Rejection of Tenders on Hyper-Technical Grounds Defeats the Objective of Maximizing Public Value and Competitive Bidding

In brief

The question

1. Whether the Respondent's rejection of the Kotak Mahindra Bank Solvency Certificate based on the underlying date of financial data was legally sustainable under the NIT terms.

The court held

The Court held that the disqualification was arbitrary and lacked transparency.

It also directed

It set aside the Petitioner's disqualification communicated on 28.03.2026. The Court directed Respondent No. 1 to consider the Petitioner’s bid in accordance with the NIT conditions and proceed to award the tender to the best-suited bidder. The writ petition was allowed.

01Facts

The Petitioner challenged its technical disqualification from a tender (No. NSL/CEO/IIAC/NIT/2026/845) issued by Respondent No. 1 for interior work at the India International Arbitration Centre.

¶ 1, 2.1

The NIT required a Bank Solvency Certificate for at least 40% of the estimated project cost, issued within six months of the tender submission date.

¶ 2.1

The Petitioner’s initial submission included two certificates: one addressed to a different entity and one dated beyond the six-month window.

¶ 2.2

On 24.03.2026, the Respondent sought clarifications and "revised" certificates.

¶ 2.2

The Petitioner submitted two new certificates: one from Kotak Mahindra Bank (dated 23.03.2026) and one from PNB (dated 11.02.2026).

¶ 2.3

The Respondent disqualified the Petitioner on 28.03.2026, arguing that the Kotak certificate relied on older financial data (March 2025) and the PNB certificate was an inadmissible "new" document under Note 4 of Clause 19.

¶ 10, 11, 13

02Issues

i.1. Whether the Respondent's rejection of the Kotak Mahindra Bank Solvency Certificate based on the underlying date of financial data was legally sustainable under the NIT terms.

¶ 21, 26

ii.2. Whether a fresh solvency certificate submitted during the clarification stage can be rejected as a "new document" when its submission was invited by the tendering authority.

¶ 27, 28

03Law Applied

The court followed the principles of judicial review in contractual matters established in Tata Cellular v. Union of India, emphasizing that while courts should exercise restraint, they must interfere to prevent arbitrariness, irrationality, or favoritisim.

¶ 15

It relied on Jagdish Mandal v. State of Orissa, which holds that the purpose of judicial review is to check if a decision is made "lawfully" and serves public interest.

¶ 15

The court applied the doctrine from Shanti Construction (P) Ltd. v. State of Odisha and MDC Pharmaceuticals Ltd. v. Union of India, highlighting that the primary objective of a tender is to maximize public value, and bidders should not be excluded on hyper-technical or myopic grounds.

¶ 9, 29

Provisions in the judgment · 3

Tender No. NSL/CEO/IIAC/NIT/2026/845 Section 2(B)(iii)Section 19Section 20

04Reasoning

The Court found the NIT’s requirement that a certificate be "issued within 6 months" to be vague, as it did not explicitly state that the underlying financial data must also be from that period.

¶ 21

Since the Kotak certificate was actually issued on 23.03.2026, it technically satisfied the NIT's literal requirement; the Respondent's attempt to disqualify it based on "base data" was an impermissible post-facto addition to the tender terms.

¶ 25, 26

Regarding the PNB certificate, the Court reasoned that since the Respondent had expressly invited "revised" solvency documentation via its communication dated 24.03.2026, it could not subsequently reject a valid certificate merely because it was "new".

¶ 28

The Court characterized the Respondent's stance as "hyper-technical," noting that such an approach defeats the objective of fair and competitive bidding by excluding a potentially lower bidder (the Petitioner's bid was approximately ₹1.13 crore lower than Respondent No. 2's).

¶ 9, 28, 29