Revenue Considerations Can't Cure Ineligibility Of Bidders: Supreme Court

The appeal before the Apex Court was filed against the order passed by the Division Bench of the Punjab and Haryana High Court by which the High Court quashed the acceptance of the technical as well as the financial bid of Micky Traders ( H1 Bidder) and directed the Punjab State Agricultural Marketing Board ( Board) and the Market Committee, Ludhiana to issue a Letter of Acceptance (LoA) in favour of the eligible tenderer.

The Division Bench of Justice K.V. Viswanathan and Justice Alok Aradhe held, “Clause 9(c)(a) in terms requires; it attributes to the H1 Bidder the institutional experience of firms with which no proved nexus exists; and it does so notwithstanding the H1 Bidder’s own acquiescence, on two prior occasions, in a contrary reading of the identical clause. No reasonable authority, applying its mind to the language it had itself prescribed, could have arrived at the conclusion that the H1 Bidder possessed the requisite experience. The interpretation is accordingly patently arbitrary and is dehors the terms of the DNIT and falls squarely within the narrow exception recognised in Kimberley Club (P) Ltd. (supra) and in Jagdish Mandal (supra). The High Court was, therefore, right in exercising the power of judicial review and in declining to extend to the Committee's interpretation the ordinary deference that authorship of a tender document commands.”

“The submission that the H1 Bidder’s bid, being higher by about Rs.1.5 crore, ought to be preferred in the interest of the public exchequer, does not assist the H1 Bidder. Revenue considerations cannot cure ineligibility. Bids can be compared only among bidders who are eligible to be compared in the first place; to hold otherwise would be to allow every eligibility condition to yield to the highest figure quoted, and would render the tender document, and the enlistment instructions framed to secure competence and accountability in the collection of public revenue, wholly illusory. The public interest that the H1 Bidder invokes is served, not disserved, by holding the Committee to the conditions it has itself prescribed”, it added.

Factual Background

The Committee had issued a Detailed Notice Inviting Tender (DNIT) inviting bids for recovery/realization of user charges for utilising Mandi infrastructure by retail and other vehicles of fruits, vegetables, eatables, etc. for a period of twelve months. Clause 11 of the DNIT required the bidders to submit the documents. The reserve price of the work was fixed at Rs.12,21,58,500. On evaluation, the technical bid of the H1 Bidder was found responsive, and its financial bid of Rs.16,51,51,000 was accepted, being the highest bid received as against the H2 Bidder's bid of Rs.15,03,33,000. The H2 Bidder addressed an e-mail to the Secretary, Tender Opening Committee, Market Committee, Ludhiana, stating that the H1 Bidder did not possess the requisite experience in the collection of parking fees or user charges and the Board had erred in issuing an Enlistment Certificate in its favour.

The H2 Bidder challenged the acceptance of the bid of the H1 Bidder before the High Court in a writ petition on the ground that the experience certificate of theH1 Bidder reflected participation in cattle fairs from December 16, 2023 to December 15, 2024 and did not evidence two years' experience of collection of user charges or parking fees immediately preceding December 31, 2025, as required by Clause 9(c)(a) of the Instructions issued by the Board. The High Court, by the impugned order, held that the technical bid of the H1 Bidder did not meet the eligibility criteria, and quashed the LoA. The Board and the Committee were directed to issue a LoA in favour of the eligible tenderer in accordance with law, and the writ petition was allowed. It was in such circumstances that the Civil Appeals arising out of the Special Leave Petitions came to be filed by the H1 Bidder and by the Board.

Reasoning

The Bench explained that the requirements in a tender notice can be classified into two categories, which include those that lay down the essential conditions of eligibility and the other which are merely ancillary or subsidiary to the main object sought to be achieved by the condition. In the first case, the authorities issuing the tender may be required to enforce the condition rigidly, whereas in other cases, it may be open to the authority to deviate from it and not to insist upon strict literal compliance of the condition.

The Bench reiterated that where upon due consideration of the tender document submitted by all the tenderers on their own merits, if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which the essential conditions were laid down, the same may not ordinarily be interfered with/

The Bench further stated that the object of Clause 9(c)(a) of the Instructions issued by the Board for enlistment of contractor firms is to ensure that the entity to which the collection of a substantial public revenue is to be entrusted has previously discharged that very kind of duty, collection on behalf of, and accountable to, a public body, and not merely some activity that happens, in passing, to involve the handling of money.

On a perusal of the facts of the case, the Bench noted that the H1 Bidder’s experience, on its own showing, lay in organising cattle fairs as a fair contractor/lessee and it did not lie in collection of user charges or parking fees as a contractual duty owed to a Government, Semi-Government or PSU body. “The two are not interchangeable, and the Committee's letter dated 09.03.2026, treating them as such without more, discloses no application of mind to the language of its own clause”, it added.

The Bench held that Clause 9(c)(a) attributes to the H1 Bidder the institutional experience of firms with which no proved nexus exists; and it does so notwithstanding the H1 Bidder’s own acquiescence, on two prior occasions, in a contrary reading of the identical clause.

Thus, finding no infirmity with the impugned order, the Bench dismissed the appeal.

Cause Title: Micky Traders v. L.R.Y. Labour Contractor & Ors. (Neutral Citation: 2026 INSC 1025)

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