The Supreme Court emphasized that judicial review in tender matters ensures fairness and non-arbitrariness under Article 14. It held that misinterpretation of a tender condition, which wrongly excludes the highest bidder and deprives the state of revenue, vitiates the decision-making process. The court underscored the state’s duty to maximize public value in natural resource auctions.
Facts Of The Case:
The case involved a public auction for a five-year sand quarry lease in Odisha. The appellant, M/s Shanti Construction Pvt. Ltd., was the highest bidder but its bid was rejected by the Tender Committee for allegedly failing to comply with Rule 27(4)(iv) of the Odisha Minor Mineral Concession Rules, 2016. The rule required submission of an Income Tax Return for the “previous Financial Year.” The appellant had submitted its return for FY 2020-21, but the Committee insisted on the return for FY 2021-22, which was not yet due for filing by a company. A lower bid was accepted. The Orissa High Court upheld the rejection but directed the successful bidder to match the appellant’s higher rate. Both parties appealed to the Supreme Court. The core dispute was the interpretation of “previous Financial Year” and whether the appellant’s bid was wrongfully declared non-responsive.
Procedural History:
The procedural history began with the unsuccessful bidder (appellant) filing a writ petition before the Orissa High Court on August 10, 2022, challenging the tender award. The High Court, by its judgment dated March 1, 2023, upheld the bid’s rejection but directed the successful bidder to match the appellant’s higher quoted rate to prevent loss to the public exchequer. Dissatisfied, both parties filed Special Leave Petitions before the Supreme Court. The Court granted leave and issued an interim status quo order on March 29, 2023. Ultimately, the Supreme Court allowed the appeals, quashed the High Court’s judgment, and directed the issuance of a fresh auction notice.
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Court Observation:
The Supreme Court observed that the Tender Committee adopted a narrow and erroneous interpretation of “previous Financial Year” under Rule 27(4)(iv). It held that for a tender floated in July 2022, the relevant financial year for a company was 2020-21, as the return for 2021-22 was not yet due. This misinterpretation wrongfully excluded the highest bidder, diminished competition, and deprived the state of legitimate revenue, thereby vitiating the decision-making process on grounds of arbitrariness. The Court emphasized that tender conditions must be construed to advance the object of maximizing public value, especially for natural resources.
Final Decision & Judgement:
The Supreme Court allowed the appeals, quashed the impugned High Court judgment, and set aside the tender award. It directed the Tehsildar to issue a fresh auction notice for the sand quarry lease as per the rules. All parties, including the original bidders, were permitted to participate. The State was ordered to refund the amount deposited by the successful bidder within 30 days, along with interest at 6% per annum from the date of deposit.
Case Details:
Case Title: M/S Shanti Construction Pvt. Ltd. vs. The State of Odisha & Ors. Citation: 2025 INSC 1295 Civil Appeal No.: (@ SLP(C) No. 5829 of 2023) Date of Judgement: November 7, 2025 Judges/Justice Name: Justice Alok Aradhe
Download The Judgement Here