M/S SRI VENKATESWARA CONSTRUCTIONS V. STATE OF ODISHA & ORS 2025 INSC 580:

DATE: 25/04/2025

COURT: Supreme Court of India

BENCH: Justice Bela M. Trivedi and Justice Prasanna B. Varale

FACTS:

The dispute arises from an auction process initiated by the Tahsildar, Banspal (Respondent No. 2), on 18.07.2022 for the long-term lease of Karangadihi Stone Quarry for five years. The auction required specific documents, notably an income tax return showing sufficient income or an equivalent bank guarantee and a no-dues certificate from the concerned GST authority. Five entities submitted bids, among them M/s Sri Venkateswara Construction (the petitioner) and M/s P.K. Minerals Pvt. Ltd. (Respondent No. 4). After evaluating the bids, the Tahsildar rejected the bid of Respondent No. 4 for not submitting a proper GST no-dues certificate and declared the petitioner the successful bidder, having quoted the highest additional charge (Rs. 589/-). The petitioner was issued a letter of intimation on 10.08.2022 and complied with the subsequent formalities.

Respondent No. 4 challenged the decision before the Sub-Collector, who upheld the Tahsildar's selection process and dismissed the appeal on 20.10.2022. Dissatisfied, Respondent No. 4 filed a writ petition before the High Court of Orissa. The High Court, by its order dated 18.05.2023, set aside the decisions of both the Tahsildar and the Sub-Collector, citing procedural lapses and non-compliance with the Odisha Minor Minerals Concession Rules, 2022. It found that neither the petitioner nor Respondent No. 4 had submitted valid income tax returns for FY 2021-22 or valid GST no-dues certificates at the time of bidding. The Court held that the tender process was arbitrary and contrary to law, directing a fresh tender. Both the petitioner and Respondent No. 4 challenged this High Court order through separate Special Leave Petitions, which were jointly heard in the present appeals.

ISSUES:

The key issue in this case was whether the auction process for the lease of the Karangadihi Stone Quarry was conducted in compliance with the applicable rules and whether the selection of M/s Sri Venkateswara Constructions (the petitioner) as the highest bidder was valid. The dispute centered on the eligibility of the petitioner with regard to the submission of income tax returns and a GST no-dues certificate, and whether these met the requirements of the tender. M/s P.K. Minerals Pvt. Ltd. (respondent no.4) challenged the acceptance of the petitioner's bid, leading to the High Court's decision to cancel the allotment and direct a fresh tender. However, the Supreme Court found that the petitioner had quoted a significantly higher bid, which would have benefitted the state exchequer, and held that the revenue authorities had acted appropriately, concluding that the High Court erred in interfering with their decision.

JUDGEMENT WITH REASONING:

The Supreme Court allowed the appeals, quashed and set aside the impugned High Court order, and upheld the decision of the revenue authorities—namely the Tahasildar and the Sub-Collector—declaring the petitioner as the successful bidder for the stone quarry lease, stating that the High Court had committed a gross error in interfering with a just and lawful decision.

The Court found that the petitioner had complied with all the conditions set out in the tender notice, specifically by submitting the income tax return of the previous financial year and furnishing the requisite certificate from the concerned GST Jurisdictional Officer stating that no GST dues were pending. The revenue authorities had verified these documents and were satisfied with their authenticity and sufficiency. The income tax return for the year 2020–21 demonstrated the petitioner’s financial capability to participate in the bid, which fulfilled the intent of the tender condition. In contrast, respondent no.4 had failed to comply with one of the critical conditions—submission of a GST no-dues certificate—and therefore could not be considered at par with the petitioner. The Court emphasized that the revenue authorities had exercised their discretion appropriately, and there was no valid reason to delay or overturn their decision.

Additionally, the Court noted that the petitioner’s bid amount was significantly higher than that of respondent no.4, and thus acceptance of the petitioner’s bid would have resulted in greater revenue for the state exchequer. Ignoring a compliant, higher bid in favor of a non-compliant, lower one would not only undermine the fairness of the auction process but also cause a direct financial loss to the public. This economic rationale further validated the decision of the Tahasildar and the Sub-Collector. The High Court’s interference in a decision that was procedurally sound and financially prudent was deemed unwarranted and erroneous. Consequently, the Supreme Court held that the High Court had committed a serious error in setting aside the decision of the revenue authorities, warranting the restoration of their original determination.

ANALYSIS:

This case highlights the interplay between procedural compliance in public tendering and the practical discretion of administrative authorities in evaluating bids. At the core of the dispute was the interpretation of eligibility conditions specified in the tender notice—submission of a valid income tax return and a GST no-dues certificate. The Supreme Court scrutinized the conduct of the Tahsildar and Sub-Collector, finding that they had reasonably interpreted and applied the tender conditions. The petitioner, M/s Sri Venkateswara Construction, provided income tax returns that, although not from the immediately preceding financial year, sufficiently demonstrated financial capability. Similarly, the GST no-dues certificate, although conditional in its wording, was accepted as meeting the requirement at the stage of evaluation. This pragmatic and contextual reading of the eligibility conditions by the revenue authorities, as validated by the apex court, underscores the principle that public tenders must be assessed not through hyper-technical interpretations, but in a manner that promotes administrative efficiency and economic rationality.

Moreover, the Supreme Court emphasized the economic impact of public procurement decisions. By upholding the petitioner’s higher bid, the Court reinforced the principle that public auctions should aim to maximize returns to the state exchequer, provided that basic compliance with eligibility norms is ensured. The fact that respondent no.4 failed to submit a proper GST certificate was critical and indicative of non-compliance, disqualifying it from being considered a valid contender. The High Court, by directing a fresh tender on grounds of procedural irregularities, had overlooked the larger public interest and the discretion rightly exercised by the authorities. The Supreme Court’s judgment reflects a balanced approach—recognizing the necessity of procedural compliance while also validating decisions made in the broader interest of administrative fairness and public benefit. It serves as a precedent affirming that judicial interference should be restrained in tender matters where authorities act within the framework of rules and public interest is demonstrably safeguarded.

Judgements