Tender eligibility conditions must bear rational nexus to procurement; artificial local barriers to qualified bidders were invalidated.

A tender eligibility requiring bidders to have supplied sports goods worth at least Rs. 6 crores to Chhattisgarh State agencies in the preceding three financial years was held to lack a rational nexus with the object of procuring sports kits through fair competition. The Court stated that while the State may prescribe tender conditions, they must not be arbitrary, discriminatory, mala fide, or disconnected from the public purpose. By limiting eligibility to past supplies made only to local State agencies, the condition excluded otherwise qualified suppliers with comparable experience elsewhere and created an artificial barrier to participation. The restriction was therefore treated as unreasonable and violative of Articles 14 and 19(1)(g).

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Issues: Whether the tender condition requiring bidders to have supplied sports goods worth at least Rs. 6 crores to State Government agencies of Chhattisgarh in the preceding three financial years was arbitrary, discriminatory and unreasonable, and thus violative of Articles 14 and 19(1)(g) of the Constitution of India.

Analysis: The tender was for supply of Sports Kits to students in government schools, and the eligibility condition had to bear a rational nexus with the object of securing quality supplies at the best price through fair competition. The Court reiterated that while the State has latitude to prescribe tender conditions, such conditions may be struck down if arbitrary, discriminatory, mala fide or lacking rational connection with the public purpose. The impugned condition confined eligibility to past supplies made only to Chhattisgarh State agencies and thereby excluded otherwise competent and financially sound suppliers who had executed comparable contracts elsewhere. This created an artificial barrier to participation, narrowed competition, and did not stand justified by the explanation that the State was Maoist-affected or that local familiarity was necessary, especially when the contract concerned sports kits and not security-sensitive goods.

Conclusion: The impugned eligibility condition was held to be arbitrary, unreasonable and discriminatory, and to offend Articles 14 and 19(1)(g) of the Constitution of India.

Final Conclusion: The tender restriction could not be sustained as a lawful procurement condition and the challenge to it succeeded.

Ratio Decidendi: A tender eligibility condition that creates an artificial local barrier unrelated to the object of procurement, and excludes otherwise qualified bidders without rational justification, is liable to be invalidated as arbitrary and violative of equality and freedom of trade guarantees.

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