1. Public tender for lift installation restricted to ten specific companies, excluding other potential bidders. (Para 3 , 4 , 5 )
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2025 Supreme(SC) 1339
SUPREME COURT OF INDIA
SURYA KANT AND NONGMEIKAPAM KOTISWAR SINGH, JJ.
Omega Elevators – Appellant
Versus
State of M.P. And another – Respondent
Civil Appeal No. 1467-1468 of 2025 (Arising out of SLP(C) Nos. 13716-13717 of 2020)
Decided on : 04-02-2025
The Court held that restricting public tenders to a select few companies based on a mere presumption of superior quality, without objective, expert-backed evidence, is arbitrary and discriminatory. While judicial review of tenders is limited, such presumptive practices violate transparency and fairness in public procurement.
Headnote:(A) Judicial Review of Tender Process - Interpretation of Public Tender Notices - The terms of a tender notice issued by a statutory authority are generally not subject to judicial interference unless they are found to be arbitrary or discriminatory (Para 6, 10).
(B) Eligibility Criteria in Tenders - The practice of limiting participation to a select number of companies without sufficient justification is disapproved, emphasizing the need for objective analysis (Para 12).
(C) Transparency in Tendering - Future tender processes must be conducted transparently, with clear criteria that do not unfairly exclude potential bidders (Para 13).
Facts of the case:
The appellant company challenged the rejection of its bid for a lift installation tender, which was limited to 10 pre-selected firms due to perceived quality concerns, despite no objective evidence provided by the GMC.
Findings of Court:
The court noted the absence of justifiable reasons for limiting eligibility and highlighted the need for transparency in future tenders.
Issues: The main questions were the legality of the GMC's decision to restrict bidding to only 10 companies and the applicability of judicial review to tender terms.
Ratio Decidendi: The court concluded that without objective justification, restricting bidders based solely on arbitrary notions undermines fair competition.
Result: Appeals disposed of as infructuous.
Legal Category Hierarchy
Table of Contents
2. Whether restricting a public tender to a select list of reputed companies is arbitrary or justified to ensure quality. (Para 5 , 8 )
3. Restricting bidders based on a presumption that only foreign MNCs provide quality services, without objective expert analysis, is arbitrary and untenable. (Para 11 , 12 )
4. Terms of public tenders are subject to judicial review to prevent arbitrariness, favouritism, or discriminatory presumptions lacking objective, scientific support. (Para 10 , 12 )
5. Appeals disposed of as infructuous; High Court judgment modified to caution the authority against non-transparent and presumptive bidding restrictions. (Para 13 , 14 )
6. To what extent can the terms of a public tender notice be judicially reviewed?
Terms of a public tender are generally not open to judicial interference unless they are found to be per se arbitrary, discriminatory, or actuated by malice, with review limited to preventing arbitrariness or favouritism. (Para 10 )
7. Can a tendering authority restrict bidding to a select list of companies to ensure quality?
Such restrictions must be based on a well-reasoned, non-discriminatory, and scientifically supported conclusion reached after objective analysis by an expert team, rather than mere conjectures or presumptions. (Para 11 , 12 )
8. Is the presumption that only multinational corporations can provide high-quality services legally tenable in public tenders?
No. It is untenable to presume that domestic manufacturers are inherently incapable of competing or that their services are inferior without objective evidence; authorities should instead prescribe stricter standards to ensure quality. (Para 12 )
ORDER :
1. Leave granted.
2. The appellant-Company before us is aggrieved by the judgment dated 20.03.2020, passed by the High Court of Madhya Pradesh at Gwalior as well as the order dated 12.10.2020, whereby their Review Petition was also declined. These dual orders thus form the subject-matter of challenge in these appeals.
3. We may briefly advert to the facts of the instant case, before making any observation on merits. The Gwalior Municipal Corporation (in short, the "GMC") issued a Notice Inviting Tender (in short, the "NIT") on 17.12.2019: inviting certain permitted bidders to submit their bid(s) for the work of supply, installation, testing, commissioning, and maintenance of lifts, including allied works under the Pradhan Mantri Awas Yojana at Mahal Gaon Ki Pahadi and Manpur, Gwalior, Madhya Pradesh. Notably, the work was required to be completed within six months, and the value of the tender was approximately Rs. 1460.60 lakhs.
4. The appellant-Company firstly submitted a representation to the GMC to partake in the aforementioned NIT. When it failed to receive any response therefrom, it submitted its bid online, on 10.01.2020.
5. At this juncture, it is apposite to point out that the reason why the appellant was not permitted to participate in the NIT or submit bids towards securing the tender was that the GMC had annexed a list of 10 companies to the NIT, who alone would be eligible and permitted to submits bids for the particular contract. Statedly, these companies were considered to be the 10 most reputed firms in the business of manufacturing lifts/elevators and were accordingly selected by the GMC to ensure quality services.
6. The aggrieved appellant eventually approached the High Court, but its writ petition has been dismissed, primarily on the strength of a decision of this Court in Global Energy Ltd. and another vs. Adani Exports Ltd. and others , (2005) 4 SCC 435 . Needless to say, the ruling in Global Energy (supra) chiefly held that the terms of a tender notice by a statutory authority must not be generally interfered with, unless wholly arbitrary, discriminatory, or actuated by malice.
7. As noticed earlier, the lift installation work was to be executed within six months, and since no interim stay was granted either by the High Court or by this Court, it is not in dispute that the work has since been completed by the successful bidder, who, incidentally, has not been arrayed as one of the respondents. No effective relief, therefore, can be granted to the appellant.
8. The short question, however, that survives for consideration is whether the GMC's decision to restrict the bidding process to only 10 companies-and thereby exclude all other potential bidders-can be justified in light of the precedent cited above, and whether the High Court correctly applied the ratio decidendi of that decision.
9. We have heard learned Counsel for the parties, and minutely perused the record.
10. The legal principle that the terms of a public tender notice are not generally open to judicial scrutiny and interference, unless found to be per se arbitrary-is well known. It is trite law that judicial review would apply to the exercise of contractual powers by the Government, to the limited extent of preventing arbitrariness or favouritism.[ Tata Cellular vs. Union of India , (1994) 6 SCC 651 .] Of course, what constitutes an arbitrary action is ultimately to be answered in the facts and circumstances of any given case.[ Union of India vs. International Trading Co. , (2003) 5 SCC 437 ]
11. We have already set out the factual backdrop of these appeals hereinabove. It appears to us that the assertion that an open tender would render the allotment process cumbersome and time-consuming, or the claim that permitting bidders beyond the designated 10 would result in the installation of inferior quality lifts, is seemingly conjectural - and a mere presumption based on surmises.
12. Admittedly, all 10 companies flagged by the GMC as eligible in the
