Tender authorities must honor MSME price-matching preference despite GeM’s inability to process it electronically.

SAIL issued a tender through the Government e-Marketplace (GeM) on 5 December 2025 for handling, processing and management of raw material, scrap and slag at the IISCO Steel Plant.

The tender conditions provided that, where the lowest bidder was a non-MSE and the order could not be split, the entire order would be placed with an eligible MSE whose quoted price was within 15% of the L1 price, subject to the MSE matching the L1 price.

The writ petitioner, Metal Traders Processing Company, was an MSE holding a valid Udyam registration certificate.

After the reverse auction, United Air Express was ranked L1, FSNL Private Limited L2, and the writ petitioner L3.

SAIL sought clarification from GeM because the GeM portal did not provide a price-matching option for the relevant ITC-enabled bid.

GeM informed SAIL that MSE purchase preference was not available through the system and advised SAIL to conduct the price matching with eligible MSEs offline.

No such opportunity was given to the writ petitioner.

Although a letter of award was issued to United Air Express, SAIL continued the existing contract up to 30 September 2026.

The learned Single Judge directed SAIL and the concerned authorities to invite the writ petitioner to match the L1 price and, if it did so in accordance with the procurement policy, to take appropriate consequential action, including recalling the work order issued to United Air Express.

United Air Express preferred the present appeal, contending that the Single Judge had impermissibly altered the tender process and undermined the sanctity of the reverse auction.

Whether SAIL and GeM committed procedural impropriety by failing to treat the writ petitioner as an eligible MSE and by denying it the opportunity to match the L1 price in accordance with the tender conditions?

Whether the High Court, in exercise of judicial review under Article 226, could interfere with the award of the contract on the ground that the tender conditions had not been followed?

Whether the issuance of the letter of award in favour of United Air Express created an enforceable right to execute the contract despite the alleged violation of the tender conditions?

The Court applied the tender conditions incorporating the Government of India’s MSE procurement preference policy, particularly the requirement that, where the order could not be split and the L1 bidder was a non-MSE, an eligible MSE quoting within L1 plus 15% had to be given an opportunity to match the L1 price.

It also referred to Rule 149 of the General Financial Rules, 2017, which governs procurement by government authorities through GeM.

Under Article 226, judicial review in tender matters is concerned principally with the legality and fairness of the decision-making process, rather than with substituting the court’s commercial judgment for that of the tendering authority.

The Court relied on Tata Cellular v. Union of India, (1994) 6 SCC 651, and Silppi Constructions Contractors v. Union of India, (2020) 16 SCC 489, for the principle that judicial intervention is permissible where there is an infirmity in the tender decision-making process.

A contract awarded in breach of the express tender conditions cannot create a legally protected right in favour of the successful bidder.

The tender expressly incorporated MSE purchase preference and required an eligible MSE whose bid was within 15% of L1 to be given an opportunity to match the L1 price.

The writ petitioner satisfied the relevant MSE eligibility requirements and its bid fell within the prescribed price band.

The communications between SAIL and GeM demonstrated that both authorities were aware that the GeM portal lacked an electronic price-matching mechanism and that GeM had specifically advised SAIL to complete the process offline.

SAIL nevertheless failed to offer the writ petitioner the contractually stipulated opportunity.

The Court treated this omission as a violation of the tender conditions and a gross procedural infirmity, not as a permissible alteration of the commercial terms of the tender.

The Court rejected the appellant’s contention that the direction to undertake price matching undermined the reverse auction.

The direction merely required compliance with a pre-existing tender condition that had not been implemented because of a technical limitation of the GeM portal.

Since the appellant participated in the tender with knowledge of the price-matching provision, it could not claim a legally protected right founded on an award that was itself made contrary to the tender terms.

Any loss suffered by the appellant through mobilisation or overhead expenditure could be pursued as a claim for damages, but it did not prevent judicial correction of the defective procurement process.

The award in favour of United Air Express was therefore procedurally vitiated, and no enforceable right to execute the work arose from that award.

The appeal and the connected application were dismissed, and the Single Judge’s direction requiring SAIL to invite the writ petitioner to match the L1 price was upheld.

The subsequent request by United Air Express for stay of the judgment was also rejected.