Supreme Court Reinstates Quarry Lease to Highest Bidder: Quashes High Court's Re-Tender Order as Legally Unjustified [Read Order]

The dispute originated from a tender dated July 18, 2022, by the Tahsildar, Banspal, for the long-term lease of the Karangadihi Sand Quarry. Among the five applicants, Sri Venkateswara Constructions emerged as the highest bidder, offering an additional charge of ₹589 per unit, which is significantly above the ₹221 quoted by the second-highest bidder, P.K. Minerals Pvt. Ltd.

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The Tahsildar selected Sri Venkateswara Constructions on August 5, 2022, noting that the firm had submitted all requisite documents, including a GST no-dues certificate and the latest available Income Tax Return (ITR). P.K. Minerals challenged the selection, arguing that the ITR submitted was for FY 2020–21 rather than the required FY 2021–22 and that the GST certificate was conditional.

The Sub-Collector dismissed this objection and asserted that the ITR submitted aligned with statutory filing deadlines for tax-audited entities. The High Court reversed this finding, stating that the selection process was flawed and ordering a fresh tender. This triggered an appeal to the Supreme Court.

The Supreme Court, after considering submissions made by all parties, held that Sri Venkateswara Constructions, being a partnership firm, is subject to tax audit and that it had until October 31, 2022, to file its ITR for FY 2021–22. Hence, its submission of the previous year's return (FY 2020–21) was valid and consistent with Section 44AB of theIncome Tax Act, 1961.

The Court also found no fault in the GST compliance. It noted that the certificate issued by the jurisdictional GST officer confirmed the absence of outstanding dues. The caveat that liabilities may arise upon audit was considered a standard disclaimer and not a ground to invalidate the certificate.

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The Court stated that the role of the Tahsildar was to assess the financial soundness and compliance with the bid conditions. Having found Sri Venkateswara Constructions’ documents satisfactory, there was no obligation to delay the process further or seek approvals from other departments.

It was noted that the respondent bidder had not submitted an official GST no-dues certificate. Instead, it relied on a downloaded screenshot from the GST portal, a document the Court deemed insufficient for compliance with the tender condition. The Court asserted that judicial review of tender decisions is limited to examining arbitrariness, mala fides, or procedural impropriety, citing precedents such as Tata Cellular v. Union of India and Jagdish Mandal v. State of Orissa. In this case, it was held that no such infirmity was found in the conduct of the Tahsildar or Sub-Collector.

The Supreme Court bench, consisting of Justice Bela M. Trivedi and Justice Prasanna B. Varale, also pointed out a critical point: that the higher bid from Sri Venkateswara Constructions would result in significantly more revenue for the state exchequer. The Court observed that by accepting the petitioner's bid, the State would be financially better off and that there was no justification for preferring a lower bid under the guise of procedural insufficiencies. As a result, the appeals were allowed and the High Court’s directive for re-tender was quashed.

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