C&M E-ALERT: VALIDITY OF TENDER CONDITION RESTRICTING ELIGIBILITY BASED ON THE PLACE OF SUPPLY

On 6 October 2025, the Supreme Court in Vinishma Technologies Private Limited v. State of Chhattisgarh & Ors., 2025 INSC 1182, gave an important judgement on conditions impacting the eligibility of bidders in tenders issued by state entities.  The tender was issued by Chhattisgrah for the supply of sport kits to various government schools. The condition under challenge was a requirement that the bidder should have prior experience in delivering sports kits within the state of Chhattisgarh worth INR 6 Crores in the last three financial years.

The Petitioner was a company that had supplied sport kits in various other states but was ousted from consideration as it did not meet the condition for supply within Chhattisgarh. The condition was challenged before the High Court of Chhattisgarh in a writ petition on the grounds of discrimination and unreasonableness. The High Court repelled the challenge and further held that the State had the right to impose such conditions as it deemed fit. The question squarely before the Supreme Court was whether the said condition was fair and reasonable or whether it arbitrarily excluded bidders violating Articles 14 and 19(1)(g) of the Constitution.

 FACTUAL BACKGROUND

After a review of the law governing judicial review of tender conditions, the Court found that limiting the experience requirement to supply within the state of Chhattisgarh was both irrational and disproportionate. The doctrine of “level playing field” incorporated in Article 19(1)(g) was violated by a condition that imposed an artificial barrier. The object of any classification for purposes of the tender would be to secure quality goods and services for the benefit of the public exchequer. Confining the eligibility in this manner would be both irrational to that purpose and disproportionate. The Court rejected the argument that such condition could be justified on the basis that Chhattisgarh was a Maoist affected area since the equipment was school kits, that were to be delivered all over the state and not merely the districts that were particularly impacted and the fact that the successful agency could hire the services of local agencies to help with distribution if deemed necessary.   

Vinishma Technologies Private Limited (“Appellant”) is involved in the business of supply of sports kits to various state departments of Bihar, Karnataka Gujarat, Government of NCT Delhi etc.

On 21 July 2025, the State of Chhattisgarh (“Respondent No.1”) through the Samagra Shiksha Chhattisgarh State Project Office published three tender notices (“Tender Notices”) for a value of INR 15.24 Crores, INR 13.08 Crores and INR 11.49 Crores, through the Government-e-Market Place Portal for supply of sports kits to the students of schools run by the State Government of Chhattisgarh. The sports kits were to be supplied to 5540 cluster resource centres across 33 districts of the State of Chhattisgarh.

Section III(A) of the Tender Notices provided the qualification criteria for the bidders. The Appellant was aggrieved by the tender condition that restricted participation of bidders on the basis of past supply of sports kits within the State of Chhattisgarh. The impugned tender condition (“Impugned Tender Condition”) states as follows:

“(4) Past Performance Restriction : 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 (2021-22, 2022-23, 2023-24 or 2022- 23, 2023-24, 2024-25.”

The Appellant filed three writ petitions bearing Writ Petition (C) No. 4266 of 2025, Writ Petition (C) No. 4263 of 2025 and Writ Petition (C) No. 4274 of 2025, (collectively hereinafter referred to as “Writ Petitions”) before the High Court of Chhattisgarh impugning the Tender Notices.

The High Court of Chhattisgarh upheld the Impugned Tender Condition because similar conditions had been added in tenders in other states and that the State of Chhattisgarh had the liberty to prescribe conditions to ensure that the most capable and reliant bidder is selected, for a project of substantial scale and public importance.

Aggrieved by the decision of the High Court, the Appellant filed a Special Leave Petition before the Supreme Court.

The questions before the Supreme Court was whether the said condition was fair and reasonable or whether it arbitrarily excluded bidders violating Articles 14 and 19(1)(g) of the Constitution.

The Appellant submitted that the Impugned Tender Condition is in contravention of Articles 14 and 19(1)(g) of the Constitution of India, as it permits only suppliers from the State of Chhattisgarh to participate and discourages wider participation. The State defended the judgement of the High Court and sought to argue that the Impugned Tender Condition had been incorporated due to the peculiar socio economic conditions in Chhattisgarh.

THE JUDGEMENT

The Court referred to the case of Ramana Dayaram Shetty v. International Airport Authority of India & Ors, (1979) 3 SCC 489, to reiterate that activities of the Government having a public element should be reasonable and fair. It was also held in this case that while the discretion of the Government is wide, the same is not unlimited and cannot be exercised in an arbitrary manner.

The Court stated that the principle of non-discrimination enshrined in Article 14 has to be read along with the rights under Article 21 of the Constitution of India, which would include the right to a fair opportunity. The Court also relied on the case of UOI & Ors. v. Bharat Forge Ltd. & Anr, (2022) 17 SCC 188, for the proposition that a level playing field permits equally placed competitors to bid and that the same encourages competition and serves the larger public interest.

The Court held that the eligibility criteria should have a nexus with the object for the issuance of the Tender Notices i.e. the supply of sports kits to encourage wide participation and secure a fair price. The Impugned Tender Condition excluded bidders that are technically and financially sound but have not supplied sports goods to the state agencies of Chhattisgarh, which has no reasonable nexus with the object.

By restricting the eligibility to only one state, the Court held that the Impugned Tender Condition is arbitrary and disproportionate and thus in violation of the constitutional guarantees under Article 14 and 19(1)(g).

The Court also rejected the contentions of the Respondents stating that Tender Notices were issued for the purpose of supplying sports kits and not security sensitive equipment for it to be affected by Maoists. Further, only certain areas of the state of Chhattisgarh were affected by Maoists acts, and it would be incorrect to treat the entire state as affected by Maoist activities and exclude eligible bidders. The Court also stated that a bidder not well versed with the topography may always engage a local supply chain for the supply of sports kits.

C&M COMMENT:

The judgement in Vinishma Technologies highlights the fact that while the court is reluctant to interfere in tender conditions normally under the power if judicial review, it has no hesitation in striking down tender conditions that are parochial and those which cannot be justified as per the stated object of the tender in question. The judgement is a welcome reminder that judicial restraint does not imply judicial abdication of tender conditions that are unreasonable and unsound.

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