1. Writ petition challenging cancellation of tender after being declared successful bidder. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 )
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2026 Supreme(All) 1409
HIGH COURT OF JUDICATURE AT ALLAHABAD LUCKNOW
SHEKHAR B. SARAF, ABDHESH KUMAR CHAUDHARY, JJ.
M/S Yuvaan Infotech Thru. Partner Ritvik Pandey - Petitioners
Versus
State Of U.P. Thru. Addl. Chief Secy. Medical And Health Lko And 2 Others - Respondents
WRIT - C No. – 9641 of 2026
Decided On : 18-09-2026
Important Points
A tender cannot be cancelled at the final stage due to a curable, ancillary error (such as an incorrect ePBG percentage) made by the authority, especially when the successful bidder is willing to comply, as this would be arbitrary and violate the principle of legitimate expectation.
Subject
Administrative Law - Government Contracts and Tendering
Act Referred
CONSTITUTION OF INDIA : Art.14, Art.226
Headnote
(A) Constitution of India - Article 14 and 226 - Tendering Process - Performance Bank Guarantee (ePBG) - Cancellation of Tender - Essential vs. Ancillary Conditions - Cancellation of a tender after declaring a successful bidder (H-1) and uploading the contract, solely due to an inadvertent error in the ePBG percentage (0.75% instead of 3-5%), is arbitrary and unsustainable - ePBG is a financial safeguard and an ancillary term, not an essential condition going to the root of the tender - Correction of such an error, especially when the successful bidder is willing to comply, does not prejudice other participants or constitute a material change in financial terms (Paras 11, 12, 14).
(B) Administrative Law - Legitimate Expectation - Once a bidder is declared H-1 and the contract is uploaded for signature, a legitimate expectation of consummation of the contract is generated - Cancellation without a substantive lawful impediment, public interest, or impossibility of performance violates Article 14 (Para 15).
(C) Legal Maxim - nullus commodum capere potest de injuria sua propria - An authority cannot take advantage of its own wrong or visit the consequences of its own inadvertence upon a party (Para 12).
Facts of the case:
A bidder was declared successful (H-1) in a tender for consultancy services published on a government portal. After the contract was uploaded for signature, the respondent authority cancelled the tender citing "unavoidable circumstances," later admitting the real reason was an inadvertent error in the Performance Bank Guarantee (ePBG) percentage, which was mentioned as 0.75% instead of the mandated 3-5%. The bidder offered to deposit the deficit amount to meet the required range, but the authority refused, claiming such a correction would be a "material change" and would prejudice other participants.
Findings of Court:
The cancellation of the entire process at a belated stage on a ground that is both self-created and curable is disproportionate, arbitrary, and unsustainable in law. The ePBG is a performance security that does not bear upon the eligibility, technical competence, or comparative merit of a bidder.
Issues: Whether the ePBG percentage is an "essential" condition going to the root of the tender, the non-compliance or correction of which would vitiate the entire process, or whether it is a collateral term amenable to correction without disturbing the substratum of the tender.
Ratio Decidendi: The court held that tender conditions are classified into essential and ancillary; deviations from the latter may be waived or corrected if they do not prejudice other parties. Since ePBG is a financial safeguard and not a criterion for merit, correcting the percentage does not touch the essential fabric of the selection process. The authority cannot rely on its own mistake to cancel a process where a legitimate expectation was created, and increasing the ePBG for the successful bidder alone imposes a heavier burden on them without conferring any advantage over other bidders.
Result: Writ petition allowed. The impugned order cancelling the tender is quashed.
(B) Administrative Law - Legitimate Expectation - Once a bidder is declared H-1 and the contract is uploaded for signature, a legitimate expectation of consummation of the contract is generated - Cancellation without a substantive lawful impediment, public interest, or impossibility of performance violates Article 14 (Para 15).
(C) Legal Maxim - nullus commodum capere potest de injuria sua propria - An authority cannot take advantage of its own wrong or visit the consequences of its own inadvertence upon a party (Para 12).
Facts of the case:
A bidder was declared successful (H-1) in a tender for consultancy services published on a government portal. After the contract was uploaded for signature, the respondent authority cancelled the tender citing "unavoidable circumstances," later admitting the real reason was an inadvertent error in the Performance Bank Guarantee (ePBG) percentage, which was mentioned as 0.75% instead of the mandated 3-5%. The bidder offered to deposit the deficit amount to meet the required range, but the authority refused, claiming such a correction would be a "material change" and would prejudice other participants.
Findings of Court:
The cancellation of the entire process at a belated stage on a ground that is both self-created and curable is disproportionate, arbitrary, and unsustainable in law. The ePBG is a performance security that does not bear upon the eligibility, technical competence, or comparative merit of a bidder.
Issues: Whether the ePBG percentage is an "essential" condition going to the root of the tender, the non-compliance or correction of which would vitiate the entire process, or whether it is a collateral term amenable to correction without disturbing the substratum of the tender.
Ratio Decidendi: The court held that tender conditions are classified into essential and ancillary; deviations from the latter may be waived or corrected if they do not prejudice other parties. Since ePBG is a financial safeguard and not a criterion for merit, correcting the percentage does not touch the essential fabric of the selection process. The authority cannot rely on its own mistake to cancel a process where a legitimate expectation was created, and increasing the ePBG for the successful bidder alone imposes a heavier burden on them without conferring any advantage over other bidders.
Result: Writ petition allowed. The impugned order cancelling the tender is quashed.
Legal Category Hierarchy
- constitutional law
- administrative law
-
practice and procedure
-
writ petition
- article 226 of the constitution of india (Para 3)
-
writ petition
Advocates:
Advocate Appeared:
For the Petitioner: Pankaj Gupta, Harish Chandra Yadav
For the Respondent: C.S.C.
Advocate Appeared:
For the Petitioner: Pankaj Gupta, Harish Chandra Yadav
For the Respondent: C.S.C.
Table of Contents
2. Petitioner argued cancellation was illegal; respondent argued it stemmed from inadvertent error in performance bank guarantee percentage. (Para 5 , 6 , 7 , 8 )
3. Performance bank guarantee percentage held to be ancillary term, not essential condition; cancellation was disproportionate and arbitrary. (Para 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 )
4. Tender conditions essential vs. ancillary; authority may correct its own curable error without vitiating process. (Para 11 , 12 , 16 )
5. Writ allowed; impugned cancellation order quashed; petitioner to deposit deficit performance bank guarantee; contract to be revived. (Para 17 , 18 , 19 , 20 )
6. What distinguishes an essential tender condition from an ancillary or subsidiary one?
An essential condition goes to the root of the tender process, while an ancillary or collateral term is amenable to correction without vitiating the entire proceedings. (Para 11 )
7. Can a tendering authority correct its own inadvertent error in a bid document without invalidating the process?
Yes, if the error is the authority's own, the correction does not prejudice other bidders, and the term is ancillary rather than essential to the selection process. (Para 11 , 12 , 13 , 14 , 15 , 16 )
8. Does an increase in the performance bank guarantee for the successful bidder alone prejudice other participants?
No, an increased performance security applicable only to the successful bidder imposes a heavier burden on him and confers no comparative advantage on others. (Para 14 )
9. What is the legal effect of creating a legitimate expectation in a tender process before formal contract signing?
A legitimate expectation of contract consummation arises, which cannot be defeated by arbitrary cancellation lacking substantive and lawful impediment. (Para 15 )
10. Does an amendment clause in a Request for Proposal (RFP) render financial terms immutable?
No, the presence of an amendment clause recognizes that circumstances may warrant modification; it does not prohibit correcting the authority's own error. (Para 13 )
JUDGMENT :
ABDHESH KUMAR CHAUDHARY, J.
1. Instruction produced today by the learned Standing Counsel is taken on record.
2. Heard learned Counsel appearing on behalf of the parties.
3. This is a writ petition under Article 226 of the Constitution of India, wherein the writ petitioner has sought for the following substantial reliefs:-
"(i) Issue a writ, order or direction in the nature of certiorari, quashing the order dated 22.8.2026 (annexure no.1).
(ii) Issue a writ, order or direction in the nature of mandamus, commanding the opposite parties, specially, opposite party no. 2 to execute the contract in pursuance of the finalization of the tender and after its approval,"
4. It has been submitted by the learned Counsel for the petitioner that the petitioner has been declared the successful bidder in the tender floated by the respondent relating to ‘Hiring Consultancy Services- percentage based- selection of service provider for establishing “Aadhar Enrollment Centre, Project Management, E-Governance, Selection of Service Provider and Field Level O”, published on GeM Portal. According to the learned Counsel, almost seven entities participated in the Tender, amongst which only three including the petitioner were found successful in the technical evaluation. Thereafter, the petitioner and the other two participated in the technical presentation and the committee constituted for that purpose, after considering the pre- qualification and the technical qualification declared the petitioner successful by awarding H-1 grade and an order to that effect was also uploaded to that effect on the GeM portal on 05.08.2026.
5. It has been further submitted that subsequently the Respondent No.2/ Director General (Medical Health), Lucknow in terms of the tender process also uploaded the contract on the GeM portal on August 11, 2026 after its due approval and mere formality of signing the contract was contemplated under the tendering process by the Respondent-Authority. It is the case of the petitioner that dehors the finalization of the contract as aforesaid, the respondent in the most illegal and unprecedented manner cancelled the Tender vide the impugned order subsequently uploaded on 22nd August, 2026 and the only reason assigned for such cancellation is stated to be unavoidable circumstances.
6. Earlier, we had directed learned Standing Counsel to seek instructions from the respondent authority and to apprise this Court the reasons relating to cancellation of the Tender as we prima-facie, found the reasons mentioned for cancellation to be rather sketchy, casual and devoid of any particulars.
7. Pursuant thereto, learned Standing Counsel for the State has filed instructions dated 17th September, 2026 and has inter alia disclosed, for the first time that the real reason for cancellation is the inadvertent mentioning of the Performance Bank Guarantee (ePBG) as 0.75% in the Bid Document, instead of the prescribed range from 3% to 5% as per the rules applicable for tender published on GeM portal.
8. On a specific enquiry by this Court as to whether the tender would be revived, in case the petitioner made good the shortfall of the Performance Bank Guarantee (ePBG) so as to meet the required range of 3% to 5%, the learned Standing Counsel fairly submitted that such a course would be impermissible, broadly for two reasons; (i) it would constitute a “material change” in the financial terms of the tender, contrary to the amendment procedure under Clause 2.3 of the RFP; and (ii) it would prejudice the other participants who had contested and lost in the tendering process. However, on the other hand, the petitioner, through his Counsel, has given an unconditional undertaking to deposit the deficit ePBG, so as to raise it to 5% of the contract value and to abide by such terms, as this Court may impose.
9. After hearing learned Counsel for the parties and giving our anxious consideration to the dispute raised in the present writ petition, as well as upon perusing th
