Tender challenge requires prima facie eligibility and genuine interest; interim restraint fails where Swiss Challenge disclosures are not shown deficient.

A challenger to a tender or auction process must still show prima facie eligibility and a genuine interest in participating, even when attacking the validity of the process itself. On the pleadings here, the plaintiff did not adequately establish locus standi or a cause of action because eligibility to submit an expression of interest was not sufficiently shown and the challenge was raised immediately on publication. The Swiss Challenge auction framework was treated as a recognised bidding method, and the disclosure of reserve price, mark-up price, and access to further materials for shortlisted bidders did not, at that stage, show opacity or breach of the RBI Master Direction on transfer of loan exposures. Interim restraint was therefore considered unwarranted on the facts.

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Issues: (i) Whether the plaintiff had locus standi and a cause of action to challenge the notice inviting expression of interest without participating in the process; (ii) whether the auction process was vitiated by lack of transparency or non-compliance with the RBI Master Direction governing transfer of loan exposures; (iii) whether the grant of ad interim injunction was justified on the facts.

Issue (i): Whether the plaintiff had locus standi and a cause of action to challenge the notice inviting expression of interest without participating in the process.

Analysis: A distinction was drawn between a challenge to the breach of tender terms and a challenge to the validity of the tender terms themselves. While prior participation is not invariably necessary where the terms of the process are attacked, a challenger must still show a real interest in participating and prima facie eligibility to do so. The plaint did not contain sufficient pleading that the plaintiff satisfied the eligibility conditions for submission of an expression of interest, and the immediate challenge on the very day of publication of the notice cast doubt on bona fides.

Conclusion: The challenge was not maintainable at the instance of the plaintiff, and locus standi and cause of action were prima facie absent.

Issue (ii): Whether the auction process was vitiated by lack of transparency or non-compliance with the RBI Master Direction governing transfer of loan exposures.

Analysis: The Swiss Challenge method was treated as a legally recognised mode of bidding, including in government tenders, and the RBI framework contemplated a base bid, counter-bids, and disclosure of the essential elements of the base bid. The notice and deal summary disclosed the reserve price, mark-up price, and access to further materials for shortlisted eligible bidders. The allegations regarding inadequate due diligence time, absence of external valuation, and non-disclosure of essential elements were found to be premature or unsupported at the stage of the notice inviting expression of interest.

Conclusion: No prima facie illegality, opacity, or violation of the RBI framework was made out.

Issue (iii): Whether the grant of ad interim injunction was justified on the facts.

Analysis: In view of the absence of a prima facie maintainable challenge, the insufficiency of pleadings on eligibility, and the lack of demonstrable violation of the governing circulars, the basis for injunctive relief was found to be erroneous. The order under appeal proceeded on considerations that were inconsistent with the legal nature of the Swiss Challenge process and did not properly apply the governing tests for interim relief.

Conclusion: The ad interim injunction was not justified and was liable to be set aside.

Final Conclusion: The appellate court held that the suit challenge was prima facie untenable and that the interim restraint on the auction process could not stand, thereby restoring the appellants' freedom to proceed in accordance with the notice and governing circulars.

Ratio Decidendi: A party challenging the validity of a tender or auction process must still demonstrate prima facie eligibility and a genuine interest in participating, and a court will not sustain interim restraint where the alleged irregularities are unsupported or premature under the governing bidding framework.

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