Court directs reconsideration of technical bid, emphasizing substantial compliance over formality to promote fair competition in public contracts
In a significant verdict delivered on February 27, 2026, the Kerala High Court ruled in favor of Marymatha Infrastructure Private Limited, which had been disqualified on technical grounds by Southern Railway during the tender process for the redevelopment of Chengannur Railway Station in Kerala. The court emphasized the importance of encouraging maximum participation in public tenders and rejected the hyper-technical approach adopted by the respondents that led to the disqualification of the petitioner.
The tender in question, with a probable contract value of over Rs. 89.5 crore and a completion timeline of 28 months, was floated by Southern Railway inviting bids for execution on an Engineering Procurement and Construction (EPC) basis. Marymatha Infrastructure had partnered with Kerala Rail Development Corporation Limited (K-Rail), a joint venture company formed by the Government of Kerala and the Ministry of Railways, to submit a joint venture bid.
Southern Railway disqualified Marymatha Infrastructure on the ground that the petitioner failed to submit a valid Board Resolution from K-Rail authorizing participation in the joint venture tender. Instead, Marymatha Infrastructure had submitted the minutes of the Board meeting of K-Rail which authorized a Director to act on behalf of K-Rail in tenders, supported by a Power of Attorney executed accordingly. The respondents contended that the minutes did not meet the tender's strict requirement for a Board Resolution, and that a special resolution or super majority resolution was necessary due to the joint venture agreement between the Government and Ministry.
The court, presided over by Mr. Ziyad Rahman A.A., J., rejected these objections as overly technical and not grounded in the purpose of the tender requirements. The judgment highlighted that the minutes of the meeting clearly showed unanimous authorization by all directors present, effectively amounting to a super majority resolution. Moreover, the chain of Powers of Attorney executed under this authorization fulfilled the tender conditions for participation in the joint venture bid.
Importantly, the court underscored that the objections raised did not affect the petitioner's capability or capacity to execute the project. The ruling cited the principle that public authorities must encourage broad participation in tenders to promote competition and serve the public interest. Disqualifying bidders on non-critical technical grounds that do not impact the quality or efficiency of work is contrary to fair competition principles.
The court referred to the Supreme Court's observations in Surguja Bricks Industries Company v. State of Chhattisgarh, noting that while the tendering authority's interpretation of eligibility criteria is generally respected, it cannot be upheld if it leads to irrational or arbitrary consequences. In this case, since Marymatha Infrastructure substantially complied with tender requirements and was otherwise qualified, their bid deserved consideration.
Consequently, the High Court quashed the disqualification orders (Exts.P12 and P13), directing Southern Railway to reevaluate the petitioner's technical bid and allow participation in the financial bid stage if found otherwise qualified. The court mandated expeditious completion of the tender process to avoid further delay.
This judgment sets a precedent reinforcing that public procurement processes in India should avoid hyper-technical rejections and focus on substantive compliance to ensure fair and competitive tendering. It also clarifies that minutes of meetings, when clearly establishing authority, can suffice in the absence of formal Board Resolutions for tender purposes, provided the essential authorization is unambiguous and unanimous.
Bottom Line:
Tender disqualification based on technical objections - Hyper-technical approach in public contracts is not justified if the objections do not affect the quality, efficiency, or capacity of the bidder to execute the work.
Statutory provision(s):
Clause 2.11.2(g)(i)(c) of Tender Documents, Companies Act, 2013 (pertaining to Board resolutions and minutes of meetings), Joint Venture Agreement between Government of Kerala and Ministry of Railways (provisions regarding super majority resolution)
Marymatha Infrastructure Private Limited v. Southern Railway, (Kerala) : Law Finder Doc Id # 2859998
