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M/S. STEAG Energy Services (India) Pvt. Ltd. v. GSPC Pipavav Power Company Ltd. (GPPC) and Ors.

Civil Appeal · 2026 INSC 295Decided 25 Mar 2026
C.A. No.-003895-003896 - 2026 (arising out of SLP(C) Nos. 30209-30210 of 2025)
Justice Pamidighantam Sri Narasimha · Justice Alok Aradhe

Background

GSPC Pipavav Power Company Ltd. (GPPC), which runs a 702.86 MW gas-based power plant, floated a tender for operation and maintenance services, to be evaluated on a Quality and Cost Based System (70% technical score, 30% price score). Of three qualifying bidders, STEAG Energy Services narrowly outscored a rival bidder (O&M Solutions Pvt. Ltd., the writ petitioner) on both technical marks (95 vs 93 out of 100) and price score, and was awarded the Letter of Award, after which it mobilised manpower, took over the plant, and executed a formal contract. The unsuccessful bidder challenged the tender evaluation as arbitrary before the Gujarat High Court, which set aside the award in its favour; STEAG and GPPC then appealed to the Supreme Court.

Decision Breakdown

The Supreme Court allowed the appeal concerning the main award (Special Civil Application No. 7289 of 2025) and set aside the High Court's judgment, while separately dismissing STEAG's appeal on a narrower technical-marks dispute (Special Civil Application No. 12328 of 2025) after finding the High Court's specific factual finding on that point correct. On the central issue, the Court reaffirmed the well-established principle of judicial restraint in reviewing tender/contract awards by government instrumentalities: courts should not act as an appellate technical evaluator, should give "fair play in the joints" to the tendering authority, and should intervene only where the process is shown to be arbitrary, mala fide, or grossly unfair, not merely because the scoring margin between bidders was small. It held that the tender document itself vested the final choice in the owner (GPPC), which reserved the right to accept or reject any bid, and that unsettling a contract already a year into execution would cause needless delay and public expense.

Lesson Learnt

Courts exercise significant restraint when reviewing the award of government tenders and will not re-score or second-guess a technical evaluation merely because the margin between bidders was narrow; interference is reserved for cases of clear arbitrariness, mala fide conduct, or gross procedural unfairness, and the practical cost of unsettling an already-executing contract is a relevant factor against judicial intervention.

Official source (sci.gov.in)View Judgment (PDF)

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