Mitul Enterprises Vs State of Chhattisgarh

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2026:CGHC:2680-DB

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NAFR

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Digitally ROHIT signed by KUMAR ROHIT CHANDRA KUMAR CHANDRA

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HIGH COURT OF CHHATTISGARH AT BILASPUR WPC No. 184 of 2026

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Mitul Enterprises A Proprietorship Firm Through Its Proprietor, Shri Bipin Chandra Kothari, Aged About 79 Years, Having Office At Shop No. 13, Vijeta Complex, Main Road, Shastri Market, Raipur (C.G.) 492001

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... Petitioner

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versus

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1 - State of Chhattisgarh Through The Secretary, Department of Agriculture, Govt. of Chhattisgarh, Mahanadi Bhawan, Atal Nagar, Raipur, Chhattisgarh

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2 - The Director Directorate of Horticulture And Farm Forestry, Indrawati Bhawan, Atal Nagar, Naya Raipur (C.G.)

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3 - The Assistant Director (Horticulture) Directorate Of Horticulture And Farm Forestry, Indrawati Bhawan, Atal Nagar, Naya Raipur (C.G.)

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4 - Government E-Market Place (Gem) Through Its Chief Executive Officer, Ministry of Commerce And Industry, New Delhi

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5 - The Director (States) Govt. E-Marketplace, Ministry of Commerce And Industry Having Its Office At 2nd Floor, Jeevan Tara Building 5- Sansad Marg, Near Patel Chowk, New Delhi

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6 - The Sr. Asst. Director- Chhattisgarh State Govt. E-Marketplace, Ministry of Commerce And Industry Having Its Office At 2nd Floor, Jeevan Tara Building 5- Sansad Marg, Near Patel Chowk, New Delhi

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... Respondents

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------------ For Petiti	------------ oner	----------------------------------------------------------------------- : Mr. Manoj Paranjpe, Senior Advocate assisted by Mr. Sudhanshu Upadhyay, Advocate
For Resp /State	ondents	: Mr. Shashank Thakur, Addl. Adv. General
For Resp /UOI ------------	ondents ------------ Hon Hon'b	: Ms. Annapurna Tiwari and Ms. Anmol Sharma, Central Government Counsels ----------------------------------------------------------------------- 'ble Mr. Ramesh Sinha, Chief Justice le Mr. Ravindra Kumar Agrawal , Judge

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Order on Board

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Per Ramesh Sinha, Chief Justice

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16.01.2026

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Heard Mr. Manoj Paranjpe, learned Senior Advocate assisted by Mr. assisted by Mr. Sudhanshu Upadhyay, learend counsel for the petitioner. Also heard Mr. Shashank Thakur, learned Additional Advocate General, appearing for the State-respondents and Ms.Annapurna Tiwari and Ms. Anmol Sharma, learned Central Government Counsel, appearing for UOI-respondents.

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Though the matter is listed for hearing on admission, but as all the respondents are represented by their respective counsels and they are ready to argue the matter finally, hence, there is no need issue notices to the respondents and with the consent of learned counsel for the parties, the matter is heard finally.

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The present petition has been filed by the petitioners under Article 226 of the Constitution of India, with the following prayers :-

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“(i) That, this Hon'ble Court may kindly be pleased to allow the present writ petition & call for the entire record pertaining to the present case.

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(ii) That, this Hon'ble Court may kindly be pleased to issue an appropriate Writ/order/direction for quashing and setting aside the Respondents' unilateral decision taken via letter dated 08-12-2025 and email communication dated 12-12-2025 and action whereby which the Tender bearing GeM Bid No. GEM/2025/B/6604538 awarded to the Petitioner via contract bearing GEMC No. 511687741466556, pursuant to Letter No. 4510 dated 10.10.2025 and the executed Agreement dated 13.10.2025, was arbitrarily cancelled by the Respondents.

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(iii) That, this Hon'ble Court may kindly be pleased to issue an appropriate Writ/order/direction declaring a

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valid, binding, and executable contract exists between the Petitioner and the State/Department of Horticulture under GeM GTC, ATC, and the executed offline agreement, and that the Respondents are legally bound and mandated to honour the contract issued in favor of the Petitioner via letter dated 10-10-2025;

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(iv) That, this Hon'ble Court may kindly be pleased to issue an appropriate Writ / order / direction directing the Respondents to forthwith issue district-wise purchase/work orders and supply instructions to the Petitioner for the quantity envisaged under the ATC (approximately 75,00,000 seedlings) at the RAdiscovered L-1 rate of Rs. 9.26 per seedling (inclusive of all taxes and levies), or such quantity as may still be feasible and viable in the current agricultural season, within a reasonable time period

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(v) In the alternative and without prejudice, direct the Respondents to compensate the Petitioner by way of damages, compensation, or ex gratia relief for the loss suffered on account of deterioration and destruction of grafted seedlings produced in reliance on the Respondents' representations and the concluded contract, together with interest at 12% per annum from the date of loss until payment;

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(vi) Issue a Writ of Prohibition or Mandamus restraining the Respondents from issuing, finalizing, or proceeding with any fresh/parallel tender in relation to the same subject matter (Grafted Vegetable Hybrid Seedlings Tomato and Brinjal), pending final adjudication of the present petition or until lawful cancellation of the existing GEMC/contract in accordance with law and GeM GTC with full compliance to principles of natural justice;

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(vii) That, Award the costs of the petition in favour of the Petitioner;

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(viii) Grant such other and further reliefs as this Hon'ble Court may deem fit, proper, and just in the facts and circumstances of the case.”

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Mr. Manoj Paranjpe, learned Senior Advocate assisted by Mr.Sudhanshu Upadhyay, learned counsel for the petitioner vehemently argued that the petitioner is a registered MSME

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proprietorship firm engaged in the business of supplying horticultural inputs, including grafted vegetable hybrid seedlings, and is a regular participant in Government procurements via the GeM portal. Respondent No. 2 floated a Custom Bid on the GeM portal under Tender No. GEM/2025/B/6604538 dated 25.08.2025 for the supply of grafted tomato and brinjal seedlings for the horticultural season 2025-26, with an approximate requirement of 75,00,000 seedlings with basic rates per unit, which is evident from sub-clause 3 and 4 of Clause 5.11 of the tender document itself. The bid was open for participation by accredited nurseries or authorized distributors sourcing from accredited nurseries. The petitioner, as a consortium bidder with M/s Shreeji Nursery (an accredited nursery), submitted its bid, qualified technically, participated in the Reverse Auction, and emerged as L-1 at a rate of Rs. 9.26 per seedling and upon completion of the Reverse Auction, the GeM system generated a binding GeM Contract (GEMC No. 511687741466556) in favor of the petitioner. Following this, the respondent department issued an official letter dated 10.10.2025, declaring the petitioner as L-1, directing the execution of an offline agreement in stamp of Rs.100/- and requesting submission of performance security. In compliance of the same, the petitioner has submitted the agreement on 13.10.2025, wherein, it has specifically mentioned the quantity of seedlings as 75,00,000 at the rate of Rs. 9.26 per grafted plant Tomoto/Brinjal as quoted by the petitioner. He further argued that thereafter, the

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dispute arose at the instance of Horticulture Department saying that the work order was issued for 1 piece and the agreement which was submitted is for 75,00,000 pieces. The said dispute has been resolved by Committee constituted by the Department itself which is evident from Annexure-P/18 dated 13.11.2025, wherein it has been specifically mentioned that in the reverse auction, rates per unit have been quoted by all the firms except M/s. Balaji Automobiles, which is L-5 and accordingly, guidance regarding entering into a contract with the petitioner, L-1 institution has been sought for. Thereafter, Annexure-P/1 dated 08.12.2025 has been issued by respondent No.2, whereby whole tender has been cancelled assigning the reason that “Since the department invited the tender for the supply of 75 lakhs grafted plants and the contract signed with the L-1 organization after the tender resulted in only one plant being displayed and as per GeM Rules, the supply order must be issued online, therefore, the contract is being cancelled due to discrepancy between the number of plants listed in the departments invited tender and the number of plants displayed upon contract issuance”, which is evident from page 37 part of Annexure-P/1. He further submitted that the cancellation predicated solely on alleged "quantity confusion" (system: 1 unit Rs. 9.26 vs. ATC: 75 lakhs) is legally untenable as GeM Helpdesk (Ticket 12771100) categorically confirmed that such representation is "correct and intentional for Custom Bids", evaluation was on per-unit basis, and Petitioner remains valid L-1.

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On the other hand, learned State counsel as well as learned CCG, appearing for respective respondents though tried to justify the order passed by respondent No.2, but could not dispute that the petitioner participated in the Reverse Auction and emerged as L-1 bidder at the rate of Rs. 9.26 per seedling. However, they submitted that the tender documents and the entire procurement process were based on the understanding that the quantity of seedlings to be supplied was 75 lakh, as specified in the terms of the tender. They further submitted that the issue at hand arises from the fact that the GeM system displayed a quantity of "1" unit for the contract awarded to the petitioner, which was contrary to the tender specifications, which clearly outlined the requirement of 75 lakh seedlings and as such, the cancellation of the contract by Respondent No. 2 on 08.12.2025 was based on this very discrepancy. The cancellation was done in accordance with the provisions of the General Terms and Conditions (GTC) of the GeM platform and the applicable guidelines governing such contracts.

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We have heard learned counsel for the parties and perused the documents appended with the writ petition.

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The Hon'ble Supreme Court in Gas Authority of India Ltd. vs. Indian Petrochemicals Corporation Ltd. [(2023) 3 SCC 629) , held that writ jurisdiction under Article 226 can be exercised when a government enterprise (being a State) in its contractual dealings, fails to exercise a degree of fairness or practices discrimination. Further, the Hon'ble Supreme Court in Uttar Pradesh Power

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Transmission Corporation Ltd. vs. CG Power and Industrial Solutions Ltd. ((2021) 6 SCC 15) held that relief under Article 226 can be granted in a case arising out of a contract if the act of the state smells of malafides, arbitrariness and non-transparency.

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Recently the Hon'ble Apex Court in the matter of Subodh Kumar Singh Rathour v. Kolkata Metropolitan Development Authority, reported in (2024) 15 SCC 461 has held & observed that:

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“61. Therefore, what can be culled out from the above is that although disputes arising purely out of contracts are not amenable to writ jurisdiction yet keeping in mind the obligation of the State to act fairly and not arbitrarily or capriciously, it is now well settled that when contractual power is being used for public purpose, it is certainly amenable to judicial review.

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Now coming to the facts of the case at hand, the appellant has challenged the cancellation of the tender at the instance of the respondent on the ground of being manifestly arbitrary and influenced by extraneous considerations. It is evident from the Notice of Cancellation dated 7-2-2023, that the tender was not terminated pursuant to any terms of the contract subsisting between the parties, rather, the respondent "cancelled the tender saying that there was technical fault in the tender that was floated.

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Thus, the respondent could be said to have exercised powers in its executive capacity as the action to cancel the tender falls outside the purview of the terms of the contract. Hence, it cannot be said that the present matter is purely a contractual dispute. It is also not a breach of contract, as no such breach has been imputed to the appellant in terms of the contract, but rather a plain and simple exercise of the executive powers.

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Thus, the present dispute even if related to a tender, cannot be termed as a pure contractual dispute, as the

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dispute involves a public law element. Although there is no discharge of a public function by the respondent towards the appellant yet there is a right to public law action vested in him against the respondent in terms of Article 14 of the Constitution. This is because the exercise of the executive power by it in the contractual domain ie. the cancelling of the tender carries a corresponding public duty to act in a reasonable and rationale manner. Thus, we find that the writ petition filed by the respondent was maintainable and the relief prayed for could have been considered by the High Court in exercise of its writ jurisdiction.

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To ascertain whether an act is arbitrary or not, the court must carefully attend to the facts and the circumstances of the case. It should find out whether the impugned decision [Subodh Kumar Singh Rathour v. Kolkata Metropolitan Development Authority, 2023 SCC OnLine Cal 6553) is based on any principle. If not, it may unerringly point to arbitrariness. If the act betrays caprice or the mere exhibition of the whim of the authority it would sufficiently bear the insignia of arbitrariness. In this regard supporting an order with a rationale which in the circumstances is found to be reasonable will go a long way to repel a challenge to State action. No doubt the reasons need not in every case be part of the order as such. If there is absence of good faith and the action is actuated with an oblique motive, it could be characterised as being arbitrary. A total non-application of mind without due regard to the rights of the parties and public interest may be a clear indicator of arbitrary action.

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One another way, to assess whether an action complained of could be termed as arbitrary is by way of scrutinising the reasons that have been assigned to such an action. It involves overseeing whether the reasons which have been cited if at all genuinely formed part of the decision-making process or whether they are merely a ruse. All decisions that are taken must earnestly be in lieu of the reasons and considerations that have been assigned to it. The Court must be mindful of the fact that it is not supposed 72. to delve into every minute details of the reasoning assigned, it need not to

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go into a detailed exercise of assessing the pros and cons of the reaso ns itself, but should only see whether the reasons were earnest, genuine and had a rationale with the ultimate decision. What is under scrutiny in judicial review of an action is the decision-making process and whether there is any element of arbitrariness or mala fide.

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Thus, the question to be answered in such situations is whether the decision was based on valid considerations. This is undertaken to ensure that the reasons assigned were the true motivations behind the action and it involves checking for the presence of any ulterior motives or irrelevant considerations that might have influenced the decision. The approach of the court must be to respect the expertise and discretion of administrative authorities while still protecting against arbitrary and capricious actions. Thus, now the only question that remains to be considered is: whether the action of the respondent to cancel the tender could be termed as arbitrary?

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The sanctity of public tenders lies in their role in upholding the principles of equal opportunity and fairness. Once a contract has come into existence through a valid tendering process, its termination must adhere strictly to the terms of the contract, with the executive powers to be exercised only in exceptional cases by the public authorities and that too in loathe. The courts are duty bound to zealously protect the sanctity of any tender that has been duly conducted and concluded by ensuring that the larger public interest of upholding bindingness of contracts are not sidelined by a capricious or arbitrary exercise of power by the State. It is the duty of the courts to interfere in contractual matters that have fallen prey to an arbitrary action of the authorities in the guise of technical faults, policy change or public interest, etc.

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The sanctity of contracts is a fundamental principle that underpins the stability and predictability of legal and commercial relationships. When public authorities enter into contracts, they create legitimate expectations that the State will honour its obligations. Arbitrary or unreasonable terminations undermine these

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expectations and erode the trust of private players from the public procurement processes and tenders. Once a contract is entered, there is a legitimate expectation, that the obligations arising from the contract will be honoured and that the rights arising from it will not be arbitrarily divested except for a breach or non-compliance of the terms agreed thereunder. In this regard we may make a reference to the decision of this Court in Sivanandan C.T. v. High Court of Kerala (Sivanandan C.T.v. High Court of Kerala, (2024) 3 SCC 799: (2024) 1 SCC (L&S) 67] wherein it was held that a promise made by a public authority will give rise to a legitimate expectation that it will adhere to its assurances. The relevant portion reads as under: (SCC pp. 812 & 822, paras 18 & 45)

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“18. The basis of the doctrine of legitimate expectation in public law is founded on the principles of fairness and non-arbitrariness in Government dealings with individuals. It recognises that a public authority's promise or past conduct will give rise to a legitimate expectation. The doctrine is premised on the notion that public authorities, while performing their public duties, ought to honour their promises or past practices. The legitimacy of an expectation can be inferred if it is rooted in law, custom, or established procedure. (Salemi v. MacKeller (No. 2), 1977 HCA 26: (1977) 137 CLR 396)

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The underlying basis for the application of the doctrine of legitimate expectation has expanded and evolved to include the principles of good administration. Since citizens repose their trust in the State, the actions and policies of the State give rise to legitimate expectations that the State will adhere to its assurance or past practice by acting in a consistent, transparent, and predictable manner. The principles of good administration require that the decisions of public authorities must withstand the test of consistency, transparency, and predictability to avoid being regarded as arbitrary and therefore violative of Article 14."

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(emphasis supplied)

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Cancellation of a contract deprives a person of his very valuable rights and is a very drastic step, often due to significant investments having already been made by the parties involved during the subsistence of the contract. Failure on the part of the courts to zealously protect the binding nature of a lawful and valid tender, would erode public faith in contracts and tenders. Arbitrary terminations of contract create uncertainty and unpredictability, thereby discouraging public participation in the tendering process. When private parties perceive that their contractual rights can be easily trampled by the State, they would be dissuaded from participating in public procurement processes which may have a negative impact on such other public-private partnership ventures and ultimately it is the public who would have to bear the brunt thereby frustrating the very object of public interest.

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We caution the public authorities to be circumspect in disturbing or wriggling out of its contractual obligations through means beyond the terms of the contract in exercise of their executive powers. We do not say for a moment that the State has no power to alter or cancel a contract that it has entered into. However, if the State deems it necessary to alter or cancel a contract on the ground of public interest or change in policy then such considerations must be bona fide and should be earnestly reflected in the decision-making process and also in the final decision itself. We say so because otherwise, it would have a very chilling effect as participating and winning a tender would tend to be viewed as a situation worse than losing one at the threshold.”

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In the present case, it is undisputed that the petitioner, a registered MSME proprietorship firm, participated in the GeM portal procurement process under Tender No.

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GEM/2025/B/6604538 for the supply of 75,00,000 grafted tomato and brinjal seedlings. The petitioner emerged as the L-1 bidder following the Reverse Auction, quoting a rate of Rs. 9.26 per

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seedling. Subsequently, a GeM contract (GEMC No. 511687741466556) was generated, and an official letter dated 10.10.2025 was issued to the petitioner, declaring it as L-1 and directing the execution of the agreement and submission of performance security. The petitioner duly complied by submitting the signed agreement on 13.10.2025, which clearly specified the quantity of seedlings as 75,00,000 at the agreed rate.

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The respondents have raised a concern regarding the quantity discrepancy in the GeM system, which displayed “1” unit instead of the 75 lakh seedlings required under the tender. However, the GeM Helpdesk, through Ticket No. 12771100, clarified that such quantity representation is intentional for Custom Bids and that the evaluation was conducted on a per-unit basis. Therefore, the discrepancy was not a genuine error but rather a technical aspect of the system that should not have impacted the execution of the contract. The respondents failed to adequately address this clarification and proceeded with the unilateral cancellation of the contract.

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The respondents issued the cancellation order on 08.12.2025, citing the quantity discrepancy as the reason. However, the respondents did not issue a show-cause notice or provide the petitioner an opportunity to present its case before making this decision. This is a clear violation of the principles of natural justice, which require that no party be condemned unheard. The absence of procedural fairness in cancelling the contract undermines the

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legitimacy of the respondents’ action. The respondents have failed to establish any valid legal grounds for the cancellation of the contract. No fraud, misrepresentation, or breach of terms by the petitioner has been alleged. The cancellation is based solely on the technical issue of a system-generated quantity discrepancy, which was clarified by the GeM Helpdesk. Therefore, the cancellation is arbitrary and unreasonable.

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In light of the above findings, this Court is of the considered view that the actions of the respondents in cancelling the contract are arbitrary, illegal, and in violation of the principles of natural justice. The petitioner, having fulfilled all contractual requirements and having acted in good faith, is entitled to the enforcement of the contract.

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Accordingly, the writ petition is allowed with the following directions:

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(i) The unilateral cancellation of the GeM contract by the respondents, as communicated through the letter dated 08.12.2025 and email communication dated 12.12.2025, is hereby quashed and set aside.

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(ii) A valid, binding, and enforceable contract exists between the petitioner and the respondents under the GeM GTC, the ATC, and the executed offline agreement. The respondents are directed to honor the contract issued in favor of the petitioner via letter dated 10.10.2025.

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(ii) The respondents are directed to immediately issue districtwise purchase/work orders to the petitioner for the supply of approximately 75,00,000 seedlings at the rate of Rs. 9.26 per seedling (inclusive of all taxes and levies) or such quantity as may

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still be feasible within the current agricultural season, within a reasonable time period.

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Sd/Sd/- (Ravindra Kumar Agrawal) (Ramesh Sinha) Judge Chief Justice

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Chandra

Mitul Enterprises v. State of Chhattisgarh

Case brief

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Mitul Enterprises v. State of Chhattisgarh

Case brief

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