Playing 'Hide and Seek': High Court Reprimands Railways Over Arbitrary Tender Exclusions

In a sharp indictment of institutional conduct, the Allahabad High Court (Lucknow Bench) has slammed the North Eastern Railway (NER) authorities for their "whimsical" and " mala fide " attempt to oust a sister government enterprise, the Konkan Railway Corporation Ltd. (KRCL) , from a high-value tender process. Justices Shekhar B. Saraf and Abdhesh Kumar Chaudhary characterized the railway's repeated rejections of KRCL’s bid as a "hide and seek" game that lacks the fairness expected of a state instrumentality .

The Procedural Deadlock The dispute arises from a tender for the "Design, Supply, Erection, Testing & Commissioning of Traction Sub Stations" in the Varanasi Division, a project valued at approximately INR 262.12 Crores. After an initial rejection on the grounds of inadequate stamp duty—which the High Court previously ruled was a " curable defect "—the KRCL returned to the fold. However, the NER authorities immediately moved the goalposts, rejecting the bid anew on the grounds that the bank guarantee listed an incorrect beneficiary's name. When KRCL corrected this error, the authorities claimed the submission was "belated."

Arguments at the Bar The petitioner, KRCL, argued that the authorities were fixated on eliminating them despite their lowest financial bid, pointing out that their treatment by the NER stood in stark, discriminatory contrast to how other arms of the Indian Railways —such as the Southern Railway —handled similar technical lapses.

Conversely, the North Eastern Railway maintained a rigid stance, insisting that strict compliance with tender conditions was non-negotiable. They argued that the errors in the bank guarantee documentation justified the rejection, effectively seeking to disqualify the petitioner based on procedural technicalities.

Justice and the 'Model Employer' In its analysis, the Court drew upon the Supreme Court’s ruling in Meerut Development Authority v. Assn. of Management Studies , which holds that while a bidder does not have an indefeasible right to win a contract, state authorities are bound by the duty of non-arbitrariness and fairness. The High Court questioned why the NER identified these defects sequentially rather than collectively, noting that the "piecemeal" approach to finding faults with the documentation clearly signaled a mala fide intent.

Finding the Southern Railway ’s previous lenient approach to the same beneficiary name error persuasive, the Bench highlighted the lack of uniformity within the same national institution, terming it “amusing” and legally indefensible.

Key Observations The Court did not mince words in its assessment of the railway’s conduct:

• "As a model employer they cannot choose to play hide and seek."
• "The acts of the respondent North Eastern Railways Authorities besides being arbitrary smacks of malafide and are whimsical."
• "All the defects, which had been pointed out by the authorities are curable defects and such defects could have been pointed out at much earlier stage."
• "Having considered the facts and circumstances, we are rather amused as to how there can be two different yard-sticks for two arms of the same organization."

A Clear Directive The High Court has formally quashed the June 8, 2026 , rejection letter. In a decisive move to restore the integrity of the tender process, the Court has mandated that the North Eastern Railway accept the corrected bank guarantee and proceed with the evaluation of KRCL’s financial bid within three working days.

This ruling serves as a stern reminder to public authorities that technical tender requirements should not be weaponized to suppress competition. For the broader legal landscape, the judgment reinforces the principle that when dealing with "curable" administrative lacunae, public bodies must act with fairness and transparency rather than exclusionary zeal.