Prakash Asphaltings and Toll Highways (India) Limited v. Mandeepa Enterprises 2025 INSC 1108 - Judicial Review - Tender

Case Name and Neutral Citation

• Case Name: Prakash Asphaltings and Toll Highways (India) Limited v. Mandeepa Enterprises & Others
• Neutral Citation: 2025 INSC 1108

Coram

• Judges: Manoj Misra, Ujjal Bhuyan

Judgment Date

• Date of Judgment: 12 September 2025

Caselaws and Citations Referred

The judgment refers to the following cases:

1. West Bengal State Electricity Board Vs. Patel Engineering Company LimitedCitation: (2001) 2 SCC 451
2. Jagdish Mandal Vs. State of OrissaCitation: (2007) 14 SCC 517
3. Afcons Infrastructure Limited Vs. Nagpur Metro Rail Corporation LimitedCitation: (2016) 16 SCC 818
4. Johra Vs. State of HaryanaCitation: (2019) 2 SCC 324
5. M/s. ABCI Infrastructures Private Limited Vs. Union of IndiaCitation: (2025) INSC 215
6. Supreme Infrastructure India Limited Vs. Rail Vikas Nigam LimitedCitation: 2012 SCC Online Delhi 616
7. CIDCO Vs. Shishir Realty Private LimitedCitation: (2012) 16 SCC 527
8. Subodh Kumar Singh Rathore Vs. Chief Executive OfficerCitation: 2024 SCC Online SC 1682

Statutes / Laws Referred

• Article 226 of the Constitution of India (regarding writ jurisdiction)
• Tender Conditions Clauses:
• • Clause 4(g) of the Notice Inviting Electronic Bid (regarding change in BOQ template)
  • Clause 5B(v) of the Instructions to Bidders (regarding clarification/information during bid evaluation)

Q1: What was the core legal issue brought before the Supreme Court in Prakash Asphaltings and Toll Highways (India) Limited v. Mandeepa Enterprises? A1: The core legal issue was whether a bidder (Mandeepa Enterprises) could be permitted to rectify its financial bid after the bidding process was over and financial bids had been opened, specifically converting a per-day quoted rate into a consolidated rate for the entire contract period. The Supreme Court had to determine if such rectification was permissible under the tender conditions and established principles of tender law, and whether the Division Bench of the High Court erred in allowing it.

Q2: What was the legal basis for the learned Single Judge's dismissal of Mandeepa Enterprises' writ petition, and how did it differ from the Division Bench's reasoning? A2: The learned Single Judge dismissed Mandeepa Enterprises' writ petition on the grounds that "bona fides cannot be attributed to the petitioner" and the petitioner was "grossly negligent" in quoting an erroneous amount, despite clear instructions in the BOQ. The Single Judge held that allowing such an opportunity after financial bids were opened would "upset the entire tender process," make it "opaque and arbitrary," be "contrary to every known principle of fairness pertaining to tenders," and amount to a "special favour".

In contrast, the Division Bench allowed the intra-court appeal, finding the error "inadvertent" and that Mandeepa Enterprises had "promptly sought for correction". The Division Bench broadly interpreted Clause 5B(v) of the Instructions to Bidders, which allows the tendering authority to "seek clarification/information or additional supporting documents," to mean that the authority had "sufficient leverage and play in the joints to seek for any clarification or information during the entire evaluation process" and that this power extended from "inception till the issuance of work order".

Q3: How did the Supreme Court interpret Clause 5B(v) of the Instructions to Bidders and Clause 4(g) of the tender conditions regarding the rectification of financial bids? A3: The Supreme Court held that the Division Bench's interpretation of Clause 5B(v) was "stretching things a bit too far". It clarified that this clause is meant to empower the authority to seek clarification or further information regarding documents filed, not to allow "rectification of the BOQ rates". The Court emphasized that this provision must be read conjointly with Clause 4(g) of the notice inviting electronic bid, which is "very specific" and states that "Any change in template of BOQ will not be accepted under any circumstances". The Court concluded that Clause 4(g) imposes a "complete embargo" on any change in the BOQ template, thus precluding post-bid rectification of quoted rates.

Q4: What legal principle did the appellant, Prakash Asphaltings, invoke regarding the Division Bench's proceedings, and why was it considered violated? A4: Prakash Asphaltings, being the highest (H1) bidder, invoked the principles of natural justice, specifically the right to be heard. They submitted that they were not made a party respondent in the intra-court appeal before the Division Bench, even though the relief granted to Mandeepa Enterprises would "adversely affected the appellant" and entailed "adverse civil consequences" by downgrading its H1 status. The Supreme Court agreed, holding that the appellant was a "necessary party" and that "non-impleadment and consequential non-hearing of the appellant by the High Court, has vitiated the impugned judgment and order". This aligns with the fundamental principle reiterated in Johra (supra) that no order can be passed against any party without hearing and giving an opportunity of hearing.

Q5: What was the Supreme Court's stance on the "public interest" argument presented by Mandeepa Enterprises, specifically concerning higher revenue versus adherence to tender conditions? A5: While acknowledging that "benefit to the public exchequer is certainly an important criteria in award of contract," the Supreme Court stated that it is "equally in public interest to adhere to the rules and conditions subject to which bids are invited". The Court observed that "public interest" should not be "narrowly confined to financial aspect only". It highlighted that "sanctity of the tender process being paramount and should be maintained at all cost". The Court also referenced CIDCO v. Shishir Realty Private Limited and Subodh Kumar Singh Rathore v. Chief Executive Officer, which held that the "mere possibility of more money in the public coffers, does not in itself serve public interest" and emphasized "upholding contracts and the fairness of public authorities". The Supreme Court further noted that due to the "avoidable litigation instituted by respondent No. 1," the State lost "considerable amount of revenue" because the contract work could not start timely, an aspect overlooked by the Division Bench.

Q6: What are the established principles for judicial review of tender and contract awards, as reiterated by the Supreme Court in this judgment, particularly concerning interference by constitutional courts? A6: The Supreme Court reiterated several key principles regarding judicial review of tender and contract awards, notably from Jagdish Mandal (supra) and Afcons Infrastructure Limited (supra):

• Purpose: Judicial review prevents "arbitrariness, irrationality, unreasonableness, bias and mala fides" and checks if a decision is made "lawfully," not if it is "sound".
• Commercial Functions: Evaluating tenders and awarding contracts are "essentially commercial functions," and "principles of equity and natural justice stay at a distance".
• Non-Interference: Courts will not interfere if the decision is bona fide and in public interest, "even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out".
• Resistance to Imaginary Grievances: Attempts by "unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry" to interfere with the tender process "should be resisted".
• Deference to Authority: Constitutional courts must defer to the tendering authority's understanding and appreciation of tender documents unless there is "mala fides or perversity".
• High Threshold: A "mere disagreement with the decision-making process or the decision" is insufficient; the "threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met".
• Restraint: Constitutional courts should "exercise utmost restraint in interfering with a tender process unless the threshold of judicial review are met".

Q7: How did the Supreme Court address Mandeepa Enterprises' claim of an "inadvertent mistake" in its financial bid? A7: The Supreme Court rejected Mandeepa Enterprises' claim of an "inadvertent or unintentional mistake". It scrutinized the item rate BOQ submitted by Mandeepa Enterprises (extracted in paragraph 15 of the judgment) and noted that column 5 explicitly stated "Amount of Road User Fee in Figures To be entered by the Bidder for 1095 Days". Against this heading, Mandeepa Enterprises quoted Rs. 9,72,999.00 in figures and "Nine Lakh Seventy Two Thousand Nine Hundred & Ninety Nine Only" in words. The Court found that based on these clear entries, it could not be considered an inadvertent mistake. It cited Patel Engineering Company Limited (supra), which rejected a similar contention that mistakes were unintentional and occurred due to computer fault, stating that mistakes "may be unintentional but it was not beyond the control" of the bidders to correct them before submission.

Q8: Which precedents did the Supreme Court rely upon to support its decision regarding the sanctity of the tender process and the limited scope of judicial interference? A8: The Supreme Court relied on a compilation of judgments, including:

• West Bengal State Electricity Board Vs. Patel Engineering Company Limited (2001): Cited for rejecting claims of unintentional mistakes and emphasizing adherence to tender rules.
• Jagdish Mandal Vs. State of Orissa (2007): Provided a succinct summary of the limited scope of judicial review in contract awards, emphasizing commercial functions and resisting interference in the absence of mala fides, arbitrariness, or irrationality.
• Afcons Infrastructure Limited Vs. Nagpur Metro Rail Corporation Limited (2016): Reiterated that tender document words cannot be ignored, constitutional courts must defer to the owner's interpretation, and that eligible bidders should be made parties in challenges.
• Johra Vs. State of Haryana (2019): Reiterated the fundamental principle of natural justice, i.e., no order against a party without hearing.
• M/s. ABCI Infrastructures Private Limited Vs. Union of India (2025): A recent case dealing with a similar "system error" claim in quoting bid price, where the bidder was found at fault for failing to add zeroes.
• CIDCO Vs. Shishir Realty Private Limited (2012): Cited for the proposition that mere possibility of more money in public coffers does not solely serve public interest; broader understanding of public interest is needed.
• Subodh Kumar Singh Rathore Vs. Chief Executive Officer (2024): Examined public interest in administrative decisions, highlighting the importance of maintaining the "sanctity of tenders" as a cornerstone of governmental procurement processes, which ensures fairness and transparency.

Q9: What was the ultimate legal conclusion and directive of the Supreme Court in this appeal? A9: The Supreme Court concluded that the Division Bench of the High Court "clearly fell in error" by directing rectification of Mandeepa Enterprises' financial bid. It found that such an exercise was "clearly impermissible" given the contract terms and established judgments. The Court held that the Division Bench's judgment and order dated February 23, 2024, was "vitiated" due to non-impleadment and non-hearing of the appellant (Prakash Asphaltings) and "cannot be sustained" due to unduly interfering with a tender process.

Consequently, the Supreme Court set aside and quashed the impugned judgment and order of the Division Bench. It directed Respondent Nos. 2 to 4 (the tendering authority) to be "free to proceed with and finalise the award of contract in terms of the notice inviting electronic bid dated 17.10.2023". The Civil Appeal was allowed.