Joint Venture Experience Must Be Considered for Tender Eligibility Unless Explicitly Excluded: Supreme Court

The Supreme Court of India has held that the experience gained by a contractor as a partner in a Joint Venture (JV) must be considered for meeting the eligibility criteria in a tender, provided there is no explicit condition in the Notice Inviting Tender (NIT) excluding such experience. The Court set aside the disqualification of a bidder whose technical bid was rejected by the Chhattisgarh Public Works Department on the ground that its experience certificate pertained to work executed as a JV partner.

The Supreme Court allowed the appeal filed by M/s. Surguja Bricks Industries Company against the judgment of the High Court of Chhattisgarh. The core legal issue was whether a tenderer could rely on work experience gained as a partner in a Joint Venture to meet the eligibility criteria of a “prime contractor” in a government tender. The Supreme Court ruled that in the absence of an explicit exclusion, the proportionate experience of a JV partner must be considered. The Court termed the disqualification “arbitrary and unreasonable” and violative of Article 14 of the Constitution.

Background of the Case

On January 8, 2025, the Chief Engineer (Central Tender Cell), Office of the Engineer-in-Chief, Public Works Department, Naya Raipur (Respondent No. 3), issued a Notice Inviting Tender (NIT No. 246/TC/24-25). The tender was for the construction of a road from Gram Ramgarh to Gram Kotadal in District Korea, Chhattisgarh, with a probable contract value of Rs. 4521.56 lakhs (approx. Rs. 45.21 crore).

The pre-qualification document, under Clause 1(b), stipulated the following eligibility criteria:

“to qualify for award of the contract, each prime contractor in the same name and style (tenderer) in its name must have in the last five years… satisfactorily completed atleast one similar work equal in value to the extent of 50 percent of the probable amount of contract as on the date of submission of the financial offer…”

The appellant, M/s. Surguja Bricks Industries Company, submitted its tender. However, on March 3, 2025, Respondent No. 3 informed the appellant of deficiencies in its bid. Specifically, the authority noted that one experience certificate submitted was for work executed through a Joint Venture, and the other individual work certificate was below the required financial value.

Despite the appellant’s explanation that it held a 49% share in the Joint Venture (MPSBI-JV) and that its proportionate share exceeded the required value, Respondent No. 3 disqualified the appellant on March 19, 2025.

The appellant challenged this disqualification before the High Court of Chhattisgarh. The High Court, in its judgment dated April 4, 2025, dismissed the writ petition. The High Court held that it could not “go into the niceties of the conditions stipulated by the authority” and found no malice or arbitrariness in the decision-making process. Aggrieved, the appellant approached the Supreme Court.

Arguments of the Parties

Appellant’s Submissions

Senior Advocate Ms. Pooja Mehra Saigal, appearing for the appellant, argued that the appellant had fulfilled the eligibility criteria. She submitted:

• The appellant was a partner in the Joint Venture ‘MPSBI-JV’ with a 49% share, while the other partner, M/s. Mohan Poddar, held 51%.
• The total value of the work completed by the JV was Rs. 4904.09 lakhs.
• The appellant’s proportionate share (49%) amounted to Rs. 2404.00 lakhs, which was well above the 50% requirement (Rs. 2261.00 lakhs) of the current tender.
• Relying on the Supreme Court’s decision in New Horizons Limited v. Union of India (1995), she argued that a constituent of a joint venture is entitled to proportionate experience.
• She contended that the NIT did not contain any stipulation that experience as a JV partner would not be considered.
• She further pointed out past correspondence from the department (dated 10.02.2017) which clarified that work done by a JV partner should be treated as work done by the prime contractor for that portion.

Respondent’s Submissions

Mr. Bishwajit Dubey, Additional Advocate General for the State of Chhattisgarh, supported the disqualification and the High Court’s order. He argued:

• The NIT expressly used the phrase “each prime contractor in the same name and style.” This meant the tenderer must have the requisite experience in its own name, not as a member of a JV.
• A “prime contractor” is one who coordinates all work, and an individual acting merely as a JV member does not satisfy this definition.
• The Joint Venture is a distinct legal entity, and its experience cannot be apportioned to individual members for independent bidding.
• Citing Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corp. Ltd. (2016) and Bharat Coking Coal Ltd. v. AMR Dev Prabha (2020), he argued that the tendering authority is the best judge of its own documents, and the Court should not substitute its view for that of the authority unless there is perversity or mala fides.
• The appellant’s individual experience certificate was for Rs. 1675.86 lakhs, which was below the required 50% threshold.

Court’s Analysis and Observations

The Bench comprising Justice Manoj Misra and Justice Ujjal Bhuyan delivered the judgment.

Interpretation of “Prime Contractor”

The Court noted that the term “prime contractor” was not defined in the NIT. Applying the common parlance test, the Court observed:

“The expression ‘prime contractor’ in the context of the NIT would mean the tenderer who has submitted the tender in terms of the instant NIT. If there is more than one contractor bidding together then it would mean the contractor who is primarily responsible for the contract offer.”

On Joint Venture Experience

The Court referred extensively to the precedent set in New Horizons Limited v. Union of India (1995), which established that a Joint Venture is an association of persons sharing risks and profits. The Court observed that the experience of a JV is essentially the experience of its constituents.

“In respect of a joint venture, its experience can only mean the experience of the constituents of the joint venture. … Failure to consider the same had rendered the decision arbitrary and irrational.”

The Court also referenced Ganpati PV – Talleres Alegria Track Pvt. Ltd Vs. Union of India (2009), where the rejection of a bid for failing to consider JV experience was held to be incorrect.

Absence of Explicit Exclusion

A critical factor in the Court’s reasoning was the absence of any clause in the NIT prohibiting the use of JV experience.

“From a perusal of the NIT or the conditions in the pre-qualification document, we do not find any criteria or condition therein stating that past experience as member of a joint venture would not be considered. There is, thus, no specific or explicit exclusion of the work experience gained by a contractor in a joint venture or partnership.”

Ambiguity and Arbitrariness

Citing Reliance Energy Limited v. Maharashtra State Road Development Corporation Ltd. (2007), the Court emphasized that tender terms must indicate norms with “legal certainty.”

“We are of the unhesitant view that an eligibility criteria should be clear and unambiguous. Otherwise, it may lead to arbitrary exercise of power by the State disqualifying a tenderer who would otherwise meet the eligibility criteria.”

Limits of Judicial Non-Interference

While acknowledging the principle that courts generally defer to the authority’s interpretation of tender documents, the Court clarified that this deference is not absolute.

“If the interpretation of the tender inviting authority or its understanding of the tender conditions is vitiated by mala fides or perversity, there is no question of a constitutional court showing deference to such understanding. Likewise, if the interpretation of the tender inviting authority of a particular condition of tender… is irrational or absurd leading to arbitrary consequences, it would be the duty of a constitutional court to interdict such a decision making process.”

Decision

The Supreme Court held that the respondents’ decision to disqualify the appellant by not considering its proportionate experience in the Joint Venture was “vitiated by irrationality leading to the arbitrary decision.”

The Court passed the following orders:

1. The decision of Respondent No. 3 dated 19.03.2025 disqualifying the appellant was set aside.
2. The impugned judgment of the High Court dated 04.04.2025 was set aside and quashed.
3. The respondents were directed to “reconsider the case of the appellant by accepting its experience certificate as member of the joint venture MPSBI-JV.”
4. The appeal was allowed with no order as to costs.

Case Details:

• Case Title: M/s. Surguja Bricks Industries Company v. State of Chhattisgarh & Ors.
• Case No.: Civil Appeal No. 14859 of 2025 (Arising out of SLP (Civil) No. 10039 of 2025)
• Bench: Justice Manoj Misra and Justice Ujjal Bhuyan
• Counsel for Appellant: Ms. Pooja Mehra Saigal, Senior Advocate
• Counsel for Respondents: Mr. Bishwajit Dubey, Additional Advocate General
• Citation: 2025 INSC 1456