New Delhi, October 6, 2025: The Supreme Court of India on Monday issued a significant ruling, asserting that the State cannot exercise its power to prescribe conditions in a tender in a manner that infringes upon constitutional guarantees, by closing the market to outsiders without a just cause.
A bench comprising Justices Sanjay Kumar and Alok Aradhe made this crucial observation while effectively setting aside certain tenders issued by the Chhattisgarh government. The tenders were for the supply of sports kits to students of government primary, upper primary, high, and higher secondary schools in the state.
The Doctrine of Level-Playing Field
The apex court stressed that while the State has the freedom to set conditions, this power is not absolute and must adhere to constitutional principles.
“The State, while it enjoys the freedom to prescribe the conditions in the tender, cannot exercise that power in a manner that infringes upon constitutional guarantees, by closing the market to outsiders without a just cause. The doctrine of level-playing field requires that gates of competition be opened to all who are equally placed,” the bench stated.
The court elaborated that the “doctrine of level-playing field requires that all equally-placed competitors must be given an equal opportunity to participate in trade and commerce.” It is designed to prevent the State from “skewing the market in favour of a few by erecting artificial barriers.”
Rational Nexus with Tender Object
The Bench observed that the eligibility criteria in the tender notices must have a rational nexus with the object sought to be achieved, which in this case was the supply of “good-quality sports kits to school students at the best price.”
The court noted that the Chhattisgarh government’s tender linked eligibility to past experience of supplying sports goods specifically to the state government agencies of Chhattisgarh within the preceding three years.
The Supreme Court held this condition to be arbitrary:
“In the instant case, the impugned tender condition has the effect of excluding bidders who, though otherwise financially sound and technically competent, have no experience of supplying sports goods to the state government agencies of Chhattisgarh in the past three years.”
The bench concluded that the State, by linking the eligibility criteria with past local supplies, “has created an artificial barrier against the suppliers who had no past dealing with the state of Chhattisgarh.” This condition was found to curtail the fundamental rights of otherwise eligible bidders to participate in the tenders.
The judgment mandates that future eligibility criteria “should be framed in a manner which encourages wider participation and secures the best prize for the State, which in turn safeguards the public exchequer.”