M/S Malik Builders & Contractors vs Ut Of J&K And Anr
2025 Latest Caselaw 2435 J&K

Jammu & Kashmir High Court

M/S Malik Builders & Contractors vs Ut Of J&K And Anr on 18 October, 2025

Author: Sanjay Dhar

Bench: Sanjay Dhar

     HIGH COURT OF JAMMU & KASHMIR AND LADAKH
                     AT JAMMU
                                                    Reserved on: 08.10.2025
                                                 Pronounced on: 18.10.2025
                                                    Uploaded on:18.10.2025
                                                Whether the operative part or
                                                 full judgment is pronounced
 Case No.:- WP(C) No 1406/2024

 M/s Malik Builders & Contractors



                                                            .....Petitioner(s)

               Through: Mr. Muzaffar Iqbal Khan, Advocate
                           Mr. Mazher Ali Khan, Advocate.

             Vs
 UT of J&K and anr.
                                                         ..... Respondent(s)

                Through: Mr. Ravinder Gupta, AAG
                            Mr. M.Y Akhoon, Advocate

 Coram:        HON'BLE MR. JUSTICE SANJAY DHAR, JUDGE

                                JUDGMENT

1. The petitioner, through the medium of present petition, has

challenged order No. 23-CEP (R&B) of 2024 dated 05.06.2024

issued by respondent No. 2 whereby Letter of Acceptance

issued vide No. CEP/R&B/3296-3300 dated 15.02.2024 in

favour of the petitioner in connection with the work

"construction of road from Darmala Saleri to Danti Killa

(under NABARD)" has been withdrawn. Challenge has also

been thrown to e-NIT No. 01 of 2024-25 dated 05.06.2024

issued by respondent No. 2 whereby fresh tenders have been

invited for the aforesaid work.

2. Briefly stated, the facts emanating from the pleadings of the

parties are that e-NIT No. 01 of 2023-24 dated 24.11.2023 for

allotment of civil works including the work related to

construction of road from Darmala Saleri to Danti Killa in

District Rajouri was issued by respondent No. 2. The

estimated cost of work was to the tune of Rs. 810.00 lacs. The

petitioner as well as respondent No. 3 and 05 more entities

responded to the aforesaid e-NIT. Upon opening of technical

bid on 05.02.2024, the petitioner and three more bidders

including respondent No. 3 were declared as "responsive",

whereas, three other bidders were declared as "non-

responsive". Respondent No. 3 was also declared as "non-

responsive"" by the "Technical Evaluation Committee" in terms

of technical Evaluation Summary Sheet/Report dated

14.02.2024. Thereafter, the official respondents opened the

financial bid on 14.02.2024 and declared the petitioner as

lowest bidder (L1).

3. It seems that one of the bidders M/s Green Earth

Infrastructure Pvt. Ltd called in question the Technical

Evaluation Summary Sheet/Report dated 14.02.2024 to the

extent of declaration of the petitioner firm as technically

qualified/responsive by way of writ petition bearing WP(C) No.

327/2024. Challenge was also thrown to financial bid

summary dated 14.02.2024 issued by respondent No. 2

whereby the petitioner-firm was declared as lowest bidder. The

aforesaid writ petition came to be disposed of by this Court in

terms of judgment dated 22.03.2024.

4. Respondent No. 2 vide his communication No.

CEP/R&B/3296-3300 dated 15.02.2024 issued Letter of

Acceptance in favour of the petitioner-firm whereby while,

accepting offer of the petitioner for contract price of

Rs. 6,25,89,900/- , the petitioner firm was directed to furnish

security (3%) for an amount of Rs. 18,77,697/- with additional

performance security (10%) for an amount of Rs. 62,58,990/-

valid as per Standard Bidding Document (SBD) conditions

duly pledged to Chief Accounts Officer, PW(R&B) Department,

Pir Panjal Range within a period of 21 days from the date of

issuance of Letter of Acceptance and it was further provided

that the petitioner shall submit documents in original for

signing contract agreement within 10 days.

5. According to the petitioner, in compliance to the aforesaid

Letter of Acceptance, it deposited the performance security as

well as additional performance security vide two separate bank

guarantees dated 26.03.2024, copies whereof have been

placed on record.

6. It seems that the official respondents after the aforesaid

developments, issued the impugned order dated 25.06.2024

wherein, it has been provided that it has become necessary to

rectify the bidding process by way of a withdrawing Letter of

Acceptance dated 15.02.2024 issued in favour of the petitioner

so as to avoid huge loss of Government Exchequer and to

conduct healthy competition amongst the bidders. Besides

this, the official respondents vide the said order which, it

appears has been issued on the recommendations of Technical

Evaluation Committee members found lack of merit for

allotment of contract in favour of the petitioner and it was also

decided that fresh e-NIT shall be issued for execution of the

work in question. Pursuant to the said order, the impugned e-

NIT No. 01 of 2024-25 dated 05.06.2024 has been issued by

the official respondents.

7. The petitioner has challenged the impugned action of the

respondents on the grounds that the same is mala-fide and

actuated by extraneous considerations. It has been contended

that once the Letter of Acceptance was issued by the official

respondents in favour of the petitioner, the contract between

the two stood concluded as such, it was not open to the official

respondents to revoke the said contract that too without

hearing the petitioner. It has been further contended that the

reason assigned by the official respondents in revoking the

Letter of Acceptance and in issuing the fresh tender is

completely irrational inasmuch as merely, because private

respondent No. 3 had submitted a bid lower than the bid of

the petitioner would not give a cause to the official

respondents to revoke the Letter of Acceptance and issue fresh

tenders particularly, when private respondent No. 3 had

admittedly been declared as "non-responsive" during the

technical evaluation. It has been contended that the action of

respondent No. 2 is completely arbitrary which cannot be

sustained in law.

8. The official respondents while, defending their action have

submitted that during the opening of the financial bids

inadvertently, the financial bid of private respondent No. 3

who was declared as "non-responsive" during the technical

evaluation also came to be uploaded/opened though, he was

not eligible. It has been further submitted that the rates

quoted by the said bidder were Rs. 94.63 lacs less than the

rate quoted by the petitioner. Thus, there was a huge gap

between the rate quoted by the petitioner and that quoted by

private respondent No. 3. Taking into consideration this

aspect, the matter was again referred to Technical Evaluation

Committee for re-examination and it was decided that in

exercise of power under Clause 28.1 of the SBD, Letter of

Acceptance issued in favour of the petitioner deserves to be

revoked and the work should be put to retendering so as to

avoid loss to the State Exchequer.

9. The official respondents have further contended that there was

no concluded contract between the petitioner and the official

respondents and that letter dated 15.02.2024 was only a

Letter of Intent and in terms of the said letter, the petitioner

was required to fulfil certain conditions which included the

furnishing of performance security and additional performance

security in accordance with the terms of SBD. It has been

submitted that the petitioner furnished bank guarantees only

for a period of one year though as per the terms of the SBD, it

was required to furnish bank guarantees for 05 years. Thus,

the petitioner has not fulfilled the terms and conditions

mentioned in the Letter of Acceptance as such, no concluded

contract had taken place between the parties.

10. I have heard learned counsel for the parties and perused the

record of case.

11. From the pleadings of the parties, it comes to the fore that it is

not in dispute that pursuant to the participation of the

petitioner in e-NIT dated 24.11.2023, the work relating to

construction of road from Darmala Saleri to Danti Killa was

allotted to the petitioner in terms of Letter of Acceptance dated

15.02.2024. The official respondents claim that they cancelled

its Letter of Allotment because during the re-examination of

bid documents, it came to the fore that inadvertently, financial

bid of private respondent No. 3 who was admittedly declared

as disqualified/non-responsive during the process of technical

evaluation, had been uploaded/opened. It is the case of the

official respondents that bid submitted by the said respondent

was lower by more than Rs. 94 lacs than the bid of petitioner

and in view of this huge gap, the Technical Evaluation

Committee decided to cancel the allotment letter issued in

favour of the petitioner so as to avoid loss to the State

Exchequer. It is the further case of the official respondents

that as per the terms of allotment letter dated 15.02.2024, the

petitioner was required to furnish two bank guarantees on

account of performance security and additional performance

security valid for a period of 05 years but instead of doing so,

it furnished bank guarantees valid only for one year. Thus, the

conditions of Letter of Acceptance have not been fulfilled by

the petitioner as a result whereof, no concluded contract has

come into being between the parties.

12. In the impugned cancellation order dated 05.06.2024, the only

reason given by the official respondents for cancellation of

letter of allotment is inadvertent opening of financial bid of

private respondent No. 3 which turned out to be Rs. 94.63 lacs

below the rate quoted by the petitioner who had emerged as L1

amongst the responsive bidders. The case set up in the

impugned cancellation letter dated 05.06.2024 is that in the

interests of the State Exchequer, it was decided to cancel the

letter of allotment issued in favour of the petitioner and to

retender the works. In the impugned cancellation letter, aid of

Clause 5.6.6 of Manual for Procurement of Works, 2019 issued

by Government of India, Ministry of Finance Department and

Expenditure has also been taken for issuing the said letter.

The official respondents, in their reply, have also relied upon

Clause 28.1 of Section 1 of Instructions to Bidders as

contained in SBD.

13. As already noted, there is no mention of non-furnishing of

bank guarantees valid for a period of 05 years by the petitioner

as a ground for cancellation for the letter of allotment issued

in favour of the petitioner in the impugned order. This stand

has been taken by the official respondents for the first time in

their reply affidavit. The Supreme Court has, in the case of

Mohinder Singh Gill Vs. Chief Election Commissioner;

1978 (1) SCC 405 held that where an authority makes an

order based on certain grounds its validity must be judged by

the reasons so mentioned and cannot be supplemented by

fresh reasons in the shape of affidavit or otherwise. The

Supreme Court has further observed that if an authority is

allowed to supply fresh reasons, then an order bad in the

beginning may be, by the time it comes to Court on account of

a challenge, get validated by additional grounds later brought

out.

14. In the face of aforesaid legal position, it is not open to the

official respondents to supply an additional ground for their

impugned action by urging the same in their reply affidavit. In

any case, the respondents have not placed on record any

document to even remotely suggest that they had called upon

the petitioner to extend the validity of bank guarantees

furnished by it and that despite this, the petitioner had

avoided to do so. Thus, the contention of the official

respondents in this regard cannot be accepted.

15. That takes us to the question as to whether the other reason

furnished by the official respondents for cancelling the letter of

allotment of the petitioner offers the justification for their

impugned action. The only reason given by the official

respondents for cancelling the letter of allotment in favour of

the petitioner is that while opening the financial bid of a non-

responsive bidder, it was found that bid of the said non-

responsive bidder was more than Rs. 94 lacs below the bid

submitted by the petitioner and therefore, with a view to avoid

loss to the State Exchequer, it was thought appropriate to

cancel the letter of allotment issued in favour of the petitioner.

16. In the first place, the official respondents could not have

opened the financial bid of a non-responsive bidder. If they

have done so inadvertently, which is a fault attributable to

none other than the respondents, they cannot make the

petitioner to suffer for that. Merely because the bid of the non-

responsive bidder was found to be less than the bid submitted

by the petitioner, who had emerged L1 amongst the responsive

bidders, does not offer a ground to cancel the letter of

allotment in its favour. It is a settled law that merely because a

bid is the lowest, the requirement of compliances to the rules

and conditions should be ignored. If the logic given by the

official respondents is accepted, then if they open the financial

bids of other non-responsive bidders, it is quite probable that

they may find some other non-responsive bidder having

quoted a lesser price than what has been quoted by private

respondent No. 3. If such a procedure is permitted, then

technical evaluation of bids will become an empty formality

and even an unqualified bidder who has quoted less price can

stake his claim for contract. The same is not permissible in

law. The reason and logic given by the official respondents for

cancelling the letter of allotment in favour of the petitioner is

grossly irrational and arbitrary which, no prudent employer

would take in the facts and circumstances of the case.

17. The official respondents for the purpose of defending their

impugned action have taken resort to Clause 5.6.6 of Manual

For Procurement of Works issued by the Government of India.

The said Clause reads as under:-

"5.6.6 Negotiations

i) Normally, there should be no negotiation.

Negotiations should be a rare exception rather than the rule and may be resorted to only in exceptional circumstances. If it is decided to hold negotiations for reduction of prices, they should be held only with the lowest acceptable bidder (L1), who is techno- commercially responsive for the supply of a bulk quantity and on whom the contract would have been placed but for the decision to negotiate. In no case, including where a cartel/ pool rates are suspected, should negotiations be extended to those who had either not tendered originally or whose tender was rejected because of unresponsiveness of bid, unsatisfactory credentials, inadequacy of capacity or unworkable rates. The circumstances where negotiations may be considered could be:

a) Where the procurement is done on nomination basis;

b) Procurement is from single or limited sources; c) Procurements where there is suspicion of cartel formation which should be recorded; and

d) Where the requirements are urgent and the delay in re-tendering for the entire requirement due to the unreasonableness of the quoted rates would jeopardise essential operations, maintenance and safety, negotiations with L1 bidder(s) may be done for bare minimum quantum of requirements. The balance

bulk requirement should, however, be procured through a re-tender, following the normal tendering process.

ii) The decision whether to invite fresh tenders or to negotiate and with whom, should be made by the tender accepting authority based on the recommendations of the TC. Convincing reasons must be recorded by the authority recommending negotiations. The CA should exercise due diligence while accepting a tender or ordering negotiations or calling for a re-tender and a definite timeframe should be indicated.

iii) Normally all counter offers are considered negotiations by other means and the principles of negotiations should apply to such counter offers. For example, a counter offer to L1, in order to arrive at an acceptable rate, shall amount to a negotiation.

However, any counter offer to L2, L3, and so on (at the rates accepted by L1) in case of splitting of quantities shall not be deemed to be a negotiation.

iv) After the CA or TC has decided to call a specific bidder for negotiation, the following procedure should be adopted:

a) Negotiations must be carried out by the CA or TC only;

b) It must be understood that, if the period of validity of the original offer expires before the close of negotiations, the original offer will not be available for acceptance. The period of validity of the original offer must, therefore, be extended, wherever necessary, before negotiations;

c) The tenderer to be called in for negotiations should be addressed as per the format of letter laid down in Annexure 4, so that the rates originally quoted by him

shall remain open for acceptance in the event of failure of the contemplated negotiation;

d) A negotiations meeting should be started only after obtaining a signed declaration from the negotiating contractor as per Annexure 4; and

e) Revised bids should be obtained in writing from the selected tenderers at the end of the negotiations in the format of letter laid down in Annexure 5. The revised bids so obtained should be read out to the tenderers or their representatives present, immediately after completing the negotiations. If necessary, the negotiating party may be given some time to submit its revised offer. In case, however, the selected bidder prefers to send a revised bid instead of being present at the negotiation, the offer should be taken into account. In case a bidder does not submit the revised bid, its original bid shall be considered."

18. From a perusal of the aforesaid Clause, it comes to the fore

that negotiations with the bidders after the opening of bids are

forbidden except in certain circumstances. It has been

provided that negotiations should be held in exceptional

circumstances that too only with the lowest acceptable

bidder (L1) who is techno-commercially responsive. It further

provides that in no case, the negotiations should be extended

to those who had either not tendered originally or whose

tender was rejected because of unresponsiveness of bid.

19. This Court fails to comprehend as to how the afore quoted

Clause comes to the rescue of official respondents. As per the

mandate of said Clause, the respondents could not have held

negotiations with respondent No. 3 who was admittedly non-

responsive and, therefore, could not have been treated as L1.

Amongst the responsive bidders, the petitioner was the L1 and

they could have negotiated only with the petitioner and no one

else if at all negotiations were needed. By taking resort to the

said Clause, the official respondents cannot justify their

impugned action.

20. The official respondents have also drawn support for their

impugned action from Clause 28.1 of Section 1 of Instructions

to bidders of the SBD, which reads as under:-'

"Not withstanding Clause 27 the Employer reserves the right to accept or reject any bid and to cancel the bidding process and reject all bids, at any time prior to award of Contract, without thereby incurring any liability to the affected bidder or bidders or any obligations to inform the affected bidder or bidders of the grounds for the Employer's action"

21. A perusal of the aforesaid Clause reveals that employer has

the right to accept or reject any bid or even to cancel the

bidding process as a whole but the said right has to be

exercised prior to the award of the contract. In the instant

case, the bid submitted by the petitioner which was admittedly

responsive, was accepted by the official respondents pursuant

whereto they issued Letter of Acceptance dated 15.02.2024. In

the said letter, the respondent No. 2 has, in unequivocal terms

conveyed to the petitioner that its bid in response to e-NIT No.

01/2023-24 dated 24.11.2023 with respect to work for

construction of road from Darmala Saleri to Danti Killa stands

accepted for contract price of Rs. 6,25,89,900/- meaning

thereby a concluded contract came into being between the

petitioner and official respondents with the issuance of the

said letter.

22. Section 4 of the Contract Act clearly provides that

communication of the acceptance is complete as against the

proposer when it is put in course of transmission so as to be

out of the power of the acceptor and as against the acceptor

when it comes to the knowledge of the proposer. In the present

case, e-NIT issued by the official respondents constituted an

invitation to offer in pursuance whereto, the petitioner

submitted its bid for contract price of Rs. 6,25,89,900/- which

constitutes its proposal to the official respondents. Once Letter

of Acceptance dated 15.02.2024 was put into transmission by

the official respondents accepting the proposal of the

petitioner, the said acceptance is complete as against the

official respondents when the said letter came to the

knowledge of the petitioner. Thus, the moment, Acceptance

Letter dated 15.02.2024 came to the knowledge of the

petitioner, a concluded contract came into being between the

petitioner and the official respondents. Therefore, at that

stage, it was not open to the official respondents to take resort

to the Clause quoted above with a view to revoke the

acceptance letter as well as the bidding process.

23. The acceptance letter issued by respondent No. 2 is clear and

unequivocal. The requirement of fresh performance security

and additional performance security and signing of contract

agreement is only a formality, and not a condition precedent to

the contract. Merely, because the petitioner in the first

instance, did not furnish the bank guarantees valid for period

of 05 years and instead furnished bank guarantees with

validity for a period of one year, does not amount to non-

fulfilment of the conditions of the Letter of acceptance which,

as already stated, is unequivocal and unconditional in nature.

24. It has been contended by learned counsel for the respondents

that even if there is any breach on the part of the respondents,

still then, the remedy available to the petitioners is to claim

damages by filing a civil suit against the official respondents. I

am afraid the contention raised by learned counsel for the

official respondents is not legally tenable. As already stated,

with the issuance of Acceptance Letter dated 15.02.2024, a

complete and binding contract came into being between the

parties giving rise to rights and liabilities amongst the parties

inter-se. The official respondents were, therefore, obliged to

issue a notice to the petitioner before taking any action

prejudicial to his interests under the Contract. The official

respondents being officers of the State are duty bound to act

fairly before taking an action against the allottee of the work

which, in the instant case, has not been done.

25. The Supreme Court in the case of R.D Shetty Vs. Intl. Air

Port Authority, 1979 (3) SCC 489 held that actions of the

State authorities even in matters relating to contract have to

meet the tests of fairness and reasonableness. The action of

the respondents in cancelling the Letter of Acceptance in

favour of the petitioner smacks of arbitrariness as they have

breached the principles of natural justice, thereby rendering

their action unsustainable in law. Once it is shown that the

action of the functionaries of the State smacks of arbitrariness

violating the provisions of Article 14 of the Constitution, writ

Court would be well within its jurisdiction to intervene even in

contractual matters. Thus, the present writ petition is

maintainable.

26. In view of what has been discussed hereinabove, the instant

writ petition is allowed and the cancellation order dated

05.06.2024 whereby Letter of Acceptance issued in favour of

the petitioner and the e-NIT No. 01 of 2023-24 dated

24.11.2023 have been cancelled, is quashed. Consequently,

e-NIT No. 01 of 2024-25 dated 05.06.2024 shall also stand

quashed. The respondents are directed to permit the petitioner

to execute the work in accordance with the terms and

conditions of the contract/allotment letter.

(SANJAY DHAR) JUDGE JAMMU 18.10.2025 Tarun/PS Whether order is speaking: Yes

Whether order is reportable: Yes

Mahavir Singh

2025.10.18 17:54

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