Supreme Court on Tender Rejection: Valuation Certificate Need Not Be Issued by District Magistrate.

Headnote:

The Supreme Court held that a tendering authority cannot reject a technical bid on grounds that are not explicitly stated in the Notice Inviting Tender (NIT). The Court ruled that the Krishi Utpadan Mandi Parishad had acted beyond the NIT’s terms by disqualifying Kimberley Club Pvt. Ltd. for submitting a “haisiyat praman patra” (solvency/valuation certificate) issued by a private valuer rather than a District Magistrate. Since the NIT did not specify that the certificate must be issued by a District Magistrate, the rejection was arbitrary and dehors the tender terms. The Court set aside the High Court’s decision and directed reconsideration of the appellant’s bid.

Background:

1. The Krishi Utpadan Mandi Parishad issued a tender to lease a banquet hall/terrace lawn for ten years through a two-stage bidding process — technical and financial.
2. Clause 18 of the NIT required bidders to submit a “haisiyat praman patra” (solvency certificate) of at least ₹10 crores.
3. Kimberley Club Pvt. Ltd. submitted a certificate issued by a private architect-cum-valuer empanelled with the Income Tax Department, assessing assets at ₹99 crores.
4. The Parishad rejected the bid, holding that the certificate was invalid as it was not issued by a District Magistrate, and the Allahabad High Court upheld this view.
5. The appellant approached the Supreme Court, arguing that the NIT nowhere required the certificate to be issued by the District Magistrate.

Court’s Observations:

1. The Court emphasized that judicial review in tender matters is limited and interference is justified only when the decision is dehors (beyond) the tender terms or patently arbitrary (Tata Cellular v. Union of India, (1994) 6 SCC 651).
2. Clause 18 of the NIT did not specify that the “haisiyat praman patra” must be issued by a District Magistrate or as per any government notification.
3. The Parishad, being a statutory body under the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964, was not automatically bound by the government notification of 29.10.2018 prescribing such procedure.
4. The Court rejected the Parishad’s argument that the requirement was implied or customary, holding that tender conditions must be clear and unambiguous (Maha Mineral Mining & Benefication Pvt. Ltd. v. M.P. Power Generating Co. Ltd., 2025 SCC OnLine SC 1942).
5. The Parishad’s later attempt to justify rejection on new grounds — such as non-disclosure of encumbrances — was impermissible, since administrative orders must stand on reasons recorded therein (Mohinder Singh Gill v. Chief Election Commissioner, (1978) 1 SCC 405).
6. The valuation certificate demonstrated a net worth well above ₹10 crores, and the Parishad could have sought clarification on encumbrances instead of outright rejecting the bid.

Decision:

1. The Supreme Court set aside the High Court’s order and quashed the rejection of the appellant’s technical bid.
2. The matter was remanded to the Krishi Utpadan Mandi Parishad to reconsider the appellant’s technical bid and, if satisfied with the asset’s valuation and net worth, proceed to negotiate between the appellant and the successful bidder to determine who would continue the contract.

Legal Provisions and Precedents Discussed:

1. Clause 18, Notice Inviting Tender (NIT) – Requirement of solvency certificate of ₹10 crores.
2. U.P. Krishi Utpadan Mandi Adhiniyam, 1964 – Statutory framework for the Mandi Parishad.
3. Tata Cellular v. Union of India, (1994) 6 SCC 651 – Judicial review in tender matters.
4. Maha Mineral Mining & Benefication Pvt. Ltd. v. M.P. Power Generating Co. Ltd., 2025 SCC OnLine SC 1942 – Clarity in tender terms.
5. Mohinder Singh Gill v. Chief Election Commissioner, (1978) 1 SCC 405 – Orders must be justified on stated reasons.

The Supreme Court reaffirmed that tender conditions must be explicit and cannot be supplemented by implied or unstated rules. Rejecting a bid on grounds not specified in the NIT violates fairness and transparency in public procurement.

Citation: 2025 INSC 1276

Case: Kimberley Club Pvt. Ltd. v. Krishi Utpadan Mandi Parishad & Ors.

Court: Supreme Court of India

Coram: Justice Surya Kant & Justice Joymalya Bagchi

Date of Decision: 31 October 2025

Civil Appeal No.: (Arising out of SLP (C) No. 20557 of 2021)