Hardev Construction Private Limited Vs Union of India & Ors. (Supreme Court of India)
E-Paid Bid Security Cannot Be Rejected for Want of a Physical “Original” Receipt
Background: Security Paid, Yet Bid Rejected
Hardev Construction Private Limited participated in a tender issued by the Railways for the construction of guide bunds, launching aprons and associated river protection works connected with the Bikramshila–Katareah New Line Rail Link Project.
The tender permitted bidders to furnish bid security through several modes, including a bank guarantee, account-payee demand draft, fixed deposit receipt, banker’s cheque or the authority’s e-payment gateway.
The appellant chose the electronic payment option. It transferred the bid security directly into the respondent’s account and uploaded a scanned copy of the digital payment receipt along with its bid.
Nevertheless, the bid was rejected because the appellant had not physically submitted the original bid-security document as required by clause 2.20.6(ii) of the Request for Proposal. The Patna High Court upheld the rejection, prompting the appellant to approach the Supreme Court.
Rival Contentions: Literal Compliance Versus Completed Payment
The appellant argued that the requirement to produce an original could not sensibly apply to an electronic payment. The money had already reached the authority’s account, and the digital receipt had been uploaded. No further physical instrument remained to be delivered.
The Railways maintained that the tender expressly required submission of the original and that non-compliance justified rejection.
The successful tenderer relied on Prakash Asphaltings and Toll Highways (India) Ltd. v. Mandeepa Enterprises, contending that the tendering authority was best placed to understand its requirements and interpret its tender documents. Courts should ordinarily defer to that interpretation.
The appellant also claimed that its financial bid was substantially lower. However, the Railways pointed out that the appellant’s financial bid had never been opened, since it had been rejected at the technical stage. Its alleged price advantage had therefore not been established through comparison of the bids.
Physical Instruments and Electronic Payments Serve the Requirement Differently
The Supreme Court examined the purpose of requiring physical delivery of the original bid-security instrument.
Where security is furnished through a bank guarantee, demand draft, fixed deposit receipt or banker’s cheque, the original must reach the authority so that it can exercise the relevant rights over the security. Uploading a scanned copy alone does not place the underlying instrument in its hands.
Electronic payment operates differently. Once the money is transferred into the authority’s account, the authority already has full control over the security amount.
The Court therefore accepted the appellant’s contention that nothing further required physical production when the bid security had been paid electronically and the digital receipt uploaded with the tender documents.
Judicial Deference Does Not Protect a Perverse Interpretation
The Supreme Court distinguished the decision in Prakash Asphaltings.
That case concerned a bidder who quoted a small amount as the financial bid and subsequently claimed that it represented a daily figure rather than the amount for the entire contract period. The Court had refused to permit the bidder to explain away the omission by effectively reconstructing the financial offer.
The present case involved no comparable alteration of a financial bid. The appellant had used a mode of payment expressly permitted by the tender and had actually deposited the security.
The Court also noted that Prakash Asphaltings itself recognised an exception to judicial deference where the authority’s understanding or application of the tender conditions was mala fide or perverse.
Here, rejection solely because a physical original of an electronic payment receipt had not been produced amounted to clear perversity. The Court held that rigid adherence to the wording of a document could not be accepted when the demanded compliance was impossible.
Relief Granted and Further Tender Process
The Supreme Court set aside the impugned order and allowed the appeal.
Since the bid-security amount had been refunded after rejection, the Court directed the authorities to facilitate electronic payment within two weeks. If technical difficulties prevented that payment, the appellant was to furnish the security through another permitted mode within a further two weeks.
Upon submission of the security, the appellant’s financial bid was to be opened and considered with the other bids, and the tender finalised according to the remaining conditions.
Although paragraph 11 states that the contract should be awarded to the appellant, paragraph 12 expressly requires comparative consideration of its financial bid and finalisation under the tender conditions. Accordingly, the judgment should be presented with both directions, rather than as an unconditional award irrespective of financial evaluation.
Author’s Comments
The decision illustrates the need to interpret a procedural requirement by reference to the purpose it serves and the mode of compliance expressly permitted. Requiring possession of an original security instrument makes sense where that instrument enables enforcement. Applying the same demand mechanically after the money has already reached the authority’s account defeats that purpose.
The ruling does not provide a general exemption from mandatory tender conditions. The appellant had furnished the security through an authorised mode and uploaded proof; the defect alleged was the absence of a physical original in an electronic transaction.
The distinction is practical: a completed electronic payment should not fail merely because a condition designed for physical instruments is applied without regard to its function.
Cases Discussed
- Prakash Asphaltings and Toll Highways (India) Ltd. v. Mandeepa Enterprises and Others, (2026) 4 SCC 310 (Supreme Court) — Distinguished on the facts. The precedent concerned a bidder seeking to reinterpret a financial quotation made for a tender period as a daily rate. It also recognised that judicial deference to a tender authority’s interpretation does not protect mala fide or perverse application of tender conditions.
FULL TEXT OF THE SUPREME COURT JUDGMENT
Leave granted.
2. The appellant’s bid for the project ‘Engineering Procurement and Construction (EPC) of Construction of guide bunds, Launching Aprons and Associated River Protection Works etc. in connection with Bikramshila-Katareah New Line Rail Link Project on EPC Mode”-Bid/ Package No. ECR-CAO-C-S-EPC-05-25-26 dated 06.01.2026’ was rejected for reason of non-submission of original of the Bid Security furnished; stipulated vide Clause 2.20.6 (ii) of the Request For Proposal (RFP), as indicated in the e-portal of the respondent, a copy of which is produced at Annexure P3. The Division Bench of the Patna High Court affirmed the rejection, which is impugned in the instant appeal.
3. We heard Sri A. K. De, learned Counsel for the appellant, Sri Kanakamedala Ravindra Kumar, learned A.S.G. for the respondent-Ministry of Railways and Ms. Nina R. Nariman, learned Counsel for the 3rd respondent, who was the successful tenderer.
4. Learned Counsel for the appellant points out that the rejection was only on the ground that the appellant had not submitted the original of the Bid Security furnished, which in the case of the appellant was submitted through the e-payment Gateway of Authority. The Bid Security was remitted to the account of the respondent through e-payment, the receipt of which in the digital form was scanned and uploaded along with the bid.
5. Learned A.S.G. for the respondent-Ministry of Railways, however, points out that Clause 2.20.6(ii) specifically requires the original to be submitted, and in that circumstance, the rejection was proper. Learned Counsel for the 3rd respondent relied on the decision in Prakash Asphaltings and Toll Highways (India) Ltd. v. Mandeepa Enterprises and Others1 to argue that the awarder is the best equipped to understand and appreciate its requirements and interpret bid documents and the Constitutional Courts should defer to such understanding and appreciation of the tender documents. There is no elbow room insofar as producing the original documents, is the 3rd respondent’s contention.
6. Learned Counsel for the appellant also points out that his financial bid was far lower than that of the 3rd respondent and this causes loss to the exchequer. Learned A.S.G. alertly points out that there was no opportunity to compare the financial bids, since the appellant had failed in its technical bid at the inception, for non-production of the required original receipt, and in that circumstance, the appellant’s financial bid was never opened.
7. Clause 2.20.6 of the RFP, produced as Annexure P1, speaks of submission of Bid Security in the form of Bank Guarantee/ Account Payee Demand Draft/Fixed Deposit Receipt/ Banker’s Cheque/ e-payment Gateway of Authority. It is also stipulated in Clause 1 that a scanned copy of the same shall be uploaded on e-Procurement Portal while applying for the tender. There is no dispute that the appellant made payment of the Bid Security by means of e-payment and the rejection was only on the ground of violation of Clause (ii). Clause (ii) prescribes that the form in which the Bid Security is furnished, should be delivered in person, physically, to the official nominated, as indicated in the tender document. The appellant’s contention is that there is no question of production of an original, since the payment has already gone into the coffers of the respondents and the digital receipt has been uploaded along with the tender document.
8. We are perfectly in agreement with the contention of the appellant, especially looking at the various forms in which the Bid Security can be furnished; a Bank Guarantee/ Account Payee Demand Draft/Fixed Deposit Receipt/ Banker’s Cheque, unless physically furnished to the respondent, there can be no lien exercised on the Bid Security. It is, hence, the stipulation that at the time of application, the scanned copy should be uploaded and later the original should be handed over to the nominated official. Insofar as the appellant is concerned, the money was deposited to the account of the respondents and there is nothing further required to be produced insofar as the e-payment made, especially when the digital payment receipt had been uploaded along with the bid document.
9. Prakash Asphaltings and Toll Highways (India) Ltd.1 was a case in which a tender was invited for toll collection. When the financial bid was opened, tenderers whose technical bid was found to be qualified; three of them, had quoted in crores while one had quoted a paltry amount of Rs.9,72,999/-. The contention raised was that this was a bona fide mistake, and the financial bid indicated only the collection of a single day and if it is worked out for the total contract of 1095 days, it would be Rs.100.65 crores and then their bid would be the highest. It was in this context that this Court held that the words used in the tender documents cannot be ignored or treated as redundant or superfluous. The tenderer was required to give the total collection for the contract period and an omission insofar as submitting a paltry amount, even if inadvertent, cannot be explained by putting forth the contention that the bid was mistakenly quoted at the per day rate. It is also pertinent that this Court in the aforesaid decision, while cautioning the Constitutional Court’s to defer to the understanding and appreciation of the tender documents, also carved out an exception insofar as mala fide and perverse understanding or appreciation of the documents, especially in the application of the terms of the tender document.
10. We are convinced that here, there is a clear perversity; insofar as an e-payment was made, as required by the tender document, the digital receipt of which was scanned and uploaded, rejected only since the original was not produced; which is an impossibility. Rigid adherence to the letter of a document cannot be countenanced, especially when there is a clear impossibility in compliance of the same. As we noticed, Bid Security, when furnished in all other forms, cannot be enforced, unless the original comes into the hands of the respondents. However, insofar as the e-payment is concerned, the money has already been transferred to the account of the respondents, and they have full control over it.
11. We, hence, set aside the impugned order and direct the contract to be awarded to the appellant herein.
12. We have been informed by the learned Counsel for the appellant that after rejection, the amounts deposited in the e-portal was refunded to the appellant. In that circumstance, the respondent Nos.1 and 2 would facilitate either a measure of e-payment within a period of two weeks from today, and if there is any technical difficulty, then the appellant shall be required to submit the amounts in any other form within a further period of two weeks. On the submission of the Bid Security, the appellant’s financial bid shall be opened to be considered along with the other bids and the tender finalized, in accordance with the other tender conditions stipulated.
13. The appeal stands allowed with the above directions.
14. Pending application(s), if any, shall stand rejected.
Note:
1 (2026) 4 SCC 310
