Mandatory Experience In Public Tenders Held Unconstitutional

Mandatory Experience In Public Tenders Held Unconstitutional

Supreme Court Judgement

Mandatory Experience In Public Tenders Held Unconstitutional

Supreme Court Strikes Down Chhattisgarh's Restrictive Tender Clause as Arbitrary and Anti-Competitive

Oct 26, 2025·6 min read

Mandatory Experience In Public Tenders Held Unconstitutional

In a landmark judgment delivered on October 6, 2025, the Supreme Court of India in Vinishma Technologies Pvt. Ltd. v. State of Chhattisgarh & Anr. (2025 INSC 1182) struck down a restrictive tender condition that mandated bidders to demonstrate prior supply experience exclusively within the state of Chhattisgarh. The two-judge bench of Justice P.V. Sanjay Kumar and Justice Alok Aradhe held that such geographical restrictions in public procurement are arbitrary, discriminatory, and violative of Articles 14 and 19(1)(g) of the Constitution of India.

This judgment reinforces the constitutional mandate of equality and the doctrine of a "level playing field" in government contracting, sending a strong message to state governments against creating artificial barriers that favor local suppliers at the cost of fair competition and public interest.

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Background and Facts of the Case

On July 21, 2025, the Samagra Shiksha Chhattisgarh State Project Office issued three tender notices for the supply of sports kits to students in government schools across all 33 districts of Chhattisgarh. The combined value of these tenders was approximately ₹39.81 crore (₹15.24 crore, ₹13.08 crore, and ₹11.49 crore respectively), covering primary, upper primary, and high/higher secondary schools.

The tender notices contained a controversial eligibility clause that required:

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"Bidders must have supplied sports goods worth at least ₹6.00 crores (cumulative) to State Government agencies of Chhattisgarh in the last three financial years."

Vinishma Technologies Pvt. Ltd., a Mumbai-based company with extensive experience supplying sports kits to government departments in Bihar, Karnataka, Gujarat, Jharkhand, and Delhi, found itself disqualified from participating solely due to the absence of prior supply experience with Chhattisgarh state agencies—despite having proven financial soundness, technical competence, and a strong track record in similar large-scale projects across India.

The company filed representations with the tendering authority seeking modification or relaxation of the clause, which were rejected. Subsequently, Vinishma challenged the tender condition before the Chhattisgarh High Court through writ petitions.

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High Court's Decision

The Chhattisgarh High Court, by orders dated August 11 and 12, 2025, dismissed the writ petitions and upheld the impugned tender condition. The High Court reasoned that:

The condition ensured the selection of a "capable and reliable bidder" for a project of significant scale and public importance.
It was justified to ensure familiarity with local conditions and timely, reliable delivery to remote and Maoist-affected areas.
Similar conditions were prevalent in other states like Gujarat, Assam, Delhi, Odisha, and Jharkhand.
The clause was neither violative of Article 14 nor Article 19(1)(g), as it related to the legitimate objective of ensuring technical competence, financial strength, and long-term reliability.

Aggrieved, Vinishma Technologies approached the Supreme Court of India in appeal.

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Issue

Is a tender condition that restricts eligibility to bidders with prior supply experience within a specific state arbitrary, discriminatory, and violative of the constitutional guarantees under Articles 14 and 19(1)(g)?

Specifically:

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Does such a condition create an "artificial barrier" that excludes otherwise competent and experienced suppliers?
Does it violate the "doctrine of a level playing field" in public procurement?
Can the state justify such restrictions on grounds of ensuring reliability and familiarity with local conditions?

Law

The Supreme Court examined the following legal principles and precedents:

1. Article 14 (Right to Equality)

The State cannot act arbitrarily or discriminate between equals. Government actions, including tender conditions, must have a rational nexus with the stated objective.

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2. Article 19(1)(g) (Freedom to Practice Any Profession, Trade, or Business)

While reasonable restrictions can be imposed in public interest under Article 19(6), they must be proportionate and not unduly restrictive.

3. Doctrine of Level Playing Field

Articulated in Ramana Dayaram Shetty v. International Airport Authority of India (1979) 3 SCC 489, this doctrine mandates that:

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Government largesse cannot be distributed arbitrarily.
All equally placed competitors must be given equal opportunity.
The State cannot create artificial barriers that skew the market in favor of a few.

4. Judicial Review of Tender Conditions

While courts generally exercise restraint in interfering with tender conditions and commercial policy decisions, they will intervene when:

Conditions are arbitrary, malicious, or irrational.
They violate fundamental rights.
They lack rational nexus with the stated objective.

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Analysis – Supreme Court's Reasoning

1. Arbitrary and Discriminatory Nature

The Supreme Court observed that the impugned tender condition was "arbitrary, unreasonable, and discriminatory" as it:

Excluded competent and financially sound suppliers who had successfully executed contracts of far greater magnitude in other states or for Central Government departments.
Created an artificial, geography-based barrier that had no rational connection to the objective of ensuring effective supply of sports kits.
Discriminated against suppliers who, despite having superior credentials and experience elsewhere, had not dealt with Chhattisgarh state agencies before.

2. Violation of Level Playing Field Doctrine

The Court emphasized:

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"The doctrine of level playing field requires that gates of competition be opened to all who are equally placed. The impugned tender condition excludes the competent and experienced suppliers... and has the impact of promoting cartelisation. The impugned condition operates as a closed door to outsiders and restricts the wider participation of bidders and restricts competition."

By linking eligibility exclusively to past local supplies, the State erected an artificial barrier that:

Favored a small pool of local vendors.
Fostered cartelization and crony capitalism.
Restricted healthy competition, thereby harming public interest and the public exchequer.

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3. Lack of Rational Nexus

The Court rejected the State's justification that prior local experience was necessary due to the Maoist-affected geography of certain areas. It held:

The stated objective of ensuring effective and timely delivery could be achieved through non-discriminatory criteria such as:
Demonstrating adequate financial capacity.
Proving technical competence.
Showing satisfactory past performance in contracts of similar nature, regardless of the place of performance.
Confining eligibility to suppliers within one state was "not only irrational but also disproportionate" to the goal of ensuring quality supply.

4. Closing the Market to Outsiders Without Just Cause

Reiterating the constitutional principle from Ramana Dayaram Shetty, the Court observed:

"The State cannot 'close the market to outsiders without just cause'—such action offends both Article 14 and Article 19(1)(g) of the Constitution."

Conclusion

The Supreme Court allowed the appeals and:

Quashed and set aside the impugned orders of the Chhattisgarh High Court dated August 11 and 12, 2025.
Struck down the tender notices containing the restrictive eligibility condition.
Directed the State of Chhattisgarh to issue fresh tender notifications consistent with constitutional guarantees and principles of fair competition.

Key Ratio Decidendi (Legal Principle)

Tender conditions that restrict participation based on prior supply experience within a specific state, without rational justification, are arbitrary, discriminatory, and violative of Articles 14 and 19(1)(g). Public procurement must ensure a level playing field by allowing all competent and equally placed bidders to participate, regardless of geographical boundaries, to promote fair competition and safeguard public interest.

Conclusion

The Vinishma Technologies judgment is a watershed moment in Indian public procurement law. It reaffirms that while state governments possess the discretion to frame tender conditions, such discretion is not absolute and must operate within the constitutional framework of equality, fairness, and free trade.

By striking down geographical protectionism, the Supreme Court has opened the gates of competition to all equally placed players, thereby ensuring that public money is spent wisely, transparently, and in the true service of the people.