Jharkhand HC dismisses plea against tender cancellation, citing budget limits and no concluded contract

News Citation : 2026 LN (HC) 312 | 2026:JHHC:12223-DB

April 27, 2026 : In a significant ruling on government tender processes, the Jharkhand High Court has dismissed a writ petition filed by Terracis Technologies Limited challenging the cancellation of a major IT infrastructure tender, holding that the decision was justified due to budgetary constraints and did not violate constitutional principles.

The case arose from a tender floated by the Jharkhand Agency for Promotion of Information Technology (JAP-IT) for the supply, installation, and maintenance of server systems and related infrastructure for the High Court. Terracis Technologies emerged as the lowest bidder (L-1) with a quote of over ₹30.5 crore and was issued a Letter of Intent (LOI). However, the project’s sanctioned budget was significantly lower, in the range of ₹22–23 crore.

Following the bid, the authorities asked the company to negotiate and reduce its quoted price to align with the available budget. Despite multiple extensions, the company declined to revise its financial bid. As a result, JAP-IT, with approval from the High Court, cancelled the tender in August 2025 and decided to initiate a fresh process with revised specifications.

The petitioner argued that once the LOI was issued and a performance bank guarantee submitted, a binding contract had come into existence. It contended that the cancellation was arbitrary, lacked reasoning, and violated Article 14 of the Constitution. The company also challenged the demand for post-bid price negotiation, calling it unlawful.

Rejecting these arguments, the division bench led by Chief Justice M.S. Sonak and Justice Rajesh Shankar clarified that a Letter of Intent does not amount to a concluded contract. The court emphasized that an LOI merely indicates an intention to enter into a contract and does not create binding obligations. Since no formal agreement or work order had been issued, the petitioner could not claim enforceable contractual rights.

On the issue of arbitrariness, the court found that the cancellation was based on valid financial considerations. It noted that the petitioner’s bid far exceeded the High Court’s approved budget and that reasonable efforts were made to negotiate and even scale down project specifications. When those efforts failed, the decision to cancel and retender was neither arbitrary nor irrational.

The bench also reiterated the limited scope of judicial review in contractual matters involving the State. Courts, it observed, are concerned with the legality of the decision-making process rather than the merits of the decision itself. Unless there is evidence of mala fide intent, procedural impropriety, or irrationality, interference is unwarranted.

Importantly, the court noted that the petitioner had accepted the refund of its earnest money deposit (EMD) after the tender cancellation without protest, and had not disclosed this fact in its petition. While the court chose not to dismiss the case solely on this ground, it indicated that such conduct weakened the petitioner’s claim for equitable relief.

Concluding that the tender cancellation was transparent, justified, and aligned with financial prudence, the High Court dismissed the petition and declined to grant any relief.

Case Reference : W.P. (C) No. 5235 of 2025, Terracis Technologies Limited (formerly Ecentric Digital Limited) vs State of Jharkhand & Ors.; Counsels: For the Petitioner – Mr. M. S. Mittal, Sr. Advocate, Mrs. Swati Shalini, Advocate; For Respondent Nos. 1 to 4 – Mr. Ashutosh Anand, AAG-III, Ms. Rishi Bharti, AC to AAG-III; For Respondent No. 5 – Dr. (Mrs.) Vandana Singh, Advocate.