Court directs State authorities to adhere to tender clauses ensuring equitable distribution of supply orders, emphasizing the necessity of reasoned administrative discretion.
In a significant ruling, the Jharkhand High Court has quashed the rejection of M/s. G.S. Enterprises' bid by the State of Jharkhand, mandating adherence to stipulated tender conditions. The court's decision emphasized the importance of fairness and the rule of law in administrative procedures, particularly concerning public procurement.
The case originated when M/s. G.S. Enterprises, a technically qualified bidder, was denied a supply order despite matching the L-1 bid rate in a tender for supplying Paneer and Khowa-making units across Jharkhand. The tender conditions, specifically Clauses 5.8 and 5.9 of the Notice Inviting Tender (NIT), entitle the L-1 bidder to 60% of the supply orders, with the remainder to be distributed among other qualified bidders who agree to the L-1 rate.
Despite being informed of its bid acceptance in June 2025, M/s. G.S. Enterprises faced an unexpected bid rejection in October 2025, prompting legal action. The court noted that the State's deviation from the tender conditions lacked justification and was a clear breach of established procurement protocols.
The bench, comprising Chief Justice M.S. Sonak and Justice Rajesh Shankar, underscored that public authorities do not possess unfettered discretion, highlighting the necessity for decisions to be judicious, transparent, and in the public interest. Citing the Supreme Court's precedent in Sterling Computers Limited v. M/s M&N Publications Limited, the court reiterated that legal limits on governmental discretion are essential to ensure actions are taken for the public good.
The judgment also pointed out the lack of reasons provided by the State for its decision, deeming the actions arbitrary and unsustainable. Consequently, the court quashed the October 2025 communication rejecting the bid and ordered compliance with the tender conditions, directing that 40% of the supply orders be placed with M/s. G.S. Enterprises.
This ruling reinforces the judiciary's role in overseeing administrative actions, ensuring they conform to legal standards and principles of fairness, thus safeguarding the integrity of public procurement processes.
Bottom Line:
A technically qualified bidder who matches the L-1 rate in accordance with the tender conditions must be given proportionate supply orders, and public authorities cannot exercise unfettered discretion in deviation from the tender conditions.
Statutory provision(s): Clauses 5.8 and 5.9 of the Notice Inviting Tender (NIT)
M/s. G.S. Enterprises v. State of Jharkhand, (Jharkhand)(DB) : Law Finder Doc id # 2883259
