Supreme Court Upholds Tender Award in Mining Lease Case: M/S Sri Venkateswara Constructions vs. State of Odisha (2025)

Introduction

Date of the Judgment: April 25, 2025

Citation: 2025 INSC 580

Judges: Bela M. Trivedi and Prasanna B. Varale

When is a bidder considered to have met all tender conditions? The Supreme Court of India addressed this question in a recent case involving a dispute over the award of a long-term mining lease. The Court examined whether the winning bidder, M/S Sri Venkateswara Constructions, had appropriately fulfilled conditions relating to income tax returns and Goods and Services Tax (GST) dues. Justices Bela M. Trivedi and Prasanna B. Varale, in a judgment delivered on April 25, 2025, overturned a High Court decision and upheld the original tender award.

Case Background

On July 18, 2022, the Tahasildar, Banspal, issued an auction notice for the long-term lease of the Karangadihi Stone Quarry for five years, from the financial year 2022-23 to 2026-27. The deadline for submitting bids was August 4, 2022, and the bids were to be opened on August 5, 2022. The auction notice specified that bidders must enclose certain documents with their applications, including:

• ✓ Income Tax Return of the Previous Financial Year: The annual income should not be less than the royalty mentioned in Schedule-1 as per the annual Minimum Guaranteed Quantity (MGQ) of minor minerals and additional charge offered in the application. Alternatively, a Bank Guarantee with 18 months validity could be submitted, not less than the royalty mentioned in Schedule-1 as per annual MGQ and additional charge offered.
• ✓ GST Clearance: A certificate/letter from the concerned GST jurisdictional officer confirming that no GST dues are pending against the bidder.

The tender drop box was opened on August 5, 2022, and five sealed envelopes were found, submitted by Dileswar Behera, Anil Khirwal, Soumyajit Mohanty, M/s Sri Venkateswara Construction, and M/s P.K. Minerals (P) Ltd. (respondent no.4).

Timeline

Course of Proceedings

After scrutiny of the documents on August 5, 2022, the Tahsildar found that the bids of Dileswar Behera, Anil Khirwal, and Soumyajit Mohanty were not accompanied by the required documents. M/s Sri Venkateswara Construction was found to have quoted the highest additional charge at Rs. 589/-, while M/s P.K. Minerals (P) Ltd. quoted the second highest at Rs. 221/-. Consequently, M/s Sri Venkateswara Construction was declared the successful bidder. The Tahsildar provided the following reasons for this decision:

“The Serial No.04, M/S P.K Minerals Ltd. MD Soumya Ranjan Pahi. of Susila Saw Mill Campus, Keonjhar the 2nd highest bidder have not submitted any letter or certif[cate from the concerned GST Jurisdictional authority…it is found that he has submitted only a photocopy of GST portal site from internet , which can’t be considered as certificate or letter from the concerned GST jurisdictional Officer. Hence the case of 2nd highest bidder is not considered…On the other hand, SL No. 05, M/S Sri Venkateswara Constructions…has submitted all requisite documents along with the IT return of assessment year 2021-22…and has also submitted the certificate/letter from the Office of the Supdt. Central GST & Central Excise…that there is no GST liability against M/S Sri Venkateswara Constructions…”

M/s P.K. Minerals (P) Ltd. challenged the Tahsildar’s order by filing an appeal before the Sub-Collector, who dismissed the appeal on October 20, 2022. The Sub-Collector reasoned that M/s Sri Venkateswara Construction had fulfilled the tender conditions:

“After careful verification of documents available in the C/R, it is found that the return available as per the Act has been submitted with Tender Notice and the condition of the Annual Turnover and Net Worth of all partners also fulfilled and satisfied…the respondent No.1 has not committed any illegality in respect of acceptance of the Income Tax Return of the respondent No.2 and consequential order is valid…As per the records, the Respondent No.1 is satisfied and verified the facts that, the no dues certificate has been issued by the jurisdictional officer of the respondent No.2 and found correct in respect of dues stands against the firm as on the date of selection…”

Aggrieved by the Sub-Collector’s order, M/s P.K. Minerals (P) Ltd. filed a Writ Petition before the High Court of Orissa. The High Court allowed the petition, quashing the orders of the Tahsildar and Sub-Collector and directing a fresh tender. The High Court observed:

“As per the provision mentioned above, the bidder has to submit the income tax return of previous financial year…As required under Clause-5 of the auction notice, though opposite party no.4 had enclosed a check list along with bid application and vide sl.no.5 had enlisted “income tax return of FY 2021-22″, but had enclosed the income tax return for the assessment year 202122 for the financial year 2020-21…So far as the petitioner is concerned, it had no clues of Goods and Service Tax (GST)…Accordingly, the petitioner had downloaded the information from their website, which contained the information that the petitioner had no outstanding GST dues. Thereby, the same is in compliance of Clause-7 of the auction notice.”

Legal Framework

The Supreme Court considered the following legal provisions and rules relevant to the case:

• ✓ **Section 139(1) of the Income Tax Act, 1961**: This section specifies the due dates for filing income tax returns.
• ✓ **Section 44AB of the Income Tax Act, 1961**: This section pertains to tax audits for businesses and professions and specifies the due dates for filing audited accounts.
• ✓ **Rule 27(4)(iv) of the Odisha Minor Minerals Concession (Amendment) Rules, 2022**: This rule stipulates the requirement of submitting an income tax return of the previous financial year or a bank guarantee. The rule states: “Income tax return of previous financial year showing annual income far on amount not less than the amount of additional charge offered and the royalty payable for the minimum guaranteed quantity for one whole year or bank guarantee valid for a period of eighteen months for the amount not less than the amount as above.”

Arguments

The arguments presented by the appellant (M/S Sri Venkateswara Constructions) and the respondents (State of Odisha and M/s P.K. Minerals (P) Ltd.) revolved around the interpretation of the tender conditions and the compliance of each bidder.

Arguments by M/S Sri Venkateswara Constructions (Appellant):

• ✓ **Income Tax Return Compliance:** The appellant submitted the latest available Income Tax Return as per the law. Given that the due date for filing the Income Tax Return for the financial year 2021-2022 was October 31, 2022, the 2020-2021 return was the most recent at the time of bid submission.
• ✓ **GST Certificate Validity:** The certificate obtained from the GST jurisdictional officer confirmed that there were no outstanding GST liabilities as of July 28, 2022, fulfilling the tender requirement. The disclaimers in the certificate were standard and did not undermine its validity.
• ✓ **Verification Process:** Confirmations and clarifications from relevant authorities are not essential preconditions, provided proper verification is conducted. The Tahasildar initiated clarifications and verifications on the same day and recorded his findings.
• ✓ **Non-Compliance by Respondent No. 4:** Respondent No. 4 failed to comply with bid condition S. No. 7 by submitting a self-downloaded printout from the GST portal instead of an official ‘no dues’ certificate.
• ✓ **Interpretation of Rule 27(4)(iv):** The tendering authorities reasonably ensured a level playing field by not strictly adhering to a literal interpretation of the condition, considering the amendment to Rule 27(4)(iv) was recent.
• ✓ **No Dues Certificates:** Tax authorities do not typically issue “no dues certificates” as part of statutory provisions but may do so upon request. The appellant could not dictate the format of the certificate issued by the statutory authority.
• ✓ **Quashing the Tender:** The High Court should not have quashed the entire tender process but could have directed the Tahasildar to make appropriate enquiries.
• ✓ **Competitive Disadvantage:** The appellant has lost its competitive advantage as its bid amount is now public.

Arguments by M/s P.K. Minerals (P) Ltd. (Respondent No. 4):

• ✓ **Income Tax Return Requirement:** The income tax return for the previous financial year was a crucial requirement, and the appellant submitted the return for the financial year 2020–2021 instead of 2021–2022.
• ✓ **GST Certificate Conditionality:** The ‘no dues’ certificate submitted by the appellant was conditional and stated that it would be invalid if any liability arose during scrutiny.
• ✓ **Premature Declaration:** The Tahasildar prematurely declared the appellant as the successful bidder without awaiting necessary clarifications.
• ✓ **GST Information Submission:** Respondent No. 4 submitted the downloaded document from the CGST website, which indicated that there were no pending GST dues, considering it compliant with Clause 7.
• ✓ **Availability of ITR Filing:** The appellant could have filed the Income Tax Return for the financial year 2021-2022 anytime between April and August 3, 2022.
• ✓ **Contradictory Claims:** The Respondent State contradicted its own tender advertisement and the OMMC Rules by supporting the appellant.
• ✓ **Reliance on Chartered Accountant:** The Tahasildar relied on clarifications provided by the appellant’s Chartered Accountant, who could not offer an independent opinion.

Arguments by the State of Odisha (Respondents No. 1-3):

• ✓ **Clarifications Not Mandatory:** Clarifications and confirmations were not mandatory, and the Tahasildar confirmed the details after verifying the documents.
• ✓ **Validity of Clarification:** The clarification provided by the Managing Partner of the appellant is valid, stating that under Section 44AB of the Income Tax Act, 1961, the due date for filing the audited balance sheet and profit & loss account for the financial year 2021-2022 was 30.09.2022, and the due date for filing the Income Tax Return was 31.10.2022.
• ✓ **Invalid GST Submission:** The appellant submitted a valid certificate from the GST jurisdictional officer, while Respondent No. 4 submitted an invalid photocopy from the GST portal.

Issues Framed by the Supreme Court

The Supreme Court addressed the following key issues:

1. Whether the appellant, M/S Sri Venkateswara Constructions, complied with the tender conditions regarding the submission of the income tax return for the previous financial year.
2. Whether the appellant complied with the tender condition regarding the submission of a certificate/letter from the concerned GST Jurisdictional Officer stating that the bidder has no GST dues pending.

Treatment of the Issue by the Court: “The following table demonstrates as to how the Court decided the issues”

Authorities

The Supreme Court considered the following authorities:

• ✓ **Section 44AB of the Income Tax Act, 1961**: This provision was considered to determine the due date for filing audited balance sheets and profit & loss accounts for partnership firms with a turnover exceeding Rs. 1 crore.
• ✓ **Central Coalfields Ltd. v. SLLSML (2016)**: The Court relied on this case to emphasize judicial restraint in interfering with tender-related decisions made by the employer.
• ✓ **G.J. Fernandez v. State of Karnataka (1990)**: This case was cited to affirm that deviations from tender terms are permissible if they apply equally to all applicants and are non-objectionable.
• ✓ **Tata Cellular v. Union of India (1994)**: The Court referred to this case to clarify that judicial review focuses on the lawfulness—not the soundness—of administrative decisions.
• ✓ **Jagdish Mandal v. State of Orissa (2007)**: This case was cited to support the principle that courts should not intervene at the behest of unsuccessful bidders over mere technical or procedural issues.

Judgment

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• ✓ **Compliance with Tender Conditions**: The Court found that M/S Sri Venkateswara Constructions had substantially complied with the tender conditions, particularly regarding the submission of the income tax return and the GST clearance certificate.
• ✓ **Reasonable Interpretation**: The Court accepted the Tahasildar’s reasonable interpretation of the tender conditions, which ensured a level playing field for all bidders, considering the due dates for filing income tax returns.
• ✓ **Financial Capacity**: The Court emphasized that the intention of the tender condition was to ascertain the financial capacity and capability of the bidder, which M/S Sri Venkateswara Constructions had demonstrated.
• ✓ **Revenue Benefit**: The Court noted that accepting the bid of M/S Sri Venkateswara Constructions would benefit the state exchequer due to the higher additional charge quoted by the appellant.

The Supreme Court reasoned that the Tahasildar had acted reasonably in accepting the income tax return submitted by M/S Sri Venkateswara Constructions, as the due date for filing the return for the financial year 2021-22 had not yet passed. The Court also noted that the certificate submitted by the appellant regarding GST dues was valid, and the rider attached to it did not invalidate the certificate. On the other hand, the Court found that M/s P.K. Minerals (P) Ltd. had failed to comply with the tender condition regarding the submission of a GST clearance certificate.

The Court emphasized that the intention of laying down such conditions is to ascertain and assess the financial capacity and capability of the bidder. In this case, the appellant had demonstrated its financial capability, and accepting its bid would benefit the state exchequer.

“Admittedly, the petitioner had submitted the requisite documents along with his income tax return. Tahasildar for his satisfaction had made an enquiry with the managing partner Shri. G.N. Subrahamanyeswar Rao of M/s. Sri Venkateswara Constructions. In response to the query made by the Tahasildar, the representative i.e. the managing partner submitted certificate of the chartered accountant.”

“In so far as the other condition is concerned the petitioner has submitted the communication issued by the GST officer revealing that there are no dues against the successful bidder, merely because there is a rider attached to it, the same would not ipso facto, lose the sanctity of the certificate issued by the GST officer in favour of the petitioner.”

“Another aspect which is also worth consideration is the bid quoted by the petitioner was much more than the respondent no.4 and by way of accepting the tender of the petitioner the state ex-chequer could have been benefitted and there was no reason for the revenue authorities i.e., the Tahasildar and the Sub-Collector to turn down the bid of the petitioner.”

The Court concluded that the High Court had committed a gross error in allowing the petition filed by M/s P.K. Minerals (P) Ltd. and quashing the tender award.

Key Takeaways

• ✓ **Substantial Compliance**: Bidders must substantially comply with tender conditions, but minor deviations may be acceptable if the overall intention of the condition is fulfilled.
• ✓ **Reasonable Interpretation**: Tendering authorities should adopt a reasonable and fair interpretation of tender conditions to ensure a level playing field for all bidders.
• ✓ **Financial Capacity**: The primary objective of tender conditions related to financial documents is to assess the financial capacity and capability of the bidder.
• ✓ **Judicial Restraint**: Courts should exercise restraint in interfering with tender-related decisions made by tendering authorities, unless there is evidence of arbitrariness, irrationality, mala fide, or bias.

Development of Law

The ratio decidendi of the case is that substantial compliance with tender conditions is sufficient, provided that the overall intention of the condition is fulfilled, and the tendering authority has acted reasonably and fairly. This judgment reinforces the principle of judicial restraint in tender-related matters and clarifies the interpretation of tender conditions related to financial documents.

Conclusion

The Supreme Court allowed the appeals filed by M/S Sri Venkateswara Constructions, setting aside the High Court’s order and upholding the original tender award. The Court held that the appellant had substantially complied with the tender conditions, and the Tahasildar had acted reasonably in accepting the appellant’s bid. This judgment reinforces the principles of substantial compliance, reasonable interpretation, and judicial restraint in tender-related matters.