Eagle Hunter Solutions Limited vs. State Of Chhattisgarh

Facts

The petitioner, Eagle Hunter Solutions Limited, filed a writ petition challenging tender conditions set by Chhattisgarh State Marketing Corporation Limited (CSMCL) for empanelment of placement agencies. The primary challenge was to Clause 3.5 of the Additional Terms and Conditions and related GeM Bid Documents, which mandated a minimum average annual turnover of ₹300 Crore for the preceding three financial years. The petitioner argued this was arbitrary and disproportionate, especially since the total tender value was approximately ₹301.65 Crore for three years, to be distributed among eight agencies, resulting in an approximate annual allocation of ₹12-13 Crore per agency. The petitioner also challenged the turnover-linked evaluation mechanism, the reduction of the Performance Bank Guarantee to 5%, and procedural issues with the GeM portal's order-splitting functionality. The petitioner had prior satisfactory contractual engagements with CSMCL.

Held

The Court held that the minimum average annual turnover requirement of ₹300 Crore, while high, was not arbitrary or disproportionate. The Court referred to Sub-clause 2(c) of Clause 5.1.9 of the Manual for Procurement of Non-consultancy Services, 2025, issued by the Government of India, which provides for financial capability criteria, stating that average annual gross billing should be at least 3 to 7 times the estimated annual cost. The Court noted that the estimated annual cost was ₹1,00,55,12,405.33, and applying the lower threshold of three times would result in a significant financial requirement. The Court found that such a stipulation, based on government guidelines, could not be considered arbitrary. Regarding the other challenges to the evaluation criteria, performance bank guarantee, and procedural aspects of the GeM portal, the Court held that these fall within the administrative and commercial discretion of the procuring authority. As no material was presented to demonstrate mala fides, favouritism, or perversity, the Court found no grounds for interference under Article 226. The ratio decidendi is that judicial review of tender conditions is limited, and courts will not interfere unless conditions are arbitrary, discriminatory, or lack a rational nexus with the objective, or if there is evidence of mala fides. The writ petition was dismissed.

Key Issues

1. Whether the minimum average annual turnover requirement of ₹300 Crore for the preceding three financial years, as stipulated in the tender conditions (Clause 3.5 and GeM Bid Documents), is arbitrary, disproportionate, and lacks a rational nexus with the object of the tender, thereby violating Articles 14 and 19(1)(g) of the Constitution of India? The petitioner contended that this requirement is excessively high given the total tender value and the multi-agency empanelment model, which limits individual agency work allocation to approximately ₹12-13 Crore annually. The petitioner argued that a similar tender in 2024 required only ₹50 Crore average annual turnover. The respondents did not record specific arguments on this point in the judgment. 2. Whether the turnover-linked evaluation mechanism, the reduction of the Performance Bank Guarantee to 5%, and the alleged procedural infirmity from non-enabling of the order-splitting functionality on the GeM portal are violative of Articles 14 and 19(1)(g) of the Constitution of India? The petitioner argued these aspects were also arbitrary and unfair. The respondents contended that these aspects fall within the administrative and commercial discretion of the procuring authority, and no material was placed on record to demonstrate mala fides, favouritism, or perversity.