Quashing of Tender Conditions for Arbitrariness and Restricting Fair Competition via Discrepant GeM Categorization

The Petitioner, a Micro Enterprise shoe manufacturer, challenged Bid Document No. GEM/2026/B/7621416 dated 04.06.2026 issued by Respondent No. 2 for the procurement of 12.40 lakh pairs of Gents Casual Canvas Walking Shoes

The Petitioner alleged that the tender conditions were tailor-made to favor large entities by prescribing an incorrect BIS standard (Safety Footwear standard IS 15298 instead of Casual Canvas), requiring excessive turnover and machinery ownership, and failing to provide a pre-bid meeting

Furthermore, the product category on the GeM Portal was changed from "Walking Shoes" (used in 2024) to "Safety Footwear," making it technically impossible for the Petitioner to submit a bid for the actual product required

Though the Respondents decided the Petitioner’s representation on 23.06.2026, they could not justify the stringent deviations from previous tender criteria

1. Whether the technical specifications and eligibility criteria in the impugned bid document were arbitrary, discriminatory, and violative of Article 14 of the Constitution of India

2. Whether the discrepancy in product categorization on the GeM Portal effectively excluded eligible manufacturers from participating in the bidding process

The Court primarily applied Article 14 of the Constitution of India, which mandates fairness, transparency, and non-arbitrariness in State action, including public procurement

It also considered the principles of the MSMED Act, 2006 and the Public Procurement Policy, 2012, which provide protections for Micro and Small Enterprises

While acknowledging that the State has the competence to prescribe technical standards under the Chhattisgarh Store Purchase Rules, 2002, such conditions must be rational, proportionate, and not designed to restrict fair competition

The Court found that the Respondents failed to provide a rational basis for significantly enhancing technical and financial eligibility criteria compared to previous identical procurements

Specifically, the Court noted that the procurement was for "Casual Canvas Walking Shoes," yet the tender required compliance with "Safety Footwear" BIS standards (IS 15298)

The Court observed that since the correct product category was unavailable on the GeM Portal and a "nearest" but incorrect category was selected, the system would mechanically prevent eligible manufacturers of canvas shoes from successfully submitting bids

The Court concluded that in the absence of cogent material justifying these stringent and mismatched conditions, the criteria were arbitrary and served to stifle healthy competition

The Court quashed Bid Document No. GEM/2026/B/7621416 dated 04.06.2026 and the accompanying Additional Terms and Conditions (ATC). The Respondents were directed to issue a fresh Notice Inviting Tender (NIT) with terms and conditions that comply with statutory provisions and the governing principles of public procurement