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The State of Madhya Pradesh & Anr. v. U.P. State Bridge Corporation Ltd. & Anr.

Civil Appeal · 2020 INSC 686Decided 8 Dec 2020
Civil Appeal No. 4002 of 2020
Justice Rohinton Fali Nariman · Justice K.M. Joseph

Background

The Madhya Pradesh government floated a tender worth about Rs. 272 crore for building a flyover in Indore. The lowest bidder, U.P. State Bridge Corporation (UPSBC), was disqualified by the technical evaluation committee for not disclosing that it had been "indicted" after one of its earlier-built bridges had collapsed, and also for alleged non-compliance with a technical-experience clause. The High Court had ruled in UPSBC's favour and set aside its disqualification, prompting the State and a competing bidder (Rajkamal) to appeal, while a third bidder (Rachana Construction) separately challenged a different eligibility clause.

Decision Breakdown

The Supreme Court held that tender conditions are generally to be interpreted by the authority that framed them, and courts should not readily substitute their own view unless the interpretation is absurd or arbitrary. It found that UPSBC had indeed suppressed a material fact, the FIR relating to the collapsed bridge, which amounted to an "indictment" it was bound to disclose, so its disqualification was valid and the High Court's judgment reinstating it was set aside. On the separate challenge by Rachana Construction, the Court upheld the tendering authority's interpretation of the "similar work" experience clause, dismissing that appeal too. It directed the State to issue the Letter of Intent to Rajkamal, the next eligible bidder, at the same bid value UPSBC had offered.

Lesson Learnt

Bidders in government tenders must proactively disclose adverse facts like pending criminal cases or past project failures when the tender conditions require it: concealment can validly disqualify even the lowest bidder, and courts will usually defer to the tendering authority's own reasonable reading of its tender conditions.

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

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