Court’s Decision
The Supreme Court held that the rejection of the appellant’s technical bid—on the sole ground that the “haisiyat praman patra” (solvency certificate) was not issued by the District Magistrate—was dehors the tender conditions and therefore unsustainable in law. Since the tender document (NIT) never required such certificate to be issued exclusively by a District Magistrate, the tendering authority could not import such a requirement later or rely on a government notification never incorporated into the NIT.
The Court set aside the High Court’s affirmation of the rejection, quashed the tender authority’s decision, and remanded the matter, directing the authority to reconsider the technical bid strictly in accordance with Clause 18 of the NIT. If the net worth reflected in the valuation certificate meets the minimum ₹10-crore requirement, the bid must be processed further in accordance with law.
Facts
Supreme court observed that a statutory body floated a tender for leasing a banquet hall/terrace lawn for ten years. The process comprised a two-stage system: technical bids followed by financial bids. Under Clause 18 of the NIT, bidders were required to submit a “haisiyat praman patra” of minimum ₹10 crores.
Supreme Court’s Role in Tender Evaluations
The appellant, along with other bidders, submitted bids. While other bidders submitted solvency certificates issued by District Magistrates, the appellant submitted a valuation certificate issued by an experienced architect–valuer empanelled with the Income Tax Department, reflecting asset value around ₹99 crores, of which the appellant held a substantial share.
The tendering authority rejected the technical bid solely because the certificate was not issued by a District Magistrate. The High Court upheld the rejection. Aggrieved, the appellant approached the Supreme Court.
Issues
- Whether Clause 18 of the NIT required a solvency certificate exclusively issued by a District Magistrate.
- Whether the tendering authority could rely on a government notification not incorporated into the NIT to impose additional conditions.
- Whether the rejection was arbitrary, dehors the tender terms, or violative of the principles of judicial review in tender evaluation.
- Whether additional grounds introduced later in court filings could justify the earlier rejection.
Petitioner’s Arguments
The appellant contended that the NIT never required a District Magistrate–issued certificate. The valuation certificate was issued by a professional, government-registered valuer, competent to certify asset value. The certificate established net worth many times over the ₹10-crore threshold.
It was argued that importing the requirement of a District Magistrate certificate from an unrelated government notification was impermissible because tender conditions must be explicit, certain, and transparent. The appellant emphasised that the authority never rejected the certificate on the ground of encumbrances or net-worth issues; these objections surfaced for the first time in the counter-affidavit and could not retrospectively justify the rejection.
Respondent’s Arguments
The tendering authority argued that “haisiyat praman patra” was traditionally and procedurally issued by a District Magistrate under the Uttar Pradesh government notification of 29.10.2018. It claimed that all other bidders had furnished such certificates and the appellant was expected to conform.
It further argued that a private valuer’s certificate did not reflect net worth, nor did it record whether the valued asset was free from encumbrances. Therefore, it could not be accepted as a valid solvency document under Clause 18. The authority maintained that its decision was rational and within the scope of tender evaluation.
Analysis of the Law
The Supreme Court reiterated two core principles:
1. Tender conditions must be explicit, unambiguous, and strictly construed.
The Court emphasised that if the tendering authority wished to mandate a District Magistrate–issued certificate, such requirement must have been expressly incorporated in the NIT. Tender eligibility cannot rest on implied assumptions or informal administrative practices.
2. Judicial review in tender matters is limited—but illegality cannot be condoned.
Relying on Tata Cellular, the Court noted that judicial review intervenes only when a tender rejection is arbitrary or contrary to the tender itself. Rejecting a bid for non-compliance with a condition not found in the NIT is a patent illegality warranting judicial correction.
3. Additional grounds in court filings cannot salvage an illegal administrative order.
The principle laid down in Mohinder Singh Gill mandates that the legality of an administrative decision must be judged only on the reasons recorded at the time of decision, not on later justifications. Thus, arguments about asset encumbrances raised later could not sustain the original rejection.
Precedent Analysis
Tata Cellular v. Union of India
Judicial review in tender matters is restricted to correcting decisions that are arbitrary, irrational, mala fide, or in violation of tender terms.
Maha Mineral Mining & Beneficiation Pvt. Ltd.
Tender terms must be clear and unambiguous; ambiguities cannot be supplied through assumptions or external policies.
Mohinder Singh Gill v. Chief Election Commissioner
Administrative orders must stand or fall on the reasons originally stated; new grounds cannot be manufactured later.
Each precedent reinforced that the impugned rejection was contrary to settled legal principles.
Court’s Reasoning
The Court conducted a detailed analysis of the NIT and found:
- No clause mandated “haisiyat praman patra” to be issued by a District Magistrate.
- The government notification was not incorporated into the NIT; hence, bidders could not be bound by it.
- The tendering authority is a statutory board, not a government department, and the notification does not automatically apply.
- The valuation certificate was issued by a competent, experienced government-registered valuer, sufficient to demonstrate asset worth.
- The rejection was based solely on the absence of DM signature; thus, the later encumbrance argument could not be entertained.
- The rejection was therefore dehors the NIT, arbitrary, and illegal.
The Court held that if the tendering authority had doubts about encumbrances, it should have sought clarification, not rejected the bid outright.
Conclusion
The rejection of the technical bid for lack of a District Magistrate–issued certificate was held unsustainable. The Supreme Court:
- Set aside the High Court decision.
- Quashed the tender authority’s rejection order.
- Remanded the matter for reconsideration of the technical bid strictly as per Clause 18.
- Directed that, if the certificate meets the ₹10-crore requirement, negotiations between the appellant and the existing successful bidder may determine who continues with the contract.
The appeal was accordingly allowed.
Implications
- Tendering authorities cannot impose unwritten conditions.
- Bidders need not comply with government notifications unless incorporated into the NIT.
- Judicial review will intervene when tender rejection is based on non-existent eligibility criteria.
- Ensures transparency, certainty, and fairness in public procurement.