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: State Cannot Cancel Finalised Tender For Its Own Mistake In ePBG
In a significant ruling that reinforces principles of fairness in public procurement, the has held that a tendering authority cannot cancel a finalised tender merely because it committed an error in fixing the percentage. The bench of Justice Shekhar B. Saraf and Justice Abdhesh Kumar Chaudhary quashed the cancellation order passed by the , directing revival of the tender upon the successful bidder depositing the deficit ePBG.
A Tender Won, Then Cancelled
The case involved
, a consultancy firm that emerged as the successful bidder (
) in a tender floated by the
, for
"Hiring Consultancy Services – percentage based – selection of service provider for establishing Aadhaar Enrollment Centre."
The tender was published on the
portal on
. After a rigorous technical evaluation and presentation, the petitioner was declared H-1 on
. The contract was uploaded for signature on
. However, on
, the tender was abruptly cancelled citing "unavoidable circumstances."
State’s Self-Inflicted Error
The court, finding the initial reason sketchy, directed the State to disclose the real cause. In instructions dated , the State admitted that the ePBG had been inadvertently mentioned as 0.75% in the bid document instead of the prescribed range of 3% to 5% under GeM rules. The State argued that correcting this would amount to a "" prohibited under Clause 2.3 of the Request for Proposal (RFP) and would other bidders who participated on the original terms.
The petitioner, through counsel, unconditionally offered to deposit the deficit amount to raise the ePBG to 5% of the contract value.
Essential or Ancillary? The Key Distinction
The court drew a crucial distinction between going to the root of the tender and . Relying on the 's decision in Poddar Steel Corporation v. Ganesh Engineering Works (1991) 3 SCC 273, it noted that deviation from ancillary conditions, particularly where it does not other parties, may be waived or corrected by the tendering authority.
The court observed:
"Correcting the percentage upward, at the tendering authority's own admitted error, and at the volunteered instance of the petitioner, does not touch the essential fabric of the selection process. It is, in essence, curing an error of the author of the tender document, not amending a term that shaped the competitive field."
The ePBG was held to be a performance security with no bearing on a bidder's eligibility, technical competence, or comparative merit. It does not affect the substantive evaluation that led to the petitioner's H-1 ranking.
No to Other Bidders
Rejecting the State's argument, the court held that increasing the ePBG only for the successful bidder imposes a heavier financial burden on him, conferring no advantage over other technically qualified bidders. As for the suggestion that an artificially low ePBG might have deterred some bidders from participating, the court termed it "preposterous," reasoning:
"If the ePBG amount would have been decreased, we could very well eschew that the said process may potential participants, but to say that increase in amount of ePBG would be prejudicial to the participants appears to be absolutely preposterous and without any basis."
and the Final Verdict
The court underscored that having permitted the petitioner to progress through technical and financial evaluation, declaration as H-1, and upload of the contract, the State created a of consummation. Citing v. Kamdhenu Cattle Feed Industries (1993) 1 SCC 71, it held that cancellation at this belated stage on a self-created and defeats that expectation without any countervailing .
The writ petition was allowed. The impugned cancellation order dated was quashed. The petitioner was directed to deposit the deficit ePBG within one week. Upon such deposit, the tender shall stand revived, and the State must make the contract available for signature within two weeks.
The judgment clarifies that authorities cannot use their own administrative lapses as a justification to undo a transparent and advanced tendering process, particularly when the error is curable and the successful bidder is willing to bear the additional burden.
