Blacklisting Unsustainable on Mere Disputes on Interpretation of Tender Conditions: Madras HC

The Hon’ble Madras High Court, in Eco Protection Engineers Pvt. Ltd. v. The State of Tamil Nadu & Ors. (W.P. No. 16595 of 2026), decided on August 5, 2026, held that blacklisting or debarment cannot be imposed merely on account of a dispute regarding the interpretation or compliance of tender conditions, in the absence of material establishing a fraudulent practice under the tender document.

The dispute arose from a tender issued by the Chennai Metropolitan Water Supply and Sewerage Board (“CMWSSB”) for providing a Ring Main System in Chennai City, including its operation and maintenance for 10 years. The petitioner participated as a joint venture and was the lowest bidder. However, its bid was declared non-responsive and the petitioner and its joint venture partner were subsequently, by order dated April 16, 2026, declared ineligible for ADB-financed, administered or supported contracts and debarred from future CMWSSB tenders for three years.

The petitioner contended that it satisfied the eligibility requirements under Clauses 2.4.1 and 2.4.2(b)(4) of the tender document and relied upon certificates issued by the Tamil Nadu Water Supply and Drainage Board and Siliguri Municipal Corporation. It was further submitted that any disagreement regarding the interpretation of the tender conditions could not constitute a “fraudulent practice” under Clause 3.1(a)(ii).

The respondents contended that the petitioner had executed work of only about Rs. 560 crores and had thus failed to satisfy the requirement relating to a contract exceeding Rs. 690 crores and had also failed to meet the requirement relating to construction of pipe carrying bridges. It was submitted that these deficiencies came to light upon verification with the issuing authorities and justified the debarment proceedings.

The Hon’ble Court observed that the certificates issued by the statutory authorities indicated compliance with Clause 2.4.1, including actual work valued at approximately Rs. 698 crores. The Court held that even if the respondents’ interpretation of the requirement was accepted, the issue was one of interpretation and there was no material to establish a knowing or reckless misrepresentation. The Court similarly rejected the respondents’ interpretation of the pipe carrying bridge requirement (a minimum span of 100 metres for a total length of at least 300 metres), which counted only the steel truss over the water body, observing that the supporting structures formed an integral part of such bridges.

The Hon’ble Court further held that blacklisting carries serious civil consequences and must be imposed only where debarment is necessary in the facts of the case. It distinguished disqualification from a particular tender from debarment, noting that the latter has substantially graver consequences and may amount to the “civil death” of an entity. The impugned order was found to be non-speaking and to suffer from gross non-application of mind.

Accordingly, the Hon’ble Court set aside the order blacklisting and debarring the petitioner. The writ petition was disposed of without costs and the connected miscellaneous petitions were closed.