Manipal Technologies Limited and Anr v. Bank of Baroda and Ors
A tender clause that excludes bidders whose promoter-directors are defaulters or associated with non-performing accounts is within the buyer's commercial judgment and not manifestly arbitrary under Article 14, because the credit standing of those in control of a closely held company bears on the company; 'promoter director' there is read by control and not only by the Companies Act's annual-return test; and a bidder that took part without objection cannot later attack the clause.
By CA Nikhil Gupta · Reviewed against the retained judgment 2026-10-09
Manipal Technologies and a shareholder challenged Bank of Baroda's rejection of its bid for supplying magnetic-strip and QR-code self-service passbooks under pre-qualification point No. 14, which excludes bidders whose promoter directors are defaulters or have NPA accounts. The Division Bench upheld the clause and the disqualification at the interim stage.
What happened
On 10 April 2026 Bank of Baroda issued an RFP for empanelment of vendors for printing and supplying magnetic strip and variable QR code self-service passbooks for three years, with point No. 14 requiring that the vendor and its promoters or directors not be defaulters, not have accounts classified as NPAs, and not be sister concerns of NPA holders, backed by an undertaking and credit reports. Manipal Technologies Limited joined the pre-bid meeting of 18 April 2026 without objection and bid on 8 May 2026 with an undertaking. On 26 May 2026 the GeM portal showed that its bid was not considered as it did not meet point No. 14. The bank said that Sri T. Gautham Pai, the Executive Chairman and whole-time Director of the company, was a director of MVP Group International Inc., whose credit facilities were NPAs, that a section 95 insolvency application had been filed against him, and that the company filed Form DIR-12 on 8 May 2026, the date of the bid, changing his category to professional director from 21 January 2026. The Single Judge refused interim relief on 8 June 2026.
Questions before the court
- Is point No. 14 invalid as arbitrary, and was the bidder rightly disqualified because its executive chairman is treated as a promoter director?
Why the court ruled this way
The clause aims to ensure financially sound and creditworthy bidders; a company acts through its directors, and in New Horizons v. Union of India the Supreme Court said credentials are judged by looking at the persons in control, so the standing of promoters and persons in control is relevant (paragraphs 23 to 25). Judicial review of tender conditions is narrow under Tata Cellular, Raunaq International, Municipal Corporation, Ujjain v. BVG India and Silppi Constructions, and no mala fides were alleged (paragraphs 26 to 30). The bidder joined the pre-bid meeting and gave an undertaking, and under National High Speed Rail Corporation v. Montecarlo it cannot now challenge the clause (paragraph 31). 'Promoter Director' is not limited to the Companies Act annual-return test; section 2(69) also covers a person who has control, and 'control' under section 2(27), read with ArcelorMittal India v. Satish Kumar Gupta, covers de facto control (paragraphs 33 to 35, 42, 43). The company is closely held by the family, Sri Pai was a signatory to its memorandum, has been managing director since 2003, was re-appointed executive chairman from 28 May 2026 and re-categorisation changed nothing on the ground (paragraphs 36 to 45).
Controlling point
The clause was not manifestly arbitrary, and the executive chairman who controls the company is a promoter director for the clause, so the disqualification could not be interfered with at this stage.
Order and next steps
The appeal was dismissed and pending applications were disposed of; no opinion was expressed on whether Sri T. Gautham Pai or any entity in which he is a director defaulted, as those facts were not on record and could be raised in the pending writ petition.
Practical implications
Bidders for bank and public tenders should assume that conditions about promoters' and directors' credit standing are enforceable against those in actual control, whatever their label in company records, and should object to the clause before bidding.
Limits of this ruling
- The decision is on an interim order and the clause; the Court expressly did not decide whether the promoter actually defaulted or whether any listed entity of his is an NPA, and the main writ petition remains pending.
Law and judgment source
- Companies Act, 2013, sections 2(27), 2(69) and 92
- Constitution of India, articles 14 and 226
- Karnataka High Court Act, 1961, section 4
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Source checked: 2026-10-09 · Judgment paragraphs: paragraphs 1-48 · Later case history: not verified. Verify appeals, stays and subsequent orders before reliance.
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