Supreme Court Quashes State-Specific Tender Condition: Upholds Level Playing Field in Government Contracts
In a landmark judgment that reinforces constitutional principles of equality and free trade, the Supreme Court of India has struck down a controversial tender condition that restricted bidding for sports kits supply to only those companies with prior business experience within Chhattisgarh state. The case involved Vinishma Technologies Pvt. Ltd., an experienced supplier excluded from participating in a Rs. 40 crore tender process due to a condition requiring Rs. 6 crore worth of previous business with Chhattisgarh government agencies. This ruling represents a significant victory for businesses seeking to participate in government procurement across state boundaries and establishes important limitations on how states can frame tender conditions.
The Tender Controversy and Legal Challenge
The dispute began when the Samagra Shiksha Chhattisgarh State Project Office published three tender notices on July 21, 2025, for supplying sports kits to students in government schools across Chhattisgarh. The tender involved supplying sports kits to 5540 cluster resource centers spread across all 33 districts of the state, with total contract values of Rs. 15.24 crores, Rs. 13.08 crores, and Rs. 11.49 crores respectively.
Vinishma Technologies Pvt. Ltd., the appellant company, claimed substantial experience in supplying sports kits to various state governments including Bihar, Karnataka, Gujarat, and Government of NCT Delhi. However, the company found itself automatically disqualified due to condition No. 4 in the tender document, which stated: “Bidders must have supplied sports goods worth at least Rs.6.00 crores (cumulative) to State Government agencies of Chhattisgarh in the last three financial years (2021-22, 2022-23, 2023-24 or 2022-23, 2023-24, 2024-25).”
The company submitted a representation on July 29, 2025, challenging this condition as arbitrary and exclusionary. When this representation went unanswered, the company filed three writ petitions before the Chhattisgarh High Court. During the pendency of these petitions, the state authorities deleted some other contested conditions but retained the crucial condition No. 4 regarding past performance within Chhattisgarh.
The High Court’s Decision and Constitutional Challenge
The Division Bench of the Chhattisgarh High Court, through orders dated August 11 and 12, 2025, dismissed the writ petitions. The High Court held that the impugned eligibility condition was similar to conditions upheld by the Supreme Court in Association of Registration Plates v. Union of India. The Court noted that similar conditions existed in other states like Gujarat, Assam, Delhi, Odisha, and Jharkhand, and interestingly observed that the appellant company itself had been awarded a contract under a similar condition in Jharkhand.
The High Court rejected the constitutional challenge, holding that “State is entitled to prescribe the condition in the impugned tender notices, to ensure that selection of the most capable and reliable bidder takes place, to execute the public project of significant scale, sensitivity and public importance.” The Court further held that the condition was “neither violative of Article 14 nor Article 19(1)(g) of the Constitution of India and relates to legitimate object of ensuring technical competence, financial strength, operational capacity as well as long term reliability of successful bidder.”
Arguments Before the Supreme Court
Before the Supreme Court, the appellant’s Senior Counsel argued that “High Court has failed to appreciate that decision of this Court in Association of Registration Plates (supra) has no application to the obtaining factual matrix of the case and therefore, erred in placing reliance on the said decision while deciding the writ petitions.” The counsel contended that “the impugned tender condition which prescribes that bidders must have supplied Sports Kits worth at least Rs.6.00 crores (cumulative) to State Government agencies of Chhattisgarh in last 3 financial years is violative of Articles 14 and 19(1)(g) of the Constitution of India, as it excludes competent suppliers from outside the State and discourages wider participation and fosters cartelisation.”
The respondents defended the condition, arguing that “the tendering authority is well within its power to frame the impugned tender condition. It is further submitted that in view of geographic/social conditions of State of Chhattisgarh, the impugned tender condition is incorporated to safeguard timely delivery, ensure quality compliance and prevent supply chain disruptions.” The state particularly emphasized that “the impugned tender condition has been incorporated with an object to ensure that successful bidder has the knowledge of the topography of the State of Chhattisgarh which is a Naxal affected State, so that Sports Kits could be timely delivered to the children of Government Schools in the State.”
The Supreme Court’s Constitutional Analysis
The Supreme Court bench comprising Justices Sanjay Kumar and Alok Aradhe conducted a comprehensive analysis of the constitutional principles governing tender conditions. The Court began by reiterating established principles of judicial review in tender matters, citing Ramana Dayaram Shetty v. International Airport Authority of India, which held that “discretion of the Government in granting the largesse, is not unlimited and the Government cannot give or withhold largesse in its arbitrary discretion or at its sweet will.”
The Court emphasized the doctrine of level playing field as a fundamental constitutional principle, noting that “The doctrine of level playing field is an important concept while construing Article 19(1)(g) of the Constitution of India. Article 19(1)(g) confers Fundamental Right to carry out business to a company, it is entitled to invoke the doctrine of level playing field which is however, subject to public interest. The doctrine of level playing field provides the space within which equally placed competitors are allowed to bid so as to subserve larger public interest.”
The Court’s Reasoning on Constitutional Violations
The Supreme Court found that the impugned condition created an artificial barrier that violated constitutional guarantees. The Court powerfully stated that “The doctrine of level playing field requires that all equally placed competitors must be given an equal opportunity to participate in trade and commerce. It is designed to prevent the State from skewing the market in favour of few by erecting artificial barriers. In the instant case, the impugned tender condition has the effect of excluding bidders who though otherwise financially sound and technically competent, have no experience of supply of sports goods to the State Government agencies of Chhattisgarh in past three years.”
The Court further observed that “The State by linking the eligibility criteria with past local supplies has created an artificial barrier, against the suppliers who had no past dealing with the State of Chhattisgarh. The impugned condition curtails the fundamental rights of the bidders, who have been ineligible to participate in the tenders.”
Addressing the core purpose of public procurement, the Court noted that “The object of public procurement is to secure quality goods and services for the benefit of public exchequer. The said object can be achieved by requiring the bidders to demonstrate financial capacity, technical experience, and past performance in contracts of similar nature, regardless of place of performance of the contract. To confine the eligibility to participate in the tender, within one State is not only irrational but is also disproportionate to the goal of ensuring effective delivery of Sports Kits.”
The Court categorically held that “Such a restriction, therefore, cannot be justified as reasonable within the meaning of 19(6) of the Constitution of India. The State while it enjoys the freedom to prescribe the conditions in the tender, cannot exercise that power in a manner that infringes upon constitutional guarantees, by closing the market to outsiders without just cause.”
Rejection of State’s Security Justification
The Supreme Court specifically rejected the State’s argument that Chhattisgarh being a Maoist-affected area justified the restrictive condition. The Court provided three compelling reasons: “Firstly, the tender in question is not for security sensitive equipment but is for supply of Sports Kits which does not involve, any special risk or security repercussions. Secondly, only some districts of Chhattisgarh are affected by Maoist activities, and it is incorrect to treat the entire State, as uniformly affected by Naxalites, for exclusion of other eligible bidders. Thirdly, a successful bidder, who may not be conversant with the topography can engage a local supply chain to supply the Sports Kits.”
The Court concluded that “The impugned tender condition excludes the competent and experienced suppliers, who may have executed contracts of far greater magnitude in other States or for the Central Government departments, from participating in the tender and has the impact of promoting cartelisation. The impugned condition operates as a closed door to outsiders and restricts the wider participation of bidders and restricts competition. The impugned tender condition, therefore, is violative of Article 14 and also offends Article 19(1)(g) of the Constitution of India.”
Final Judgment and Broader Implications
In its conclusive ruling, the Supreme Court declared that “impugned tender condition is arbitrary, unreasonable and is discriminatory. The same does not have any rational nexus to the object of ensuring effective supply of Sports Kits to the children in State. It offends the mandate of Article 14 and freedom of trade guaranteed by Article 19(1)(g) of the Constitution of India.”
The Court accordingly quashed the High Court’s orders and the impugned tender notices, while allowing the state to issue fresh tender notices without the unconstitutional condition.
This landmark judgment represents a significant reinforcement of constitutional principles in government procurement. It establishes clear boundaries on how states can frame tender conditions and strengthens the doctrine of level playing field as a constitutional imperative. The decision ensures that qualified businesses across India can participate in government contracts without facing artificial state-based barriers, thereby promoting competition, preventing cartelization, and ultimately benefiting the public exchequer through better prices and quality. By striking down protectionist tender conditions, the Supreme Court has reaffirmed India’s constitutional vision of an integrated economic space where businesses can compete fairly across state boundaries.
Petitioner Name: Vinishma Technologies Pvt. Ltd..Respondent Name: State of Chhattisgarh & Anr..Judgment By: Justice Sanjay Kumar, Justice Alok Aradhe.Place Of Incident: Chhattisgarh.Judgment Date: 06-10-2025.Result: allowed.
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