Introduction:

Government tenders are governed by transparency, fairness, and strict adherence to the conditions contained in the bidding documents. While bidders may develop expectations after participating in a tender process, such expectations cannot supersede the contractual terms accepted by them or compel the State to proceed with a project that lacks statutory or administrative approval. The Patna High Court reaffirmed this principle while deciding M/s Energy United India Private Limited v. State of Bihar and Others (Civil Writ Jurisdiction Case No. 16154 of 2025). A Division Bench comprising Justice Sudhir Singh and Justice Ranjan Kumar Jha dismissed a writ petition challenging the cancellation of an Expression of Interest (EOI) issued by the Bihar Renewable Energy Development Agency (BREDA) for the empanelment of agencies to establish grid-connected rooftop solar power plants on government buildings across Bihar.

The petitioner had successfully participated in the bidding process, matched the lowest bid, received a Letter of Intent, executed an agreement with BREDA, and was allotted three districts for undertaking preparatory work. However, before any work order was issued, BREDA cancelled the EOI after the project failed to receive the necessary administrative approval and financial sanction. The petitioner challenged the cancellation, alleging arbitrariness and invoking the doctrine of legitimate expectation.

Arguments of the Parties:

The petitioner argued that once the Letter of Intent had been issued and a formal agreement executed, the tender process had substantially concluded. Acting on BREDA’s instructions, it had conducted site surveys and undertaken preparatory activities, investing time, effort, and financial resources. According to the petitioner, these circumstances created a legitimate expectation that the project would proceed and that work orders would be issued. It contended that BREDA was estopped from cancelling the tender after inducing the successful bidders to commence preparations. The cancellation, it was argued, was arbitrary, unreasonable, and contrary to the principles governing public contracts.

The State of Bihar and BREDA opposed the petition, submitting that the project was subject to administrative approval for enhancement of capacity and corresponding financial sanction from the competent authority. Since those approvals were never granted, the project itself could not legally proceed. They further pointed out that the tender conditions expressly reserved BREDA’s right to modify, withdraw, or cancel the EOI at any stage without assigning reasons. The respondents maintained that no work orders had been issued to any empanelled agency and that the cancellation was applied uniformly to all bidders, demonstrating the absence of arbitrariness or discrimination.

Court’s Judgment:

The Patna High Court dismissed the writ petition, holding that the challenge lacked merit. The Bench first examined the tender conditions and found that the EOI expressly empowered BREDA to withdraw or cancel the tender process at any stage. Since the petitioner had participated with full knowledge of these clauses, it could not subsequently contend that the authority lacked the power to cancel the process.

The Court further observed that the cancellation was not based on any arbitrary or discriminatory consideration but was necessitated by the absence of the requisite administrative approval and financial sanction. Public authorities cannot be compelled to execute projects that have not received approval from the competent authorities or for which funds have not been sanctioned. Such decisions fall within the realm of administrative policy and financial governance.

Rejecting the petitioner’s reliance on the doctrine of legitimate expectation, the Court explained that the doctrine ensures fairness in administrative decision-making but cannot override the express terms of a contract or tender. Legitimate expectation cannot create enforceable rights contrary to contractual provisions voluntarily accepted by the parties, nor can it require the Government to proceed with a project that has become administratively unviable.

The Bench also found no evidence of mala fides, favouritism, or unfair treatment. The decision to cancel the EOI affected every empanelled agency equally and was taken because the project itself could not proceed. In such circumstances, judicial review is confined to examining the fairness of the decision-making process and not the wisdom of the administrative decision.

Accordingly, the High Court upheld BREDA’s action and dismissed the writ petition, reiterating that courts will not interfere with tender decisions unless they are arbitrary, discriminatory, or actuated by mala fides. The judgment reinforces the settled principle that legitimate expectation cannot override explicit tender conditions or substitute mandatory administrative approval and financial sanction.