Bihar HC Upholds ₹5 Lakh Compensation For L-1 Bidder Arbitrarily Rejected Over Stamp-Paper Condition Absent From Tender

The respondent company was found technically eligible in the original tender and was declared L-1 after the financial bids were opened.

Following a complaint by an MLA, the Tender Committee disqualified it on the ground that the stamp paper for its affidavit had not been purchased in the deponent’s name, and cancelled the tender.

During the writ proceedings, a fresh tender was issued and the second respondent was awarded the work.

The writ petitioner was permitted to participate in the fresh tender, subject to the outcome of its writ petition, but did not do so.

In a later order, the Single Judge found the original exclusion unsustainable.

Given that approximately 80% of the work under the subsequent tender had been completed, the Single Judge did not disturb that work but directed the State to pay the writ petitioner Rs. 5,00,000.

The State appealed against that monetary direction.

The Court applied the principle that a tendering authority must assess a bid against the conditions actually stated in the NIT; a bidder cannot be disqualified for failing to meet an unstated requirement.

In exercising writ jurisdiction, the Court may mould relief to account both for an established arbitrary act and for subsequent developments affecting the public interest, including substantial progress of public work.

The Court distinguished the Rs. 5,00,000 award from contractual damages, describing it as compensation for the arbitrary exclusion rather than relief under a concluded contract.

The State relied on Rabindra Nath Ghosal v. University of Calcutta, Sube Singh v. State of Haryana, W.B. SEB v. Dilip Kumar Ray and Municipal Corporation of Delhi v. Uphaar Tragedy Victims Association; the Court held those decisions inapplicable to the facts, without setting out or applying their principles in detail.

The petitioner had been found eligible and declared L-1, while the State conceded that the NIT did not require the affidavit’s stamp paper to be purchased in the deponent’s name.

The Court therefore upheld the finding that the petitioner’s disqualification on that ground was arbitrary.

The subsequent tender did not cure the original illegality, particularly because the petitioner’s challenge was already pending and its participation in the fresh tender had been made subject to the writ petition’s outcome.

However, because the work had substantially progressed, restoring it to the petitioner would have disrupted an ongoing public project.

The Court held that the Single Judge had properly balanced those circumstances by leaving the work undisturbed while awarding compensation for the arbitrary exclusion; it did not treat the award as contractual damages.

It found no ground to interfere with the direction requiring the State to pay Rs. 5,00,000, and dismissed the appeal as devoid of merit.