Supreme Court: In an appeal arising from Gujarat High Court’s judgment directing re-evaluation of technical bids by the consultant which was originally awarded to the appellant based on higher technical score, a Division Bench of P.S. Narasimha and Alok Aradhe, JJ., upheld the Letter of Award dated 9 June 2025 and the contract dated 1 July 2025 in favour of the appellant and set aside the High Court’s judgment, holding that the High Court had exceeded the principle of judicial restraint in contractual matters.
The Court held that courts cannot interfere in contractual matters merely because another view is possible or because a competing bidder has a marginally higher score, unless the decision-making process is vitiated by mala fides, arbitrariness, or perversity, the choice of the tendering authority and the owner must prevail.
Factual Matrix
In the instant matter, the dispute arose out of a tender floated in January 2025 by GSPC Pipavav Power Company Limited (GPPC) for operation and maintenance of a 702.86 MW gas-based combined cycle power plant. The tender adopted a Quality and Cost Based System (QCBS), assigning 70 per cent weightage to technical evaluation and 30 per cent to financial bids.
The appellant and the writ petitioner were among the bidders. After evaluation, the appellant secured a higher technical score (95/100) as compared to the writ petitioner (93/100), and also marginally better financial scoring. Consequently, the appellant was declared the successful bidder and a Letter of Award (LOA) was issued on 9 June 2025, followed by execution of the contract on 1 July 2025.
Subsequently, the writ petitioner challenged the tender process before the Gujarat High Court alleging arbitrariness and violation of Article 14. During the proceedings, the High Court directed re-evaluation of technical scores by the consultant. Upon re-evaluation, the appellant’s score was reduced from 95 to 93, resulting in a tie between the competing bidders.
After re-evaluation, both bidders obtained equal technical scores, i.e. 93 each. The High Court then examined the financial bids quoted by the writ petitioner and the appellant being Rs 19,65,55,668 and Rs 19,65,69,120 respectively and found that the writ petitioner had a marginally better total score due to a slightly lower price. On this basis, the High Court quashed the LOA issued to the appellant and directed GPPC to award the contract to the writ petitioner. Relying strictly on Clause 20.2(vi), the High Court reasoned that the tender condition mandated selection of the bidder with the highest total score, even if the difference was “miniscule”.
Aggrieved, the appellant approached the Supreme Court challenging the impugned order.
Issues for Determination
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What approach should the judicial review proceeding adopt while considering highly competitive bids?
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Whether the High Court was justified in interfering with the award of contract in exercise of judicial review?
Court’s Analysis and Decision
While considering the scope of judicial review, the Court referred to Montecarlo Ltd. v. NTPC Ltd., (2016) 15 SCC 272, which focuses on two principles, (i) the judicial restraint in contractual matters, and (ii) the freedom of contract permitting allowance of free play in the joints.
The Court in Montecarlo Ltd. (supra) underscored that judicial review in tender matters must be exercised with restraint, particularly where the subject involves complex technical and commercial considerations. It reiterated that courts are not equipped to undertake a comparative evaluation of bids or to reassess technical parameters determined by experts. While judicial scrutiny is not entirely excluded, it is confined to examining whether the decision-making process is vitiated by arbitrariness, mala fides, or procedural impropriety. Where the decision is “manifestly in consonance with the language of the tender document” and subserves the purpose of the tender, courts must adhere to the principle of restraint and refrain from interference.
The Court cautioned against adopting a hypertechnical or overly analytical approach in tender disputes. It observed that courts should not use a “magnifying glass” to detect minor discrepancies or treat insignificant variations as substantial illegality. The judicial role is not to convert every small mistake into a “big blunder”, especially in a competitive commercial environment where slight differences are inevitable.
The Court rejected the argument that the bidder with the marginally higher score must necessarily be selected, for being a rigid or purely mathematical application of the tender formula. It observed that in highly competitive tenders, especially where price bands are regulated, differences in financial bids are often minimal.
The Court held that “judicial solution… is not to be found in mathematical precision or application of rigid formulae”. Instead, courts must ensure that the process reflects reason, fairness, and integrity. Judicial review requires a “nuanced discretion between multiple outcomes and binary choices”, ensuring that the object and purpose of the tender process are not lost. Thus, mere disagreement with the decision or a marginal difference in scoring cannot justify interference.
The Court found it strange that in the whole process of judicial scrutiny the contesting contractors as well as the Court lost sight of the needs and requirements of the owner. It noted that, in the present case, the tender process had commenced in January 2025, the LOA was issued in June 2025, and substantial time had already elapsed. It further questioned the consequences of delay in execution and commencement of operations, implicitly highlighting the impact on public interest.
The Court clarified that even though the tender condition provided that the bidder with the highest total score “shall be considered” for award of the contract, however, “judicial review courts cannot ignore the needs of the owner(s), the speed at which they would want the appropriate contractor to be identified and other considerations that weigh in their endeavour”.
The Court noted that the tender document itself reserved to GPPC the right to accept or reject any bid and even to cancel the bidding process without assigning reasons. This contractual flexibility reflects the principle of “free play in the joints”, allowing the owner to take pragmatic decisions based on operational needs, timelines, and broader considerations.
The Court asserted that “while exercising judicial review of contractual matters, constitutional courts do not exercise, should not exercise ex-ante jurisdiction to pre-empt executive actions. The Court held that, on this point, the High Court had exceeded the first principle of judicial restraint in contractual matters.
While addressing the argument that the re-evaluation of technical marks justified reconsideration of the outcome, the Court observed that the mere fact that the consultant revised marks does not warrant judicial interference unless the process is shown to be illegal or arbitrary. The Court asserted that the cooperation of government counsel in facilitating re-evaluation, thought an important facet of good practices at the bar, cannot be treated as a ground for deeper judicial scrutiny. It was held that the burden remains on the Court to adhere to established principles governing judicial review.
On the issue relating to the claim of additional marks under another technical parameter, i.e. operation and maintenance of sea water system, the Court upheld the findings of the High Court holding that the High Court’s interpretation of the tender condition on this aspect was “true and correct” and did not warrant interference. Accordingly, it dismissed the appeal relating to that issue.
The Court concluded that there was no justification to interfere with the grant of the LOA dated 9 June 2025 or the subsequent execution of the contract dated 1 July 2025. Even after re-evaluation, the marginal difference between the bidders did not meet the threshold for judicial intervention.
Accordingly, the Court set aside the High Court’s judgment, upheld the contract awarded to the appellant, and permitted the GPPC to proceed with its execution.
[Steag Energy Services (India) (P) Ltd. v. GSPC Pipavav Power Co. Ltd., 2026 SCC OnLine SC 478, decided on 25-3-2026]
Advocates who appeared in this case:
Mr. DVS Somayajulu, Sr. Adv., Mr. AVS Subramanyam, Adv., Mr. Niraj Kumar, Adv., Mr. P. Srinivasan, AOR, Counsel for the Appellant
Mr. Priyabrat Tripathy, Adv., Mrs. Prabhleen Apoorv Shukla, AOR, Mr. Ayush Acharjee, Adv., Mr. Nahush Khera, Adv., Mr. Aspi Kapadia, Adv., Ms. Anushree Prashit Kapadia, AOR, Mr. Pranay Bhardwaj, Adv., Ms. Pragya Jaishwal, Adv., Counsel for the Respondents