Kiran Raj

The Supreme Court Division Bench of Justice Manoj Misra and Justice Ujjal Bhuyan on Thursday (December 18) held that experience gained by an entity as a partner in a joint venture executing contractual works can be counted in proportion to its share when the entity later bids on its own in a tender. The Court set aside the Chhattisgarh High Court’s decision upholding the rejection of a bidder’s technical bid for a road construction contract, where the tendering authority had declined to accept the bidder’s work experience certificate issued in the joint venture’s name despite its 49% stake. The Court also quashed the disqualification decision and directed the authorities to reconsider the bid by accepting the bidder’s proportionate joint venture experience.

The appeal arose from a tender process initiated by the Public Works Department, Chhattisgarh, through a Notice Inviting Tender dated 08 January 2025 for construction of a road in District Korea. The appellant submitted its bid in response to the tender. During technical evaluation, the tendering authority raised objections to the experience certificates furnished by the appellant. One certificate was rejected on the ground that its value was less than the stipulated percentage of the contract value, while the second certificate was rejected because it related to work executed through a joint venture in which the appellant was a partner.

Also Read: Evidence Act | Incriminating Material Handed Over By Accused During Police Check Not Section 27 “Discovery”: Supreme Court

The appellant submitted explanations asserting that its proportionate share of experience in the joint venture met the eligibility criteria. The Technical Evaluation Committee rejected this explanation and disqualified the appellant by communication dated 19 March 2025. The appellant challenged this decision before the High Court of Chhattisgarh under Article 226 of the Constitution. The High Court dismissed the writ petition by judgment dated 04 April 2025, holding that no arbitrariness was established in the decision-making process.

Aggrieved, the appellant approached the Supreme Court by way of special leave. The appellant relied upon the eligibility conditions of the tender, proportionate experience derived from the joint venture, and prior judicial precedents recognising joint venture experience. The respondents defended the disqualification by asserting that the tender required experience in the bidder’s own name and that joint venture experience was not admissible.

The Court examined the eligibility clause in the pre-qualification document and noted that “the phrase ‘prime contractor’ is not a defined expression either in the pre-qualification document or in the NIT.” It recorded that, in the absence of a definition, “the common parlance test has to be applied.” The Court stated that “the expression ‘prime contractor’ in the context of the NIT would mean the tenderer who has submitted the tender in terms of the instant NIT.”

While analysing the appellant’s claim based on joint venture experience, the Court observed that the appellant was relying only on its proportionate share and that “respondents are of the view that appellant cannot claim the benefit of such an experience because such experience was gained as a member of the joint venture and not in its individual name.” This, according to the Court, required an examination of the concept of joint ventures.

Referring to New Horizons Limited v. Union of India, the Court recorded that “in respect of a joint venture, its experience can only mean the experience of the constituents of the joint venture.” It further stated that “failure to consider the same had rendered the decision arbitrary and irrational.” The Court also reproduced the principle that tender conditions must be assessed commercially, observing that “the terms and conditions of such a document have to be construed from the standpoint of a prudent businessman.”

The Court expressly noted that “we do not find any criteria or condition therein stating that past experience as member of a joint venture would not be considered.” It recorded that “there is no specific or explicit exclusion of the work experience gained by a contractor in a joint venture.”

On the requirement of clarity in tender conditions, the Court observed that “an eligibility criteria should be clear and unambiguous.” It stated that “to hold that a State or its agencies can reject a tender for breach of a term or condition in the tender document which is not explicit in the tender documents is to give room to the State or its agencies to arbitrarily reject tenders.” The Court further recorded that vagueness “may result in an unequal and discriminatory treatment and provide room for manipulation.”

While acknowledging the general principle of deference to tendering authorities, the Court stated that “this principle has its own limitations.” It recorded that “if the interpretation of the tender inviting authority… is irrational or absurd leading to arbitrary consequences, it would be the duty of a constitutional court to interdict such a decision making process.”

Applying these principles to the facts, the Court concluded that “there was no justification at all on the part of the respondents in not considering the proportionate experience certificate of the appellant as a member of the joint venture.” It held that “such decision of the respondents is arbitrary and unreasonable rendering the decision making process in breach of the mandate of Article 14 of the Constitution of India.”

Also Read: Judicial Process Not A Tool To Obstruct Or Delay Rehabilitation : J&K And Ladakh High Court Vacates 12-Year Stay On Srinagar Shop Allotments

The Court held that “the decision making process of the respondents in disqualifying the appellant from the tender by not taking into account its past proportionate experience in the joint venture is vitiated by irrationality leading to the arbitrary decision of declaring the appellant as disqualified. The said decision of respondent No. 3 dated 19.03.2025 cannot be sustained and is accordingly set aside.”

“Since the High Court failed to notice such irrationality leading to arbitrary consequences, the impugned judgment and order dated 04.04.2025 is wholly untenable and is accordingly set aside and quashed.”

“In consequence thereof, respondents are directed to reconsider the case of the appellant by accepting its experience certificate as member of the joint venture MPSBIJV. The appeal is accordingly allowed. However, there shall be no order as to cost.”

Advocates Representing the Parties

For the Appellant: Mrs. Pooja Mehra Saigal, Sr. Adv. Mr. Mohit Negi, AOR Ms. Aayushi Sharma, Adv. Mr. Ankit Mittal, Adv. Mr. Nivesh Dixit, Adv.

For the Respondents: Mr. Bishwajit Dubey, A.A.G. Mr. Vinayak Sharma, Standing Counsel, Adv. Mr. Ravinder Kumar Yadav, AOR Mr. Aprajita Verma, Adv.

Case Title: M/s. Surguja Bricks Industries Company v. State of Chhattisgarh & Ors.
Neutral Citation: 2025 INSC 1456
Case Number: Civil Appeal No. 14859 of 2025 (arising out of SLP (Civil) No. 10039 of 2025)
Bench: Justice Manoj Misra, Justice Ujjal Bhuyan