Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(SC) 1899

SUPREME COURT OF INDIA
Sanjay Kumar, Alok Aradhe, JJ.
M/S Shanti Construction Pvt. Ltd. – Appellant
Versus
The State Of Odisha & Ors. – Respondents
Civil Appeal No. 13484 of 2025 (@ Out of S.L.P. (C) No. 5829 of 2023), Civil Appeal No. 13485 of 2025 (@ Out of S.L.P. (C) No. 16140 of 2023)
Decided On : 07-11-2025

Advocates appeared:
For the Petitioner(s): Mr. Ashok Panigrahi, Sr. Adv. Mr. R. Chandrachud, AOR Ms. Geetanjali Das Krishnan, Adv. Mr. Dhuli Venkata Krishna, Adv. Mr. Aryan Singh, Adv. Mr. Surajit Bhaduri, Adv. Mr. Dhananjaya Mishra, AOR Mr. Amritesh Mohanty, Adv. Mr. Navneet Dogra, Adv.
For the Respondent(s): Mr. Shibashish Misra, AOR Mr. Dhananjaya Mishra, AOR Mr. Amritesh Mohanty, Adv. Mr. Navneet Dogra, Adv. Mr. Ashok Panigrahi, Sr. Adv. Mr. R. Chandrachud, AOR Mr. Dhuli Venkata Krishna, Adv. Ms. Geetanjali Das Krishnan, Adv. Mr. Aryan Singh, Adv. Mr. Surajit Bhaduri, Adv.

The term 'previous Financial Year' in tender rules must be interpreted to mean the year preceding the current one, ensuring compliance aligns with statutory filing deadlines and serves public interest.

Headnote:(A) Odisha Minor Mineral Concession Rules, 2016 - Rule 27(4)(iv) - Interpretation of 'previous Financial Year' was central to the bids for sand extraction lease - The Tender Committee disqualified the unsuccessful bidder due to alleged non-compliance with the Rule, without considering statutory deadlines for filing Income Tax Returns. (Paras 11-16)

(B) Judicial Review in Tender Matters - The court’s role is to ensure non-arbitrariness and fairness in the State's actions regarding public tenders—an interpretation that narrows competition contradicts the public interest. (Paras 9, 10)

Facts of the case:
The appeals arise from a High Court judgment upholding the rejection of bids for a sand quarry lease under the Odisha Minor Mineral Concession Rules, determining the interpretation of 'previous Financial Year' significantly affected award results. (Paras 2-3)

Findings of Court:
The interpretation by the Tender Committee was deemed erroneous, requiring fresh bids and ensuring compliance with Rule 27(4)(iv), while directing the State to refund the successful bidder’s deposit with interest. (Paras 16)

Issues: Key matters were the proper interpretation of 'previous Financial Year' regarding required documentation for tender bids and the legality of the Tender Committee's decisions. (Paras 4, 7)

Ratio Decidendi: The term 'previous Financial Year' should be construed as the financial year prior to the current, reflecting the necessity of advancing public interest and revenue maximization in tender processes. (Paras 12-15)

Result: Impugned judgment set aside; fresh auction notice directed for bids to be submitted for sand extraction. (Para 17)

Table of Content
1. interpretation of auction process and applicable rules. (Para 2 , 3)
2. arguments regarding compliance with tender requirements. (Para 5 , 6 , 7 , 8)
3. judicial review principles in public tender matters. (Para 9 , 11 , 12 , 13 , 14)
4. need for fairness and transparency in interpretation. (Para 10 , 15)
5. court’s directions regarding new auction process. (Para 16 , 17)

JUDGMENT :

ALOK ARADHE, J.

Leave granted.

2. Both these appeals emanate from the judgment dated 01.03.2023 passed by the High Court of Orissa in a writ petition. These appeals involved the issue of interpretation of the term ‘previous Financial Year’ as defined in Rule 27(4)(iv) of ODISHA MINOR MINERAL CONCESSION RULES , 2016 (hereinafter, referred to as ‘the Rules’).

3. The relevant facts leading to filing of these appeals are as under.

3.1 The Tehsildar, Tangi Chowdwar, Cuttack on 11.07.2022 issued a notice inviting bids for extraction of sand on lease for a period of five years of Mahanadi Sand Quarry under Tehsil Tangi Chowdwar, District Cuttack, in the State of Orissa (hereinafter, referred to as ‘auction notice’). The bids were required to be submitted in a sealed cover on or before 18.07.2022. The sealed envelopes were to be opened on 19.07.2022 and after verification of bid documents, the lease was to be granted in favour of the highest bidder. Clause 5 of the tender incorporates provision of the amended Rule 27(4)(iv) of the Rules and requires the bidders to submit either (i) Income Tax Return of previous financial year showing annual income for an amount not less than the amount of additional charge offered and the royalty payable for the minimum guaranteed quantity for one whole year; Or (ii) Bank Guarantee valid for a period of eighteen months for the amount not less than the amount as above.

3.2 In response to the auction notice, 20 bidders submitted their bids. The unsuccessful bidder submitted its bid for grant of quarry lease for a period of five years quoting rate of Rs.2127.27 per cubic meter, whereas, the successful bidder submitted its bid quoting a rate of Rs.1250/- per cubic meter.

3.3 The Tender Committee in its meeting held on 19.07.2022 examined the bids. The bid of the unsuccessful bidder who had quoted the highest rate was declared non-responsive on the ground that it failed to comply with provision of Rule 27(4)(iv) of the Rules, as it did not submit the Income Tax Return for financial year 2021-2022. The bid of the successful bidder was found to be technically responsive and he was declared to be the highest bidder.

3.4 The Tehsildar on 25.07.2022 issued Form-F by which intimation was sent to the successful bidder informing him that he is successful bidder and he was called upon to (i) convey his acceptance to the terms and conditions and (ii) to deposit an amount of Rs.1,26,75,000/- under Rule 27(7) and 27(9) of the Rules. The successful bidder on 25.07.2022 conveyed his acceptance to the terms and conditions prescribed in the communication dated 27.07.2022 and deposited an amount of Rs.1,26,75,000/- through RTGS from Bank of India.

3.5 The unsuccessful bidder filed a writ petition, on 10.08.2022, before the High Court, in which challenge was made to award of tender in favour of successful bidder. The High Court by an ex-parte interim order dated 24.08.2022 directed that any action taken in pursuance of issuance of Form-F to the successful bidder shall not be given effect to till further orders.

3.6 The High Court by an order dated 01.03.2022 inter alia held that bid of the unsuccessful bidder was rightly rejected on account of non-compliance with Rule 27(4)(iv) of the Rules and upheld the grant of tender in favour of successful bidder. However, the High Court held that there is a huge difference between the rates quoted by unsuccessful and successful bidder and the grant of tender to successful bidder shall result in huge loss to public exchequer. The Tehsildar was, therefore, directed to call upon the successful bidder to