without any reasons, constituted an arbitrary volte-face.The Court also took note of its earlier order directing compliance with Clauses 5.8 and 5.9, which had not been challenged by the State but was nevertheless not followed. It observed that such disregard further reinforced the arbitrariness in the State's action.Accordingly, the High Court allowed the writ petition, quashed the email dated 10.10.2025 rejecting the petitioner's bid, and directed the State to comply with Clauses 5.8 and 5.9 of the NIT by allocating 40% of the work to the petitioner while permitting up to 60% to be executed by the L1 bidder.Case Title: M/s. G.S. Enterprises vs. State of Jharkhand & Ors. [W.P. (C) No. 2914 of 2025]Click Here To Read/Download Order

'State Cannot Exercise Unfettered Discretion In Tender Matters Or Deviate From Notice Conditions Without Reasons': Jharkhand High Court

Saksham Vaishya

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