The Rajasthan High Court has clarified that in public procurement, mere spousal relationship between bidders is insufficient for disqualification, but shared operational infrastructure - such as common premises, financial advisors, and notaries - creates a presumption of access to confidential bid information, triggering disqualification under conflict of interest rules.
Background & Facts
The Dispute
The appellant, M/s Bhaskar Industries, a proprietary firm owned by Meena Devi, participated in a tender (NIB No. 2/2025-26 dated 15.09.2025) issued by the Department of Food and Civil Supplies, Government of Rajasthan, for the handling and transportation of food grains under the Public Distribution System (PDS) in Bhilwara district. The appellant’s technical bid was rejected on 31.10.2025 on grounds of conflict of interest under the Rajasthan Transparency in Public Procurement Act, 2012 (RTPP Act) and Rules of 2013.
Key Facts
- The appellant’s firm and another bidder, M/s Maruti Industries, were both operated from the same address: H-273, RIICO, Jhunjhunu, Rajasthan.
- The same Chartered Accountant firm managed the financial records and audit documentation for both firms.
- All bid documents submitted by both firms were notarized by the same Notary Advocate.
- The proprietor of M/s Maruti Industries is the husband of Meena Devi, proprietor of M/s Bhaskar Industries.
- Both firms submitted declarations under Form TECH-5, affirming no conflict of interest as defined under the RTPP Act and Rules.
- The technical bid of M/s Maruti Industries was also rejected in the same tender process.
- The preceding year’s work order (2024-25) had been awarded to M/s Maruti Industries.
Procedural History
- 15.09.2025: Notice Inviting Bid (NIB) issued for PDS logistics work.
- 31.10.2025: Appellant’s technical bid rejected by the District Supply Officer, Bhilwara.
- 21.12.2025: Writ Petition (No. 21690/2025) filed before the Single Judge of the High Court seeking quashing of rejection order.
- 21.05.2026: Single Judge dismissed the writ petition, upholding the rejection on grounds of conflict of interest under Rule 81(3)(d) of the Rules of 2013.
- 28.05.2026: Special Appeal (Writ No. 655/2026) filed before the Division Bench challenging the dismissal.
- 02.06.2026: Arguments concluded and judgment reserved.
- 30.06.2026: Judgment pronounced dismissing the appeal.
Relief Sought
The appellant sought quashing of the order dated 31.10.2025, restoration of its technical bid, and direction to re-evaluate its bid fairly without prejudice.
The Legal Issue
The central question was whether the existence of shared operational infrastructure - common premises, common Chartered Accountant, and common notary - between two bidders constitutes a conflict of interest under Rule 81(3)(d) of the Rajasthan Transparency in Public Procurement Rules, 2013, even in the absence of proof of actual information exchange or collusion.
Arguments Presented
For the Appellant
Counsel for the appellant relied on the Meghalaya High Court judgment in Ms. La Monte Enterprise v. Union of India, arguing that husband and wife are distinct legal entities and that a mere spousal relationship cannot, by itself, justify disqualification unless explicitly prohibited by tender conditions. Counsel emphasized that no evidence existed of bid rigging, information leakage, or collusion. The RTPP Act and NIB contained no express bar against spouses bidding independently. The rejection, therefore, was based on presumption, not fact, and violated principles of natural justice.
For the Respondent
The State and intervenor argued that the appellant’s bid was rightly rejected under Rule 81(3)(d), which disqualifies bidders who, through any relationship or association, are in a position to access or influence another bidder’s bid. The shared address, common CA, and common notary created an undeniable structural link that permitted potential access to confidential bid information. The Madras High Court in M/s. Travel News Services v. AAI and the Delhi High Court in Sterlite Grid Limited v. PFC Consulting had held that actual exchange of information need not be proven - only the potential for access suffices. The appellant’s declaration of no conflict was rendered misleading by the objective facts on record.
The Court's Analysis
The Court examined the language of Rule 81(3)(d) of the Rules of 2013, which disqualifies a bidder if it has a relationship with another bidder, directly or through common third parties, that puts them in a position to have access to information about or influence on the bid of another. The Court noted that the provision does not require proof of actual collusion or information exchange; it focuses on the potential for access.
"All that the respondent was required to examine was, whether, the two companies were in a position so as to have access to information of the other company with regard to their bids."
The Court relied on the Delhi High Court’s reasoning in Sterlite Grid Limited, which held that a reasonable inference based on structural links - such as shared premises, common financial advisors, and common legal notaries - is sufficient to establish conflict of interest. The Court observed that the appellant and M/s Maruti Industries were not merely related by marriage but were operationally intertwined: same office address, same CA handling accounts, same notary verifying documents. This created a real and tangible risk of information leakage, regardless of intent.
The Court distinguished Ms. La Monte Enterprise, noting that case involved absence of any specific tender condition prohibiting spousal participation. Here, Rule 81(3)(d) was explicit and applicable. The Court held that the Single Judge’s inference was not speculative but grounded in documented facts. The appellant’s declaration of no conflict was rendered legally untenable by the objective circumstances.
The Court further noted that the purpose of the RTPP Act is to ensure transparency and prevent even the appearance of impropriety in public procurement. Allowing bidders with such close operational ties to compete would undermine public confidence in the tender system.
The Verdict
The Special Appeal was dismissed. The Court upheld the rejection of the appellant’s technical bid dated 31.10.2025. The order of the Single Judge dated 21.05.2026 was affirmed. No relief was granted. The stay application was disposed of. The tender process was permitted to proceed without further delay.
What This Means For Similar Cases
Shared Infrastructure Triggers Automatic Disqualification
- Practitioners must advise clients to avoid using the same office address, accountant, or notary when submitting competing bids in the same tender.
- Even if bidders are legally distinct entities (e.g., spouses), shared operational resources create a rebuttable presumption of conflict under Rule 81(3)(d).
- Tender documents must be scrutinized for any clause referencing "access to information" or "influence" - these are interpreted broadly.
Declarations Are Not a Shield Against Objective Evidence
- A bidder’s self-declaration of no conflict is insufficient if objective facts contradict it.
- Procuring entities may rely on documentary evidence (address, CA, notary, bank details) to infer conflict, even without whistleblower testimony or emails.
- Legal counsel must conduct pre-bid conflict audits, not just compliance checks.
Judicial Deference to Procuring Entities on Reasonable Inferences
- Courts will not substitute their own judgment but will uphold procurement decisions if based on reasonable inferences from documented facts.
- The burden shifts to the bidder to prove absence of access, not to the procuring entity to prove actual collusion.
- This aligns with the principle that public procurement must be beyond suspicion, not merely free of actual wrongdoing.
