SC Quashes Arbitrary Bid Rejection to ensure Fair Play in Public Tenders
On 11.7.2022, the Tahsildar issued the tender notice for the works of extraction of sand on lease for five years.
Clause 5 of the tender notice incorporates the amended Rule 27(4)(iv) of the Odisha Minor Mineral Concession Rules, 2016 and require the bidder either to submit IT return of previous “financial year” or bank guarantee valid for 18 months.
The bid of the highest rate tender was rejected as non-responsive for non-filing of IT return for 2021-2022. However, the said tenderer had submitted the return of 2021-2022 since the tender was floated in the midst of the year.
A public tender is not a private bargain. It is instrument of governance, a mechanism through which the State discharges its solemn duty as trustee of public wealth. Its purpose is not merely procedural compliance but maximization of public value through processes i.e. fair, transparent and competitive.
The obligation of the Tendering Committee is two-fold – to interpret its own terms with consistency and to ensure that such interpretation advances, not defeats the object of tender.
When an interpretation of a tender condition narrows interpretation and excludes the highest bidder on a ground unsupported by law, the decision making process is vitiated.
The interpretation of the terms of tender must, therefore, serve the object and purpose of the tender mainly to maximize the revenue of the State, when it deals with a natural resource.
It is well settled that tenders and public auctions, especially for natural resources, are not mere commercial transactions but an exercise in public trust. The State as custodian of natural wealth is obligated to secure the best value for public resources consistent with the principles of fairness and transparency.
Judgment dated 7.11.2025 of the Supreme Court of India in SLP (Civil) No.5829 of 2023 of M/s Shanti Construction Pvt Ltd Vs. The State of Odisha and others with connected matter
