Tender Condition Requiring Past Supply Within One State Irrational, Violates Article 19(1)(g) : Supreme Court

The Supreme Court on Monday (October 6) struck down a Chhattisgarh Government tender condition that mandated bidders to show prior supply experience of at least ₹6 crores to state government agencies in the past three years, as a prerequisite for participating in bids to supply sports kits to government schools in the state.

The Court observed that to confine eligibility for participation in a tender to entities operating within a single State is not only irrational but also disproportionate to the stated goal of ensuring the efficient and effective delivery of sports kits.

A Bench of Justice Sanjay Kumar and Justice Alok Aradhe rejected the State's contention that prior experience with the government was necessary since the supply of sports kits was to be made in Maoist-affected areas. The Court held that such a tender condition imposed an unreasonable restriction on trade and violated the doctrine of a level playing field, as it created an artificial barrier that excluded bidders lacking prior government supply experience

“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 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.”, the court said.

The dispute arose from three tender notices issued for the supply of sports kits worth nearly ₹40 crores to government schools in Chhattisgarh. The eligibility criteria required bidders to demonstrate prior supply of sports goods worth at least ₹6 crores to state government agencies of Chhattisgarh during the last three financial years.

This effectively excluded national suppliers like petitioners who had experience in other states but none with Chhattisgarh's agencies.

Vinishma Technologies Pvt. Ltd., a Mumbai-based supplier, challenged these eligibility clauses before the Chhattisgarh High Court, arguing that they were designed to restrict participation and deny a level playing field to suppliers outside the State.

During the pendency of the case, the State issued a corrigendum deleting some clauses, but it retained the controversial “past performance” requirement. The High Court, by orders dated August 11 and 12, 2025, upheld the condition and dismissed the company's writ petitions, prompting the present appeal before the Supreme Court.

Setting aside the High Court's decision, the judgment authored by Justice Aradhe stated that the clause was an “artificial barrier” designed to favour a small pool of local vendors, fostering cartelization and shutting out equally competent national players.

“The doctrine of level playing field requires that gates of competition be opened to all who are equally placed. 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.”, the Court said.

The Supreme Court observed that while tendering authorities enjoy discretion in setting eligibility conditions, such discretion must not be exercised in an arbitrary or exclusionary manner. The Court emphasised that every tender condition must have a rational nexus with the purpose of the contract.

The Bench found that the Chhattisgarh Government's restriction, confining eligibility to suppliers with past experience only within the State, lacked any rational justification. The State's claim that local experience was necessary for logistical ease and operational familiarity was found to be unconvincing, particularly since the contract involved the supply of sports kits and not sensitive or technical equipment.

“The justification advanced by the State that Chhattisgarh being a Maoist affected area and only those with past experience of supply in the State to State Government agencies of Chhattisgarh can be relied upon, is untenable for several 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 added.

The Court said that the object of public procurement to secure quality goods and services in the best interest of the public exchequer. can be achieved by requiring bidders to demonstrate adequate financial capacity, technical competence, and satisfactory past performance in contracts of a similar nature.

"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"

Accordingly, the appeals were allowed.

Cause Title: VINISHMA TECHNOLOGIES PVT. LTD. Versus STATE OF CHHATTISGARH & ANR. (and connected cases)

Citation : 2025 LiveLaw (SC) 971

Click here to read/download the judgment

Appearance:

For Petitioner(s) : Mr. M. Dutt, Sr. Adv. Mr. Nitish Kumar Singh, Adv. Mr. Abhishek Raj, Adv. Mr. Amit Kumar Thakur, Adv. Mr. Harsh Abhishek, Adv. Mr. Anil Kumar Soni, Adv. Mr. Anand Kumar Soni, Adv. Mr. Niteen Kumar Sinha, AOR

For Respondent(s) : For State of Chhattisgarh Mr. Praphulla Kumar Bharat, Sr. Adv./A.G. Ms. Ankita Sharma, Adv./AOR Mr. Arjun D. Singh, Adv. Ms. Ishika Neogi, Adv.

For State Project Director Mr. Balbir Singh, Sr. Adv. Mr. Pallav Mongia, AOR Samagra Shisha Mr. Anubhav Mishra, Adv. Chhattisgarh Ms. Kashish Lalwani, Adv.

For intervenor/ impleader in IA 241372/2025 in SLP(C) 24075/2025 Mr. Sunil Otwani, Sr. Adv. Mr. Amit Soni, Adv. Mr. Rajat Khattry, Adv. Mr. Abhay Kumar, AOR Mr. Shagun Ruhil, Adv.