Patna High Court
Intelligence Security Of India vs The State Of Bihar on 28 March, 2025
Author: Ashutosh Kumar
Bench: Partha Sarthy, Ashutosh Kumar
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.14167 of 2024
======================================================
JMD Services Private Limited a company, having its Registered Office at Plot
No. 60, Nandanpuri, Khajpura, Maurya Path, Patna-14 through its Director,
namely, Rakesh Kumar Singh, aged about 40 years (Male), Son of Gautam
Singh, Resident of Defence Colony, Near Family Quarter Shahpur, P.O. and
P.S.- Shahpur, District - Patna, Bihar-801503.
... ... Petitioner/s
Versus
1. The State of Bihar through the Additional Chief Secretary, Health
Department, Government of Bihar, 1st Floor, Vikas Bhawan, Bailey Road,
Patna-800015.
2. The Additional Chief Secretary, Health Department, Government of Bihar,
1st Floor, Vikas Bhawan, Bailey Road, Patna-800015.
3. The Officer on Special Duty, Health Department, Government of Bihar, 1st
Floor, Vikas Bhawan, Bailey Road, Patna-800015.
4. The Bihar Medical Services and Infrastructure Corporation Ltd., through its
Managing Director, Swasthya Bhawan, Sheikhpura, Patna- 800014.
5. The Managing Director, Bihar Medical Services and Infrastructure
Corporation Ltd., Swasthya Bhawan, Sheikhpura, Patna- 800014.
6. The Chief General Manager, Bihar Medical Services and Infrastructure
Corporation Ltd., Swasthya Bhawan, Sheikhpura, Patna- 800014.
7. The General Manager (Administration), Bihar Medical Services and
Infrastructure Corporation Ltd., Swasthya Bhawan, Sheikhpura, Patna-
800014.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 14186 of 2024
======================================================
Shiva Protection Force (P) Ltd. a company, having its Registered Office at
Main Road Hinoo, Ranchi, Jharkhand, India, 834002, with its Branch Office
at 71/47, Akashwani Road, Khajpura, Bailey Road, Patna-800014, through its
Director, namely, Rakesh Kumar, aged about 49 years (Male), Son of
Mahendra Singh, Resident of Flat No. 402, Premium Royal Apartment,
Shoubhagya Sharma Path, Behind Sai Corporate Park, Rukanpura, P.S.-
Rupaspur, District Patna, Bihar- 800014.
... ... Petitioner/s
Versus
1. The State of Bihar through the Additional Chief Secretary, Health
Department, Government of Bihar, 1 Floor, Vikas Bhawan, Bailey Road,
Patna-800015.
2. The Additional Chief Secretary, Health Department, Government of Bihar,
1st Floor, Vikas Bhawan, Bailey Road, Patna-800015
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
2/21
3. The Officer on Special Duty, Health Department, Government of Bihar, 1st
Floor, Vikas Bhawan, Bailey Road, Patna-800015.
4. The Bihar Medical Services and Infrastructure Corporation Ltd., through its
Managing Director, Swasthya Bhawan, Sheikhpura, Patna-800014.
5. The Managing Director, Bihar Medical Services and Infrastructure
Corporation Ltd., Swasthya Bhawan, Sheikhpura, Patna-800014.
6. The Chief General Manager, Bihar Medical Services and Infrastructure
Corporation Ltd., Swasthya Bhawan, Sheikhpura, Patna-800014.
7. The General Manager (Administration), Bihar Medical Services and
Infrastructure Corporation Ltd., Swasthya Bhawan, Sheikhpura, Patna-
800014.
8. The Principal, Bhagwan Mahavir Institute of Medical Sciences College,
Pawapuri, Nalanda.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 14226 of 2024
======================================================
Intelligence Security of India, a company, having its Registered Office at 1
Floor, 30, Road No. 2, Patliputra Colony, Patna-800013 through its Director,
namely, Ajit Kumar Singh, aged about 56 years (Male), Son of Ramyash
Singh, Resident of Gujral Path, Geeta Mansion, Parwati Lane, Keshari Nagar,
P.S.-Patliputra, District - Patna, Bihar- 800024.
... ... Petitioner/s
Versus
1. The State of Bihar through the Additional Chief Secretary, Health
Department, Government of Bihar, st1 Floor, Vikas Bhawan, Bailey Road,
Patna-800015.
2. The Additional Chief Secretary, Health Department, Government of Bihar,
1st Floor, Vikas Bhawan, Bailey Road, Patna-800015.
3. The Officer on Special Duty, Health Department, Government of Bihar, 1st
Floor, Vikas Bhawan, Bailey Road, Patna-800015.
4. The Bihar Medical Services and Infrastructure Corporation Ltd., through its
Managing Director, Swasthya Bhawan, Sheikhpura, Patna-800014.
5. The Managing Director, Bihar Medical Services and Infrastructure
Corporation Ltd., Swasthya Bhawan, Sheikhpura, Patna-800014.
6. The Chief General Manager, Bihar Medical Services and Infrastructure
Corporation Ltd., Swasthya Bhawan, Sheikhpura, Patna-800014.
7. The General Manager (Administration), Bihar Medical Services and
Infrastructure Corporation Ltd., Swasthya Bhawan, Sheikhpura, Patna-
800014.
... ... Respondent/s
======================================================
with
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
3/21
Civil Writ Jurisdiction Case No. 14739 of 2024
======================================================
M/s Lion Security Guard Services, Registered Proprietorship Concern,
Having ts Registered Office at B-2/6, Vineet Khand, Gomti Nagar, Lucknow
through its Proprietor Mr. Randhir Singh, aged about 59 Years Old, Son of
Manager Singh, R/o 3/311, Vivek Khand, P.S.-Gomti Nagar, Lucknow, U.P.-
226010.
... ... Petitioner/s
Versus
1. The State of Bihar through the Additional Chief Secretary, Health
Department, Government of Bihar, 1st Floor Vikas Bhawan, Bailey Road,
Patna-800015.
2. The Additional Chief Secretary, Health Department, Government of Bihar,
1st Floor Vikas Bhawan, Bailey Road, Patna-800015.
3. The Officer on Special Duty, Health Department, Government of Bihar, 1st
Floor Vikas Bhawan, Bailey Road, Patna-800015.
4. The Bihar Medical Service and Infrastructure Corporation Limited, through
its Managing Director, 2nd and 3rd Floor, Swasthya Bhawan, Behind
IGIMS, Sheikhpura, adjacent to State Health Society, Patna, Bihar-800014.
5. The Managing Director, Bihar Medical Service and Infrastructure
Corporation Limited, 2nd and 3rd Floor, Swasthya Bhawan, Behind IGIMS,
Sheikhpura, adjacent to State Health Society, Patna, Bihar-800014.
6. The Chief General Manager (Supply Chain), Bihar Medical Service and
Infrastructure Corporation Limited, 2nd and 3rd Floor, Swasthya Bhawan,
Behind IGIMS, Sheikhpura, adjacent to State Health Society, Patna, Bihar-
800014.
7. The General Manager (Administration), Bihar Medical Service and
Infrastructure Corporation Limited, 2nd and 3rd Floor, Swasthya Bhawan,
Behind IGIMS, Sheikhpura, adjacent to State Health Society, Patna, Bihar-
800014.
... ... Respondent/s
======================================================
Appearance :
For the Petitioner/s : Mr. Y.V. Giri, Sr. Advocate
Ms. Shrishti Singh, Advocate
Mr. Pranav Kumar, Advocate
Mr. Devashish Giri, Advocate
For the State : Mr. P.K. Shahi, AG
Mr. P.K. Verma, AAG-3
Mr. Vikas Kumar, Advocate
Mr. Amish Kumar, Advocate
Mr. Arvind Kumar, AC to GA-9
For the BMSICL : Mr. Lalit Kishore, Sr. Advocate
Mr. Vikash Kumar, Advocate
Mr. Ayush Kumar, Advocate
Mr. Kanishka Shankar, Advocate
For the Respondent : Mr. Prabhat Ranjan, Advocate
======================================================
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
4/21
CORAM: HONOURABLE THE ACTING CHIEF JUSTICE
and
HONOURABLE MR. JUSTICE PARTHA SARTHY
CAV JUDGMENT
(Per: HONOURABLE THE ACTING CHIEF JUSTICE)
Date : 04-04-2025
The central issues in all the writ petitions are:(a)
Whether the Government/ Government Agency is
justified in cancelling the tender which was issued inviting
bidders for empanelment of agencies only on the ground
of one of the conditions in the tender being technically
incorrect and not in conformity with the Private Securities
Agencies (Regulation) Act, 2005 (hereinafter referred to
as the 'Act of 2005')?; (b) Whether the contract with the
successful bidders under the tender could be cancelled
without issuing notice to them?; (c) Whether the faulty
condition in the tender could be segregated and the
already entered into contract could be saved?; (d)
Whether the State has the authority to cancel the tender
when the selection process has not been adversely
commented upon in any manner or that after the
allocation of work orders, the contractor had made any
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
default in terms of the contract?; and (e) Whether the
action of the State in cancelling the tender in its entirety
smacks of malafides?
2. The Bihar Medical Services and Infrastructure
Corporation Limited (hereinafter referred to as 'the
BMSICL') had floated a tender for empanelment of
agencies for outsourcing different job profiles. In the
'Instructions to the Bidder', which was part of the tender
document, it was mentioned that for the outsourcing of
security guards, if an agency or a bidder does not have a
licence under the Act of 2005, the agency will source the
same from a security firm having licence in accordance
with the Act of 2005 in the State, thereby permitting
even unlicensed bidders to participate in the bid.
3. The Act of 2005 specifies in Section 4 thereof
that no person shall carry on or commence the business
of private security agency, unless he holds a licence
issued under the Act. The proviso to Section 4, however,
permits that the person carrying on the business of
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
private security agency, immediately before the
commencement of the Act, may continue to do so for a
period of one year from the date of such commencement
and if he has made an application for such licence within
the said period of one year, till the disposal of such
application. The second proviso to Section 4 further
stipulates that no private security agency shall provide
private security abroad without obtaining permission of
the controlling authority, which shall consult the Central
Government before according such permission.
4. It would further be necessary, for the disposal
of these writ petitions, to indicate that there were various
positions, viz., that of Manager, Assistant Manager,
Electrician, Sweeper, etc. for which outsourcing agency
had to be empanelled. Out of several such positions (ten
in number), only one related to the supply of security
guard/office boy/lift operator/ fireman.
5. The writ petitioners had applied under the bid
and were successful for being allotted the work of
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
supplying manpower for all positions including the
security guards.
6. Later, on a review of the tender process, it
was found that the relaxed condition in the tender
document of permitting even the unlicensed bidders was
not appropriate and thus a decision was taken to cancel
all the tenders.
7. This was not a knee-jerk reaction. In fact, the
Health Department, as it appears from the records, had
constituted a committee under the Chairmanship of the
Secretary, Health, which committee had discussed
several issues, especially with regard to relaxing the
terms of the tender, in violation of the provision contained
in the Act of 2005, permitting such bidders also to
participate who did not have a licence under the Act of
2005 with the only condition that, if selected, they would
supply the manpower/security guards only from the
licensed agencies.
8. One of the clauses of the tender papers, viz.,
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
Clause-8 provided that there could be no subletting or
subcontracting permissible under any circumstance and
the contract would be terminated in case the service
provider sublet it to other contractors.
9. On a careful consideration of all the issues
which had cropped up because of the relaxed tender
condition, it was decided that the entire tender be
cancelled and a fresh tender be published within a week,
strictly following the Act of 2005 and other applicable
rules and the process be completed within a month. As an
interim arrangement, it was decided that the currently
working agencies like the petitioners will continue to work
till finalization of fresh tender so that there is no
disruption of services.
10. The contention of the petitioners is that
eight out of ten enlisted contractors had the licence under
the Act of 2005, whereas two others obtained the licence
later.
11. However, the decision to cancel the contract
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
was taken because of the relaxed/ wrong tender condition
of permitting unlicensed bidders as well.
12. The primary contention on behalf of the
petitioners is that the tender was for enlistment of
contractors for supply of manpower for various positions;
only one of which was for supply of security guards, which
supply contract required the bidder to have a licence
under the Act of 2005. No such licence is required for
supply of other positions in the health organizations of the
Government.
13. In that case, the faulty condition could be
segregated and only such selected bidders could have
been allowed to operate in the field who had the licence
for supply of security guards.
14. The tender floated was carried to its logical
conclusion and no complaint whatsoever was made with
respect to the selection of the bidders or with respect to
any lethargy, unpreparedness or lack of infrastructure of
any one of the selected bidders to perform their part of
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
the obligation.
15. In that event, it has been argued that
instead of cancelling the tender in its entirety, an attempt
ought to have been made to salvage the contract which
had been entered into between the BMSICL and the
petitioners.
16. The reasons for such submission is that
public tenders are the corner stone of governmental
procurement process, ensuring transparency, competition
and fairness in the allocation of public resources. The
sanctity of public tenders and of contracts is a
fundamental principle that underpins the stability and
predictability of legal and commercial relationships. When
public authorities enter into contracts, they create
legitimate expectations that the State will honour its
obligations. Arbitrary or unreasonable terminations
undermine these expectations and erode the trust of
private players from the public procurement processes
and tenders. Once a contract is entered into, there is a
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
legitimate expectation, that the obligations arising from
the contract would be honoured and that the rights arising
from it will not be arbitrarily dissolved, except for breach
or non-compliance of the terms agreed thereunder. The
public authorities ought to be circumspect in disturbing or
wriggling out of contractual obligations for no apparent
good reason.
17. The second strand of argument on behalf of
the petitioners is that in any view of the matter, before
cancelling the tender and terminating the contract with
respect to petitioners, notice to the petitioners was a must
and it cannot be argued that not noticing the petitioners
has not caused any prejudice to them as the entire
tender has been withdrawn on account of one of the
conditions in the tender to be faulty or not in consonance
with the Act of 2005.
18. The decision of the government in cancelling
the entire tender and calling for a fresh tender does not
appear to be purposive or for preserving public interest.
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
19. Lastly, it has been submitted, though not
specifically pleaded, that the unilateral cancellation of
tender process which was not faulted on any other count
except for the relaxed condition for supply of security
guards, smacks of malafides for accommodating or giving
contract to favoured contractors.
20. The contention on behalf of the State is that
with such faulty condition in the tender requirement, the
purity of the tender process can definitely be presumed to
have been compromised. It would have been unfair if the
entire tender process was not cancelled and only that part
of process which required supplying of security guards,
were to be segregated.
21. It matters not that most of the selected
bidders had the requisite licence but with the tender
process having been discovered to be incorrect, it was
only in the fairness and fitness of things and for
preserving the sanctity of tenders and contracts
emanating therefrom that the decision of cancellation of
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
tender has been taken.
22. The fact that fresh tender has been directed
to be floated with no proscription of the petitioners not
participating in the said bid is clearly reflective of lack of
any malafides. The interim arrangement also confirms
that the action taken by the State is neither vindictive nor
with any oblique purpose with any special motive, but
only with a view of course correction.
23. During the course of arguments, the learned
Advocates appearing for the petitioners have submitted
that assuming the stand of the State that there was a
technical fault in the tender document, only the authority,
viz. the BMSICL, an agency of the State was required to
take a decision.
24. In the present case, the State has entered in
the arena with a unilateral decision asking the BMSICL to
cancel the contract. The action of the State is nothing but
a hurried action without any basis, triggered only by a
Member of the Bihar Legislative Assembly having piloted
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
a starred question on the floor of the House.
25. There does not appear to be any dispute
about the assertion that according to the terms of the
tender papers, the bid of the petitioners was evaluated
and the petitioners were found to be successful bidders.
26. The BMSICL entered into a contract with all
the petitioners and they were allocated work.
Nonetheless, on the ground of faulty tender condition, the
Government took a decision to cancel the entire tender.
There could have been another step to correct the same
but in the event of the State having taken a decision,
which cannot be faulted on legal grounds, there cannot be
any judicial intervention.
27. In Sterling Computers Limited vs. M/s
M & N Publications Limited & Ors. : (1993) 1 SCC
445, the Supreme Court had clearly laid down that while
exercising the power of judicial review, in respect of
contracts entered into on behalf of the State, the Court is
concerned primarily as to whether there has been any
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
infirmity in the decision making process. A Court can
certainly examine whether the decision making process is
reasonable, rationale, not arbitrary and violative of Article
14 of the Constitution of India; but it could not sit in
appeal over the correctness of the decision in general.
28. In Tata Cellular vs. Union of India :
(1994) 6 SCC 651, the freedom of the Government in
matters of contract was espoused. A fair play in the
joints, the Supreme Court asserted, would be a necessary
concomitant for an administrative body functioning in an
administrative sphere or quasi administrative sphere. In
cases of contract, the decision of the Government must
not only be tested by the application of Wednesbury
principle of reasonableness but also that such action is
free from arbitrariness and not affected by bias or
actuated by malafides.
29. In Jagdish Mandal vs. State of Orissa &
Ors. (2007) 14 SCC 517, it was held that judicial
review of administrative action is only intended to prevent
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
arbitrariness, irrationality, unreasonableness, bias and
malafides. Its purpose is to check whether choice or
decision is made lawfully and not to check whether choice
or decision is sound. When a power of judicial review is
invoked in matters relating to tenders or award of
contracts, certain special features should be borne in
mind. A contract is a commercial transaction. Evaluating
tenders and awarding contracts are essentially
commercial functions in which principles of equity and
natural justice stay at a distance. Before interfering in any
decision of the State in such matters, two primary
questions are required to be evaluated, viz. :
(i) Whether the process adopted or decision
made by the authority is malafide or intended to favour
someone or whether the process adopted or decision
made is arbitrary and irrational? and
(ii) Whether public interest is affected?
30. If the answers of these two posers are in the
negative, there ought not be any interference under
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
Article 226 of the Constitution of India.
31. In Subodh Kumar Singh Rathour vs.
Chief Executive Officer and others : 2024 SCC
OnLine SC 1682, a tender inviting bid was cancelled by
the authority on the ground of tender having technical
fault, the conditions being non-specific and not well-
defined which created ambiguity resulting financial losses.
The challenge to the cancellation of tender failed before
the High Court. The Supreme Court, on finding that there
was nothing on record to suggest that the technical fault
in the tender had resulted in financial losses or there
being a possibility of fetching higher licence fee, directed
for salvaging the tender. It had been argued that the
technical fault in the tender, which if rectified, would have
created a possibility of generating more revenue, which
did not find favour with the Supreme Court. The Supreme
Court was of the view that when a contract is evaluated,
the mere possibility of more money in the public coffers
might not itself be said to serve public interest. Public
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
interest cannot be conflated with an evaluation of
monetary gain or loss alone. The Supreme Court in this
instance has specified that public interest cannot be used
as a pretext to arbitrarily terminate the contracts. There
must be clear and demonstrable ramification or detriment
on the public interest to justify any such action. It was
also held that considerations of public interest ought not
to be narrowly confined. A decision to terminate a
contract or cancel the tender must be based on careful
consideration of all relevant factors including the potential
harm to the integrity and sanctity of contractual
relationships.
32. The facts of the present case are absolutely
different. The technical flaw in the tender was that the
tender condition had been relaxed, we repeat, which was
in derogation of the Act of 2005. Segregating that part of
the tender paper and salvaging the tender and resultant
contract would have been a difficult and onerous task. If
the tender condition would not have been relaxed in
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
derogation of the Act of 2005, perhaps many other
persons, especially licensees under the Act would have
applied and the BMSICL would have had a larger pool to
select from. It has also to be taken into account that the
enlistment under the tender was of the agencies which
had to supply manpower in hospitals.
33. In recent past, offences committed by the
outsourced personnel had created lot of controversy with
respect to the very process of selecting such agencies.
34. We have not been able to diagnose any
malafides in the action of the State.
35. True it is that the evaluation of the tender
started after a starred question was moved by one of the
members of the Legislative Assembly but the action was
based on a report of the High Level Committee which had
deliberated on all the issues concerning the tender in
question.
36. Though some of the petitioners have raised
questions about the correctness of the allegation that
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
they are not the licensees but the issue pales into
insignificance once it is found that the action of the State
in cancelling the tender and taking a decision to float a
fresh tender within a stipulated time, not preventing the
petitioners from participating in such tender, any
interference in that decision which cannot be called to be
arbitrary or against public interest, would be unjustified.
37. We have also taken into account that in a
contract of this kind, there is not expected to be any
infrastructure investment by anyone of the contractors. It
cannot, therefore, be said that the decision overlooked
the interest of the contractors.
38. As noted above, in the interim arrangement,
the petitioners have been permitted to keep on supplying
the manpower till fresh tender is floated and fresh
contracts are made thereafter.
39. There is every possibility of the petitioners
coming out successful in the fresh tender.
40. Considering all these facts, we uphold the
Patna High Court CWJC No.14167 of 2024 dt. 04-04-2025
decision of the respondents in cancelling the tender in its
entirety.
41. All the writ petitions are dismissed.
(Ashutosh Kumar, ACJ)
Partha Sarthy, J : I agree.
(Partha Sarthy, J)
Rajesh/Saurav
AFR/NAFR NAFR
CAV DATE 27.03.2025
Uploading Date 04.04.2025
Transmission Date NA
