Authored by R & D Law Chambers LLP Ravish Bhatt  |  Advocate, Bar Council of Gujarat (G/504/2008)  |  Dual-qualified lawyer (India and England & Wales)  |  ADIT, CIOT, London  |  SRA (non-practising) Registration No. 492 477 Published: 4 October 2026  |  Last reviewed: 4 October 2026

 

Law stated as at 4 October 2026, as declared by the Supreme Court under Articles 14 and 226 of the Constitution of India. This article covers rejection of a bid at evaluation; cancellation of a tender or Letter of Intent, and blacklisting, are separate questions. The general rules on writ petitions in the Gujarat High Court are on the firm’s Gujarat High Court page.

 

Yes. The lowest price creates no right to the contract; it entitles the bidder to be judged by the tender’s published conditions, applied equally. The tendering authority decides what those conditions mean and which are essential, and courts defer to that reading. A rejected lowest bidder rarely wins with a better reading of the tender. It wins by showing that a condition was relaxed for a rival and not for it, or applied in a way no reasonable authority could.

 

Index of Topics

1. Does the lowest price give a bidder a right to the contract?
2. Who decides what the tender conditions mean?
3. Can an authority reject a bid for what looks like a technical defect?
4. When does a rejected lowest bidder succeed?
5. What questions will the High Court ask?
6. Is review stricter before the contract is awarded?
7. What can the High Court order if the rejection was unlawful?
8. Which arguments succeed and which fail?
9. What should a rejected bidder do before filing?

Frequently Asked Questions

How R & D Law Chambers Works on These Matters

1. Does the lowest price give a bidder a right to the contract?

No. Article 14 does not entitle any bidder to an award. It requires the State’s choice to rest on a rational and non-discriminatory norm, which in a tender is the set of conditions the State itself published. Price decides only among bids that satisfy those conditions, applied in the same way to every bidder.

 

The foundation is Ramana Dayaram Shetty v International Airport Authority of India, (1979) 3 SCC 489. The State cannot act arbitrarily in entering into a contractual relationship with a third party; its action must conform to some standard or norm that is rational and non-discriminatory. The same decision holds that an executive authority must be rigorously held to the standards by which it professes its actions to be judged. A three-judge Bench reaffirmed both passages in Subodh Kumar Singh Rathour v Chief Executive Officer, 2024 INSC 486 (paragraphs 63 and 88).

Tata Cellular v Union of India, (1994) 6 SCC 651, confines review to the decision-making process, not the merits, and preserves the government’s freedom of contract (as summarised in Subodh, paragraph 68). Jagdish Mandal v State of Orissa, (2007) 14 SCC 517, adds that evaluating tenders is essentially a commercial function, reviewed for lawfulness, not soundness. Whether a bid is the lowest is therefore an output of the evaluation, not an input to it.

2. Who decides what the tender conditions mean?

The authority that wrote them. In Afcons Infrastructure Ltd v Nagpur Metro Rail Corporation Ltd (2016), the Supreme Court held that the owner or employer of a project, having authored the tender documents, is the best person to understand and interpret them. Courts defer to that reading unless it is mala fide or perverse, even where the court would itself read the condition differently.

 

A joint venture relied on an inter-city high-speed railway project in China to meet a metro experience condition for a Nagpur Metro viaduct; the employer held that it was not a metro civil construction work and disqualified the bid (paragraphs 3 to 5). The Bombay High Court held the disqualification arbitrary. The Supreme Court, by its judgment of 15 September 2016 reported at (2016) 16 SCC 818, set that aside.

The Court held that constitutional courts must defer to the author’s understanding and appreciation of its tender documents unless there is mala fides or perversity in the understanding, appreciation or application of the tender conditions; an interpretation the court itself would not accept is, by itself, no reason to interfere (paragraph 15). Even if a condition were ambiguous, the High Court should have refrained from giving its own interpretation unless it had come to a clear conclusion that the employer’s interpretation was perverse, mala fide or intended to favour one of the bidders (paragraph 16).

3. Can an authority reject a bid for what looks like a technical defect?

Yes, if the authority treats the condition as essential. In Central Coalfields Ltd v SLL-SML (Joint Venture Consortium) (2016), the Supreme Court upheld rejection of a bid whose earnest money bank guarantee was not in the prescribed format, although the bidder said its guarantee was stricter. Whether a term is essential is the employer’s decision, and the court respects it.

 

The tender, for a contract of about ₹2,000 crore, allowed earnest money by bank guarantee “in the format given in the bid document” and rejection as non-responsive of any bid without acceptable bid security (paragraphs 8, 12 and 32). Nine of eleven bidders used the prescribed format; one did not and was rejected (paragraphs 13 and 33). The Jharkhand High Court reinstated the bid.

The Supreme Court, by its judgment of 17 August 2016 reported at (2016) 8 SCC 622, allowed the appeal. It is not for the employer or the court to scrutinise each guarantee to decide whether it is stricter than the format (paragraph 39). Whether a term is essential, or ancillary, is the employer’s decision and should be respected (paragraph 52). A thing to be done in a certain way must be done in that way or not at all (paragraph 56, applying Nazir Ahmad v King Emperor).

Poddar Steel Corporation v Ganesh Engineering Works, (1991) 3 SCC 273, allows the employer to waive technical literal compliance with an ancillary condition. Central Coalfields keeps that distinction but notes that Poddar Steel did not consider whether others could have bid had they known of the deviation (paragraphs 43 and 44), and confines Rashmi Metaliks Ltd v Kolkata Metropolitan Development Authority to its own facts (paragraph 49). It also held against the bidder that it neither sought a clarification nor represented against the supposed ambiguity (paragraphs 32 and 33).

4. When does a rejected lowest bidder succeed?

When the authority has moved the goalposts. Central Coalfields holds that an employer may deviate even from an essential term, but only if the deviation is made applicable to all bidders and potential bidders. Excusing a lapse in one bid and not in another, or relaxing a condition for one bidder, is the unequal treatment Article 14 forbids.

 

In Ramana Dayaram Shetty the tender required bidders to be registered second-class hoteliers, and the authority accepted a bidder that did not meet the condition. The Supreme Court held this unequal treatment: others who did not meet the condition might also have bid had they known it would not be enforced, and they were denied the privilege of participating (as explained in Central Coalfields, paragraphs 36 to 38).

G.J. Fernandez v State of Karnataka, (1990) 2 SCC 488, holds that the employer may enforce the terms rigidly, and may deviate where the change affects all intending applicants alike. Deviation is permissible so long as the level playing field is maintained; the goalposts cannot be rearranged during the bidding process to affect the right of some or deny a privilege to some (Central Coalfields, paragraphs 39, 40 and 52).

The evidence is comparative and sits in the evaluation record, not the rejection letter. Once a decision is made, the file notings that formed part of it can be examined on judicial review (Subodh, paragraphs 85 and 87).

5. What questions will the High Court ask?

The Jagdish Mandal questions. Is the process or decision mala fide or intended to favour someone; or is it so arbitrary and irrational that no responsible authority acting reasonably and in accordance with relevant law could have reached it; and is public interest affected? If the answers are in the negative, there is no interference under Article 226.

 

The questions were followed in Michigan Rubber (India) Ltd v State of Karnataka, (2012) 8 SCC 216, and applied in Central Coalfields (paragraphs 46, 50 and 51). The reason for restraint is that interference, interim or final, may hold up public works for years. A bona fide decision in the public interest stands even if a procedural aberration or an error in assessment is made out, and the tenderer with a grievance can seek damages in a civil court (Jagdish Mandal, quoted in Central Coalfields, paragraph 45).

6. Is review stricter before the contract is awarded?

Yes. The Supreme Court distinguishes a matter at the threshold of a contract from a breach of contract: at the threshold, the court’s scrutiny is more intrusive. A challenge to the rejection of a bid is a threshold challenge, so Article 14 applies with full force, within the limits Tata Cellular and Jagdish Mandal set.

 

The distinction is from Noble Resources Ltd v State of Orissa, (2006) 10 SCC 236, paragraph 15, reproduced in Subodh (paragraph 53). MP Power Management Co Ltd v Sky Power Southeast Solar India Pvt Ltd, (2023) 2 SCC 703, as summarised in Subodh (paragraph 55), confirms that a writ lies before award where the process suffers from procedural impropriety, arbitrariness, favouritism or non-application of mind. The court still reviews how the decision was made, not whether it was the best commercial choice.

7. What can the High Court order if the rejection was unlawful?

It can quash the rejection and require the bid to be evaluated again in accordance with the tender. It does not award the contract. As summarised in Subodh Kumar Singh Rathour, the court may set aside a decision vitiated by arbitrariness or favouritism at the pre-award stage but cannot substitute its own decision.

 

A petition framed around quashing the rejection and a fresh evaluation asks for relief the court can give. One that asks only for a direction to award the contract asks the court to substitute its decision for the authority’s.

8. Which arguments succeed and which fail?

Arguments resting on price alone, on a better reading of the tender, or on a document being stricter than the prescribed form usually fail. Arguments that show unequal application of the same condition, an unannounced relaxation, or a decision made to favour a rival succeed if proved on the record. The table maps each argument to its authority.

 

Argument	Authority	Effect in a writ petition
“Our price was the lowest”	Ramana Dayaram Shetty; Jagdish Mandal	Fails on its own
“Our reading of the eligibility clause is better”	Afcons Infrastructure	Fails unless the authority’s reading is perverse, mala fide or intended to favour a bidder (paragraphs 15 and 16)
“The defect was technical; our document was stricter”	Central Coalfields, paragraphs 39 and 52	Fails where the employer treats the term as essential
“The same lapse was excused in a rival bid”	Ramana Dayaram Shetty; G.J. Fernandez; Central Coalfields, paragraphs 38 to 40 and 52	A ground for interference if proved
“A condition was relaxed without telling other bidders”	Ramana Dayaram Shetty; Central Coalfields, paragraphs 37 and 38	A ground for interference if proved
“The decision was made to favour a rival”	Jagdish Mandal, first question	A ground for interference if proved on the record

 

9. What should a rejected bidder do before filing?

Three things. Obtain the written reason for rejection and the evaluation record. Compare how the same condition was applied to every other bid. And check whether the point is one the bidder could have raised as a clarification under the tender, because Central Coalfields held the bidder’s silence against it.

 

The case turns on the evaluation record and the treatment of rival bids. In Subodh Kumar Singh Rathour a right to information application was the route to the file (paragraphs 18 and 19). The petition should identify the condition, the authority’s reading of it, and the bid in which it was read or applied differently, and should join the other eligible bidders: Afcons Infrastructure says courts should insist on all eligible bidders being made parties (paragraph 18).

Frequently Asked Questions

Is a government department bound to accept the lowest bid?

No. The lowest price creates no right to the contract. The Supreme Court requires the State to act on rational and non-discriminatory norms, which in a tender are the published conditions applied equally (Ramana Dayaram Shetty). Evaluating tenders is a commercial function reviewed for lawfulness, not soundness (Jagdish Mandal). Price decides only among bids that satisfy the conditions.

Can a bid be rejected because the bank guarantee is not in the prescribed format?

Yes, where the tender prescribes the format and the employer treats it as essential. In Central Coalfields (2016) the Supreme Court upheld such a rejection although the bidder said its guarantee was stricter, holding that it is not for the employer or the court to compare each guarantee with the prescribed format. Nine of the eleven bidders had used that format.

Can the High Court direct that the contract be awarded to the lowest bidder?

Ordinarily no. As summarised in Subodh Kumar Singh Rathour (2024), at the pre-award stage the court may set aside a decision vitiated by procedural impropriety, arbitrariness or favouritism, but cannot substitute its own decision. The relief the court can give is quashing the rejection and a fresh evaluation in accordance with the tender.

What is the difference between an essential and an ancillary tender condition?

Poddar Steel (1991) held that an employer may waive technical literal compliance with an ancillary or subsidiary condition, but not deviate from an essential one. Central Coalfields (2016) holds that which category a term falls into is the employer’s decision, to be respected, and that any deviation, even from an essential term, must be made applicable to all bidders and potential bidders.

Can a tendering authority relax a tender condition?

Yes, but only for everyone. G.J. Fernandez (1990) and Central Coalfields (2016) allow the employer to deviate from the tender’s terms where the change affects all intending bidders alike and the level playing field is maintained. Relaxing a condition for one bidder denies others the privilege of participation, which Ramana Dayaram Shetty holds is unequal treatment.

Should a bidder raise an ambiguity in the tender before bidding?

Yes. In Central Coalfields the Supreme Court held it against a bidder that it neither sought the clarification the tender allowed nor made any representation against the supposed ambiguity. The Court said the objection, and the bidder’s conduct in relation to the prescribed format, did not appear to be fully above board.

How R & D Law Chambers Works on These Matters

Tender disputes are decided on the evaluation record, and the stronger ground is usually comparative rather than interpretive, as set out above.

R & D Law Chambers advises on writ petitions under Article 226 before the Gujarat High Court challenging tender evaluations, and on public procurement and EPC contracts with government departments, public sector undertakings and statutory authorities.

Related services

• Gujarat High Court Lawyers in Ahmedabad: writ petitions under Articles 226 and 227 and other proceedings before the High Court of Gujarat.
• Dispute Resolution and Court Representation: civil and commercial litigation before courts and tribunals.

General information on Indian law as at 4 October 2026. Not legal advice, and no advocate-client relationship is created. Each matter turns on its own facts and on the authorities in force when it is decided.