The Supreme Court of India, in a significant ruling on public procurement, has quashed a tender condition imposed by the Chhattisgarh government that required bidders to have prior experience supplying goods specifically to its state agencies. A division bench comprising Justice Sanjay Kumar and Justice Alok Aradhe held that such a condition is arbitrary, discriminatory, and infringes upon the fundamental rights to equality and freedom of trade guaranteed under Articles 14 and 19(1)(g) of the Constitution. The court set aside the Chhattisgarh High Court’s orders upholding the clause and quashed the related tender notices.
Background of the Case
The case arose from three tender notices issued on July 21, 2025, by the Samagra Shiksha Chhattisgarh State Project Office for the supply of Sports Kits to government primary, upper primary, and high and higher secondary schools across the state. The cumulative value of the tenders was Rs. 15.24 crores, Rs. 13.08 crores, and Rs. 11.49 crores.
The appellant, Vinishma Technologies Pvt. Ltd., a company with experience supplying sports kits to government departments in Bihar, Karnataka, Gujarat, and Delhi, was rendered ineligible by a specific condition. The contentious clause, Condition No. 4 under Section III(A), stipulated: “Bidders must have supplied sports goods worth at least Rs. 6.00 crores (cumulative) to State Government agencies of Chhattisgarh in the last three financial years.”
After its representation to the State Project Director on July 29, 2025, failed to elicit a response, the company challenged the condition in three separate writ petitions before the High Court of Chhattisgarh. The High Court, by orders dated August 11 and 12, 2025, dismissed the petitions. It held that the condition was permissible to ensure the selection of the most “capable and reliable bidder” for a public project of significant scale and importance. The High Court found the condition to be neither discriminatory nor unreasonable. This led to the present appeals before the Supreme Court.
Arguments of the Parties
Learned Senior Counsel for the appellant, Vinishma Technologies, argued that the tender condition effectively excluded competent suppliers from outside Chhattisgarh, thereby discouraging wider participation and fostering cartelisation. It was contended that the condition violated Articles 14 and 19(1)(g) of the Constitution by creating an unfair barrier to entry.
Representing the State of Chhattisgarh, Learned Senior Counsel defended the condition, stating it was within the tendering authority’s power to frame such terms. The justification provided was that the unique geographic and social conditions of Chhattisgarh, a state affected by Naxalism, necessitated a supplier with local experience to ensure “timely delivery, ensure quality compliance and prevent supply chain disruptions.” It was also submitted that financial bids had already been opened and that interference by the court would cause significant delays, impacting the academic year.
Court’s Analysis and Findings
The Supreme Court bench, in its judgment authored by Justice Alok Aradhe, framed the solitary question for consideration as whether the tender condition “meets the test of reasonableness and fairness.”
Reviewing the established legal principles on judicial review of tender conditions, the court reiterated that while the government has a free hand in setting tender terms, its actions cannot be arbitrary or malicious. Citing Ramana Dayaram Shetty v. International Airport Authority of India & Ors., the judgment noted that government actions must adhere to fairness and equality.
The court heavily relied on the “doctrine of level playing field,” which it stated “finds expression in Article 19(1)(g) of the Constitution.” The judgment observed that this doctrine is “designed to prevent the State from skewing the market in favour of few by erecting artificial barriers.”
Applying this to the present case, the court found that the impugned condition created such an artificial barrier. It stated, “In the instant case, the impugned tender condition has the effect of excluding bidders who though otherwise financially sound and technically competent, have no experience of supply of sports goods to the State Government agencies of Chhattisgarh in past three years.” The court further held that the “condition curtails the fundamental rights of the bidders, who have been ineligible to participate in the tenders.”
The judgment reasoned that the primary objective of public procurement—to secure quality goods at the best price—is achieved by evaluating bidders on financial capacity and technical experience, “regardless of place of performance of the contract.” The Court declared that confining eligibility to one state is “not only irrational but is also disproportionate to the goal of ensuring effective delivery of Sports Kits.”
The court dismissed the state’s justifications as “untenable” for several reasons:
- The tender was for Sports Kits, not “security sensitive equipment.”
- It is incorrect to treat the entire state as uniformly affected by Maoist activities to justify the exclusion of all outside bidders.
- A successful bidder without local knowledge could “engage a local supply chain to supply the Sports Kits.”
The court concluded its analysis by stating, “this Court finds that impugned tender condition is arbitrary, unreasonable and is discriminatory. The same does not have any rational nexus to the object of ensuring effective supply of Sports Kits to the children in State. It offends the mandate of Article 14 and freedom of trade guaranteed by Article 19(1)(g) of the Constitution of India.”
Decision
In its final conclusion, the Supreme Court allowed the appeals and quashed the High Court orders dated August 11 and 12, 2025. Consequently, the tender notices dated July 21, 2025, were also quashed and set aside. The court granted liberty to the respondents to issue fresh notices inviting tenders.
