Assam HC sets aside re-tender, orders ₹7-crore cheaper L1 bidder’s appointment after finding unfair ouster and opaque decision-making

The Chief Engineer, Public Works Department (Roads), Assam issued a tender notice dated 17 October 2025 comprising two packages under the ASOM MALA project.

The petitioner submitted his bid for Package I.

After an earlier dispute concerning issuance of a site-visiting certificate, resolved by the High Court in WP(C)/6450/2025 on 19 November 2025, the petitioner’s bid was declared technically responsive and, upon opening of the financial bids, was adjudged L1.

No Letter of Intent was issued, leading to WP(C)/712/2026 seeking completion of the tender process.

During the pendency of that petition, the respondents issued a communication dated 12 February 2026 cancelling the earlier tender and initiating a fresh tender based on a change in construction methodology from Granular Sub-Base (GSB) to Cement Treated Sub-Base (CTSB).

The petitioner challenged the cancellation and re-tender in WP(C)/948/2026.

It was undisputed that the second package under the same tender had been awarded and completed using the original GSB methodology.

The petitioner’s bid was approximately ₹7 crore lower than that of the second bidder.

The respondents did not communicate reasons for cancellation to the petitioner and did not produce any original file or note-sheet explaining the decision-making process.

1. Whether the cancellation of the earlier tender and initiation of a fresh tender, without immediately communicating reasons to the bidders, violated Section 26(3) of the Assam Public Procurement Act, 2017?

2. Whether the respondents’ decision to change the construction methodology from GSB to CTSB and cancel the earlier tender was arbitrary, mala fide, or vitiated by malice in law?

3. Whether the petitioner, despite being adjudged L1, was entitled to judicial relief directing allotment of the work to him?

The Court applied Section 26(3) of the Assam Public Procurement Act, 2017, which requires immediate communication of reasons to bidders when a tender is cancelled.

It applied the principles of fairness, transparency, non-arbitrariness, and public interest governing State action in the distribution of public largesse.

The Court relied on Subodh Kumar Singh Rathour v. Chief Executive Officer, AIR 2024 SC 3784, for the principle that cancellation of a tender must be supported by cogent materials demonstrating a real and palpable public interest, and that courts may examine the decision-making process, including internal file notings.

It also considered Mahalaxmi Enterprises v. State of Assam, WP(C)/3832/2024, for the principle that State action must disclose a discernible and reasonable basis.

The Court further recognised the distinction between malice in fact and malice in law, holding that arbitrary exercise of power may be vitiated by malice in law even without impleading an individual officer or beneficiary by name.

The Court held that the respondents admittedly failed to communicate the reasons for cancellation as required by Section 26(3), which raised concerns regarding the bona fides of the decision-making process.

The tender had already progressed through technical evaluation and financial bid opening, and the petitioner had been declared L1.

Although being L1 did not automatically create an indefeasible right to the contract, the State was nevertheless required to act fairly and on the basis of cogent, demonstrable public-interest considerations.

The Court found the justification for adopting CTSB insufficient because the change was prompted only after a local MLA’s representation, despite the original tender having been preceded by survey, study, and preparation of a DPR.

The alleged factors—low-lying land and heavy traffic—were not shown to be unique to Package I, particularly since Package II of the same project had been executed using the original GSB methodology.

The respondents also failed to produce original file notings or other materials demonstrating how and by whom the decision had been taken or establishing that CTSB was necessary for all similarly situated works.

In these circumstances, the cancellation appeared designed to exclude the petitioner after he had emerged as L1, especially considering the approximately ₹7 crore difference between his bid and the second bidder’s bid.

The Court therefore concluded that the decision was neither fair nor transparent and was vitiated by malice in law and mala fide exercise of power.

It set aside the impugned order dated 12 February 2026 cancelling the earlier tender and directing re-tendering.

The Court further directed the respondents to allot the work to the petitioner, who had been adjudged L1, in accordance with law.

No order as to costs was made.