Constitutional Courts Cannot Pre-Empt Executive Decisions In Tender Matters Through Ex-Ante Judicial Review: Supreme Court

The Court was hearing civil appeals arising out of a judgment of the Gujarat High Court, which had set aside the award of a contract and directed its grant to a competing bidder based on marginal differences in evaluation scores.

A Bench of Justice P.S. Narasimha and Justice Alok Aradhe observed: “while exercising judicial review of contractual matters, constitutional courts do not exercise, should not exercise ex-ante jurisdiction to pre-empt executive actions.”

Senior Advocate D.V.S. Somayajulu appeared for the appellant, while Advocate Priyabrat Tripathy appeared for the respondents.

Background

The dispute arose from a public tender floated by GSPC Pipavav Power Company Limited for the operation and maintenance of a combined cycle power plant.

The tender followed a Quality and Cost Based System (QCBS), assigning 70% weightage to technical evaluation and 30% to financial evaluation. Three bidders qualified for final evaluation, including the appellant and the writ petitioner.

Upon evaluation, the appellant scored higher overall and was declared the successful bidder. A Letter of Award was issued, followed by execution of the contract, and the appellant commenced performance of the contract.

The writ petitioner challenged the tender process before the High Court, alleging arbitrariness. During proceedings, the High Court directed re-evaluation of technical marks, resulting in equal technical scores between the competing bidders.

Relying solely on a marginal difference in financial scores, the High Court set aside the award of the contract to the appellant and directed that the contract be granted to the writ petitioner.

This led to the present appeals before the Supreme Court.

Court’s Observation

The Court reiterated settled principles governing judicial review in contractual and tender matters.

Relying on precedents including Afcons Infrastructure (2016) and Montecarlo Ltd. (2016), the Court held that interference is permissible only where the decision-making process is tainted by mala fides, arbitrariness, or perversity, while reiterating that “a mere disagreement with the decision-making process… is no reason for a constitutional court to interfere.”

The Court underscored the principle that the owner of the project must be given flexibility in decision making, while observing that “the owner should be allowed to carry out the purpose and there has to be allowance of free play in the joints.”

The Court held that tender processes involving complex technical and financial considerations require a degree of flexibility that cannot be curtailed by rigid judicial scrutiny.

The Court found that the High Court had exceeded its jurisdiction by effectively undertaking a fresh evaluation of bids. It noted that after re-evaluation, both bidders had equal technical scores and the difference in financial scores was marginal.

Despite this, the High Court interfered solely based on a minuscule difference, without finding any arbitrariness or illegality in the process. The Court held that such interference was unwarranted, particularly when the High Court itself had recorded that there was no arbitrariness in the actions of the tendering authority.

The Court noted that the High Court had failed to consider the practical needs of the project owner. It was observed that the tender had been initiated in January 2025, the Letter of Award was issued in June 2025, and significant time had already elapsed due to litigation. The Court emphasised that delays in the execution of public contracts can have serious implications, including operational inefficiencies and financial losses.

The Court further observed that the difference between the competing bidders was extremely minimal and arose in a highly competitive bidding environment. It held that such marginal differences cannot justify judicial interference, particularly when the decision-making process is otherwise valid.

The Court highlighted the need for a balanced approach in judicial review. It observed that courts must ensure fairness and legality in the process, but at the same time must not lose sight of the purpose of the tender and the practical realities involved.

“While scrutinising the process reason and integrity so that the action is not fraught with illegality or arbitrariness. Judicial review must balance justice with flexibility, and this would require the courts to exercise a nuanced discretion between multiple outcomes and binary choices. In the process, the judicial wisdom to subserve the purpose and object of the tendering process should not be lost. Without this approach, it will be difficult to balance certainty in the market with fair play in action, in other words, to maintain the equilibrium between the need for order and quest for justice”, the Bench remarked.

Conclusion

The Supreme Court concluded that there was no justification for the High Court to interfere with the award of the contract in favour of the appellant. It upheld the Letter of Award and the contract, and set aside the judgment of the High Court directing the grant of the contract to the writ petitioner.

The appeal was allowed accordingly.

Cause Title: M/s Steag Energy Services (India) Pvt. Ltd. v. GSPC Pipavav Power Company Ltd. & Ors. (Neutral Citation: 2026 INSC 295)

Appearances

Appellant: D.V.S. Somayajulu, Senior Advocate; A.V.S. Subramanyam, Niraj Kumar, Advocates; P. Srinivasan, AOR

Respondents: Priyabrat Tripathy, Advocate; Prabhleen Apoorv Shukla, AOR; Arvind Sangwan, Senior Advocate; Deepak Swami and team of counsel

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