Delhi HC Upholds Tender Clause Excluding Bidders Facing Economic Offence Proceedings

The Hon’ble High Court of Delhi in the case of M/s Dhanvine Engineering Pvt. Ltd. & Anr. v. Delhi Jal Board & Govt. of NCT of Delhi, (2026:DHC:1164:-DB), decided February 5, 2026, upheld the validity of a tender condition introduced by the Delhi Jal Board (DJB) that disqualified bidders where a First Information Report (FIR) or charge sheet alleging corruption, fraud, or economic offences in relation to DJB contracts was pending against the bidder or its key managerial personnel.

The challenge arose in the context of a tender for construction and operation of decentralized sewage treatment plants and pumping stations in Delhi. The petitioners contended that the impugned clause introduced a pre-conviction disqualification, rendering bidders ineligible merely on account of registration of an FIR or filing of a charge-sheet, without any finding of guilt by a competent court. They argued that this approach was inconsistent with Rule 151 of the General Financial Rules (GFR), 2017, which contemplates debarment primarily upon conviction for specified offences and mandates procedural safeguards, including an opportunity for representation and defined timelines for debarment.

Opposing the petitions, the DJB argued that tendering authorities are best placed to determine eligibility criteria consistent with project requirements and risk considerations. It pointed out that the condition was put in place after investigations found problems with previous sewage projects involving the petitioners and was meant to protect the integrity of important public health and environmental projects.

The High Court confirmed that its ability to review tender issues is limited, stating that while the GFR framework sets basic standards, it allows tendering authorities to create extra eligibility requirements based on specific project risks. The Court also stated that the challenged clause was a way to manage risks and prevent problems, not a punishment, and it didn’t mean that bidders were banned from participating in other projects. Noting the public importance of sanitation infrastructure and the need for integrity in contractor selection, the Court declined to interfere with the tender condition and dismissed the petitions.