SKYLARK INFRA ENGINEERING PVT LTD V. MUNICIPAL CORPORATION OF DELHI 2026:DHC:5745-DB:

DATE: 20.07.2026

COURT: High Court of Delhi

BENCH: Justice Anil Kshetarpal and Justice Shail Jain

FACTS:

The case arose from a writ petition filed under Article 226 of the Constitution challenging the Notice Inviting Tender (NIT) dated 05.06.2026 issued by the Municipal Corporation of Delhi (MCD) for the engagement of a contractor to collect Toll Tax and Environment Compensation Charge (ECC) at Delhi's border points and to upgrade the existing Radio Frequency Identification (RFID) system to a Multi Lane Free Flow (MLFF) based collection system. The petitioner sought quashing of the tender on the ground that the technical eligibility condition requiring prior experience of operating a minimum of 122 toll lanes under a single contract for at least two years was arbitrary, irrational, and violative of Articles 14 and 19(1)(g) of the Constitution. The petitioner contended that it had extensive experience in toll collection and had previously managed the same 154 border points as part of a joint venture but was rendered ineligible solely because it lacked experience of operating 122 lanes under a single contract in its independent capacity. It further argued that the respondent had previously acknowledged the same condition to be anti-competitive, removed it through a corporate resolution in 2025, and had now reintroduced it without any rational justification.

The Municipal Corporation of Delhi opposed the petition, contending that the impugned tender related to an entirely different and technologically advanced MLFF system involving RFID integration, Automatic Number Plate Recognition (ANPR), centralized monitoring, real-time transaction processing, and unified management of 244 toll lanes across 154 border points. The respondent submitted that the revised eligibility criterion was introduced pursuant to the recommendations of the Commission for Air Quality Management (CAQM) and the directions of the Supreme Court mandating implementation of the MLFF system by October 2026. It argued that managing a single integrated project of such magnitude required demonstrable experience under one integrated contract and that experience acquired through multiple independent contracts or as a constituent of a joint venture could not be treated as equivalent. The respondent also produced an affidavit showing that three bidders had successfully satisfied the impugned eligibility criterion, demonstrating that the condition was neither tailor-made nor anti-competitive.

ISSUES:

The principal issue before the Delhi High Court was whether the eligibility condition contained in the impugned Notice Inviting Tender requiring prior experience of operating at least 122 toll lanes under a single contract for two years was arbitrary, irrational, anti-competitive, or violative of Articles 14 and 19(1)(g) of the Constitution, thereby warranting judicial interference in exercise of the High Court's power of judicial review over public tender conditions.

JUDGEMENT WITH REASONING:

The Delhi High Court dismissed the writ petition and upheld the validity of the impugned tender condition. The Court held that the respondent had demonstrated a rational basis for prescribing the eligibility criterion, which bore a direct nexus with the objective of ensuring timely and efficient implementation of the technologically advanced MLFF system in compliance with the Supreme Court's directions. It concluded that the condition was neither arbitrary nor discriminatory and did not violate Articles 14 or 19(1)(g) of the Constitution.

The Court reiterated the well-established principle that judicial review in contractual and tender matters is extremely limited. Referring to decisions such as Tata Cellular v. Union of India, Michigan Rubber (India) Ltd. v. State of Karnataka, Jagdish Mandal v. State of Orissa, and Reliance Energy Ltd. v. Maharashtra State Road Development Corporation Ltd., the Court observed that the formulation of tender conditions, including eligibility criteria, falls primarily within the domain of the executive authority. Courts are not expected to substitute their views for those of the tendering authority unless the conditions are shown to be arbitrary, mala fide, irrational, discriminatory, or contrary to public interest. Applying these principles, the Court held that the impugned eligibility criterion had a clear and rational nexus with the scale and complexity of the proposed project, which envisaged implementation of an integrated MLFF system involving RFID and ANPR technologies, centralized monitoring, and real-time processing of transactions generated by more than 4.12 crore commercial vehicles entering Delhi annually. Consequently, the respondent was justified in insisting upon prior experience of executing a project of comparable magnitude under a single integrated contract.

The Court further rejected the petitioner's contention that its experience as a joint venture partner and its execution of multiple similar contracts should be treated as equivalent to the prescribed eligibility requirement. It held that experience acquired through several independent contracts could not automatically be equated with managing one integrated project involving unified operational responsibility, technology platforms, and accountability mechanisms. The Court also observed that the petitioner's previous experience had been gained as part of a joint venture, whereas the lead partner had chosen to participate independently in the present tender, making the petitioner's inability to satisfy the eligibility condition a consequence of the dissolution of the joint venture rather than any arbitrariness in the tender itself. The Court further found that the impugned condition neither restricted competition nor violated the petitioner's right to carry on business, as multiple bidders had successfully qualified under the prescribed criteria and the condition merely regulated participation in a public tender without prohibiting the petitioner from carrying on its commercial activities. Emphasizing that policy decisions must evolve to meet changing technological requirements, particularly in view of the Supreme Court's mandate for implementation of the MLFF system to address air quality concerns in the National Capital Territory of Delhi, the Court concluded that it could not rewrite the eligibility conditions framed by the tendering authority merely to enlarge the field of competition.

ANALYSIS:

The judgment reaffirms the settled jurisprudence governing judicial review of public tenders by emphasizing that courts should not interfere with policy decisions of tendering authorities unless they are demonstrably arbitrary, discriminatory, mala fide, or contrary to public interest. The Delhi High Court recognized that the prescription of technical eligibility criteria is primarily a commercial and administrative decision falling within the expertise of the procuring authority. By relying on established precedents such as Tata Cellular v. Union of India, Michigan Rubber (India) Ltd. v. State of Karnataka, and Jagdish Mandal v. State of Orissa, the Court underscored that judicial scrutiny is confined to examining the legality of the decision-making process rather than reassessing the wisdom or desirability of the eligibility conditions. The decision highlights that a tender condition cannot be invalidated merely because it excludes certain bidders or reduces the field of competition, so long as it bears a rational nexus with the object sought to be achieved. In the present case, the Court found that the requirement of prior experience in managing 122 toll lanes under a single integrated contract was reasonably connected with the technological complexity, operational scale, and time-sensitive implementation of the MLFF system, thereby satisfying the constitutional requirement of non-arbitrariness under Article 14.

The judgment also provides significant guidance on balancing the principles of fair competition with the broader public interest in infrastructure procurement. While acknowledging the petitioner's extensive experience in toll collection, the Court refused to dilute the eligibility criteria merely to accommodate an individual bidder, observing that public procurement must prioritize successful execution of technologically sophisticated projects over expanding market participation. The Court accepted the respondent's distinction between experience gained under multiple independent contracts and the execution of a single integrated project involving centralized management, real-time monitoring, and unified technological infrastructure. Equally important was the Court's recognition that governmental policy is not static and may legitimately evolve in response to changing technological requirements and judicial mandates. Since the impugned tender had been formulated pursuant to the recommendations of the Commission for Air Quality Management and the Supreme Court's directions requiring implementation of the MLFF system within a stipulated timeline, the revised eligibility criteria were held to be a legitimate policy choice designed to secure efficient execution of a project having substantial environmental and public revenue implications. The ruling therefore reinforces the principle that courts exercising writ jurisdiction cannot rewrite tender conditions or substitute their own commercial assessment for that of the competent authority, particularly where the impugned policy demonstrably advances public interest.