SCOI Strikes Down State Tender Restriction as Arbitrary and Discriminatory

In a significant ruling on public procurement and constitutional fairness, the Supreme Court in Vinishma Technologies Pvt. Ltd. v. State of Chhattisgarh & Anr. (2025 INSC 1182) quashed tender conditions imposed by the Chhattisgarh government that restricted bidders to those with prior supply experience within the State.

The Court held that such a requirement was arbitrary, discriminatory, and violative of Articles 14 and 19(1)(g) of the Constitution, as it created an artificial barrier excluding otherwise qualified and experienced bidders from outside Chhattisgarh.

What's The Matter?

The case arose from a series of tenders issued by the Samagra Shiksha Project Office for the supply of sports kits to over 5,500 government schools across 33 districts.

The tender required that bidders must have supplied sports goods worth at least ₹6 crore cumulatively to State Government agencies of Chhattisgarh in the preceding three financial years.

This condition disqualified the appellant, Vinishma Technologies Pvt. Ltd., despite its extensive experience supplying sports equipment to multiple state governments and central departments.

The company challenged the condition before the Chhattisgarh High Court, arguing that it violated the constitutional principles of equality and free trade.

The High Court, however, upheld the tender condition, reasoning that it ensured reliable and timely supply, especially given Chhattisgarh’s difficult geography and Naxal-affected areas. On appeal, the Supreme Court took a contrasting view.

The Bench of Justices Sanjay Kumar and Alok Aradhe emphasized that while the State has discretion in setting tender conditions, such discretion is subject to constitutional limits and cannot be exercised arbitrarily.

Referring to Ramana Dayaram Shetty v. International Airport Authority of India and Bharat Forge Ltd. v. Union of India, the Court reiterated that public contracts must ensure a “level playing field” and cannot be tailored to favour a local or select set of bidders.

The Court observed that the impugned condition was wholly disproportionate to the object of ensuring timely delivery of sports kits. It noted that the supply of such kits was neither a security-sensitive nor a technically complex task that required prior local experience.

The argument that the State’s Naxal-affected regions justified exclusion of non-local suppliers was dismissed as an overgeneralisation, as such areas constituted only a part of the State. The Court further remarked that non-local suppliers could always engage local subcontractors to meet logistical challenges.

In its categorical finding, the Bench declared that the State’s action violated the doctrine of level playing field embedded in Articles 14 and 19(1)(g), as it closed competition to outsiders without rational justification.

It warned that such restrictive tendering fosters cartelisation and defeats the purpose of public procurement, which is to ensure efficiency, transparency, and best value for public funds.

Consequently, the Supreme Court quashed both the High Court orders and the tender notices, while granting liberty to the State to issue fresh, constitutionally compliant tenders. The decision reiterates that while governments enjoy operational freedom in procurement, that freedom is circumscribed by the constitutional commitment to fairness and equality.

By striking down a tender clause that privileged familiarity over merit, the judgment underscores a broader jurisprudential truth that public procurement is not a private market transaction but a constitutional exercise in economic justice.

Disclaimer:This article is a legal analysis written for educational and informational purposes only and does not constitute legal advice or opinion.