The Supreme Court on Friday set aside an Orissa High Court order concerning the Mahanadi Sand Quarry lease, holding that the tender committee had wrongly interpreted a key eligibility requirement. The Court directed authorities to conduct a fresh auction for the sand quarry and refund the deposited amount to the earlier successful bidder with interest.
Background
The dispute arose after the Tehsildar of Tangi Chowdwar, Cuttack, issued a notice on July 11, 2022, inviting bids for a five-year sand mining lease. Multiple bidders participated. The highest bidder, however, was disqualified on the grounds that it had not submitted its Income Tax Return (ITR) for the financial year 2021–22. The tender committee awarded the lease to another bidder whose quoted price was significantly lower.
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This difference in quoted rates raised concerns, and the disqualified bidder challenged the award before the Orissa High Court. While the High Court upheld the disqualification, it directed the successful bidder to match the higher rate to protect public revenue.
Both parties appealed to the Supreme Court.
Court’s Observations
The Supreme Court focused on the meaning of “previous Financial Year” under Rule 27(4)(iv) of the Odisha Minor Mineral Concession Rules, 2016. The rule requires bidders to submit an ITR of the previous financial year to show sufficient financial strength, or alternatively, to furnish a bank guarantee.
The bench noted that the tender was floated in July 2022, while the statutory deadline for filing the ITR for FY 2021–22 had not yet expired. Therefore, expecting the bidder to submit that return was unreasonable.
The bench observed, “The phrase ‘previous financial year’ cannot be interpreted in a manner that excludes bidders merely because the statutory timeline for filing returns had not closed.” The Court reasoned that the logical “previous year” in this situation was 2020–21, for which the bidder had submitted its returns.
Further, the Court pointed out that the tender committee’s interpretation effectively removed the highest bidder from the race and caused a clear financial disadvantage to the State. The judges stressed that tenders involving natural resources are not just commercial exercise but acts of public trust, and any interpretation that reduces competition or public revenue must be scrutinised carefully.
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The Court’s Decision
The Supreme Court quashed the High Court’s judgment and ordered:
- A fresh auction must be held for the Mahanadi Sand Quarry under the 2016 Rules.
- Both the previously successful and unsuccessful bidders may participate again along with any other interested parties.
- The State must refund the entire deposit made by the previous successful bidder, with 6% annual interest, within 30 days.
The matter concluded at this direction.
Case Title:M/s Shanti Construction Pvt. Ltd. vs State of Odisha & Others
Court: Supreme Court of India
Bench: Justice Sanjay Kumar and Justice Alok Aradhe
Citation: 2025 INSC 1295
Case Type: Civil Appeals (arising out of SLP (C) No. 5829/2023 and SLP (C) No. 16140/2023)
Date of Judgment: 07 November 2025