Debarment Must Have Express Tender Backing; Cannot Be Imposed by Implication: Patna High Court Quashes Blacklisting Of Contractor

The Patna High Court has held that debarment of a bidder, which entails serious civil consequences, must be founded on an express provision in the tender conditions or applicable statutory framework, setting aside a three-year debarment imposed on a contractor.A Division Bench of Justice Sudhir Singh and Justice Rajesh Kumar Verma was hearing a writ petition challenging the Office Order dated 15.10.2025 issued by the Bihar State Power Transmission Company Limited (BSPTCL), whereby the Notification of Award (NOA) granted to the petitioner was cancelled, Earnest Money Deposit was forfeited, and the petitioner was debarred from participating in future tenders for a period of three years. The petitioner, a Joint Venture, had been declared L-1 in a tender for construction of transmission lines and was issued Notification of Award on 01.07.2025. However, due to delay in furnishing Performance Security in the form of a bank guarantee, the respondent cancelled the award and passed the impugned order.The petitioner confined its challenge to the debarment portion of the order, contending that Clause 11.4.7 of the General Conditions of Contract, which formed the basis of the impugned order, provided only for cancellation of award and forfeiture of earnest money, and did not contemplate debarment. The respondents sought to justify the action by relying on Clause 51 of the Standard Bidding Document, which deals with debarment.The Court framed the issue as whether the debarment of the petitioner could be sustained in absence of an express enabling provision under the applicable tender conditions. The Court reproduced Clause 11.4.7:“11.4.7. The successful bidder, after receipt of LOA, shall execute the agreement within 30 days of award of the contract after duly furnishing the 10% bank guarantee. If there is delay beyond the specified period in submission of contract performance BG, 15 days' notice will be given to the successful bidder and after which the Employer may entail cancellation of letter of award after giving another 15 days final notice and forfeiting of Earnest Money/bid guarantee as also detailed under Earnest Money Clause.”The Court noted that in the present case, no agreement had been executed between the parties and therefore the stage of contractual performance had not commenced. Emphasising the legal position, the Court held:“Debarment, which results in serious civil consequences by restricting future commercial participation, must necessarily be founded upon an express provision in the applicable terms and conditions of the tender, or under any statutory rule or regulation governing the tender. In the absence of such enabling provision, the action of debarment cannot be legally sustained.”In view of the above, the Court held that the debarment of the petitioner for a period of three years was unjustified and legally unsustainable.Accordingly, the Court set aside the impugned order to the extent of debarment, while upholding the cancellation of the Notification of Award and forfeiture of Earnest Money Deposit.Case Title: M/s Mavin Switchgears and Control Pvt. Ltd v. State of Bihar and Ors.Case No.: Civil Writ Jurisdiction Case No. 20831 of 2025.Appearance: Senior Advocate Mr. Lalit Kishore, assisted by Mr. Ayush Kumar, Mr. Kanishka Shankar, and Mr. Sanjeev Kumar appeared for the Petitioners. Dr. Anand Kumar and Mr. Manish Kumar appeared for the Respondents.Click Here To Read/Download Order

Debarment Must Have Express Tender Backing; Cannot Be Imposed by Implication: Patna High Court Quashes Blacklisting Of Contractor

Rushil Batra

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