Yash Raj, Dhrublok (J.V.) vs. Bihar State Tourism Development Corporation LTD.

Facts

The petitioner, Yash Raj, Dhrublok (J.V.), participated in a tender process initiated by the Bihar State Tourism Development Corporation Ltd. (BSTDC) for the operation and maintenance of Hotel Lichhavi Vihar, Muzaffarpur. The petitioner was declared successful in the technical bid and subsequently informed on February 23, 2021, that it had been declared successful for a 10-year period. The petitioner was asked to deposit a licensing amount of Rs. 1,23,96,550.00 (including GST) and a security deposit of Rs. 1,05,05,551.00. The petitioner deposited these amounts by March 3, 2021. Despite subsequent representations, no agreement was executed. On June 19, 2021, the BSTDC issued a letter cancelling the tender process and the earlier letter of award, citing unavoidable reasons.

Held

The Court held that the impugned order dated 19.06.2021, cancelling the tender, was unsustainable in law. Firstly, the order was a non-speaking order, devoid of any reasons, which is an indispensable component of a decision-making process, thus vitiating it on this ground alone. The Court emphasized that the validity of an order must be judged by the reasons stated therein and cannot be supplemented by fresh reasons provided in a counter affidavit, citing the Supreme Court judgment in Mohinder Singh Gill vs. The Chief Election Commissioner. Secondly, the Court found that the grounds for cancellation mentioned in the counter affidavit (non-furnishing of labour license and blank litigation column) were themselves admitted to have been treated as directory earlier. The Court opined that such minor deviations ought to have been condoned, and the Corporation could have sought clarification. Thirdly, the Court held that the cancellation violated the principles of natural justice as the petitioner was not afforded an opportunity of hearing or issued a show cause notice before cancellation, especially after depositing significant amounts. Finally, the Court noted that the decision to cancel the tender appeared to have been taken on the dictate of the Principal Secretary, Department of Tourism, Bihar, Patna, rather than an independent decision by the Corporation, which further vitiated the order. Consequently, the impugned order was quashed, and the writ petition was allowed.

Key Issues

1. Whether the impugned order dated 19.06.2021, cancelling the tender process, is vitiated for being a non-speaking order and lacking reasons, thereby violating the principles of natural justice? 2. Whether the reasons for cancellation, as disclosed in the counter affidavit, can supplement the impugned order which was silent on its face? 3. Whether the cancellation of the tender, after the petitioner had deposited the licensing fee and security amount, without affording an opportunity of hearing, violates the principles of natural justice? 4. Whether the decision to cancel the tender was taken on the dictate of a higher authority, thus vitiating the independent decision-making process? Petitioner's arguments: The petitioner contended that the cancellation order was non-speaking and violated natural justice. They argued that since they had deposited the amounts, a right had accrued, and they could not be non-suited. They also pointed out that tenders for other properties under the same notice had been finalized, making the cancellation of this specific tender arbitrary. The petitioner relied on the principle that an order must be judged by the reasons stated therein, not by subsequent justifications. Respondent's arguments: The respondent Corporation argued that the cancellation was due to the petitioner not furnishing a labour license certificate and leaving the "no pending litigation" column blank. Although initially treated as directory, these omissions were cited as reasons for cancellation to ensure fairness and transparency, following a direction from the Principal Secretary, Department of Tourism. The respondent also referred to Clause 3.16 of the tender conditions, reserving the right to accept or reject any bid without assigning reasons.