Facts of the Case

The Bihar State Road Development Corporation Limited (BSRDCL) invited bids for the construction of the Ara–Ekauna–Khaira–Sahar Road in Bihar. JSP Projects Pvt. Ltd. participated in the tender process and emerged as the lowest (L-1) bidder.

A Letter of Acceptance dated 16.12.2025 was issued in favour of the petitioner. Besides requiring the petitioner to furnish the normal Performance Bank Guarantee equal to 5% of the contract value, the respondents also demanded an Additional Unconditional Bank Guarantee of ₹22.28 crore on the ground that the bid was considered an Abnormally Low Bid (ALB) under Clause 38.4(b) of the Instructions to Bidders.

The petitioner challenged the demand, contending that it was contrary to the tender conditions, and submitted a representation objecting to the additional guarantee. As the representation was allegedly not considered and the demand was reiterated through another communication dated 26.12.2025, the petitioner approached the Patna High Court by filing the present writ petition. During the pendency of the case, the competent authority considered the representation and passed a detailed reasoned order dated 08.03.2026.

Issues Involved

  1. Whether the respondents could demand an Additional Performance Security solely because the bid was categorized as an Abnormally Low Bid.
  2. Whether the respondents were required to first obtain and objectively examine the bidder's explanation before demanding additional security.
  3. Whether the writ petition challenging earlier communications remained maintainable after a subsequent reasoned order was passed on the petitioner's representation.
  4. Whether the earlier communications merged into the subsequent final order under the Doctrine of Merger.

Petitioner's Arguments

The petitioner contended that the demand for an Additional Performance Security was arbitrary, illegal and contrary to the tender conditions.

It was argued that Clauses 38.2(b) and 38.3 of the Instructions to Bidders required the employer to first seek a written explanation from the bidder whenever a bid appeared abnormally low and thereafter objectively assess the justification before taking any adverse decision.

According to the petitioner, the respondents bypassed this mandatory procedure and directly imposed the requirement of furnishing an Additional Bank Guarantee without first considering the petitioner's explanation. Therefore, the impugned communications were liable to be quashed.

Respondents' Arguments

The respondents informed the Court that, pursuant to the Court's earlier direction dated 16.02.2026, the petitioner's representation had already been considered.

They submitted that a detailed and reasoned order dated 08.03.2026 had been passed dealing with the petitioner's objections, and therefore the grievance regarding non-consideration of the representation no longer survived.

Accordingly, it was submitted that the controversy relating to the earlier communications had been overtaken by subsequent events.

Court Order / Findings

The Patna High Court observed that the principal grievance in the writ petition was directed against the communications dated 16.12.2025 and 26.12.2025 as well as the alleged failure to decide the petitioner's representation.

The Court noted that during the pendency of the proceedings, the competent authority had already passed a detailed and reasoned order dated 08.03.2026 after considering the petitioner's representation.

Since that order had not been challenged in the present writ petition, the Court declined to examine its correctness or legality.

The Court further held that once the competent authority had passed a final reasoned order, the earlier communications stood merged into that final decision. Therefore, adjudicating the validity of the earlier communications independently would serve no useful purpose.

Relying upon the Supreme Court decision in Kunhayammed & Ors. vs State of Kerala (2000) 6 SCC 359, the Court reiterated the principle that when a superior or competent authority passes a final order, the earlier order merges into the subsequent order, and the latter alone governs the rights of the parties.

Consequently, the writ petition was disposed of while granting liberty to the petitioner to challenge the order dated 08.03.2026 in accordance with law, if so advised.

Important Clarification

  • A writ petition challenging only preliminary communications may become infructuous if a final reasoned order is subsequently passed on the same subject.
  • Earlier communications generally merge into the subsequent final order under the Doctrine of Merger.
  • Courts ordinarily refrain from examining the validity of an unchallenged final order while deciding a petition directed only against earlier communications.
  • Liberty to challenge the subsequent reasoned order remains available in accordance with law.
  • The judgment emphasizes procedural developments during litigation and the legal effect of subsequent administrative decisions.=

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785405042_2407compressed.pdf

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