SRINAGAR: The High Court of Jammu & Kashmir and Ladakh has upheld the cancellation of a Rs 161.23 crore power infrastructure tender awarded to M/s SPBL Energy Pvt. Ltd., ruling that merely emerging as the lowest bidder does not create an enforceable right to the contract and that the Jammu Power Development Corporation Ltd. (JPDCL) acted bona fide and in public interest in cancelling the Letter of Intent over concerns about the firm’s antecedents.
Justice Sanjay Parihar pronounced the judgment on July 16, 2026, dismissing SPBL Energy’s writ petition challenging JPDCL’s February 3, 2023 decision to cancel the tender for development of electricity distribution infrastructure in Kathua under the Revamped Distribution Sector Scheme (RDSS). The judgment was uploaded on July 20.
The petitioner, M/s SPBL Energy Pvt. Ltd., was represented by senior advocate Sunil Sethi along with advocate Ankesh Chandel. JPDCL and another respondent were represented by senior advocate Amit Gupta assisted by advocates Sumit Moza, Khem Chand and Jatinder Choudhary.
The dispute arose after JPDCL floated the e-tender on July 27, 2022, for strengthening the electricity distribution network in Kathua district. SPBL participated in the bidding process and emerged as the lowest (L-1) bidder. However, before the contract could be awarded, a complaint by a former associate alleged that the company had been blacklisted elsewhere for financial irregularities. Although JPDCL initially examined the complaint and sought an undertaking from the company, it later cancelled the tender following legal advice and directions from higher authorities.
SPBL argued that the cancellation was arbitrary, devoid of reasons and violated principles of natural justice as it had already been cleared after a meeting with officials. It sought quashing of the cancellation order and issuance of the Letter of Award in its favour.
The respondents countered that the company had concealed material facts by filing an affidavit claiming it had not been blacklisted, despite facing blacklisting proceedings in Uttar Pradesh. They maintained that the tender conditions expressly reserved JPDCL’s right to cancel the bidding process at any stage without assigning reasons and that no vested right accrued merely because a bidder was declared L-1.
The corporation also informed the court that SPBL had been blacklisted by Dakshin Anchal Vidyut Vitran Nigam Ltd. (DVVNL), Agra, over allegedly forged bank guarantees worth Rs 11.55 crore and had earlier faced blacklisting by Uttar Pradesh Jal Nigam. Although the Allahabad High Court had initially set aside the DVVNL order on procedural grounds, a fresh blacklisting order was issued after reconsideration on November 18, 2022.
Rejecting the petition, Justice Parihar held that judicial review in contractual matters is confined to examining illegality, irrationality, mala fides and procedural impropriety and that courts should not interfere in tender decisions taken bona fide in public interest.
“The settled legal position… is that judicial review in contractual matters is confined to testing administrative actions on the touchstone of illegality, irrationality, mala fides, and procedural impropriety,” the court observed, adding that interference is warranted only where the action is “palpably unreasonable, manifestly arbitrary, or wholly irrational.”
The court found that the respondents had sufficient material to question the company’s eligibility and had repeatedly given it opportunities to explain its position regarding the blacklisting orders.
“Merely because the petitioner emerged as the L-1 bidder did not confer upon it an indefeasible right to the award of the contract. The respondents were fully justified in verifying the petitioner’s credentials before proceeding further,” the judgment said.
Holding that the cancellation was neither arbitrary nor actuated by mala fides, the court said the authorities had acted on “tangible material”, followed a transparent process and exercised their contractual powers in furtherance of public interest.
The court also noted that JPDCL had not awarded the work to the second-lowest bidder but had instead decided to issue a fresh tender, demonstrating its intention to secure the most suitable contractor rather than favour any participant.
While dismissing the petition, the court vacated interim orders and permitted JPDCL to proceed with re-tendering. It clarified that if SPBL is subsequently exonerated and satisfies the eligibility conditions, it would be free to participate in the fresh tender process.
