A) ABSTRACT / HEADNOTE

The judgment adjudicates upon the legality of rejection of technical bids in a public procurement process and delineates the boundaries of judicial review in tender matters. The dispute arose from a Notice Inviting Tender dated 02.12.2019 issued by the Public Works Department, State of Madhya Pradesh for construction of an elevated corridor in Indore. The bid of U.P. State Bridge Corporation Ltd. was rejected on the ground of suppression of material facts relating to a prior FIR and charge-sheet concerning collapse of a bridge constructed by it. The High Court interfered and directed issuance of a Letter of Intent in its favour, holding that no “investigation” was pending on the date of bid submission.

The Supreme Court reversed this view by interpreting paragraphs 11 and 13 of Appendix-I-A conjointly with Clause 7(b) of Annex-I and the definition of fraudulent practice under Clause 4.3(b). The Court held that filing of a charge-sheet amounts to being “indicted” and non-disclosure thereof constitutes suppression of a material fact. The Court further upheld rejection of Rachana Construction Co. on the ground of failure to satisfy Clause 2.2.2.2(ii) relating to experience of one similar work.

The ruling reiterates judicial restraint in contractual matters, emphasizes transparency in public tenders, and affirms that public interest cannot override mandatory disclosure requirements.

Keywords:
Public procurement, suppression of facts, indictment, tender conditions, judicial review

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute emanated from a competitive tender floated by the State of Madhya Pradesh for construction of an elevated flyover corridor measuring 7.473 kilometres with an estimated cost of ₹272.66 crores. The tender framework prescribed strict technical eligibility conditions and mandatory declarations regarding criminal antecedents and pending investigations. The process attracted eleven bidders, including U.P. State Bridge Corporation Ltd., Rajkamal Builders Infrastructure Pvt. Ltd., and Rachana Construction Co.

The tendering authority rejected the technical bid of UPSBC for non-disclosure of an FIR and subsequent charge-sheet arising from a bridge collapse in Varanasi, which resulted in fatalities. The rejection was grounded on paragraph 13 of Appendix-I-A and Clause 7(b) of Annex-I. The High Court, however, held that since investigation had culminated in a charge-sheet, no investigation was pending, thereby nullifying the allegation of suppression.

Parallelly, the bid of Rachana Construction Co. was rejected for failure to demonstrate completion of one similar work of 25% of the project cost, as mandated under Clause 2.2.2.2(ii). The High Court upheld this rejection.

The appeals before the Supreme Court raised critical issues on interpretation of tender documents, meaning of “indicted”, scope of disclosure obligations, and permissible limits of judicial intervention in tender processes.

D) FACTS OF THE CASE

The Notice Inviting Tender dated 02.12.2019 required bidders to submit technical and financial bids in prescribed formats. UPSBC submitted its bid quoting ₹306.27 crores. However, prior to submission of the bid, an FIR dated 15.05.2018 had been lodged against UPSBC relating to collapse of a bridge constructed by it, causing 15 deaths and multiple injuries. A charge-sheet was subsequently filed, and though trial was stayed by the Allahabad High Court, the criminal proceedings subsisted.

In the technical bid, UPSBC certified under paragraph 11 of Appendix-I-A that it had not been convicted or indicted. Under paragraph 13 and Clause 7(b) of Annex-I, it further certified that no investigation was pending. The State rejected the bid holding that non-disclosure of the FIR and charge-sheet amounted to suppression of material facts and a fraudulent practice under Clause 4.3(b).

UPSBC approached the High Court, which accepted its contention that investigation as defined under CrPC ends with filing of charge-sheet, and therefore no disclosure obligation survived. The High Court further relied on public interest, noting the bid was lower by ₹9 crores.

In contrast, Rachana Construction Co. relied on a contract with DFCCIL for two road overbridges valued at ₹76.87 crores. The State held that this did not satisfy the requirement of one similar work of ₹68.17 crores. The High Court affirmed this view.

E) LEGAL ISSUES RAISED

i. Whether non-disclosure of an FIR and charge-sheet amounts to suppression of material facts under the tender conditions?
ii. Whether filing of a charge-sheet constitutes being “indicted” within the meaning of paragraph 11 of Appendix-I-A?
iii. Whether courts can substitute their interpretation of tender clauses over that of the tendering authority?
iv. Whether public interest based on lower financial bid can override disqualification due to suppression?
v. Whether completion of two bridges under one contract satisfies the requirement of “one similar work”?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for UPSBC submitted that the bid format strictly required disclosure only of pending investigations. It was argued that once a charge-sheet is filed, investigation concludes, and therefore no obligation to disclose subsists. Reliance was placed on Caretel Infotech Ltd. v. HPCL to contend that bidders cannot be penalised beyond the express format requirements.

It was further contended that the rejection order only invoked Clause 7(b) and not the fraudulent practice clause, rendering subsequent reliance impermissible. The principle of contra proferentem was invoked to assert that ambiguity must be interpreted in favour of the bidder. Public interest was emphasized by highlighting the lower bid amount.

G) RESPONDENT’S ARGUMENTS

The counsels for the State submitted that paragraphs 11 and 13 of Appendix-I-A must be read conjointly. Filing of a charge-sheet amounts to being indicted, irrespective of pendency of investigation. Suppression of such fact was argued to fall squarely within Clause 4.3(b) defining fraudulent practice.

For Rachana Construction Co., it was argued that Clause 2.2.2.2(ii) requires completion of one similar work, not aggregation of two bridges. Judicial interference was contended to be impermissible unless the interpretation was perverse.

H) RELATED LEGAL PROVISIONS

i. Clause 2.2.2.2(ii) of NIT
ii. Clause 4.3(b) – Fraudulent Practice
iii. Clause 7(b) of Annex-I
iv. Paragraphs 11 and 13 of Appendix-I-A
v. Clause 2.6.2(a) – Material Misrepresentation

I) JUDGEMENT

The Supreme Court set aside the High Court judgment favouring UPSBC and restored the State’s rejection of its bid. The Court held that indictment occurs upon filing of a charge-sheet, and non-disclosure thereof constitutes suppression of material facts. The Court emphasized that fraudulent practice includes omission and incomplete disclosure.

The Court reaffirmed settled principles of judicial restraint in tender matters as laid down in Tata Cellular, Jagdish Mandal, Central Coalfields, and Afcons Infrastructure. The Court upheld rejection of Rachana Construction Co. and directed issuance of Letter of Intent to Rajkamal Builders at the same financial bid quoted by UPSBC.

a) RATIO DECIDENDI

The ratio rests on the interpretation that paragraph 11 of Appendix-I-A mandates disclosure of indictment independent of pending investigation. Filing of a charge-sheet satisfies the test of indictment. Suppression thereof vitiates the bid and attracts Clause 4.3(b). Judicial review cannot override tender authority’s interpretation unless perverse.

b) OBITER DICTA

The Court observed that tender formats must evolve to eliminate ambiguity and ensure comprehensive disclosures. It cautioned that public interest cannot be reduced to mere financial savings when integrity and transparency are compromised.

c) GUIDELINES

i. Disclosure obligations extend beyond literal wording when read contextually.
ii. Filing of charge-sheet constitutes indictment for tender purposes.
iii. Courts must defer to tender authority’s interpretation unless perverse.
iv. Financial advantage cannot cure disqualification for suppression.

J) CONCLUSION & COMMENTS

The judgment reinforces ethical transparency in public procurement and restricts judicial overreach in contractual matters. It clarifies that disclosure norms must be interpreted purposively and not mechanically. The decision strengthens integrity standards while preserving administrative discretion.

K) REFERENCES

a) Important Cases Referred

i. Tata Cellular v. Union of India, [1994] 2 Supp SCR 122
ii. Jagdish Mandal v. State of Orissa, [2006] 10 Supp SCR 606
iii. Central Coalfields Ltd. v. SLL-SML (JV), [2016] 4 SCR 890
iv. Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corp., [2016] 3 SCR 551
v. Caretel Infotech Ltd. v. HPCL, [2019] 6 SCR 950

b) Important Statutes Referred

i. Code of Criminal Procedure, 1973
ii. Public Procurement Tender Conditions (NIT)