Individual Firms Can Claim Proportionate JV Experience For Future Work Contracts When Applying Solo : Supreme Court

The Supreme Court on Thursday (December 18) observed that an experience gained as a partner in a Joint Venture contractual works can be claimed proportionately by an individual entity bidding separately in future tenders.

A bench of Justice Manoj Misra and Justice Ujjal Bhuyan set aside the Chhattisgarh High Court's decision which refused to consider the Appellant's proportionate work experience, it gained while partnering in a joint venture with 49 percent stake, for its future work contracts.

“we find that there was no justification at all on the part of the respondents in not considering the proportionate experience certificate of the appellant as a member of the joint venture. Such decision of the respondents is arbitrary and unreasonable rendering the decision-making process in breach of the mandate of Article 14 of the Constitution of India.”, the court held.

The Chhattisgarh Public Works Department had floated a tender for road construction worth approximately ₹45.22 crores. The eligibility criteria required bidders to have prior experience of completing a similar work valued at least 50% of this amount (roughly ₹22.61 crores).

The Appellant submitted its bid with an experience certificate showing its 49% share in a Joint Venture that had executed a project worth ₹49.04 crores. Its proportionate share of ₹24.04 crores exceeded the requirement. However, the state's Technical Evaluation Committee rejected the bid, arguing that the experience was not in the company's "own name and style" but as part of a JV, a separate legal entity.

The company's challenge was dismissed by the Chhattisgarh High Court, prompting an appeal to the Supreme Court.

Allowing the appeal, the judgment authored by Justice Bhuyan, relying on the New Horizons Limited Vs. Union of India, (1995) 1 SCC 478, which was further endorsed in Ganpati PV – Talleres Alegria Track Pvt. Ltd Vs. Union of India, (2009) 1 SCC 589, observed that the requisite experience as a joint venture partner can be taken into consideration by the Tender Evaluation Committee for the Appellant's solo bid in future contracts unless the Notice Inviting Tender (“NIT”) terms doesn't contains otherwise.

Since the eligibility criteria in the tender notice were unclear and ambiguous, and contained "no specific or explicit exclusion" of work experience gained as a member of a joint venture. In the absence of such a clear prohibition, the Court said disqualifying Appellant on this ground is impermissible.

“From a perusal of the NIT or the conditions in the pre-qualification document, we do not find any criteria or condition therein stating that past experience as member of a joint venture would not be considered. There is, thus, no specific or explicit exclusion of the work experience gained by a contractor in a joint venture or partnership.”, the court said.

“we hold that the decision making process of the respondents in disqualifying the appellant from the tender by not taking into account its past proportionate experience in the joint venture is vitiated by irrationality leading to the arbitrary decision of declaring the appellant as disqualified. The said decision of respondent No. 3 dated 19.03.2025 cannot be sustained and is accordingly set aside. Since the High Court failed to notice such irrationality leading to arbitrary consequences, the impugned judgment and order dated 04.04.2025 is wholly untenable and is accordingly set aside and quashed.”, the court added.

Cause Title: M/S. SURGUJA BRICKS INDUSTRIES COMPANY VERSUS STATE OF CHHATTISGARH & ORS.

Citation : 2025 LiveLaw (SC) 1221

Click here to download judgment

Appearance:

For Petitioner(s) :Mrs. Pooja Mehra Saigal, Sr. Adv. Mr. Mohit Negi, AOR Ms. Aayushi Sharma, Adv. Mr. Ankit Mittal, Adv. Mr. Nivesh Dixit, Adv.

For Respondent(s) :Mr. Bishwajit Dubey, A.A.G. Mr. Vinayak Sharma, Standing Counsel, Adv. Mr. Ravinder Kumar Yadav, AOR Mr. Aprajita Verma, Adv.