Court orders reconsideration of Sapphire Media's bid after finding irrational rejection of solvency certificates
In a significant ruling, the Delhi High Court has set aside the disqualification of Sapphire Media Limited's technical bid in a tender process conducted by NBCC Services Limited. The tender involved interior and fitout work for the India International Arbitration Centre, with an estimated cost of Rs. 31.64 crore.
The disqualification was communicated to Sapphire Media via email on March 28, 2026, citing non-compliance with the eligibility criteria. The petitioner challenged this decision, arguing that their revised solvency certificates submitted during the clarification stage met all stipulated conditions and exceeded the financial threshold required by the Notice Inviting Tender (NIT).
The court observed that the rejection of Sapphire Media's bid was based on hyper-technical grounds, which undermined the tender process's objective of maximizing public value through competitive bidding. The judgment highlighted the importance of judicial review in tender matters, stating that courts should prevent arbitrariness and irrationality in decision-making processes.
The bench, comprising Justices Anil Kshetarpal and Amit Mahajan, emphasized that while the terms of invitation to tender primarily fall within the domain of executive discretion, judicial review is warranted if decisions are marred by arbitrariness or irrationality.
Sapphire Media had initially submitted two solvency certificates, which NBCC Services claimed did not meet the requirement of being issued within six months from the tender submission deadline. Following a request for clarification, Sapphire Media submitted two revised certificates, one from Kotak Mahindra Bank and another from Punjab National Bank (PNB).
The court found that the certificate from Kotak Mahindra Bank, dated March 23, 2026, fulfilled the NIT's criteria, as it was issued within six months from the tender submission deadline. The court dismissed NBCC's argument that the certificate should reflect solvency from September 23, 2025, to March 23, 2026, noting that such a requirement was not clearly stipulated in the NIT.
Regarding the PNB certificate, which NBCC admitted met the criteria, the court criticized its rejection on the grounds that it was a "new document" not part of the original tender submission. The court stated that inviting the petitioner to submit revised documents implied acceptance of such clarifications, and rejection on hyper-technical grounds was unjust.
The court directed NBCC Services to reconsider Sapphire Media's bid in accordance with the NIT's conditions and take appropriate action to award the tender to the best-suited bidder.
This judgment reinforces the principle that tender processes should be fair, transparent, and competitive, and that arbitrary exclusions can defeat the purpose of deriving maximum benefit for the public exchequer.
Bottom line:-
Judicial review in tender matters is permissible to prevent arbitrariness, irrationality, or hyper-technical disqualifications that defeat the objective of maximizing public value through competitive bidding.
Statutory provision(s): Judicial review principles, Tender process requirements, Solvency certificate guidelines
M/s Sapphire Media Limited v. NBCC Services Limited, (Delhi)(DB) : Law Finder Doc id # 2895890
