Case: Vinishma Technologies Pvt. Ltd. v. State of Chhattisgarh & Anr.

Citation: 2025 INSC 1182

Court: Supreme Court of India (Civil Appellate Jurisdiction)

Bench: Sanjay Kumar, J. and Alok Aradhe, J. (Author)

Date: 06 October 2025

Introduction

This decision addresses a recurring and contentious facet of public procurement: whether a procuring entity can mandate a State‑specific past performance threshold as a pre‑qualification requirement. The Samagra Shiksha Chhattisgarh State Project Office invited three tenders on 21.07.2025 through the Government‑e‑Marketplace (GeM) for supply of Sports Kits to students across 5,540 cluster resource centres spanning 33 districts. The combined tender values were substantial (Rs. 15.24 crores, Rs. 13.08 crores, and Rs. 11.49 crores), underscoring the public importance and fiscal footprint of the procurement.

The appellant, Vinishma Technologies Pvt. Ltd., a private company with multi‑State supply experience, challenged a specific eligibility condition in Section III(A) — Condition (4) “Past Performance Restriction” — requiring bidders to have supplied sports goods worth at least Rs. 6.00 crores (cumulative) to State Government agencies of Chhattisgarh in the preceding three financial years. The High Court of Chhattisgarh upheld this condition, drawing support from Association Of Registration Plates v. Union Of India (2005) 1 SCC 679 and noting similar practices in other States. The Supreme Court, however, set aside the High Court’s orders and quashed the impugned tender notices, holding that the State‑specific past performance requirement is arbitrary and violative of Articles 14 and 19(1)(g) of the Constitution.

The core issues before the Court included: (i) whether a State‑specific past performance requirement bears a rational nexus to the procurement objective; (ii) whether such a condition infringes the doctrine of the level playing field intrinsic to Article 19(1)(g) and the equality mandate under Article 14; and (iii) whether the State’s justifications (delivery challenges in a Maoist‑affected geography) render the restriction reasonable under Article 19(6).

Summary of the Judgment

• The Supreme Court held that conditioning eligibility on past supplies to “State Government agencies of Chhattisgarh” in the last three years is an artificial, irrational, and disproportionate barrier to competition, violating Articles 14 and 19(1)(g).
• Public procurement must be designed to maximize competition and achieve best value for the exchequer; eligibility criteria should relate to financial capacity, technical experience, and past performance “of similar nature,” not confined to the procuring State.
• The State’s justifications (security/topography due to Maoist‑affected districts) were rejected: the procurement concerned sports kits (not security‑sensitive supplies), Maoist activities are not uniform State‑wide, and logistical risk can be mitigated by local supply chains without excluding outside bidders.
• The High Court’s reliance on Association of Registration Plates was inapposite; the tender condition there was tied to high‑security considerations in a different setting, whereas the present supplies involve no comparable sensitivities.
• The Court quashed the High Court’s orders dated 11.08.2025 and 12.08.2025 and set aside the three tender notices dated 21.07.2025, granting liberty to issue fresh tenders compliant with constitutional norms.

Analysis

Precedents Cited and Their Influence

• Ramana Dayaram Shetty v. International Airport Authority of India (1979) 3 SCC 489: The Court reaffirmed that governmental discretion in awarding largesse is bounded by fairness and non‑arbitrariness. While the State can set tender terms, it cannot exclude persons arbitrarily or without adequate reasons. This baseline informs the permissible scope of eligibility criteria — they must exhibit rationality and fairness.
• Directorate Of Education v. Educomp Datamatics Ltd. (2004) 4 SCC 19: The Court reiterated judicial deference to executive choices in tender design, emphasizing that courts should not substitute their views for the procuring authority’s unless the terms are arbitrary or mala fide. The present judgment respects that deference but clarifies its limits: deference ends where constitutional guarantees are infringed.
• Global Energy Ltd. v. Adani Exports Ltd. (2005) 4 SCC 435 and Shimnit Utsch India Pvt. Ltd. v. WBTIDC (2010) 6 SCC 303: These cases underscore that interference with tender conditions is limited to arbitrariness, discrimination, mala fides, or irrationality. Here, the Court found the State‑specific experience filter to be exactly such an irrational barrier.
• Icomm Tele Ltd. v. Punjab State Water Supply and Sewerage Board (2019) 4 SCC 401 and Uflex Ltd. v. Government of Tamil Nadu (2022) 1 SCC 165: Both decisions reinforce the settled standard — courts generally eschew micromanaging tenders but intervene where eligibility criteria are arbitrary or discriminatory. The Court used this line to justify striking down a criterion that skewed competition.
• Association Of Registration Plates v. Union Of India (2005) 1 SCC 679: The High Court applied ARP to uphold the State’s restriction. The Supreme Court distinguished ARP, noting that ARP concerned security‑sensitive high‑security registration plates, where enhanced thresholds and tightly tailored conditions could be justified by the legitimate aim of security and safety. Sports kits procurement lacks comparable security dimensions, rendering a State‑specific performance filter disproportionate and unrelated to the object of the tender.
• Union of India v. Bharat Forge Ltd. (2022) 17 SCC 188: Cited for the doctrine of the level playing field as an expression of Article 19(1)(g), mandating equal opportunity among equally placed competitors. The judgment leverages this doctrine to condemn artificial geofencing of eligibility based on prior dealings with the procuring State.

Legal Reasoning

The Court framed the central inquiry narrowly: does conditioning eligibility on prior supplies to Chhattisgarh’s State agencies in the preceding three years meet the constitutional tests of reasonableness (Article 19(6)) and non‑arbitrariness (Article 14), while respecting the level playing field (Article 19(1)(g))?

• Rational nexus and proportionality: The tender’s legitimate objective is to secure timely delivery of quality sports kits at the best price. Eligibility may legitimately demand financial strength, technical competence, and past performance in “similar contracts.” However, confining such experience to supplies made only to Chhattisgarh’s State agencies has no rational nexus to quality or timely delivery. It is over‑inclusive (excludes experienced suppliers with superior track records elsewhere) and under‑inclusive (does not necessarily assure better performance merely because the supplier has local past contracts).
• Level playing field and market distortion: By linking eligibility to prior local supplies, the State erected an artificial barrier that “skews the market,” reducing competition and increasing the risk of cartelisation. The Court emphasized that public procurement should encourage wider participation to safeguard the public exchequer, not close the market to outsiders.
• Article 14 and 19(1)(g): The State may prescribe reasonable restrictions in public interest under Article 19(6), but those restrictions must be non‑discriminatory and proportionate. The State‑specific filter unjustifiably discriminated against outsiders despite their equivalent or superior capacity and experience, thus violating Articles 14 and 19(1)(g).
• Rejection of the State’s justifications: The State argued that Chhattisgarh’s Maoist‑affected geography necessitated local prior experience to ensure timely delivery and quality. The Court found:
  • The procurement is for sports kits, not security‑sensitive items;
  • Maoist activities are localized to some districts, not an omnipresent State‑wide condition; and
  • Non‑local bidders can mitigate logistical risks via local supply chains and partnerships, without being barred from participation.
  Hence, less restrictive means exist that do not foreclose competition.
• High Court’s error: By equating the challenged condition to the one in ARP and by emphasizing prevalence in other States, the High Court overlooked the principle that commonality of practice does not cure unconstitutionality; the controlling inquiry remains one of rational nexus and proportionality to the procurement’s object.
• Remedy: Despite the opening of financial bids on 21.08.2025, the Court quashed the tender notices, prioritizing constitutional compliance and the integrity of the process over administrative convenience or the academic calendar. Fresh tenders were permitted.

Impact of the Judgment

• Immediate procurement practice: Procuring entities across India must avoid State‑specific or buyer‑specific past performance conditions unless a compelling, evidence‑based, and proportionate justification is demonstrably linked to the nature of the procurement (e.g., bona fide security‑sensitive contexts).
• Design of eligibility criteria: Experience requirements should be framed in terms of:
  • Similarity of goods/services and scale;
  • Delivery in challenging terrains or risk environments “anywhere,” not confined to the procuring State; and
  • Objective indicators (timely completion, defect‑free supplies, absence of repudiations/penalties) regardless of geography.
• GeM and custom PQ filters: While GeM enables standardized parameters, any custom qualification that geofences experience to the procuring State will attract constitutional scrutiny after this ruling.
• Competitive dynamics and price discovery: By prohibiting local‑experience cloisters, the judgment expands the bidder pool, improving price discovery and reducing the risk of cartelisation.
• Consistency with policy preferences: The ruling does not negate lawful policy‑based preferences such as local content requirements under central procurement policies or statutory set‑asides. It specifically condemns State‑specific past performance filters that are not tied to the procurement’s legitimate aims with proportional means.
• Litigation risk: Ongoing and future tenders containing State‑specific past performance clauses may be vulnerable to challenge, even post‑bid opening, if constitutional infirmities are established.

Complex Concepts Simplified

• Level Playing Field: The principle that all equally placed bidders should have an equal opportunity to compete. The State must not tilt the field by erecting artificial barriers that favour some bidders over others without valid, proportionate reasons.
• Rational Nexus: A constitutional test requiring that any eligibility condition must be logically connected to the objective of the tender (quality, timeliness, value for money).
• Proportionality (under Article 19(6)): Even if a restriction pursues a legitimate aim, it must be suitable, necessary (i.e., the least restrictive means available), and balanced in its effects on fundamental rights versus the public interest.
• Cartelisation: A reduction in competition where a small group of suppliers (often incumbents) dominate the market, potentially driving up prices or reducing quality/innovation.
• Eligibility vs. Evaluation Criteria: Eligibility (pre‑qualification) filters decide who may participate; evaluation criteria determine which eligible bidder should win. Overly restrictive eligibility can unlawfully shrink competition before merit is assessed.
• Judicial Deference in Tender Matters: Courts generally avoid micromanaging procurement unless the conditions are arbitrary, discriminatory, or mala fide. This judgment marks the boundary where deference yields to constitutional scrutiny.

Practical Guidance

For Procuring Entities

• Define experience requirements by similarity of goods, complexity, volume, and performance history, not by the geography of prior contracts.
• When geography matters, use neutral formulations (e.g., experience in last‑mile delivery in difficult terrains “anywhere”) supported by data and risk assessments.
• Prefer less restrictive tools to ensure performance: robust delivery schedules, performance securities, liquidated damages, warranties, inspection regimes, and acceptance of local subcontracting/consortiums.
• Record reasoned justifications in the tender for any special requirements; ensure they can withstand proportionality review.
• Avoid buyer‑ or State‑specific past performance thresholds unless demonstrably indispensable for a security‑sensitive procurement and narrowly tailored.

For Bidders

• Scrutinize tenders for geofenced or buyer‑specific PQ clauses; challenge them promptly with detailed representations and, if necessary, writ petitions.
• Demonstrate equivalence of past supplies (scale, complexity, delivery compliance, defect‑free performance) across jurisdictions to meet “similar experience” requirements.
• Offer local distribution/last‑mile plans (warehousing, logistics partners) to neutralize perceived geographic disadvantages without conceding to exclusionary PQ filters.

Why Association of Registration Plates Was Distinguishable

• ARP involved high‑security registration plates—a domain with manifest security and public safety concerns justifying stringent, specialized thresholds.
• Sports kits lack comparable security sensitivity; the function of the procurement is to ensure quality and timely distribution to students, achievable without State‑specific past performance filters.
• Even if delivery risks exist in some districts, tailored logistics conditions and performance safeguards are available and are less restrictive alternatives to an exclusionary State‑specific experience bar.

Key Takeaways

• State‑specific past performance requirements, absent compelling and proportionate justification, are unconstitutional.
• Eligibility must be linked to objective performance indicators and similarity of contracts, not confined to the procuring State.
• The doctrine of the level playing field is central to public procurement under Articles 14 and 19(1)(g).
• Courts will intervene where tender conditions create artificial barriers that distort competition and risk cartelisation, even at advanced stages of the procurement timeline.
• Security‑sensitive contexts may justify stricter thresholds, but such conditions must be narrowly tailored to the procurement’s unique risks.

Conclusion

Vinishma Technologies marks a significant doctrinal clarification: the Supreme Court has drawn a clear constitutional line against geofenced past performance requirements in public procurement. By situating the analysis within Articles 14 and 19(1)(g) and the doctrine of the level playing field, the Court reaffirmed that competition is not a dispensable value but a constitutional imperative in State contracting. The ruling does not diminish the State’s discretion to safeguard quality and timely delivery; it channels that discretion towards rational, proportionate, and non‑discriminatory means—experience in similar projects, financial capacity, and proven performance—without parochial constraints.

Practically, the decision will recalibrate procurement norms nationwide, steering agencies away from buyer‑ or State‑specific PQ filters and towards risk‑based, neutral, and evidence‑driven eligibility design. It is a robust reminder that value for money, fairness, and openness are mutually reinforcing cornerstones of the Indian public procurement framework.