Exclusion of disclosed assets on purely hyper-technical grounds during tender evaluation is arbitrary and vitiates the decision-making process.

In brief

The question

1. Whether the respondent’s exclusion of the Associate's immovable properties based on the absence of a specific valuation date in the reports was arbitrary or hyper-technical.

The court held

The Court allowed the petition in part, quashing the decision to declare the Petitioner "Technically Non-Responsive". It held that while the computation of "Component B" was valid, the exclusion of the Associate’s immovable properties under "Component A" was arbitrary.

It also directed

The Court directed NHAI to recompute the Petitioner’s Assessed Available Net Worth by including the immovable properties disclosed in the original bid and to proceed in accordance with law. Holding: Arbitrary exclusion of assets based on non-mandatory procedural formats vitiates the tender evaluation process.

01Facts

The Petitioner challenged an order dated 23.03.2026 passed by the National Highways Authority of India (NHAI) rejecting its technical bid for a highway upgradation project in Bihar.

pp. 1-2

Under the Request for Proposal (RFP), bidders were required to demonstrate a minimum "Assessed Available Net Worth" of ₹152.25 Cr. as of 31.03.2025.

p. 19

The Petitioner included the net worth of its Associate, Ms. Krishna Pandey, supported by a Statutory Auditor’s certificate and valuation reports for 20 immovable properties.

p. 3, 22

NHAI rejected the bid because the valuation reports (dated 18.08.2025) did not explicitly state that the value was assessed as of 31.03.2025, leading NHAI to exclude assets worth ₹87.48 Cr.

p. 5, 24

Consequently, NHAI calculated the Petitioner’s net worth at ₹148.812 Cr., falling short of the threshold by approximately ₹3.44 Cr., and awarded the contract to Respondent No. 2.

p. 7, 14

02Issues

i.1. Whether the respondent’s exclusion of the Associate's immovable properties based on the absence of a specific valuation date in the reports was arbitrary or hyper-technical.

p. 21, 27

ii.2. Whether NHAI was justified in applying the MoRTH Circular dated 06.11.2025 to compute "Component B" (existing commitments).

p. 33

03Law Applied

The court primarily applied Article 226 of the Constitution regarding judicial review of administrative action, emphasizing that while courts exercise restraint in contractual matters, they must intervene to prevent arbitrariness or irrationality.

pp. 16-17

It relied on Tata Cellular v. Union of India and Jagdish Mandal v. State of Orissa to define the scope of review.

p. 17, 18

For tender interpretation, the court applied the principle from Shanti Construction (P) Ltd. v. State of Odisha, which mandates that tender conditions be interpreted to advance genuine competition and maximize public value.

p. 31

Clause 2.1.24 of the RFP was applied to justify the use of government circulars (MoRTH) prevalent on the date of the Letter of Award.

p. 33

Provisions in the judgment · 5

Fugitive Economic Offenders (Procedure for Sending Letter of Request to Contracting State) Rules, 2018 Section 2.1.18Section 2.1.24Section 2.2.2Section 2.2.4Section 2.14.3.1

04Reasoning

The Court observed that Clause 2.2.4(ii) of the RFP only required a Statutory Auditor’s certificate specifying net worth as of the preceding financial year and did not mandate a specific format for internal valuation reports.

pp. 28-29

The Court reasoned that since the existence and ownership of the properties as of 31.03.2025 were undisputed, excluding the total value of these assets (₹87.48 Cr.) because of a missing date on a supporting document—when the recorded shortfall was a mere ₹3.44 Cr.—was disproportionate and "elevated form over substance".

p. 30, 32

Such a hyper-technical approach restricted competition, especially as the Petitioner claimed a lower financial bid than the successful bidder.

p. 32

Regarding "Component B," the Court found NHAI’s reliance on the MoRTH Circular dated 06.11.2025 valid under Clause 2.1.24 of the RFP, as the circular was issued by a relevant government agency prior to the award.

pp. 33-34