The Punjab and Haryana High Court has set aside the Punjab State Power Corporation Limited's (PSPCL) award of a tender for 1,000 Class-A power quality meters to a private bidder, holding that the corporation acted "most arbitrarily" by placing the purchase order without the bidder having furnished the mandatory type test certificates required under the tender conditions — several of which were submitted only after the order was placed, and some of which remained pending even at the time of the hearing.

A Division Bench of Justice Deepak Sibal and Justice Lapita Banerji allowed the writ petition filed by the unsuccessful bidder, Kannect Engineers Pvt. Ltd., holding that PSPCL had "put the cart in front of the horse" by awarding the contract before satisfying itself that the offered equipment actually complied with the prescribed technical standards.

PSPCL had floated a Tender Enquiry on February 20, 2025 for supply, installation, testing, commissioning and one year's operation and maintenance of 1,000 permanent power quality meters compliant with IEC 61000-4-30 Class A and various allied Indian/IEC standards. Clause 28.0 of the Notice Inviting Tenders (NIT) required bidders to upload type test certificates from recognised laboratories, certifying compliance with all prescribed standards, along with the e-bid itself, failing which the offer was liable to be rejected outright.

The mandatory check-list of documents to be uploaded with the bid also listed these type test certificates at item 14.

Following a pre-bid meeting, PSPCL issued Corrigendum-IV on April 7, 2025, based on a suggestion from a prospective bidder, permitting bids accompanied by IEC 61000-4-30 test reports based on the 2015 edition of the standard (rather than the updated 2021 edition) to be accepted, subject to an undertaking that the bidder would furnish updated 2021-edition reports before supply, if selected.

The petitioner and respondent No. 3 both cleared technical evaluation and were found L-1 after reverse auction was conducted, with respondent No. 3 emerging lowest. A purchase order was placed on respondent No. 3 on March 18, 2026. It was only thereafter — on April 29, 2026 and May 8, 2026, over a year after the last date for bid submission — that respondent No. 3 furnished several of the required type test reports for the first time, while reports for shock test (IEC-60068-2-27), vibration test (IEC-60068-2-6), damp heat cyclic test (IEC-60068-2-30) and the "over and under deviation" type test remained unsubmitted even as of the hearing.

Senior counsel for the petitioner, Anand Chhibbar, argued that respondent No. 3's equipment had failed bench testing conducted by PSPCL's Data Assessment Committee in May 2025, and that a subsequent re-test on September 24, 2025, in which the petitioner declined to participate as being outside the terms of the NIT, was conducted with the mala fide intent of passing respondent No. 3's equipment.

It was submitted that Corrigendum-IV only permitted deficiencies in an already-submitted IEC 61000-4-30 report to be cured before supply; it did not permit wholesale submission of test reports for other prescribed standards for the first time long after the bid deadline.

It was further argued that extending the operation and maintenance period from one year to five years, without notice to the petitioner, was arbitrary and vitiated the tender process. The petitioner relied on a number of Supreme Court authorities, including Kimberley Club Pvt. Ltd. v. Krishi Utpadan Mandi Parishad, Banshidhar Construction Pvt. Ltd. v. Bharat Coking Coal Limited, Tata Cellular v. Union of India, and K. Manjusree v. State of Andhra Pradesh.

Senior counsel for PSPCL,  Rahul Sharma, submitted that respondent No. 3 was never declared to have failed the May 2025 bench test, that all bidders had notice of the September 2025 re-test, and that respondent No. 3 was declared to have passed on October 3, 2025. It was argued that Corrigendum-IV converted the submission of type test reports from a bid-eligibility condition into a contractual performance condition, that dispatch clearance would not be granted to respondent No. 3 until all outstanding reports were furnished, and that penalties under Clause 9.0 of the NIT would apply for default.

PSPCL contended that, being the author of the tender documents, it was the best judge of their interpretation, that no mala fides or arbitrariness had been shown, and that the petitioner, having participated throughout without objection, was estopped from challenging the process after losing. PSPCL relied on Silppi Constructions Contractors v. Union of India, Tata Motors Ltd. v. BEST, Montecarlo Ltd. v. NTPC, and other authorities counselling judicial restraint in contractual matters. Counsel for respondent No. 3 adopted PSPCL's submissions.

The Bench undertook a detailed examination of Clauses of the NIT and the mandatory document checklist, holding that uploading of type test reports along with the e-bid was of "considerable importance," particularly given that the equipment was "highly sophisticated electrical equipment," and that Clause 28.0 unequivocally mandated outright rejection of any bid not accompanied by the required reports.

Interpreting Corrigendum-IV, the Court held that it was confined to permitting bidders who had already submitted an IEC 61000-4-30 report based on the 2015 standard (rather than 2021) to make good that specific shortfall before supply, it did not authorise acceptance of type test reports for other prescribed standards submitted for the first time, long after the bid deadline, or after the purchase order itself had already been placed.

The Court held that Corrigendum-IV "nowhere permitted PSPCL to place the order of the equipment in question without filing of the required test reports."

Tabulating the dates on which respondent No. 3 furnished each of the required certifications, the Court found that reports for numerous EMC-immunity and construction/material standards were furnished for the first time on May 8, 2026, over a year after the bid deadline of April 17, 2025, and nearly two months after the purchase order dated March 18, 2026, while four categories of test reports (shock, vibration, damp heat cyclic, and over/under deviation) remained unsubmitted altogether.

The Court held that PSPCL's action in placing the purchase order in the absence of these reports was "most arbitrary," reasoning that it risked the supply of sub-standard material to a State instrumentality and inverted the logical sequence the NIT contemplated — verification of technical compliance before, not after, contract award. The Bench observed: "This a clear example where PSPCL has put the cart in front of horse."

While reiterating settled principles of restraint in reviewing tender decisions, drawing on Tata Cellular v. Union of India, Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation, and Silppi Constructions Contractors v. Union of India , the Court emphasised that interference remains warranted where the decision-making process is arbitrary, irrational, or perverse.

Applying the Supreme Court's reasoning in Banshidhar Construction Pvt. Ltd. v. Bharat Coking Coal Ltd., where a tender award was set aside despite the project's scale on account of non-compliance with mandatory NIT conditions, the Bench held that the scale of the PSPCL project did not immunise an arbitrary award from judicial correction.

Holding that the award of the tender  was based on a decision that was "most arbitrary and completely irrational," the Court set aside PSPCL's decision declaring respondent (No. 3) the successful bidder, along with any action or agreement undertaken pursuant to it. PSPCL was granted liberty to initiate a fresh tender process in accordance with law.

Appearances: Mr. Anand Chhibbar, Senior Advocate, with Ms. Swati Vashisth Mr. Jivtesh Singh Negi and Mr. Utkarsh Khatana, for the petitioner.

Mr. Rahul Sharma, Senior Advocate, with Mr. Ayush Loomba, for respondents No. 1 and 2 (PSPCL). Mr. Prateek Gupta, Advocate, for respondent No. 3.

Case Title: Kannect Engineers Pvt. Ltd. v. Punjab State Power Corporation Ltd. and Others

Click here to read order