Supreme Court Holds ‘Previous Financial Year’ Must Be Interpreted Harmoniously With Income Tax Act—Rejects High Court’s View in Odisha Sand Tender Case (2025)

Case Name: M/s Shanti Construction Pvt. Ltd. v. State of Odisha & Ors.
Citation: Civil Appeal Nos. ___ of 2025 (Arising out of SLP (C) Nos. 5829/2023 & 16140/2023); 2025 INSC 1295
Date of Judgment/Order: 07 November 2025
Bench: Hon’ble Mr. Justice Sanjay Kumar & Hon’ble Mr. Justice Alok Aradhe

Held: The Supreme Court held that the Tender Committee misinterpreted Rule 27(4)(iv) of the Odisha Minor Mineral Concession Rules, 2016, by rejecting the unsuccessful bidder’s tender on the ground that it had not submitted the Income Tax Return for FY 2021-22, despite the fact that the statutory deadline for filing that return (31 October 2022) had not yet expired as on the bid date (18 July 2022). The Court declared that the expression “previous financial year” must be construed harmoniously with the Income Tax Act, meaning that the relevant ITR for a tender floated mid-year would be the return for the immediately preceding completed financial year (i.e., FY 2020-21), which the bidder had duly filed. The Court held that this erroneous and narrow interpretation by the Tender Committee excluded the highest bidder and undermined public interest by depriving the State of higher revenue.

Summary: The dispute arose from an auction notice dated 11 July 2022 for extraction of sand from Mahanadi Sand Quarry in Cuttack. Twenty bidders participated. The highest bidder was rejected on the ground that it had not submitted the ITR for FY 2021-22. The next highest bidder—who quoted a significantly lower rate—was declared successful and issued Form-F. Litigation ensued. The High Court upheld the rejection of the highest bidder but directed the successful bidder to match the highest quoted rate, citing potential loss to State revenue. Before the Supreme Court, the highest bidder argued that it could not have filed the ITR for FY 2021-22 because the statutory filing period had not expired when the bid was submitted. The successful bidder argued that a vested right had already accrued in its favour as Form-F had been issued and statutory deposits had been made. The State offered alternatives, including awarding the contract at the highest rate or refunding deposits without interest. The Supreme Court reviewed principles of judicial review in tenders, emphasising fairness, maximisation of public value, non-arbitrariness, and the duty of State authorities to interpret tender conditions consistently and in a manner that enhances, not diminishes, public revenue—especially in allocation of natural resources. The Court held that the Tender Committee misconstrued Rule 27(4)(iv), leading to wrongful exclusion of the highest bidder and failure to protect public exchequer.

Decision: The Supreme Court quashed the High Court’s judgment dated 01 March 2023, set aside the tender process, and directed the Tehsildar, Tangi-Chowdwar, to issue a fresh auction notice for the Mahanadi Sand Quarry in accordance with the OMMC Rules. Both the previously unsuccessful and successful bidders, along with all other interested parties, were permitted to participate in the new auction. The Court further directed the State to refund the amount deposited by the successful bidder within 30 days, with interest at 6% per annum from the date of deposit until payment, invoking principles of restitution. With these directions, the appeals were disposed of.