Award to L2 Despite Valid L1 Bid Held Mala Fide: Out-of-State Enlistment Must Be Honoured; “Emergency” Cannot Mask Bias; Cancellation and One-Year Blacklisting as Public Law Remedies
1) Introduction
The Tripura High Court (Chief Justice M.S. Ramachandra Rao and Justice Biswajit Palit) decided a writ petition arising from an e-tender issued by the Water Resource Division No. VI, Kailashahar, for embankment raising/strengthening and anti-erosion works in Unakoti District (estimated cost: Rs. 6,58,53,370; completion period: 90 days).
Petitioner: Abu Sufian, an enlisted government contractor, who submitted the lowest bid (L1) at 52.89% below the estimated cost, supported by a Class-1(A) enlistment/renewal certificate issued by PWD (R&B), Assam.
Private Respondent: M/S S.N. Bhattacharjee & Sons (Respondent No. 6), the second lowest bidder (L2) at 40.21% below the estimate.
Despite the petitioner being L1, the State awarded the work to L2, citing doubts about the petitioner’s enlistment and asserting “national emergency” considerations due to the international border context. The petitioner challenged the award as arbitrary, biased, and violative of Articles 14, 19 and 21.
Core issues: (i) Whether rejection of a valid L1 bid (with out-of-state Class-1(A) enlistment) and award to L2 was lawful and in public interest; (ii) limits of executive discretion under tender clauses permitting rejection of the lowest tender; (iii) whether “emergency” and “resourcefulness” justifications were bona fide or a pretext for favouritism; and (iv) appropriate relief where work had progressed slowly and State affidavits were inconsistent.
2) Summary of the Judgment
- The Court held the award of work to Respondent No. 6 (L2) under the work order dated 13.03.2025 to be arbitrary, unreasonable and tainted by bias/favouritism.
- The Court held the rejection of the petitioner’s tender to be mala fide, wholly unjustified, arbitrary, unreasonable and violative of Article 14.
- It directed the State to forthwith cancel the work order issued to Respondent No. 6.
- It directed the State to blacklist Respondent No. 6 for one year for future contracts.
- It awarded costs of Rs. 50,000 payable by Respondents 1 to 5 to the petitioner.
3) Analysis
3.1 Precedents Cited
The Court anchored its review within the classic administrative law framework that judicial review tests the legality of the decision-making process, not the merits of the decision itself. It extracted the well-known grounds—illegality, irrationality (Wednesbury unreasonableness), and procedural impropriety—and focused on whether the authority exceeded its powers, made an error of law, breached natural justice, reached an unreasonable decision, or abused power.
Influence on outcome: The High Court used this framework to examine the process of disqualifying L1, the shifting justifications (CPWD rule reliance; “meteoric jump”; “emergency”), and the inconsistent progress claims in affidavits—ultimately treating these as indicators of irrationality, abuse of power, and mala fides.
(b) Asia Foundation & Construction Ltd. v. Trafalgar House Construction (I) Ltd.
This precedent underscores that judicial review in government contracting is designed to prevent arbitrariness or favouritism, and is warranted when power is exercised for a collateral purpose rather than genuine public interest.
Influence on outcome: The High Court directly applied this to the State’s “emergency” narrative, finding it functioned as a post hoc justification rather than a real driver of the decision—especially since the asserted urgency did not translate into timely performance by L2, yet the State continued to extend time without termination.
The High Court relied on the structured “checkpoint” test from this case: whether the process/decision is mala fide or intended to favour someone; whether it is so arbitrary/irrational that no reasonable authority would do it; and whether public interest is affected. The Supreme Court’s emphasis on Article 14 fairness, executive latitude in tender conditions, and limited interference—except where malice or misuse of power is shown—formed the evaluative grid.
Influence on outcome: The Court found (i) mala fide rejection of L1 despite verified eligibility; (ii) irrational selection of L2 at higher cost without credible differentiation; and (iii) public interest harm via loss to the exchequer (Rs. 83,50,207), delay, and cost escalation risk—thereby satisfying the Michigan Rubber thresholds for intervention.
This authority recognizes that the State may refuse the lowest tender, but only while striving to secure the “best person” or “best quotation,” and that irrationality/arbitrariness invites judicial review.
Influence on outcome: The Court treated this as limiting the tender clause invoked by the State (“right to reject the lowest without assigning reasons”). It held that such clauses do not create a license for unreasoned, discriminatory, or biased departures from choosing L1—particularly where the rejection reasons are unsupported and contradicted by verification.
3.2 Legal Reasoning
(i) L1’s eligibility and out-of-state enlistment: verified, hence rejection was unlawful
The tender did not require Class-1(A) registration to be only from Tripura; it expressly allowed participation by contractors enlisted with government organizations of other States. The petitioner produced a certificate dated 25.11.2024 from PWD (R&B), Assam. Importantly, the State’s own inquiry elicited a confirmation dated 10.03.2025 from the Assam authority that the petitioner’s registration renewal was genuine and valid.
Against this backdrop, continuing to treat the petitioner as “non-responsive” on suspicion of a “meteoric jump” in class, or on the basis that he had not shown intermediate class experience, was treated as untenable because the tender’s eligibility criterion was the possession of Class-1(A) registration, which stood verified. The Court thus concluded there was “no scope” for doubt.
(ii) CPWD enlistment rule reliance was an afterthought and not a tender condition
Respondents cited the CPWD Rules for Enlistment of Contractors, 2021 (including a contention that one cannot hold more than one class in the same category). The Court rejected this as a basis to disqualify the petitioner because:
- the tender did not incorporate any such disqualification;
- the Assam authority had in fact granted/renewed the Class-1(A) registration, undercutting the claimed “rigidity” of the rule; and
- the reliance appeared crafted to “somehow or the other justify” disqualification—hence an afterthought.
This reasoning reflects a key tender-law principle: eligibility/disqualification must be traceable to the tender document and applied uniformly; importing external norms post hoc to exclude a bidder is typically arbitrary under Article 14.
(iii) “Abnormally low bids” rationale was applied inconsistently and arbitrarily
The State attacked the petitioner’s rate as “abnormally low” and undesirable. However, L2’s bid was also substantially below estimate. The Court reasoned that if the State truly considered such rates unacceptable, it could have cancelled and re-tendered; having chosen not to, it could not selectively use that rationale to discard L1 while accepting L2—this amounted to arbitrariness.
(iv) “National emergency” narrative was found non-credible and collateral
The Court scrutinized the emergency plea. It noted the asserted change in Bangladesh occurred in August 2024, yet the tender was issued on 31.01.2025 and the award to L2 happened only in March 2025. The Court treated the timeline as inconsistent with a sudden emergency, and further observed that there was no state of war; the plea was deemed irrelevant to the award decision and used to “draw wool over the eyes of the Court.”
(v) Conduct after award: inconsistent affidavits, delay, repeated extensions—showing favouritism and public interest harm
The Court found the State’s affidavits to be materially inconsistent on progress. Early claims (over 50% completed) were later contradicted (only 36.36% within the stipulated 90 days). Respondent No. 6 itself stated only 71% completion by 20.02.2026, far beyond the June 2025 deadline. Despite persistent delay, the State did not initiate termination and repeatedly extended time up to 31.03.2026.
These facts were treated as demonstrating:
- attempts to mislead the Court regarding execution progress;
- preferential treatment and indulgence toward Respondent No. 6; and
- jeopardy to public interest through delay-driven escalation and enrichment of L2 at the cost of the exchequer.
(vi) Relief moulding: cancellation and blacklisting as public law remedies
Even though the work had progressed to some extent, the Court “moulded the relief” to cancel the work order and directed blacklisting for one year. This signals a strong remedial stance where the procurement decision is found to be tainted by mala fides and bias, and where continued indulgence would further injure public interest.
3.3 Impact
(a) Reinforcement of “tender terms are the primary legality source”
The decision strengthens the principle that bidders’ eligibility must be assessed strictly by the tender’s stated criteria. Authorities cannot disqualify an otherwise eligible bidder by importing external norms (e.g., CPWD enlistment constraints) unless the tender makes them applicable.
(b) Out-of-state registrations: equal footing where tender permits
Where tender conditions allow participation by contractors enlisted in other States, verified out-of-state enlistment must be treated as sufficient. Suspicion about “rapid class escalation” cannot substitute for a tender-grounded disqualification once the issuing authority confirms validity.
(c) “Emergency” justifications will be judicially tested against timelines and performance
The Court’s approach indicates that emergency/national importance rhetoric will not shield an award from scrutiny where (i) the timeline does not show urgency in action, and (ii) the chosen contractor’s performance undermines the emergency claim.
(d) Stronger consequences for tainted procurement: blacklisting and costs
The direction to blacklist the private contractor for one year (in addition to cancellation and costs) signals that courts may impose consequential remedies where procurement is found to be biased and public interest is harmed. It may encourage departments to document reasons transparently, verify eligibility promptly, and avoid inconsistent affidavit positions.
4) Complex Concepts Simplified
- Judicial review (in tenders): Courts generally do not pick the “best” bid; they examine whether the process was lawful, fair, and non-arbitrary.
- Article 14 (non-arbitrariness): The State must treat similarly placed bidders alike and must not act on whims, bias, or post hoc rationalizations.
- Wednesbury unreasonableness: A decision is invalid if it is so irrational that no reasonable authority could have made it.
- Mala fide: Action taken in bad faith—e.g., to favour someone, or on a pretext rather than genuine reasons.
- L1/L2 bidder: L1 is the lowest priced bidder; L2 is the second lowest. Choosing L2 over L1 is not automatically illegal, but must be justified by rational, tender-consistent reasons that withstand Article 14 scrutiny.
- Blacklisting: An administrative sanction disqualifying a contractor from future contracts for a period; courts may direct it where conduct warrants and public interest requires.
5) Conclusion
The Tripura High Court applied settled Supreme Court principles on tender judicial review to hold that the State’s departure from awarding the contract to the verified, eligible L1 bidder was not a permissible exercise of discretion but a case of arbitrariness, mala fides, and favouritism. The Court rejected post hoc reliance on CPWD enlistment rules not embedded in the tender, dismantled the “national emergency” justification through timeline and performance scrutiny, and treated inconsistent State affidavits and repeated extensions as revealing bias and public interest harm.
The judgment’s broader significance lies in its message that government entities must (i) adhere to tender terms, (ii) treat verified eligibility as conclusive unless the tender provides otherwise, and (iii) justify any decision to bypass L1 with coherent, bona fide, and documentable reasons. Where the procurement process is tainted, the Court may grant robust remedies—cancellation, blacklisting, and costs—to restore legality and protect public funds.