Tendering Authority Cannot Import Unwritten Conditions to Disqualify a Bid: Solvency Certificate from Private Valuer Held Valid:  Supreme Court Quashes Arbitrary Bid Rejection by Mandi Parishad

“A bidder cannot be disqualified on the basis of conditions not expressly stated in the tender. The terms of the NIT are sacrosanct and binding on the tendering authority itself” –  In a significant judgment delivered on 31st October 2025, the Supreme Court set aside the disqualification of a tenderer on the ground that its solvency certificate ("haisiyat praman patra") was not issued by a District Magistrate. The Court held that the rejection was contrary to the express terms of the Notice Inviting Tender (NIT), which did not specify any authority from whom the solvency certificate must be obtained.

The two-judge bench comprising Justice Surya Kant and Justice Joymalya Bagchi clarified the scope of judicial review in tender matters, emphasizing that courts may intervene where disqualification is arbitrary or dehors the NIT. It also reaffirmed that new justifications raised during litigation cannot retrospectively validate an otherwise illegal administrative decision.

“Where the NIT is Silent, Authority Cannot Read In Conditions Through Backdoor” – Supreme Court on Arbitrary Tender Disqualification

The case arose from a tender floated by the Krishi Utpadan Mandi Parishad, a statutory body under the U.P. Krishi Utpadan Mandi Adhiniyam, 1964, to lease out a banquet hall and terrace lawn for 10 years. As per Clause 18 of the NIT, bidders were required to submit a haisiyat praman patra (solvency certificate) of minimum ₹10 crores with the technical bid.

The appellant, Kimberley Club Pvt. Ltd., submitted a valuation certificate issued by a registered valuer empanelled with the Income Tax Department. The certificate reflected ownership of an asset valued around ₹99 crores, of which the appellant held a 76% share. However, the tendering authority rejected the bid solely on the ground that the certificate was not issued by a District Magistrate.

The Allahabad High Court upheld the disqualification. Aggrieved, the appellant approached the Supreme Court.

The appellant submitted both technical and financial bids under the two-stage tender process. Despite meeting the financial capacity criteria under Clause 18, its technical bid was disqualified by the Mandi Parishad solely on the basis that the haisiyat praman patra was issued by a private valuer and not by the District Magistrate as per a U.P. Government Notification dated 29.10.2018.

The NIT, however, did not mandate that the solvency certificate be issued by the District Magistrate. The Parishad’s reliance on the notification, which was not incorporated in the tender conditions, became the focal point of challenge.

Before the Supreme Court, the Parishad attempted to introduce a new ground—that the valuation certificate failed to disclose encumbrances on the asset and therefore did not establish net worth.

The Supreme Court considered the following core legal issues:

• Whether the NIT required a haisiyat praman patra only from the District Magistrate

• Whether the tendering authority could reject the bid on a ground not mentioned in the NIT

• Whether new grounds can be introduced in litigation to justify an earlier administrative rejection

• Scope of judicial review in tender-related disputes

On Interpretation of Clause 18 of the NIT:

The Court held unequivocally that Clause 18 of the NIT did not stipulate that the solvency certificate must be issued by a District Magistrate. The bench noted:

“It is trite that the terms of an NIT must be clear and unambiguous. If the Mandi Parishad intended that the 'haisiyat praman patra' be issued by the District Magistrate alone, it ought to have specified so.”

Further, the Court noted that the U.P. Government Notification dated 29.10.2018, which laid down a process for issuance of solvency certificates by District Magistrates, was not automatically applicable to the Mandi Parishad, which is a statutory authority and not a government department.

“The Mandi Parishad is a statutory body under a special enactment. There is no material to show that the government notification was binding on tenders floated by it.”

The Court also observed that all other bidders submitting DM-issued certificates did not elevate the implied requirement into a binding legal standard. Competitive practice cannot substitute clear legal mandate.

On Judicial Review in Tender Matters:

Reiterating the limited scope of judicial review, the Court invoked the settled principle from Tata Cellular v. Union of India (1994), that courts do not function as appellate authorities in tender evaluations. However, interference is warranted where:

“The decision is either dehors the terms of the NIT or patently arbitrary.”

Here, since the bid was rejected on a ground not found in the NIT, the rejection was liable to be quashed.

On Attempt to Justify Disqualification with New Grounds in Court:

The Mandi Parishad, during litigation, raised a new argument that the valuation certificate failed to mention encumbrances and hence could not establish solvency.

The Court rejected this outright, holding that:

“An administrative order must stand or fall on the reasons assigned in the order itself. Additional grounds cannot be conjured up post hoc in affidavits or legal pleadings.”

This principle, grounded in Mohinder Singh Gill v. Chief Election Commissioner (1978), was firmly applied.

“The tender was rejected solely on the ground that the certificate was not issued by the District Magistrate. The new justification has no legs to stand on.”

“Meaning of ‘Haisiyat’ Is Capacity or Means – No Authority Prescribed Means Any Competent Valuation Suffices” – Court Affirms Lexical and Practical Interpretation

Addressing the meaning of haisiyat praman patra, the Court referred to the Oxford Hindi–English dictionary:

“The word ‘haisiyat’ translates to ‘capacity, means, or resources.’ It does not inherently require a certificate from a specific authority.”

Thus, a solvency certificate or valuation showing financial capacity above ₹10 crores—regardless of issuing authority—would suffice in absence of contrary tender condition. The certificate submitted by the appellant, showing its share in an asset worth over ₹75 crores, more than fulfilled this threshold.

If the tendering authority had doubts regarding encumbrances on the asset, the Court held:

“It ought to have sought clarification rather than outright rejection of the bid.”

Finding the disqualification unjustified, the Supreme Court set aside the order of the Allahabad High Court and directed the Mandi Parishad to:

• Reconsider the appellant’s technical bid in light of Clause 18 as actually worded

• If satisfied that the valuation meets the requirement, negotiate with the appellant and the successful bidder (Respondent No. 5) to determine whether to award the remaining period of the contract to the appellant

• Alternatively, if Respondent No. 5 matches or exceeds the financial bid of the appellant, allow it to continue

“The disqualification of the appellant was dehors the terms of the NIT and therefore, not legally sustainable. The tendering authority cannot rewrite the terms of the tender document to suit its own preferences.”

In a judgment that reaffirms the sanctity of tender documents and the boundaries of administrative discretion, the Supreme Court has once again made it clear that tendering authorities must act strictly within the four corners of the NIT. Unwritten conditions, implied practices, or internal circulars not disclosed to bidders cannot form the basis for disqualification.

This decision will have significant implications for public procurement law, particularly on how solvency, eligibility, and technical qualifications are assessed, and how transparent and fair tendering processes must remain in line with Article 14 of the Constitution.

Date of Decision: 31 October 2025