FACTS
The appellant is a company registered under the Companies Act, 2013, involved in supplying sports kits to various departments of the states. The respondents are the State of Chhattisgarh and the State Project Director of Samagra Shiksha Chhattisgarh, Department of School Education (DSE).
The DSE of Chhattisgarh issued three tender notices (on 21st July, 2025) for the supply of sports kits to students of government schools across the state. The total tender value was over Rs. 39 crores. Section III (A) of the impugned tender notices laid down the qualification criteria with additional terms and conditions. Condition no. 4 was in contention. It required that “(4) Past Performance Restriction: Bidders must have supplied sports goods worth at least Rs. 6.00 crores (cumulative) to State Government agencies of Chhattisgarh in the last three financial years.” The appellant became ineligible due to this condition. It therefore challenged the condition before the High Court because the condition was discriminatory in nature and in violation of Articles 14 and 19(1)(g) of the Constitution. However, the High Court dismissed the writ petitions and held that the tender condition was reasonable and that other states also had similar conditions. Hence, the appellant appealed to the Supreme Court.
ISSUE
Whether the impugned tender condition meets the test of reasonableness and fairness, or whether it is an arbitrary condition that excludes bidders from participating, thereby violating Articles 14 and 19(1)(g) of the Constitution.
LEGAL PROVISIONS
Article 14 of the Constitution states that the state shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.
Article 19(1)(g) states that all citizens shall have the right to practice any profession or to carry on any occupation, trade, or business.
Article 19(6) allows the State to make any law imposing restrictions on the exercise of the right in the interests of the general public, notwithstanding Article 19(1)(g), as long as it is a reasonable restriction.
ARGUMENTS
APPELLANT (Vinishma Technologies Pvt. Ltd.)
The impugned condition is violative of Articles 14 and 19(1)(g) of the Constitution, as it excludes competent suppliers from outside the state and discourages wider participation. The condition also facilitates cartelization by restricting participation to the already operating companies within the state on unreasonable grounds. Thus, the impugned orders should be quashed, and the impugned tender should be struck down.
RESPONDENTS (State of Chhattisgarh (RS-1) and the Project Director of Samagra Shiksha (RS-2))
The respondents argued that the tendering authority has the power to frame the impugned condition. The impugned condition was inserted due to the special geographic and social conditions of the State of Chhattisgarh to allow timely delivery, ensure quality, and prevent supply chain disruptions. It was also highlighted that the condition was prevalent in other states as well.
It was also argued that since successful bidders have been identified, a re-tendering would take considerable time, and a substantial portion of the academic year would be over.
The RS-2 specifically argued that the impugned condition was inserted to ensure that the bidder knows the topography of the state as it is affected by Naxals to ensure timely delivery to schools.
ANALYSIS
The Supreme Court relied on judgments relating to tender matters to highlight the limited scope of judicial review. It relied on the case of Ramana Dayaram Shetty v. International Airport Authority of India & Ors., which held that the government must have the discretion in setting the terms of the tender, and the court cannot substitute its own judgment merely because it feels some other terms would have been fairer or better. However, this discretion is not absolute. If any condition is arbitrary, discriminatory, or involves mala fide, then it reserves the right to interfere and strike it off. [Ramana Dayaram Shetty v. International Airport Authority of India & Ors. (1979) 3 SCC 489; AIR 1979 SC 1628]
The court invoked the principle of non-discrimination rooted in Article 14 and the doctrine of level playing field, which relates to Article 19(1)(g) that grants fundamental rights to carry out business to a company. The court relied on the Bharat Forge case to invoke the doctrine of level playing field. The doctrine states that all equally placed competitors must be given an equal opportunity to participate in trade and commerce. This prevents the state from creating artificial barriers to favor a few. [UOI & Ors. v. Bharat Forge Ltd. & ANR. (2022) 17 SCC 188].
Applying the above principles, the court noted that the tender condition must have a rational nexus with the object sought to be achieved. In this case, the object was a timely supply of good-quality sports kits to the school at the best price. This requires wide participation to secure the best price for the state. However, the impugned condition does the opposite. It excludes bidders who are financially sound and technically competent just because they have no experience in the supply of sports goods to the state agencies in the past three years. The previous supply condition creates an artificial barrier and violates the fundamental rights of bidders to participate in the tenders.
JUDGMENT
Following the above reasoning, the court held that such a restriction cannot be justified as reasonable under Article 19 (6) of the Constitution. The said restriction is irrational and disproportionate to the object of ensuring effective delivery of sports kits. Thus, the tender condition is violative of Article 14 and Article 19(1)(g). High Court orders and impugned tender notices are quashed and set aside by the Supreme Court.
CONCLUSION
The Supreme Court allowed the appeals and held that the tender condition was arbitrary and unconstitutional. This prevents the states from restricting competition and framing tender conditions with a rational nexus to the objective of the tender.
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WRITTEN BY: FARZEEN ZAMAN
Click here to read more: VINISHMA TECHNOLOGIES PVT. LTD. Versus STATE OF CHHATTISGARH & ANR
