Court’s Decision
The Supreme Court held that a tender condition restricting eligibility only to bidders who had supplied goods worth ₹6 crores to State Government agencies of Chhattisgarh in the past three years is arbitrary, discriminatory, and violative of Articles 14 and 19(1)(g) of the Constitution.
A Bench of Justices Sanjay Kumar and Alok Aradhe set aside the orders of the Chhattisgarh High Court, which had upheld the restrictive tender criteria for the supply of sports kits to school children.
The Court held that such restrictions “create artificial barriers that prevent fair competition and promote cartelisation,” thereby violating the doctrine of level playing field.
“The State, while enjoying freedom to prescribe tender conditions, cannot exercise that power in a manner that infringes constitutional guarantees by closing the market to outsiders without just cause.”
Accordingly, the Supreme Court quashed the impugned tender notices dated 21 July 2025, allowing the appeal and granting liberty to the State to issue fresh tenders that comply with constitutional principles of equality and fairness.
Facts
The Department of School Education, Chhattisgarh, had issued three tenders on 21 July 2025 through the Government-e-Marketplace (GeM) portal for the supply of sports kits to students of Government-run Primary, Upper Primary, High, and Higher Secondary Schools.
The tender conditions required that the bidder must have supplied sports goods worth at least ₹6 crores cumulatively to State Government agencies of Chhattisgarh in the preceding three financial years (2021–24).
The total tender values were ₹15.24 crore, ₹13.08 crore, and ₹11.49 crore respectively.
The appellant, a company registered under the Companies Act, 2013, had supplied similar kits in several States including Bihar, Gujarat, Karnataka, and Delhi, but not in Chhattisgarh. It contended that this restriction arbitrarily excluded outside suppliers.
When its representation was ignored, it approached the Chhattisgarh High Court, which dismissed the petitions, upholding the condition as a reasonable safeguard to ensure reliable delivery in a Naxal-affected region.
Aggrieved, the appellant approached the Supreme Court.
Issues
- Whether the tender condition restricting eligibility only to suppliers with prior experience in Chhattisgarh violated Articles 14 and 19(1)(g) of the Constitution.
- Whether the High Court erred in relying on Association of Registration Plates v. Union of India (2005) to justify the restriction.
- Whether the State could rely on local familiarity and Naxal conditions to justify exclusion of outside bidders.
Petitioner’s Arguments
The appellant contended that the High Court had erred in applying Association of Registration Plates (2005) 1 SCC 679, as that case related to security-sensitive vehicle registration plates and not to the supply of sports kits.
It argued that the condition mandating prior supply worth ₹6 crore to Chhattisgarh agencies was discriminatory and exclusionary, barring competent suppliers from other States.
The appellant further submitted that such a condition encouraged cartelisation among local vendors, discouraged competition, and violated the doctrine of level playing field implicit in Articles 14 and 19(1)(g).
By linking eligibility to previous local experience, the tender authority arbitrarily prevented qualified bidders from participating, even if they had experience of executing contracts of greater magnitude in other States.
Respondents’ Arguments
The State of Chhattisgarh defended the tender condition as necessary to ensure timely delivery and quality control, given the geographical and social challenges of the region.
It argued that Chhattisgarh, being Naxal-affected, required suppliers familiar with local terrain and administrative networks.
Further, the State claimed that similar eligibility conditions existed in other States such as Gujarat, Assam, Delhi, and Odisha.
It was also contended that financial bids had already been opened and successful bidders identified, and any judicial interference would delay the distribution of sports kits, affecting school children’s welfare.
Analysis of the Law
The Court began by reiterating settled principles governing judicial review of tender conditions. Referring to Ramana Dayaram Shetty v. International Airport Authority (1979) 3 SCC 489, the Court emphasised that State discretion in awarding contracts must conform to Article 14, ensuring fairness and equality.
While the government has “a free hand in setting tender terms,” courts can intervene when such conditions are arbitrary, discriminatory, or mala fide.
Citing Directorate of Education v. Educomp Datamatics (2004) 4 SCC 19 and Icomm Tele Ltd. v. Punjab State Water Supply Board (2019) 4 SCC 401, the Court noted that tender eligibility must have a rational nexus to the object of procurement, and cannot serve as an instrument of exclusion.
The Court then examined the doctrine of level playing field, which “requires that equally placed competitors be allowed to bid freely to serve public interest.” Relying on Union of India v. Bharat Forge Ltd. (2022) 17 SCC 188, it held that “States cannot erect artificial barriers favouring local suppliers”
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Precedent Analysis
- Ramana Dayaram Shetty v. International Airport Authority (1979) — Established that government largesse must be distributed fairly and non-arbitrarily, forming the foundation of tender jurisprudence.
- Global Energy Ltd. v. Adani Exports (2005) 4 SCC 435 — Reaffirmed that courts will not intervene unless tender conditions are arbitrary or mala fide.
- Icomm Tele Ltd. v. Punjab State Water Supply Board (2019) 4 SCC 401) — Clarified that eligibility criteria must be proportionate and connected to the objective sought.
- Uflex Ltd. v. Government of Tamil Nadu (2022) 1 SCC 165) — Reiterated that restrictions in tendering must promote fair competition.
- Union of India v. Bharat Forge Ltd. (2022) — Defined the doctrine of level playing field as an extension of Article 19(1)(g), ensuring equal opportunity in public procurement.
These authorities guided the Court’s conclusion that restricting tenders to local suppliers violates both equality and free trade principles.
Court’s Reasoning
The Court held that the impugned tender condition lacked any rational nexus with the objective of ensuring timely or quality supply of sports kits.
It found that the tender, being for non-sensitive, non-technical items, did not justify exclusion based on local experience.
“The impugned condition has the effect of excluding bidders who, though otherwise financially sound and technically competent, have no experience of supply to the State Government agencies of Chhattisgarh in past three years.”
The Bench rejected the State’s claim that Maoist activity warranted local familiarity, observing that only a few districts were affected and the goods could be delivered via local logistics partners.
The Court characterised the tender condition as a “closed-door policy” that undermined competition and innovation, warning that such restrictions foster monopoly and cartelisation.
It further held that linking eligibility to a specific geography violated Article 14’s guarantee of equality and Article 19(1)(g)’s right to trade freely across India.
Conclusion
The Supreme Court quashed the tender notices dated 21 July 2025 and the High Court’s orders dated 11 and 12 August 2025, declaring the tender condition unconstitutional and unreasonable.
“To confine eligibility within one State is irrational and disproportionate to the goal of ensuring effective delivery of sports kits.”
The Court granted liberty to the State to issue fresh tenders ensuring open and fair competition and compliance with Articles 14 and 19(1)(g).
The appeals were allowed, with no order as to costs.
Implications
This judgment is a landmark reaffirmation of constitutional principles in public procurement. It underscores that:
- Tender eligibility cannot be confined by geography or local bias.
- The doctrine of level playing field ensures equal opportunity for all competent bidders nationwide.
- States must frame tender conditions that are rational, proportionate, and connected to the procurement objective, not arbitrary barriers to entry.
The ruling strengthens transparency and competition in public contracts, warning against regional monopolies and cartelisation in government procurement.
FAQs
1. Can a State restrict tender eligibility only to local suppliers?
No. The Supreme Court held such restrictions violate Articles 14 and 19(1)(g) as they prevent fair competition and discriminate against competent bidders from other regions.
2. What is the “level playing field” doctrine?
It is a principle ensuring that all equally qualified bidders have an equal chance to compete, preventing the State from favouring a few through arbitrary or exclusionary tender conditions.
3. What should governments consider while framing tender criteria?
Tender conditions must have a rational nexus with the procurement goal, promote competition, and safeguard public interest without infringing constitutional equality or trade freedoms.