The Supreme Court of India, in a significant ruling on tender law, has held that allowing a bidder to rectify their financial bid after the bids have been opened is “highly improper” and “clearly impermissible.” Setting aside a Calcutta High Court order that permitted such a correction, a bench comprising Justice Manoj Misra and Justice Ujjal Bhuyan emphasised that the sanctity of the tender process is paramount and must be maintained at all costs.
The judgment was delivered in an appeal filed by Prakash Asphaltings and Toll Highways (India) Limited, the highest bidder in a tender process, challenging the High Court’s decision to allow another bidder, Mandeepa Enterprises, to correct what it termed an “inadvertent mistake” in its bid amount. The Court also ruled that the non-impleadment of the highest bidder (H1) in the High Court proceedings was a fatal flaw that vitiated the judgment.
Case Background
The Public Works (Roads) Directorate, Government of West Bengal, issued a notice on October 17, 2023, inviting electronic bids for Road User Fee (RUF) collection on a state highway for a contract period of 1095 days. The tender documents explicitly required bidders to quote a consolidated amount for the entire period and contained a specific clause, 4(g), stating, “Any change in template of BOQ [Bill of Quantity] will not be accepted under any circumstances.”
Four bidders, including Prakash Asphaltings and Mandeepa Enterprises, were found to be technically qualified. Upon the opening of the financial bids, Prakash Asphaltings was declared the highest bidder (H1) with an offer of ₹91,19,00,000.00. Mandeepa Enterprises was found to be the lowest bidder (H4), having quoted ₹9,72,999.00.
After the results were made public, Mandeepa Enterprises sent an e-mail to the tender committee on December 13, 2023, claiming that its quoted price was a “per day” rate and not for the entire 1095-day period. It requested that its bid be rectified to ₹106,54,33,905.00 (i.e., ₹9,72,999 x 1095), which would make it the highest bidder. The tendering authority rejected this request on December 20, 2023, stating it would “impeach the sanctity of the tender process.”
Mandeepa Enterprises then approached the Calcutta High Court. A learned Single Judge dismissed the writ petition, holding that giving such an opportunity “would be contrary to every known principle of fairness pertaining to tenders.” However, on appeal, a Division Bench of the High Court reversed this decision. It allowed the correction, directing the authorities to re-evaluate Mandeepa’s bid and give other bidders a chance to match the new, higher price.
Arguments Before the Supreme Court
Prakash Asphaltings, which was not made a party in the High Court proceedings, appealed to the Supreme Court. Its senior counsel, Mr. Kavin Gulati, argued that the Division Bench’s order unsettled the entire tender process and violated the principles of natural justice as the appellant was not heard despite being the declared H1 bidder. He contended that the High Court had erroneously interpreted a clause allowing for “clarification” to permit a fundamental change in the financial bid, directly contradicting the express prohibition in Clause 4(g).
On behalf of Mandeepa Enterprises, Mr. Anurag Soan submitted that the error was a bona fide and inadvertent mistake. He argued that the corrected bid would provide the state exchequer with an additional ₹15 crores, which was in the larger public interest.
The State of West Bengal, represented by Ms. Nandini Sen Mukherjee, supported the appellant, arguing that the Division Bench’s directions had unduly delayed the contract and affected revenue collection. The State maintained that post-tender modification of a quoted rate is not permissible.
Court’s Analysis and Decision
The Supreme Court undertook a detailed analysis of the tender conditions and relevant legal principles. Justice Ujjal Bhuyan, writing for the bench, found that the plea of an “inadvertent mistake” was not credible. The judgment noted, “In columns 5, 6 and 7, respondent No. 1 [Mandeepa] filled up the amount in figures and words as Rs. 9,72,999.00 and Rupees nine lakhs seventy two thousand nine hundred and ninety nine respectively for 1095 days. In such circumstances, it cannot be said to be an inadvertent or unintentional mistake.”
The Court held that the Division Bench had erred by stretching the interpretation of Clause 5B(v), which allows the authority to seek clarification on documents. The judgment stated, “This provision is meant to empower the notice inviting authority to seek clarification or further information regarding any document filed by a bidder. This cannot be interpreted so broadly as to include rectification of the BOQ rates which is governed by Clause 4(g) of the notice inviting electronic bid putting a complete embargo to any change in the template of BOQ.”
Citing precedents like Jagdish Mandal vs. State of Orissa and Afcons Infrastructure Limited vs. Nagpur Metro Rail Corporation Limited, the Court reiterated the limited scope of judicial review in contractual matters and the deference owed to the employer’s understanding of the tender documents.
The Court also held that the non-hearing of the appellant was a critical failure. “As is clearly discernible, appellant was a necessary party to the proceedings before the High Court… Therefore, non-impleadment and consequential non-hearing of the appellant by the High Court, has vitiated the impugned judgment and order.”
Addressing the public interest argument, the Court observed that it could not be narrowly confined to financial gain. Quoting its previous decision, the bench stated, “While benefit or accrual of more revenue to the public exchequer is certainly an important aspect, equally important, if not more, is adherence to the rules and conditions of tender; sanctity of the tender process being paramount and should be maintained at all cost.”
Concluding that the High Court’s judgment could not be sustained, the Supreme Court set it aside and directed the West Bengal authorities to proceed with finalizing the award of the contract based on the originally submitted bids.
