Legal Review and Analysis of Kimberley Club Pvt Ltd vs Krishi Utpadan Mandi Parishad & Ors 2025 INSC 1276

In-Short

Case: Kimberley Club Pvt. Ltd. vs Krishi Utpadan Mandi Parishad & Ors. (2025 INSC 1276): Supreme Court holds that a tender condition must be explicit; a bid cannot be rejected for failing to meet an unstated requirement. An administrative order cannot be justified by reasons not recorded in the original decision.

1. Heading of the Judgment

Case Name: Kimberley Club Pvt. Ltd. vs Krishi Utpadan Mandi Parishad & Ors.
Citation: 2025 INSC 1276 (REPORTABLE)
Court: Supreme Court of India
Judges: Hon'ble Mr. Justice Joymalya Bagchi and Hon'ble Mr. Justice Surya Kant
Date: October 31, 2025

2. Related Laws and Legal Principles

The judgment is grounded in the principles of administrative and contractual law governing public tenders, as established in landmark Supreme Court judgments. It does not interpret a specific statute but applies jurisprudential doctrines.

• Tata Cellular v. Union of India, (1994) 6 SCC 651: This precedent sets the boundaries for judicial review in tender matters, establishing that courts do not act as appellate authorities but can intervene if a decision is "dehors the terms of the NIT" or "patently arbitrary."

• Maha Mineral Mining & Benefication Pvt. Ltd. v. Madhya Pradesh Power Generating Co. Ltd. & Anr., (2025) SCC Online SC 1942: This case reinforces the principle that the terms of a Notice Inviting Tender (NIT) must be clear and unambiguous.

• Mohinder Singh Gill & Anr. v. The Chief Election Commissioner, New Delhi & Ors., (1978) 1 SCC 405: This is the foundational case for the principle that an administrative order must be judged by the reasons mentioned in it at the time of its making, and cannot be subsequently justified on new grounds.

3. Basic Judgment Details

• Appellant: Kimberley Club Pvt. Ltd.

• Respondents: Krishi Utpadan Mandi Parishad (the Mandi Parishad) & Ors., including the successful bidder (5th Respondent).

• Origin of Case: The appellant's technical bid for a tender was rejected by the Mandi Parishad. The appellant challenged this first before the Allahabad High Court via a writ petition, which was dismissed. The appellant then appealed to the Supreme Court via a Special Leave Petition (SLP).

• Subject of Dispute: A tender floated by the Krishi Utpadan Mandi Parishad for leasing out a banquet hall/terrace lawn for 10 years.

4. Core Principle of the Judgment

The Central Issue: Validity of Rejecting a Bid for Non-Conformity with an Unstated Criterion

The core legal question before the Supreme Court was whether the Mandi Parishad acted lawfully in rejecting the appellant's technical bid because the haisiyat praman patra (solvency certificate) was issued by a private architect/valuer and not by a District Magistrate, when the NIT did not explicitly specify the issuing authority.

Analysis and Reasoning of the Supreme Court

A. The Limits of Judicial Review in Tender Matters
The Court began by reaffirming the settled law from Tata Cellular. It emphasized that its role is not to re-evaluate the merits of the tender authority's decision but to ensure that the decision-making process is legal and rational. Judicial interference is warranted only if the decision is outside the terms of the NIT (dehors the NIT) or is so irrational that no reasonable authority would have arrived at it (patently arbitrary).

B. The Paramountcy of Clear and Unambiguous Tender Conditions
The Court scrutinized Clause 18 of the NIT, which required a haisiyat praman patra of a minimum value but was silent on who must issue it. The Court held that if the Mandi Parishad intended to make a certificate from the District Magistrate mandatory, it was "incumbent" upon them to state this "clearly and unambiguously" in the NIT itself. Relying on Maha Minerals, the Court stated that bidders cannot be expected to guess or infer hidden requirements. The failure to specify this condition rendered the rejection of the appellant's certificate, which was from a competent professional, invalid.

C. Rejection of Implied Conditions and Post-Hoc Justifications
The Mandi Parishad tried to justify its action by referring to a Uttar Pradesh government notification that detailed the procedure for District Magistrates to issue such certificates. The Court rejected this argument on two grounds:

1. The Mandi Parishad is a statutory body, not a government department, and it did not establish that the notification was automatically applicable to all its tenders.

2. The NIT did not reference this notification. Therefore, the requirement could not be read into the tender conditions by implication.

Furthermore, the Court strongly condemned the attempt by the Mandi Parishad to raise a new ground for rejection in its counter-affidavit—that the certificate did not disclose if the asset was free from encumbrances. Invoking the principle from Mohinder Singh Gill, the Court held that an administrative order must stand or fall on the reasons contained in the order itself. The sole reason for rejection was the identity of the issuer, not the content of the certificate. The Court refused to permit this belated justification.

5. Final Outcome and Supreme Court's Directions

The Supreme Court allowed the appeal and issued the following directives:

1. The impugned order of the Allahabad High Court was set aside.

2. The rejection of the appellant's technical bid by the Mandi Parishad was quashed.

3. The matter was remanded to the 1st respondent-Mandi Parishad with a specific direction to reconsider the technical bid of the appellant.

4. The Mandi Parishad was directed to assess whether the valuation certificate, after verifying if the asset is free from encumbrances, meets the net worth requirement of Clause 18.

5. If the technical bid is accepted, the Mandi Parishad must conduct a fresh financial evaluation. This involves due negotiations between the appellant and the 5th respondent (the successful bidder) to decide whether the contract should be awarded to the appellant for the remainder of the term or if the 5th respondent should continue by matching the appellant's financial offer.

6. MCQs Based on the Judgment

1. In the case of Kimberley Club Pvt. Ltd. vs Krishi Utpadan Mandi Parishad & Ors. (2025 INSC 1276), on what primary ground did the Supreme Court quash the rejection of the appellant's technical bid?
A) The valuation certificate was forged.
B) The financial bid of the appellant was the highest.
C) The Notice Inviting Tender (NIT) did not specify that the haisiyat praman patra must be issued by a District Magistrate.
D) The District Magistrate had refused to issue the certificate to the appellant.

2. The Supreme Court, in the Kimberley Club case, prohibited the respondent from justifying the bid rejection on a new ground taken in the counter-affidavit, based on the legal principle established in?
A) Tata Cellular v. Union of India
B) Maha Minerals v. Madhya Pradesh Power Generating Co. Ltd.
C) Mohinder Singh Gill v. The Chief Election Commissioner
D) The Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964