The Supreme Court of India, in a judgment delivered by a bench of Justice Surya Kant and Justice Joymalya Bagchi, has ruled that a tendering authority cannot reject a technical bid on the ground that a ‘haisiyat praman patra’ (capacity/solvency certificate) was not issued by a District Magistrate (DM), if the Notice Inviting Tender (NIT) itself did not explicitly specify such a requirement.
The Court held that tender conditions must be “clear and unambiguous” and new grounds for rejection cannot be introduced during judicial proceedings.
Background of the Case
The dispute arose from a tender floated by the 1st respondent, Krishi Utpadan Mandi Parishad, to let out a banquet hall/terrace lawn for 10 years. The NIT prescribed a two-stage bidding process, starting with a technical bid. Clause 18 of the NIT mandated that a bidder must submit a ‘haisiyat praman patra’ of a minimum of 10 crores with the technical bid.
The appellant, Kimberley Club Pvt. Ltd., submitted its bid along with the 5th respondent (who was ultimately the successful bidder). However, the appellant’s technical bid was disqualified by the Mandi Parishad. The reason provided for the disqualification was that the ‘haisiyat praman patra’ submitted by the appellant was issued by a private architect and not by a District Magistrate.
The appellant, claiming to be the highest bidder, challenged this disqualification by way of a writ petition before the Allahabad High Court, Lucknow Bench. The High Court dismissed the petition on September 7, 2021, holding that the valuation certificate from a private architect “could not be treated as a ‘haisiyat praman patra’, i.e., solvency certificate which is always issued by the office of District Magistrate.” This High Court order was subsequently challenged by the appellant before the Supreme Court.
Arguments of the Parties
The appellant strenuously argued before the Supreme Court that “nothing in the NIT necessitated that ‘haisiyat praman patra’ be issued by a District Magistrate.” It contended that the certificate was issued by an experienced valuer empanelled with the Income Tax Department and was therefore valid. The certificate assessed the value of the asset at around 199 crores, with the appellant holding a 76.09% share, far exceeding the 10 crore requirement.
In rebuttal, the 1st respondent-Mandi Parishad referred to a Uttar Pradesh government notification dated October 29, 2018, which lays down the procedure for the issuance of a ‘haisiyat praman patra’ by a District Magistrate. The respondent contended that Clause 18 required such a certificate, not a valuation certificate from a private valuer, and noted that all other bidders had submitted DM-issued certificates.
The Mandi Parishad also raised a new objection in its counter-affidavit, arguing that the certificate failed to disclose encumbrances, if any, on the asset and thus could not indicate the bidder’s net worth.
The Court’s Analysis
The Supreme Court began its analysis by noting the limited scope of judicial review in tender matters, referencing Tata Cellular v. Union of India, (1994) 6 SCC 651, stating that a court would only interfere if a decision is “dehors the terms of the NIT or is patently arbitrary.”
Analyzing the tender document, the bench found: “Having scanned the NIT, we are of the considered view that neither Clause 18 nor any other condition specifies that the ‘haisiyat praman patra’ submitted by a prospective bidder must be issued only by a District Magistrate…”
The judgment emphasized that tender conditions must be explicit. Citing Maha Mineral Mining & Benefication Pvt. Ltd. v. Madhya Pradesh Power Generating Co. Ltd. & Anr., (2025) SCC Online SC 1942, the Court observed, “It is trite that the terms of an NIT must be clear and unambiguous.” It held that if the Mandi Parishad “intended that ‘haisiyat praman patra’ must be issued by District Magistrate alone, it ought to have specified so in the NIT conditions.”
The Court was “unimpressed” by the submission that this condition was implied, noting that the Mandi Parishad is a statutory body constituted under the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964, and not a government department to which the 2018 notification would be “per se applicable.”
Furthermore, the Court addressed the respondent’s new objection regarding encumbrances, noting it was “taken for the first time in the judicial proceeding” and “was not a ground for rejection of the technical bid.” The judgment pointed to the respondent’s own counter-affidavit (paragraph 8) which “unequivocally states” the rejection was “on the ground that they had not submitted required certificate issued by a District Magistrate”.
Invoking the principle from Mohinder Singh Gill & Anr. v. The Chief Election Commissioner, New Delhi & Ors., (1978) 1 SCC 405, the Court stated, “There is no cavil that an order of rejection must be sustained on grounds stated therein and additional grounds cannot be subsequently pressed into service to justify such rejection.”
While acknowledging that ‘haisiyat’ (defined by the Oxford Hindi-English dictionary as “capacity, ability, means or resources”) implies net worth, the Court found the bid was not rejected on that basis. It concluded that “if the 1st respondent-Mandi Parishad doubted that the asset was encumbered it ought to have sought clarification from the appellant on such score before rejecting the bid.”
The Court’s final opinion was that the “rejection of appellant’s technical bid on ground that appellant’s certificate was not issued by District Magistrate is dehors the terms of the NIT and is liable to be quashed.”
The Decision
The Supreme Court set aside the impugned order of the Allahabad High Court. The matter was remanded to the 1st respondent-Mandi Parishad with directions to “reconsider the technical bid of the appellant.”
The Mandi Parishad must now determine if “the net worth of the asset (free of encumbrances, if any) disclosed in the valuation certificate submitted by appellant meets the requirement of Clause 18 of the NIT.”
If the technical bid is accepted, the Mandi Parishad is directed to hold “due negotiations between appellant and the 5th respondent (successful bidder)” and “decide whether remainder of contract be awarded to the appellant or in the event 5th respondent matches the financial bid or enhanced offer of the appellant, permit the 5th respondent to continue the contract for the remaining period.”
The appeal was disposed of with these directions.
