Patna High Court
Rishav Utilities Services Pvt. Ltd vs The State Of Bihar on 28 July, 2026
Author: Rajesh Kumar Verma
Bench: Rajesh Kumar Verma
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.20806 of 2025
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Rishav Utilities Services Pvt. Ltd. having its Registered Office at Lane No. 1,
behind Vijay Petrol Pump, Maharana Pratap Nagar, Bhijhanpura, Ram
Dayalu, P.S. Sadar, Muzaffarpur, 842001 through its Managing Director,
Neeraj Kumar, aged about 42 years, Male, son of Sri Sunil Sanjeev, resident
of Lane No. 1, behind Vijay Petrol Pump, Maharana Pratap Nagar,
Bhikhanpura, Ram Dayalu, P.S. Sadar, District- Muzaffarpur, 842001.
... ... Petitioner/s
Versus
1. The State of Bihar through the Additional Chief Secretary, Rural Works
Department, Government of Bihar, Patna.
2. The Engineer in Chief, Rural Works Department, Government of Bihar,
Patna.
3. The Engineer in Chief cum Additional Commissioner cum Special Secretary,
Rural Works Department, Government of Bihar, Patna.
4. The Chief Engineer- 4, (Purnia) Rural Works Department, District Purnia,
Bihar.
5. The Executive Engineer, Rural Works Department, Works Division, Gogri,
District Khagaria, Bihar.
... ... Respondent/s
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Appearance :
For the Petitioner/s : Mr.Prabhat Ranjan, Advocate
For the Respondent/s : Mr. S.D.Sanjay, A.G.
Mr. Mohit Agrawal, AC to AG
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CORAM: HONOURABLE THE ACTING CHIEF JUSTICE
and
HONOURABLE MR. JUSTICE RAJESH KUMAR VERMA
ORAL JUDGMENT
(Per: HONOURABLE THE ACTING CHIEF JUSTICE)
Date : 28-07-2026
Heard learned counsel for the parties.
2. The petitioner has sought the following reliefs in
the present writ petition:
"(i) Quashing of the ex parte decision of the
Departmental Tender Committee dated 25.09.2025
(Annexure P/13) as communicated vide Letter No. 3703
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dated 25.09.2025 (corresponding to Short Notice
Inviting Tender No. RRSMP-04/2025-26, Serial No. 15,
Package -Gogri/03, Block Goagri Tender ID 141684)
whereby, on the basis of a decision taken in other tender
process, the work order as communicated vide
Departmental Letter No. 2764 dated 31.07.2025 has
been cancelled with a further decision to re-advertise
the work, forfeiture of the Earnest Money Deposit and
direction upon the Executive Engineer to take the final
measurement and cancel the agreement in case the
Agreement has already been executed;
(ii) Restraining the Respondents from taking any
coercive action giving effect to the decision dated
25.09.2025
as taken by the Departmental Tender
Committee during the pendency of the present writ
application and/or the without the leave of this Hon’ble
Court.
3. The brief facts of the present case are that the
petitioner participated in Short Notice Inviting Tender No.
RRSMP-04/2025-26, Serial No. 15, Package-Gogri/03, issued
for execution of work relating to Initial Rectification, Minor
Improvement and Surface Renewal under the Mukhya Mantri
Gramin Sadak Yojana. Upon technical evaluation, all four
bidders were declared technically responsive. An objection was
raised by one of the competing bidders regarding the petitioner’s
Annual Turnover Certificate, and the petitioner was called upon
to furnish an explanation, which was duly submitted. Thereafter,
the petitioner continued to remain technically qualified and,
upon opening of the financial bids on 26.07.2025, emerged as
the lowest (L-1) bidder.
4. Pursuant thereto, a Letter of Acceptance dated
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22.08.2025 was issued in favour of the petitioner requiring
submission of the Performance Guarantee and Additional
Performance Guarantee. Though reminders were issued for
furnishing the requisite bank guarantee, ultimately an agreement
bearing No. CMBD-14/2025-26 dated 11.09.2025 came to be
executed between the parties for execution of the work.
Thereafter, the Executive Engineer directed the petitioner to
ensure completion of certain rectification work.
5. The grievance of the petitioner arises from the
subsequent decision of the Departmental Tender Committee
contained in its proceedings dated 25.09.2025 whereby, without
issuing any notice or affording an opportunity of hearing to the
petitioner, it was resolved to cancel the work, re-tender the
project, forfeit the earnest money deposit and direct cancellation
of the agreement, if already executed. The said decision was
communicated to the field authorities vide Letter No. 3703
dated 25.09.2025. Aggrieved by the aforesaid action, the
petitioner has approached this Court challenging the
proceedings dated 25.09.2025 and the consequential
communication.
6. Learned counsel for the petitioner submits that the
impugned decision of the Departmental Tender Committee
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cancelling the work order pertaining to Tender ID No. 141684,
directing re-tendering of the work and forfeiting the petitioner’s
earnest money deposit, has been taken in complete violation of
the principles of natural justice. It is contended that no show
cause notice was ever issued to the petitioner nor was any
opportunity of hearing afforded before taking the impugned
decision, despite the fact that the petitioner had already been
declared the successful bidder and the agreement had been
executed. It is, therefore, submitted that the impugned action,
having been taken without adherence to the requirements of
procedural fairness, is arbitrary, illegal and liable to be set aside.
7. Mr. S.D. Sanjay, learned Advocate General
appearing for the State, fairly submits that the factual position
regarding non-issuance of a show cause notice prior to passing
of the impugned decision in Tender ID No. 141684 is not
disputed.
8. In the aforesaid factual backdrop, the issue which
arises for consideration before this Court is whether the
respondents could have taken such an adverse decision affecting
the contractual rights of the petitioner without granting an
opportunity of hearing.
9. It is a settled proposition of law that though the
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State, as a contracting party, possesses the power to take
decisions in contractual matters, such power is not immune from
the requirements of fairness and reasonableness. Any action of
the State or its instrumentalities which entails civil
consequences must satisfy the test of fairness under Article 14
of the Constitution of India. The requirement of following the
principles of natural justice is not confined only to statutory
proceedings but equally applies to administrative decisions
where the rights of an individual are adversely affected.
10. In Erusian Equipment & Chemicals Ltd. v. State
of West Bengal, reported in (1975) 1 SCC 70, the Hon’ble
Supreme Court held that even in matters relating to government
contracts, an action which adversely affects a person’s right to
deal with the State cannot be taken arbitrarily and the affected
person must be afforded an opportunity to represent his case.
The relevant part of the said order reads as follows:
“20. Blacklisting has the effect of preventing a
person from the privilege and advantage of entering
into lawful relationship with the Government for
purposes of gains. The fact that a disability is
created by the order of blacklisting indicates that the
relevant authority is to have an objective
satisfaction. Fundamentals of fair play require that
the person concerned should be given an opportunity
to represent his case before he is put on the
blacklist.”
11. Further, in Gorkha Security Services v.
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Government (NCT of Delhi), reported in (2014) 9 SCC 105, the
Hon’ble Supreme Court held that where an action having
serious civil consequences is proposed against a contractor,
issuance of a proper show cause notice and grant of an
opportunity to respond is an essential requirement of fair play.
The Court observed that the purpose of issuance of a show
cause notice is to enable the affected party to understand the
precise case against it and effectively defend itself. The relevant
part of the said order reads as follows:
“Necessity of serving show-cause notice as a
requisite of the principles of natural justice
16. It is a common case of the parties that the
blacklisting has to be preceded by a show-cause
notice. Law in this regard is firmly grounded and
does not even demand much amplification. The
necessity of compliance with the principles of
natural justice by giving the opportunity to the
person against whom action of blacklisting is sought
to be taken has a valid and solid rationale behind it.
With blacklisting, many civil and/or evil
consequences follow. It is described as “civil death”
of a person who is foisted with the order of
blacklisting. Such an order is stigmatic in nature and
debars such a person from participating in
government tenders which means precluding him
from the award of government contracts.
xx xx xx
20. Thus, there is no dispute about the requirement of
serving show-cause notice. We may also hasten to
add that once the show-cause notice is given and
opportunity to reply to the show-cause notice is
afforded, it is not even necessary to give an oral
hearing. The High Court has rightly repudiated the
appellant’s attempt in finding foul with the impugned
order on this ground. Such a contention was
specifically repelled in Patel Engg.”
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12. The Hon’ble Supreme Court in Kulja Industries
Ltd. v. Chief General Manager, BSNL, reported in (2014) 14
SCC 731, while dealing with the power of the State authorities
in contractual matters, held that although the power to blacklist
or take adverse contractual decisions may exist, its exercise by
the State is subject to judicial review and must conform to the
principles of natural justice, fairness and reasonableness. The
relevant part of the said order reads as follows:
“17. That apart, the power to blacklist a contractor
whether the contract be for supply of material or
equipment or for the execution of any other work
whatsoever is in our opinion inherent in the party
allotting the contract. There is no need for any such
power being specifically conferred by statute or
reserved by contractor. That is because
“blacklisting” simply signifies a business decision by
which the party affected by the breach decides not to
enter into any contractual relationship with the party
committing the breach. Between two private parties
the right to take any such decision is absolute and
untrammelled by any constraints whatsoever. The
freedom to contract or not to contract is unqualified
in the case of private parties. But any such decision
is subject to judicial review when the same is taken
by the State or any of its instrumentalities. This
implies that any such decision will be open to
scrutiny not only on the touchstone of the principles
of natural justice but also on the doctrine of
proportionality. A fair hearing to the party being
blacklisted thus becomes an essential precondition
for a proper exercise of the power and a valid order
of blacklisting made pursuant thereto. The order
itself being reasonable, fair and proportionate to the
gravity of the offence is similarly examinable by a
writ court.”
13. Applying the aforesaid principles to the facts of
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the present case, this Court finds that the impugned decision
dated 25.09.2025 was not a mere decision relating to the tender
process, but an action affecting the vested contractual rights of
the petitioner arising out of the Letter of Acceptance and the
subsequently executed agreement. The decision resulted in
cancellation of the work, proposed forfeiture of the earnest
money deposit and re-tendering of the work, thereby imposing
serious civil and commercial consequences upon the petitioner.
14. In such circumstances, the respondents were
required to put the petitioner to notice and afford an opportunity
to explain its position before taking such adverse action. The
absence of any show cause notice or opportunity of hearing,
remains undisputed, rendering the impugned decision contrary
to the settled principles of natural justice.
15. In view of the aforesaid, this Court is of the
considered view that the decision of the Departmental Tender
Committee contained in the proceeding dated 25.09.2025,
insofar as it directs cancellation of the work, re-tendering of the
project, forfeiture of earnest money deposit and consequential
cancellation of the agreement, with respect to Tender ID No.
141684 cannot be sustained in law and is liable to be interfered
with on the ground of violation of the principles of natural
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justice.
16. Accordingly, the decision of the Departmental
Tender Committee dated 25.09.2025 as communicated vide
Letter No. 3703 dated 25.09.2025 is hereby quashed and set
aside.
17. The matter is remanded to the competent authority
to proceed afresh in accordance with law. The authority
concerned shall issue a fresh show cause notice to the petitioner,
clearly indicating the grounds on the basis of which the
proposed action is sought to be taken, along with the date and
time for appearance of the petitioner. Thereafter, upon affording
an opportunity of personal hearing to the petitioner, a fresh
reasoned order shall be passed in accordance with law.
18. It is further directed that, in case the petitioner
seeks supply of any document or material relied upon by the
department for taking the proposed action, the same shall be
furnished to the petitioner to enable an effective opportunity of
representation.
19. It is made clear that this Court has not expressed
any opinion on the merits of the allegations and all issues are
left open to be decided independently by the competent
authority in accordance with law.
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20. With the aforesaid observations and directions, the
present writ application stands allowed.
21. Pending application(s), if any, shall also stand
disposed of.
(Sudhir Singh, ACJ)
(Rajesh Kumar Verma, J)
Sujit/-
AFR/NAFR NAFR CAV DATE NA Uploading Date 03.08.2026 Transmission Date NA
