Disqualification of Abnormally Low Bidder in Public Tenders: Delhi High Court

The High Court of Delhi has recently affirmed that the judiciary should exercise restraint in interfering with public tender processes, particularly when the decision is rooted in safeguarding public interest. In Writer Business Services Pvt. Ltd. vs. Unique Identification Authority of India , a division bench comprising Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela dismissed a writ petition challenging the rejection of an "abnormally low" financial bid.

Background of the Dispute

The petitioner, Writer Business Services Pvt. Ltd., sought to set aside the award of a tender floated by the Unique Identification Authority of India (UIDAI). Having provided documentation services to the Aadhaar Authority since 2017, the company contended that it was unfairly disqualified despite being the L-1 (lowest) bidder with a superior technical score (96.5%).

Following the submission of bids for "Packet-1" (digital verification) and "Packet-2" (physical verification), the petitioner quoted an "abnormally low" rate of Rs.1.92 for Packet-1. The Financial Evaluation Committee (FEC) raised concerns regarding the feasibility of this price, leading to an exchange of clarificatory letters. Ultimately, the petitioner was disqualified, and the contract was awarded to other entities who had participated in the tender. The petitioner challenged this action, alleging arbitrary conduct and a breach of the tender's evaluation methodology.

Competing Arguments

The petitioner, represented by Senior Counsel Sandeep Sethi, argued that the UIDAI lacked the specific authority under the Request for Proposal (RFP) to reject a bid solely on the ground of it being "abnormally low." Counsel contended that the authority should have balanced the bidder’s previous successful track record with its current financial proposal, suggesting that the public would save approximately Rs. 200 crores if the petition were allowed.

Conversely, the Aadhaar Authority, represented by Senior Counsel Darpan Wadhwa, maintained that the petitioner misunderstood the technical requirements of the new "digital verification" process. The respondent argued that the FEC conducted a thorough review of the petitioner's responses and found the proposed rates neither feasible nor workable. Furthermore, the respondent emphasized that no other participating bidder was willing to match the petitioner's "abnormally low" rate, which would have rendered the tender process invalid and frustrated the operational goals of the Authority.

Judicial Analysis and Legal Precedents

The Court acknowledged that while there were procedural inconsistencies in how the UIDAI applied certain RFP clauses, this did not warrant judicial intervention. Relying on settled law—including Jagdish Mandal vs. State of Orissa and * Tata Motors vs. Brihan Mumbai Electric Supply Undertaking *—the Court reiterated that a writ court’s jurisdiction is limited to the decision-making process rather than the merits of the decision itself.

The Court held that its oversight role is subject to the doctrine of "public interest." If interference with a tender process would cause administrative chaos or financial loss to the State, the court, even when noting errors, should refrain from granting relief.

Key Observations

The judgment clarifies the court's stance on evaluating technical expert decisions: * "The Technical Evaluation Committee (TEC)/Financial Evaluation Committee are a committee consisting of experts on the subject which is highly technical. This Court cannot substitute or supplant the view taken or opinion rendered by the TEC/FEC with its own view." * "The exercise of jurisdiction under Article 226 of the Constitution of India is discretionary and relief may not necessarily be granted in all cases. In particular, where public interest would far outweigh private interests, then, even where there is some infraction by the State, the Constitutional Courts may refuse to grant relief." * "The question is not as to whether the disqualification of the petitioner was predicated on 'abnormally low' bid but the fact that no other bidder agreed to match the 'rate per packet' of Packet-1 quoted by the petitioner that propelled the FEC to abstain from considering the financial/commercial bid."

Final Decision

The Delhi High Court dismissed the petition, concluding that the Aadhaar Authority complied with the principles of natural justice by providing the petitioner multiple opportunities to justify its bid. The Court emphasized that once the authority reasonably concluded that the bid was unworkable and no other bidders agreed to the rates, rejecting the bid was a necessary action to protect the public project from failure. This ruling reinforces the judicial trend against second-guessing the technical and commercial judgment of expert committees in major public procurement projects.