Public authorities cannot exercise unfettered discretion to ignore mandatory price-matching and order-splitting tender clauses.

The Petitioner participated in a tender for the supply of Paneer and Khowa making units across Jharkhand. Respondent No. 3 was adjudged the L-I bidder at ₹94,500 per unit, while the Petitioner quoted ₹95,000

Per Clauses 5.8 and 5.9 of the Notice Inviting Tender (NIT), technically qualified bidders were permitted to match the L-I rate to ensure timely supply

On 29.03.2025, the Petitioner confirmed its willingness to match the L-I rate

Although the Tender Evaluation Committee and the State initially accepted the Petitioner’s bid via email on 20.06.2025 [para 13], and the High Court directed compliance with the NIT clauses on 26.06.2025 [para 14], the State issued a subsequent communication on 10.10.2025 rejecting the Petitioner’s bid without assigning reasons

During the pendency of the writ, the State had issued work orders for only 48 out of 261 units to Respondent No. 3

1. Whether Clauses 5.8 and 5.9 of the NIT vest unfettered discretion in the State to reject a technically qualified bidder who has matched the L-I rate

2. Whether the State's "volte-face" in rejecting the Petitioner’s bid, after initial acceptance and a court directive, constitutes an arbitrary exercise of power

The court applied Clauses 5.8 and 5.9 of the NIT, which provide a mechanism for empanelling multiple bidders at the L-I rate and splitting the supply order (60% to L-I, 40% to others) to ensure efficiency

It relied on the constitutional principle that in a rule-of-law-governed society, governmental discretion cannot be unfettered, untrammelled, or absolute

The court further cited Sterling Computers Limited v. M/s M&N Publications Limited & Ors. [(1993) 1 SCC 445], which establishes that judicial review is applicable to contractual matters of public authorities to ensure they exercise power for the public good rather than arbitrarily

The Court observed that Clauses 5.8 and 5.9 must be construed harmoniously; Clause 5.9 specifically mandates that other technically qualified bidders "shall" be given an opportunity to match the L-I rate

The Court found the State’s argument regarding "unfettered discretion" to be legally misconceived, noting that discretion must be exercised judiciously and for the public good

The State’s sudden rejection of the bid on 10.10.2025—after the Tender Committee had recommended acceptance and the Court had ordered compliance—was deemed a "volte-face" lacking any discernible reasons in the official records

The Court held that such an unreasoned U-turn, especially in the face of a binding judicial order, was patently arbitrary and a violation of the rule of law

It held that the State must comply with the regime established in Clauses 5.8 and 5.9 of the NIT

The Court issued a writ of mandamus directing the 1st and 2nd Respondents to place 40% of the work orders for the subject units with the Petitioner (as the sole other technically successful bidder), while the remaining 60% may be obtained from Respondent No. 3

Necessary work orders were directed to be issued immediately