Legitimacy of Territorial Restrictions in Biomass E‑Tenders for Environmental Objectives

1. Introduction

This commentary examines the April 18, 2025 Division Bench judgment of the Allahabad High Court in M/S Rajan Construction Company v. State of U.P. & 2 Others (Neutral Citation 2025:AHC:57344‑DB). The petitioner challenged Clause 3(i) of E‑Tender No. ET‑60/MMC/PD/ETPS/HTPS/2024, which restricted participation to pellet manufacturers located in the National Capital Region (NCR) or within 100 km of Harduaganj Thermal Power Station. The key issues were:

Whether territorial restrictions bore a reasonable nexus to the environmental objective of reducing stubble burning in the NCR area;
Whether such pre‑qualification conditions violated Articles 14, 19(1)(g) and 301 of the Constitution; and
The extent of judicial review in administrative procurement decisions involving environmental policy goals.

Parties: The petitioner (a biomass pellet supplier from Ambedkar Nagar district) vs. the State of U.P. entities, including Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd. and its Superintending Engineer.

2. Summary of the Judgment

The High Court dismissed the writ petition. It held that:

The territorial restriction in Clause 3(i) served a legitimate public interest—curbing stubble burning in areas adjacent to the power station—and was not arbitrary or discriminatory;
The restrictions mirrored central government policies and advisories on biomass co‑firing (SOP 2017, revised 2021, Model Contract 2023, Environment Rules 2023);
Judicial review of tender conditions is confined to detecting arbitrariness, mala fides or perversity; here, no such infirmity was demonstrated;
The doctrine of “level playing field” under Article 19(1)(g) yields to reasonable public‑interest restrictions, especially in environmental contexts; and
The authority enjoys wide discretion in framing tender terms to achieve policy objectives, and courts should respect that expertise.

3. Analysis

3.1 Precedents Cited

Ramana Dayaram Shetty v. IA Authority of India (1979): Established that tender conditions must bear a rational nexus to the procurement objective.
Engineering Kamgar Union v. Electro Steels (2004): Emphasized Article 14 review in tenders, prohibiting arbitrary exclusion.
Rashbihari Panda v. State of Orissa (1969): Reinforced equality before law in administrative decisions.
Tata Cellular v. Union Of India (1994): Laid down judicial restraint principles and Wednesbury unreasonableness in public contracts.
Reliance Energy Ltd. v. Maharashtra State Road Dev. Corp. (2007): Introduced the “level playing field” concept under Article 19(1)(g).
Maa Binda Express Carrier v. North‑East Frontier Railway (2014): Confirmed that courts only ensure fairness and transparency, not substitute commercial judgments.
Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corp. (2016): Recognized deference to tendering authorities’ interpretation of their own documents.
Silppi Constructions Contractors v. Union Of India (2020): Reinforced the limited scope of judicial interference absent perversity or mala fides.

These decisions collectively establish that while arbitrariness and mala fides in tender conditions are reviewable, courts must otherwise show deference to administrative expertise, especially where public‑interest objectives are at stake.

3.2 Legal Reasoning

The Court’s reasoning unfolded along three axes:

Policy Alignment: Clause 3(i) tracked central SOPs and rules mandating biomass co‑firing and stubble utilization in the NCR region to mitigate smog from open burning.
Rational Nexus Test: A territorial restriction ensures procurement of biomass from targeted agricultural areas (Punjab, Haryana, NCR) and encourages local processing, directly addressing the public‑health goal.
Judicial Restraint: Applying Wednesbury principles, the Court found no irrationality or bias in the impugned condition. The authority’s choice of measure to achieve environmental aims lay squarely within its discretion.

3.3 Impact

This judgment will guide future procurement disputes involving environmental or social‑policy objectives. Key impacts include:

Endorsement of territorial or other qualifying restrictions when rationally linked to a legitimate public interest;
Reaffirmation that central policies on co‑firing and crop‑residue utilization set the framework for state tenders;
Clarification that Article 19(1)(g) and related equality rights permit reasonable trade restrictions in the public interest;
Encouragement for state agencies to innovate tender conditions aimed at environmental compliance, secure in judicial deference unless perversity is shown.

4. Complex Concepts Simplified

Article 226 Writ Jurisdiction: State High Courts can issue orders quashing administrative acts for illegality or constitutional violation.
Wednesbury Unreasonableness: A decision so irrational or arbitrary that no reasonable authority would have adopted it.
Level Playing Field: Under Article 19(1)(g), equal opportunity in public procurement, subject to reasonable public‑interest restrictions.
Co‑firing of Biomass: Burning biomass pellets (agro‑residue) alongside coal to reduce greenhouse gases and particulate emissions.
Torrefaction vs. Non‑Torrefaction: Torrefaction is a heating process to improve pellet energy density; non‑torrefied pellets are untreated agro‑residue compressed into fuel.

5. Conclusion

The Allahabad High Court’s ruling establishes that when a public authority frames tender conditions to further unequivocal policy goals—here, combating air pollution by targeting stubble burning—territorial eligibility restrictions may be upheld if they pass the rational nexus test and bear no taint of arbitrariness or bias. This judgment reinforces the principle that courts will exercise restraint in procurement matters, intervening only where fundamental rights are breached by manifest perversity or mala fide intent. It significantly contributes to the jurisprudence on balancing equality of access with innovative public‑interest procurement strategies.