Court mandates adherence to principles of natural justice before recording adverse findings against bidders
In a significant ruling, the Patna High Court has quashed the cancellation of a tender involving M/s Narotam Kumar due to the violation of principles of natural justice. The judgment, delivered by a Division Bench comprising Mr. Sudhir Singh and Ranjan Kumar Jha, emphasizes the necessity of procedural fairness when adverse findings are recorded against a bidder.
The case revolved around the cancellation of Tender No. 02/2021-22 related to the Keshopur Payne Jeernodhar Scheme, where the petitioner, M/s Narotam Kumar, was accused of submitting forged documents. The authorities proceeded to blacklist the petitioner without providing prior notice or an opportunity for a hearing.
The court scrutinized Clause 39 of the Notice Inviting Tender (NIT), which allows the department to cancel the tender without assigning reasons. However, the Bench highlighted that any cancellation entailing adverse civil consequences, such as findings of forgery, mandates prior notice and reasonable opportunity for the affected party to defend themselves.
Referring to landmark judgments such as Gorkha Security Services v. Government (NCT of Delhi) and UMC Technologies Pvt. Ltd. v. Food Corporation of India, the court reiterated the indispensable requirement of compliance with natural justice principles. The court observed that actions leading to civil consequences must be preceded by a show-cause notice and a reasonable opportunity for the affected party to present their case.
The court found that the departmental proceedings were intrinsically founded upon allegations of misconduct attributed to the petitioner, thereby necessitating adherence to the audi alteram partem rule. The absence of a show-cause notice or opportunity for the petitioner to be heard was deemed a violation of natural justice, rendering the cancellation proceedings unsustainable in law.
Consequently, the court set aside the proceedings dated 04.02.2025, which had recorded adverse findings against the petitioner and directed action. The matter was remitted to the competent authority for fresh consideration, with instructions to issue an appropriate show-cause notice and afford a reasonable opportunity for the petitioner to respond before passing any reasoned order.
The judgment clarifies that if the authority chooses to cancel the NIT purely in exercise of the power reserved under Clause 39, without attributing any misconduct or forgery, it may proceed accordingly. However, any cancellation based on adverse findings must comply with natural justice principles.
This ruling reinforces the judicial stance on procedural fairness in administrative actions, particularly when they lead to civil consequences or affect a party's reputation. The court's decision serves as a reminder that the principles of natural justice remain a cornerstone of legal proceedings, ensuring transparency and fairness.
Bottom line:-
Principles of natural justice - Cancellation of tender involving adverse findings against the petitioner must adhere to the principles of natural justice, including prior notice and opportunity of hearing.
Statutory provision(s): Clause 39 of the N.I.T., Principles of Natural Justice
M/s Narotam Kumar v. State of Bihar, (Patna)(DB) : Law Finder Doc id # 2940788
