An entity lacking five years of financial data is not ineligible for a tender if its available financial performance, when averaged, meets the required turnover threshold, particularly where no mandatory minimum experience is prescribed.

Headnote:(A) Procurement Law - Tender - Eligibility criteria - Interpretation of turnover clauses - Requirement for average turnover based on financial years - Absence of specific experience requirement - Where a bid satisfies the required average threshold using only available financial data, rejection on the basis of non-submission of records for the entire five-year period is unjustified. (Paras 11-13, 18)

(B) Judicial Review - Tender process - Power of judicial review - While the author of a tender document is generally the best interpreter of its terms, courts may intervene when the interpretation is strained or works against the clear, objective, and substantial compliance revealed by the financial documents. (Paras 14, 17)

Facts of the case:
The petitioner sought to participate in an auction for resource allocation. After submitting a bid, the petitioner was declared ineligible based on a clause requiring an average turnover of 30% of the tender value, calculated over any three out of the preceding five financial years. The petitioner, as a recently incorporated entity, did not possess five years of financial documents; however, the available data for the existing years significantly exceeded the required turnover threshold when averaged.

Findings of Court:
The court observed that the tender conditions did not mandate five years of experience as a prerequisite. It held that the respondent’s rejection was based on a flawed application of the tender criteria. Since the petitioner’s average turnover of the available years comfortably met the 30% requirement, the disqualification was arbitrary and unreasonable.

Issues: The main issues were whether a bidder can be disqualified for failing to provide five years of financial records when no mandatory experience period is specified, and whether the respondent’s interpretation of the turnover criteria was justifiable.

Ratio Decidendi: In the absence of a mandatory minimum experience requirement, the inability to provide financial data for the full five-year period does not automatically disqualify a bidder if the average turnover criteria are satisfied by the available data. Tender conditions must be interpreted to facilitate legitimate competition rather than acting as an exclusionary barrier where the primary financial intent of the clause is met.

Result: Petition allowed. Decision of disqualification set aside.

ORDER

Per: Hon'ble Shri Justice Sanjeev Sachdeva, Chief Justice

1. Petitioner has filed the subject petition seeking a direction to the respondent to declare the petitioner eligible to participate in the tender.

2. Respondent had invited E-Tender for allocation of sand mines. Petitioner had submitted his bid pursuant to the said Notice Inviting Tender, however, the bid of the petitioner was not accepted.

3. As per learned senior counsel for the petitioner, the order rejecting the bid was never communicated, which is disputed by learned Advocate General appearing for the respondent, who submits that the order was duly communicated.

4. Be that as it may, the issue pertains to the interpretation of a tender condition. We may note that the petitioner has not challenged any of the tender conditions. The contentions of the petitioner is that the petitioner fulfils the tender condition and as such there is no requirement to challenge the same.

5. As per the communication dated 11.02.2025, it was stated by the respondent that technical bid of the petitioner has been declared as non- responsive in terms of Clause 6.2.6. of the E-Tender cum Auction document.

6. Clause 6.2.6 of the E-Tender document reads as under:-

6-2-6 izfrHkkxh dks fuEu vgZrkvksa dh iwfrZ vfuok;Z :Ik esa djuh gksxh %&

d- 31-03-2024 dh fLFkfr esa izkjafHkd vk/kkj ewY; dh U;wure 10 izfr’kr ¼;fn foRrh; o"kZ 2023&24 ds ys[ks QkbZuy u Networth, gq, gksa rks ,slh fLFkfr esa fnukad 31-03-2023 dh fLFkfr esa izkjafHkd vk/kkj ewY; dh U;wure 10 izfr’kr ½ Networth

[k- vadsf{kr ys[kksa ds vk/kkj ij foxr ikWap o"kksZ esa ls fdUgh rhu foRRkh; o"kksZ dk vkSlr VuZvksoj] izkjafHkd vk/kkj ewY; dk U;wure 30 izfr’kr gksuk vfuok;Z gSA ¼VuZvksoj dh x.kuk gsrq foRrh; o"kZ 2019&20] 2020&21] 2021&22] 2022&23 ,oa 2023&24 dks vk/kkj ekuk tk;sxkA ;fn foRRkh; o"kZ 2023&24 ds ys[ks QkbZuy u gq, gksa rks ,slh fLFkfr esa 2018&19] 2019&20] 2020&21] 2021&22 ,oa 2022&23 dks vk/kkj ekuk tk;sxk A½ bl gsrq fufonkdkj dks lunh ys[kkdkj ¼pkVZMZ ,dkmUVsaV½ }kjk ^ifjf’k"V&7* vuqlkj miyC/k djkuk vfuok;Z gksxkA Certificate

7. During submission, reference was also made to Clause 5(kha), which reads as under:-

5 ¼[k½ foRRkh; vgZrk%&

izfrHkkxh dks fuEu vgZrkvksa dh iwfrZ vfuok;Z :Ik ls djuh gksxh%&

d- 31-03-2024 dh fLFkfr esa izkjafHkd vk/kkj ewY; dh U;wure 10 izfr’kr , ¼;fn foRrh; o"kZ 2023&24 ds ys[ks QkbZuy u Networth gq, gksa rks ,slh fLFkfr esa fnukad 31-03-2023 dh fLFkfr esa ½ Networth

,oa [k vadsf{kr ys[kksa ds vk/kkj ij foxr ikWap o"kksZ esa ls fdUgh rhu foRRkh; o"kksZ dk vkSlr VuZvksoj] izkjafHkd vk/kkj ewY; dk U;wure 30 izfr’kr gksuk vfuok;Z gSA ¼VuZvksoj dh x.kuk gsrq foRrh; o"kZ 2019&20] 2020&21] 2021&22] 2022&23 ,oa 2023&24 dks vk/kkj ekuk tk;sxkA ;fn foRRkh; o"kZ 2023&24 ds ys[ks QkbZuy u gq, gksa rks ,slh fLFkfr esa 2018&19] 2019&20] 2020&21] 2021&22 ,oa 2022&23 dks vk/kkj ekuk tk;sxk A½ bl gsrq fufonkdkj dks lunh ys[kkdkj ¼pkVZMZ ,dkmUVsaV½ }kjk ^ifjf’k"V&7* vuqlkj miyC/k djkuk vfuok;Z gksxkA Certificate

8. Clause 6.2.6 (kha) stipulates that the bidder should have an average turnover of 30% of the minimum tender value by taking an average turnover of any 03 out of the 05 preceding financial years. The financial year stipulated are 2019-2020 to 2023-24. Said clause stipulates that in case the financial documents of 2023-24 were not finalized then the documents of 2018-19 to 2022-23 shall be taken into account.

9. Similarly, clause 5(kha) stipulates that for calculating turnover, the financial documents of 2019-20 to 2023-24 shall be taken into account and in case the financial documents of 2023-24 were not finalized then financial documents of 2018-19 to 2022-23 shall be taken into account.

10. Petitioner contends that petitioner was a company incorporated on 25.05.2022 and as such does not possess any financial documents for the year 2018-19 to 2021-22. In its bid submitted by the petitioner, petitioner furnished financial documents of 2022-23 and 2023-24 and also for 09 months of 2024-25.

11. We may

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2026 Supreme(Online)(MP) 36583

HIGH COURT OF MADHYA PRADESHSanjeev Sachdeva, CJ, Vinay Saraf, JSe Oil Industries Pvt. Ltd. – AppellantVersusThe State Of Madhya Pradesh – RespondentWP 7147/2025

An entity lacking five years of financial data is not ineligible for a tender if its available financial performance, when averaged, meets the required turnover threshold, particularly where no mandatory minimum experience is prescribed.

HIGH COURT OF MADHYA PRADESH
Sanjeev Sachdeva, CJ, Vinay Saraf, J
Se Oil Industries Pvt. Ltd. – Appellant
Versus
The State Of Madhya Pradesh – Respondent
WP 7147/2025