Summary
A tender condition requiring bidders for supply of sports kits to State schools to have supplied at least Rs.6 crores of sports goods to Chhattisgarh State Government agencies in the previous three financial years was struck down. Tying eligibility to past local supplies erected an artificial barrier against equally competent outside suppliers, had no rational nexus with the object of the procurement, and violated Articles 14 and 19(1)(g).
Issues
- Whether a tender eligibility condition confining past-performance experience to supplies made to State Government agencies of Chhattisgarh in the last three financial years is reasonable and fair, or arbitrary and violative of Articles 14 and 19(1)(g) of the Constitution.
- Whether the State's justification that Chhattisgarh is a Maoist-affected State requiring local experience could sustain the condition.
Provisions considered
- Article 14, Constitution of IndiaTender conditions are open to judicial review only if arbitrary, discriminatory or mala fide; the Court found the past-local-supply condition arbitrary, unreasonable and discriminatory, lacking rational nexus with effective supply of sports kits. (¶¶ 14, 15, 16, 20, 22)
- Article 19(1)(g) and Article 19(6), Constitution of IndiaApplying the doctrine of level playing field, the Court held that the condition curtailed the right of competent bidders to trade and could not be justified as a reasonable restriction under Article 19(6), since it closed the market to outsiders without just cause. (¶¶ 16, 18, 20, 22)
Held
- The Government has a free hand in setting tender terms and courts do not strike them down merely because other terms would be fairer or wiser; but the State cannot give or withhold largesse arbitrarily, and eligibility criteria that are arbitrary, discriminatory or mala fide are open to interference. (¶ 15)
- Eligibility criteria in a public procurement must bear a rational nexus to its object, here supply of good quality sports kits at the best price, and should encourage wider participation to protect the public exchequer. (¶¶ 17, 19)
- The doctrine of level playing field under Article 19(1)(g) requires that equally placed competitors get an equal opportunity and prevents the State from skewing the market through artificial barriers. Linking eligibility to past supplies to the State's own agencies excluded financially sound and technically competent suppliers, including those with larger contracts elsewhere, restricted competition and tended to promote cartelisation. (¶¶ 18, 20)
- Capacity and experience can be tested by financial capacity, technical experience and past performance in similar contracts regardless of where performed; confining eligibility to one State is irrational and disproportionate, and is not a reasonable restriction under Article 19(6). (¶¶ 19, 20)
- The Maoist-affected-area justification was rejected: the tender was for sports kits, not security-sensitive goods; only some districts are affected; and a successful bidder unfamiliar with the terrain can use a local supply chain. (¶ 21)
Result
Appeals allowed; the High Court's orders dated 11.08.2025 and 12.08.2025 and the tender notices dated 21.07.2025 quashed, with liberty to the respondents to issue fresh tender notices.