Tender Cancellation Orders Must Be Reasoned; Affidavit Cannot Supplement Missing Reasons: Allahabad High Court

"The impugned order does not reflect any reason apart from the phrase 'due to unforeseen circumstances' and what are those unforeseen circumstances cannot be inferred from any of the conditions either contained in the tender notice or in the ITB." Allahabad High Court, in a ruling dated October 8, 2026, held that public authorities are strictly bound to assign valid reasons for the cancellation of tender processes, emphasizing that such orders must stand on their own merits and cannot be retroactively supplemented by way of counter-affidavits.

 A division bench of Justice Siddharth Varma and Justice Kunal Ravi Singh observed that an order of cancellation devoid of specific reasoning violates the principles of fairness and transparency inherent in state action under Article 14 of the Constitution of India.

The petitioner, M/s Balaji Construction, challenged the cancellation of tender proceedings by the Agra Development Authority regarding internal development works for townships in Greater Agra. While the petitioner initially appeared as a technically qualified bidder on the Authority's website, the tenders were subsequently cancelled, and a fresh process was initiated without the petitioner's participation. The petitioner alleged that the cancellation was a colourable exercise of power and sought a CBI inquiry into the alleged manipulation of the e-tender process.

The primary issue before the court was whether the cancellation of the tender process, citing "unforeseen circumstances," constituted an arbitrary and colourable exercise of power. The court also examined whether the petitioner’s technical bid was illegally rejected due to a lack of relevant work experience and whether the consequential show-cause notice issued to the petitioner warranted judicial intervention.

The bench underscored that even in contractual matters, state authorities must act with fairness and non-arbitrariness to ensure economy and efficiency in public procurement. Citing established precedents including Maa Binda Express Carrier vs. North East Frontier Railway, the court reiterated that transparency is the hallmark of any valid tender process.

Requirement of Reasoned Orders

The court observed that the impugned order of April 25, 2026, was cryptic and failed to provide a rationale beyond the vague phrase "due to unforeseen circumstances." The court held that such an order fails the test of reasonableness as the tender documents contained no force majeure or "no-reason" clause that would permit the Authority to act without justification.

"No Supplementing Reasons via Affidavit"

The court strictly adhered to the Mohinder Singh Gill principle, noting that an administrative order must stand or fall based on the reasons contained within the document itself. The state cannot use an affidavit to inject justifications that were absent from the original decision.

"In the absence of any reasoning in the order, the same cannot be supplemented by means of an affidavit."

Evaluation of Tender Records

Upon perusing the original records, the court found that the petitioner’s technical bid was, in fact, rejected because the petitioner lacked the essential experience in specialized works, such as laying sewerage and drainage systems, which were vital for township development. The court concluded that while the cancellation order was procedurally deficient for lacking reasons, the Authority's underlying decision was substantively justified because the inclusion of an ineligible bidder had tainted the initial process.

Essential Eligibility Conditions

The bench held that work experience in "similar nature of work" is an essential condition for public contracts. The court refused to equate road construction experience with the complex requirements of internal township infrastructure, noting that deviating from such essential conditions would lead to substandard development.

"If the authority were to treat work experience in making a road as equivalent to undertaking internal development works in a Township, then the eligibility condition would be rendered practically meaningless."

Challenge to Show-Cause Notice

Regarding the show-cause notice, the court emphasized that judicial review of a notice is limited to cases of patent lack of jurisdiction, mala fide intent, or predetermined bias. As none of these grounds were satisfied, the court refused to quash the notice, leaving the petitioner to pursue his remedies through the appropriate administrative response.

The writ petition was dismissed. While the court critiqued the Authority for failing to provide adequate reasons in its initial cancellation order, it upheld the ultimate decision to scrap the tender due to the discovery of tainted bid evaluations involving an ineligible participant. The judgment affirms that while procedural transparency is mandatory, substantive irregularities in a tender process provide sufficient justification for a fresh start.

Date of Decision: 08 October 2026