Tender Conditions: Past, Expired Blacklisting Cannot Be Perpetual Bar to Participation, Violates Article 14: Chhattisgarh High Court - 2025-05-12

Chhattisgarh High Court Quashes Arbitrary Tender Clauses on Past Blacklisting

Bilaspur, Chhattisgarh – The High Court of Chhattisgarh, in a significant ruling, has quashed tender conditions that sought to debar bidders based on past blacklisting, even if the debarment period had expired. The Division Bench, comprising Hon'ble Chief Justice Ramesh Sinha and Hon'ble Justice Arvind Kumar Verma , held that such clauses are unreasonable and violative of Article 14 of the Constitution of India. The Court clarified that bidders whose blacklisting period is over are eligible to participate in tender processes, provided they meet other stipulated conditions.

The judgment was delivered on May 8, 2025, in two writ petitions (WPC No. 2271/2025 and WPC No. 2303/2025) filed by M/s Jai Ambey Emergency Services (I) Pvt Ltd. challenging certain eligibility criteria in tenders floated by the Chhattisgarh Medical Services Corporation Limited (CGMSC) for emergency ambulance services and mobile medical units.

Case Background

M/s Jai Ambey Emergency Services (I) Pvt Ltd. ("the Petitioner") challenged various clauses in two Requests for Proposal (RFPs) issued by CGMSC:

1. Tender No. 194/CGMSCL/108 Sanjeevani Express/2025-26 (for operation of 108 Sanjeevani Express Emergency Ambulance Services).

2. Tender No. 196/CGMSCL/Haat Bazar/2025-26 (for operationalization of Mobile Medical Units under Haat Bazar Clinic Yojana).

The Petitioner argued that several eligibility conditions, including those related to financial turnover, net worth, experience certificates, technical evaluation, and crucially, disqualification based on past blacklisting, were arbitrary, unreasonable, discriminatory, and violated Articles 14 and 19(1)(g) of the Constitution.

The Petitioner had been blacklisted for one year on July 15, 2022, by an authority in Madhya Pradesh for an unrelated project, a period which had since lapsed. Despite this, the tender conditions, even after a corrigendum limiting disqualification to blacklisting "in the last five years," effectively barred their participation.

Arguments Presented

Petitioner's Contentions (Argued by Mr. Manoj Paranjpe ):

* Arbitrary Blacklisting Clauses: The core argument was against clauses (e.g., 3.2.10, 3.3.2, Annexure 6 in WPC No. 2271/2025; Clause 3.1 S.No. 8, Annexure 5 in WPC No. 2303/2025) that disqualified bidders for any past blacklisting, or blacklisting within the last five years, irrespective of the blacklisting period's expiry or relevance to the current tender. This was termed "civil death" and disproportionate.

* Unreasonable Financial Thresholds: The required average turnover (INR 150 Crores) and net worth (INR 75 Crores) for the Sanjeevani Express tender were challenged as excessive compared to a 2019 tender for a similar scope.

* Experience Certificate Validity: A mandate for experience certificates not older than six months was deemed prejudicial, especially when authorities delayed issuance.

* Mechanical Technical Evaluation: The scoring system was criticized for not rewarding the scale or quality of past projects.

* Exorbitant EMD: An EMD of INR 10 Crores for the Sanjeevani Express tender was called prohibitive.

* Corrigenda Insufficient: Amendments limiting disqualification to "last five years" were still considered unreasonable as they penalized entities beyond the blacklisting order's tenure.

* Continued Service as Proof: The Petitioner highlighted their uninterrupted operation of 108 services in Chhattisgarh even after the MP blacklisting, proving their capability.

Respondents' Contentions (Argued by Mr. Prafull N Bharat, Advocate General/Senior Advocate):

* Authority's Prerogative: The State and CGMSC argued that it is the tendering authority's prerogative to impose conditions based on its requirements.

* Judicial Restraint: Citing Supreme Court precedents like Slippi Constructions Contractors v. Union of India and N.G.Projects Ltd. v. Vinod Kumar Jain , they emphasized that courts should exercise restraint in reviewing tender terms, and the employer's perspective on essentiality of terms is paramount.

* Grievances Redressed: It was submitted that objectionable conditions were revisited and amended via corrigenda, addressing the Petitioner's concerns.

* Conditions Need Not Suit All: The Respondents asserted they are not obliged to frame conditions to suit every potential bidder.

Court's Reasoning and Legal Principles Applied

The High Court acknowledged the tendering authority's right to set conditions but underscored that such conditions, especially by State instrumentalities, must not be arbitrary.

The Court found the clauses relating to past blacklisting, which debarred a party even after the blacklisting period had expired, to be "unreasonable." It also deemed "unjustified" the requirement for an affidavit declaring that the party was never blacklisted, as this would perpetually exclude any bidder with a past, expired blacklisting.

The judgment extensively relied on the Supreme Court's decision in Banshidhar Construction Pvt. Ltd. v. Bharat Coking Coal Ltd. & Others (2024) , which reiterated established principles of judicial review in government contracts: * Courts review the "manner in which the decision was made," not the decision itself ( Sterling Computers Limited ). * Government decisions must be free from arbitrariness, bias, or mala fides, and uphold fairness, equality, and public interest ( Tata Cellular , Mihan India Ltd. ). * Article 14 abhors arbitrariness ( ABL International Limited ). * Blacklisting cases demand a "higher degree of fairness" ( Jagdish Mandal ). * While the employer decides essentiality of tender terms, deviations must apply to all bidders ( Central Coalfields Limited ).

The Court observed: > "15. ...the clauses which relate to the fact that any intending bidder is blacklisted in the past and the blacklisting is generally for a specified period of time, and after expiry of the said period, the said party is permitted to participate. However, in the present cases, the clauses relating to blacklisting are such that a party, even if it had been blacklisted at any point of time or that the blacklisting period is over, then also, it would be debarred from participating in the tender process which appears to be unreasonable. The Annexures in which declaration is to be given that the said party was never blacklisted, also appears to be unjustified."

Final Decision and Implications

The Chhattisgarh High Court disposed of the petitions with the following directions:

* Clauses Quashed: Clause 3.2.10, 3.3.2, and Annexure 6 of Tender No. 194/CGMSCL/108 Sanjeevani Express/2025-26 (as amended by Corrigendum dated 06.05.2025), and Clause 3.1, Sl. No. 8 and Annexure 5 of Tender No. 196/CGMSCL/Haat Bazar/2025-26 (as amended by Corrigendum dated 07.05.2025), were quashed insofar as they relate to blacklisting only.

* Eligibility Clarified: "It is made clear that if the bidder has earlier been blacklisted and the period of blacklisting is over, he would be eligible to participate in the tender process subject to fulfillment of other stipulated conditions."

* Subsisting Blacklisting: "It is further made clear that if the blacklisting of any bidder is in operation/existence, the said bidder would not be entitled to participate in the tender process/NIT."

This judgment reinforces the principle that while tendering authorities have discretion in framing conditions, these cannot be arbitrary or create impracticable barriers that stifle fair competition. Specifically , a past blacklisting order, once its term has expired, cannot serve as a perpetual disqualification, as this would be disproportionate and unreasonable. The ruling promotes a more equitable and competitive public procurement landscape.