Breaking Geographic Barriers: Supreme Court on Article 19(1)(g) and Irrational Tender Norms

Case Name: Vinishma Technologies Private Limited. Versus State of Chhattisgarh and Another.

Introduction:

In an important judgement affirming the factor of economic freedom and equal opportunity in public Acquisition, on October 6 the Supreme Court invalidated a tender condition, enforced by the Government of Chhattisgarh for being unreasonable and unconstitutional. The court directed that limiting eligibility merely to suppliers with prior experience within the state violates Article 19(1)(g) of the Constitution and Obstructs fair competition in public contracts.

Background:

A company (an Appellant) registered under the Companies Act, 2013, with experience providing the sports kits to server state departments throughout the Karnataka, Bihar, Gujarat, and the Government of NCT Delhi, questioned certain tender status set by the State of Chhattisgarh. On July 21, 2025, the tenders, issued by the Samagra Shiksha Chhattisgarh State Project Office invited bids for providing sports kits to government schools across 33 districts, with over ₹39 crores of contract values totaling. The appellant filed writ petitions in the High Court challenging these conditions.

During the case, some terms were withdrawn through corrigendum, but the challenge to the key past performance criterion remained. The High Court affirmed this condition; it held that the tender status aimed at securing selection of capable and reliable bidders and did not violate constitutional regulation under Articles 14 or 19(1)(g). However, the appellant's application was dismissed, and the petition followed that brought before the Supreme Court.

Legal Provision: Article 19(1)(g)

Article 14 guarantees the right to equality, prohibiting discrimination while Article 19(1)(g) protects the freedom to practice any profession or carry on any occupation, trade, or business.  Article 14 is about equal treatment under the law, while Article 19(1)(g) is about the freedom to engage in economic activities. Both are fundamental rights, but Article 19(1)(g) is subject to reasonable restrictions in the public interest, whereas Article 14 is a more general principle of non-discrimination.

Supreme Court observation in Breaking Geographic Barriers:

A Bench consisting of Justice Sanjay Kumar and Justice Alok Aradhe denied the State's contention that previous government supply experience was required as the sports kits were to be Supplied in Maoist-affected areas. The Court clarified that this status was an Inappropriate restriction on trade. It notices that the Prerequisite created an unfair advantage, violating the factors of a Fair competition field by unreasonably excluding bidders who had no previous experience providing to the government.

The Court Said,  

“The doctrine of level playing field requires that all equally placed competitors must be given an equal opportunity to participate in trade and commerce. It is designed to prevent the State from skewing the market in favour of few by erecting artificial barriers. In the instant case, the impugned tender condition has the effect of excluding bidders who thought otherwise financially sound and technically competent, have no experience of supply of sports goods to the State Government agencies of Chhattisgarh in past three years. The State, by linking the eligibility criteria with past local supplies, has created an artificial barrier against the suppliers who had no past dealing with the State of Chhattisgarh. The impugned condition curtails the fundamental rights of the bidders, who have been ineligible to participate in the tenders.” 

Setting aside the High Court's decision, Justice Alok Aradhe, writing the verdict, directed that the tender clause created an “artificial barrier” proposed to advantage a limited group of local vendors. This, the Court noted, supported the cartel-like behavior and excluded equally qualified suppliers from other parts of the country.

Court Observed that,

“The doctrine of level playing field requires that gates of competition be opened to all who are equally placed. The impugned tender condition excludes the competent and experienced suppliers, who may have executed contracts of far greater magnitude in other States or for the Central Government departments, from participating in the tender and has the impact of promoting cartelisation. The impugned condition operates as a closed door to outsiders and restricts the wider participation of bidders and restricts competition. The impugned tender condition, therefore, is violative of Article 14 and offends Article 19(1)(g) of the Constitution of India.

The Apex Court emphasized that when government authorities have the freedom to set eligibility conditions in tenders, this power must be used reasonably and not in a way that Inequitably excludes others. As per the contract, each tender condition should have a clear and logical connection.

In this present case, the court concluded that the Chhattisgarh Government’s rule gives permission only to suppliers with experience within the State was arbitrary. The Court highlighted that the real aim of public procurement is to get high quality goods and services at good value for public money. Through this, the objective can be achieved by asking bidders to show they Possess sufficient financial strength, technical ability, and a strong performance history in similar contracts not required by limiting them to local suppliers.

Conclusion:

The Chhattisgarh Government's decision to restrict tender eligibility to suppliers with state experience was deemed unreasonable by the Apex Court. Since the contract was for the supply of sports kits rather than delicate or complicated items, the Court found no justification for this restriction.

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