Eligibility Conditions in Tender Must Be Strictly Applied: Supreme Court

The Hon’ble Supreme Court, in Micky Traders v. L.R.Y. Labour Contractor & Ors. (Civil Appeal Nos. arising out of SLP (C) Nos. 22161 and 23127 of 2026; 2026 INSC 1025), decided on September 21, 2026, upheld the decision of the Hon’ble High Court of Punjab and Haryana holding that the appellant did not satisfy the prescribed experience requirement for a tender for collection of user charges. The Hon’ble Court reiterated that while tendering authorities are ordinarily entitled to interpret their own tender conditions, such interpretation must be consistent with the language and purpose of the tender.

The dispute arose from a tender issued by the Market Committee, Ludhiana for recovery of user charges from vehicles using Mandi infrastructure. The appellant was declared the H1 bidder and its bid of approximately ₹16.51 crore was accepted. However, the H2 bidder challenged its eligibility on the ground that the appellant did not possess the required experience in collection of user charges or parking fees during the last two years up to December 31, 2025 as prescribed under Clause 9(c)(a) of the Board’s enlistment instructions.

The appellant contended that its experience in organising cattle fairs satisfied the prescribed requirement and that the Hon’ble High Court had adopted an overly technical interpretation of the experience clause. The Board also contended that the enlistment instructions were directory and that the Court ought not to interfere with the commercial wisdom of the tendering authority in the absence of mala fides, bias or arbitrariness.

The Hon’ble Supreme Court observed that Clause 9(c)(a) required experience in the successful execution of annual collection of user charges or parking fees for Government, Semi-Government or PSU organisations. It held that such experience contemplated a specialised and accountable revenue collection function on behalf of a public authority. Experience gained from organising cattle fairs, where the contractor operates as a lessee and any charges collected are incidental to the commercial arrangement, could not be treated as equivalent experience.

The Hon’ble Court further found that the experience certificates relied upon by the appellant were issued in the names of different entities and did not establish the appellant’s experience. The appellant’s claim that the experience of those entities could be attributed to its proprietor was unsupported by any partnership deed, registration certificate or other material establishing the nature and duration of the alleged association. As an independent ground, the Court noted that the appellant’s bids had been held technically non-responsive by the Market Committees at Patiala and Rajpura under an identical experience clause, which it had not challenged, and held that it could not approbate and reprobate on the meaning of the same clause.

The Hon’ble Court held that the tendering authority’s interpretation is ordinarily entitled to judicial deference, provided it is consistent with the language of the tender and its purpose. In the present case, however, the Committee’s interpretation was found to be patently arbitrary and dehors the terms of the DNIT. The Hon’ble Court also held that the fact that the appellant had submitted a higher bid could not cure its ineligibility.

Accordingly, the Hon’ble Supreme Court upheld the order of the Hon’ble High Court of Punjab and Haryana and dismissed both appeals. The Hon’ble Court further held that a condition cannot be treated as mandatory generally and directory only in its application to a particular bidder.