The Supreme Court has ruled that minor variations in rival bids are irrelevant in a tender process, as it set aside a Gujarat High Court judgment that had quashed the allotment of a tender merely because the amount quoted by the successful bidder was ₹14,000 more than its competitor.
A tender is usually awarded to the lowest bidder.
“The judicial solution for such problems arising out of the fierce competition between competing bidders is not to be found in the mathematical precision or application of rigid formulae. While scrutinising the process by which evaluation is undertaken, courts must ensure a measure of reason and integrity so that the action is not fraught by illegality or arbitrariness,” a bench of Justices Pamidighantam Sri Narasimha and Aloke Aradhe said in a judgment.
The bench passed the ruling while allowing an appeal by M/S Steag Energy Services (India) challenging the high court judgment quashing the tender allotted to it by GSPC Pipavav Power Company Ltd (GPPC) on a petition by rival bidder O&M Solutions.
The GPPC had floated a tender in January 2025 inviting bids for the operation and maintenance of a power plant for five years, and Steag Energy emerged as the successful bidder. However, while dealing with O&M’s petition, the high court observed that the price quoted by it was ₹19,65,55,668 while Steag Energy had quoted ₹19,65,69,120.
Solely based on the marginal price difference, the high court quashed the contract awarded to the appellant.