Delhi HC Backs UIDAI's Tender Rejection, Cites Public Interest in Preventing Process Frustration

New Delhi – The Delhi High Court has upheld the Unique Identification Authority of India's (UIDAI) decision to disqualify a company from a tender process due to an "abnormally low bid," emphasizing that the rejection was justified because no other shortlisted vendor was willing to match the quoted rate. In a judgment that underscores the paramountcy of public interest in procurement processes, a Division Bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela dismissed the writ petition filed by Writer Business Services Pvt. Ltd.

The Court, in its ruling dated October 14, 2025, held that while an abnormally low bid is not a standalone ground for rejection under the tender's terms, the practical inability of other bidders to match the price was a crucial factor. The decision effectively prevented the frustration of a large-scale tender for Aadhaar data quality checks, which uniquely required multiple service providers.

“The question is not as to whether the disqualification was predicated on ‘abnormally low’ bid but the fact that no other bidder agreed to match the rate per packet… propelled the Financial Evaluation Committee to abstain from considering the financial bid,” the Bench observed, highlighting the pragmatic considerations that guided UIDAI’s decision.

Background of the Dispute

The case, Writer Business Services Pvt Ltd vs Unique Identification Authority Of India , arose from a Request for Proposal (RFP) issued by UIDAI in November 2022 for Aadhaar Data Quality Check Service Agencies. The petitioner, Writer Business Services, an incumbent service provider for UIDAI for nearly six years, emerged with the highest technical score (96.5%) and was declared the L-1 bidder after financial bids were opened.

The scope of work involved two categories of quality checks: * Packet-1: Quality Check with online document verification (a new digital process). * Packet-2: Quality Check without online document verification (a physical process, similar to the work previously done by the petitioner).

The petitioner quoted a rate of ₹1.92 for Packet-1 and ₹4.55 for Packet-2. The rate for Packet-1 was deemed "abnormally low" by UIDAI, being approximately 58% lower than the estimated contract value. This prompted UIDAI to seek detailed justifications from the petitioner. Despite two rounds of detailed clarifications, UIDAI’s Financial Evaluation Committee (FEC) found the responses unsatisfactory, concluding that the petitioner had failed to demonstrate its capability to deliver the contract at the offered price and had misunderstood the scope of work for the digitally intensive Packet-1.

Consequently, UIDAI’s FEC set aside the petitioner’s bid and proceeded with the next lowest bidder, M/s. Tech Mahindra Limited, as the new L-1. The petitioner challenged this disqualification as arbitrary and contrary to the RFP’s terms, which did not list "abnormally low bid" as a ground for disqualification.

Petitioner's Arguments: A Breach of Tender Conditions

Senior Advocate Sandeep Sethi, appearing for the petitioner, argued that UIDAI's action was a flagrant violation of its own tender document. The core contentions were:

• No Contractual Basis for Rejection: The RFP’s disqualification clause (Clause 2.1.19) did not permit rejection on the grounds of an abnormally low bid.
• Flawed Evaluation Methodology: The FEC incorrectly focused solely on the ₹1.92 rate for Packet-1, whereas the RFP (Clause 2.4.3) mandated that both Packet-1 and Packet-2 be given "equal weightage to identify the lowest evaluated commercial proposal." By isolating one component, the FEC deviated from the prescribed Quality cum Cost Based Selection (QCBS) methodology.
• Proven Capability: The petitioner’s unblemished six-year track record and highest technical score were ignored. The argument that they lacked understanding of the work was a baseless afterthought.
• Public Exchequer Loss: Rejecting the L-1 bid, which was nearly ₹200 crores lower than the next competitor, would cause a significant loss to the public exchequer.

Mr. Sethi also invoked the Government of India’s Manual For Procurement of Goods, suggesting that even if the bid was low, the appropriate remedy was to ask for an additional security deposit, not outright rejection.

UIDAI's Defense: Preventing Tender Frustration

Representing UIDAI, Senior Advocate Darpan Wadhwa countered that the petitioner’s arguments were based on a "faulty understanding" of the RFP. He emphasized that this was not a standard single-winner tender. The RFP's structure (Clause 2.4.5) was designed to appoint four service providers, with the bidders at L-2, L-3, and L-4 required to match the L-1 "rate per packet."

Mr. Wadhwa argued:

• Multiple Vendor Imperative: The entire tender's success depended on finding at least four vendors willing to work at the discovered L-1 rate. Other technically qualified bidders had formally objected to the petitioner's Packet-1 rate as "abysmally low" and unworkable, signaling their inability to match it.
• Rational Decision-Making: The FEC conducted a thorough, multi-stage review of the petitioner's justifications and documented its reasons for finding them unsatisfactory. This demonstrated a fair and transparent decision-making process, which is the proper subject of judicial review.
• Inherent Risk: Allowing a bid based on a misunderstanding of the work's complexity would jeopardize the quality and integrity of the Aadhaar data verification process, a matter of significant public importance.

He stressed that if UIDAI were forced to proceed with the petitioner as L-1, and no other bidder matched the unsustainable rate, the entire procurement process would have been "rendered nugatory and frustrated," defeating the project's objective and harming public interest.

Court's Analysis: Public Interest Trumps Procedural Flaws

The High Court acknowledged that UIDAI's evaluation process was not without flaws. It noted that the FEC appeared to have deviated from the prescribed methodology in Clause 2.4.4 by not completing the full QCBS calculation before scrutinizing the Packet-1 price.

However, the Bench looked beyond this procedural irregularity to the ultimate purpose of the tender. The crucial factor was the mandate under Clause 2.4.5, which required other bidders to match the L-1 rate. The Court inferred that the inability or refusal of other bidders to match the ₹1.92 rate for Packet-1 presented UIDAI with a dead end.

"If that were so, we have no doubt whatsoever that the RFP and the tender process would have got frustrated which would be clearly contrary to the public interest," the Court reasoned. "The decision of the Aadhaar Authority appears to have been taken in the interest of the project and paramount public interest."

While recognizing its power of judicial review, the Court reiterated the limited scope of interference in technical and commercial decisions made by expert bodies like the FEC. It held that it could not substitute its own view on the viability of the quoted rate. The principles of natural justice were deemed satisfied as the petitioner was given ample opportunity to present its case.

Ultimately, the Court concluded that any interference at this advanced stage, where the contract had already been awarded and was being implemented, would not be in the larger public interest. Balancing the petitioner's grievance against the need to ensure the continuity of a vital national project, the Court found no merit in the petition and dismissed it.