JUDICIAL INTERFERENCE IN TENDER ELIGIBILITY CRITERIA IS IMPERMISSIBLE UNLESS ACTION IS PROVABLY ARBITRARY, MALAFIDE, OR TAILOR-MADE

The Steel Authority of India Limited (SAIL) floated a tender for the supply of 92,500 MT of coke breeze for its plants in West Bengal and Odisha

Clause 5(2)(b) of the tender required bidders to have prior experience in supplying minimum quantities of the material specifically via Railway Rakes

The writ petitioners (respondents herein) challenged this condition before a Single Judge, alleging it was "tailor-made" to favor a specific supplier and excluded MSMEs

The Single Judge allowed the writ petition, holding that the "rail-only" experience was unjustifiable as quality/quantity could be checked at the delivery point

SAIL appealed, arguing the condition was a strategic logistical and quality-control requirement

1. Whether the High Court has territorial jurisdiction to entertain the writ petition when the tender was issued from Rourkela but delivery was in West Bengal

2. Whether the eligibility criterion requiring prior experience of supply by rail is arbitrary, discriminatory, or "tailor-made" under Article 14 of the Constitution

3. Whether the court can interfere with the technical/logistical terms of a commercial tender set by an expert authority

The court applied the principle of limited judicial review in contractual matters, emphasizing that the author of the tender is the best judge of its requirements

It relied on Silppi Constructions Contractors v. Union of India, which mandates judicial restraint unless the decision is palpably arbitrary

The court followed Michigan Rubber (India) Ltd. v. State of Karnataka and Jagdish Mandal v. State of Orissa, establishing that tender conditions are amenable to review only if they are malicious, intended to favor someone, or so irrational that no responsible authority could reach them

It further applied the "Wednesbury principle" of reasonableness and noted that Article 19(1)(g) is subject to reasonable restrictions in public interest

The Court found that the Single Judge erred by substituting his own logic for that of the expert authority

SAIL provided detailed justifications for the rail-transport experience, including the prevention of pilferage, cost-effectiveness, and preservation of material quality (avoiding "fines" caused by truck vibrations)

The Court reasoned that eligibility criteria are prospective filters to ensure capacity and cannot be replaced by the mere right to reject poor quality at the delivery point, especially when continuous supply is vital for plant production

The Court rejected the "tailor-made" allegation, noting that six different firms had participated in a previous tender with the same condition, proving it was not designed for a single entity

The Court held that a shift from past practices is a legitimate exercise of operational learning and does not equate to arbitrariness

The Court held that the "rail-only" experience criterion was a reasonable, non-discriminatory condition linked to the objective of efficient industrial procurement

The court upheld the legality of Clause 5(2)(b) and directed the tender process to proceed based on the original terms; the question of territorial jurisdiction was left open as the matter was decided on merits