Hardev Construction Pvt. Ltd. v. Union of India & Ors.

What happened

The appellant's bid for the engineering, procurement and construction of guide bunds, launching aprons and associated river protection works for the Bikramshila–Katareah New Line Rail Link Project (Bid/Package No. ECR-CAO-C-S-EPC-05-25-26 dated 6 January 2026) was rejected for not submitting the original of the bid security required by clause 2.20.6(ii) of the Request for Proposal. Clause 2.20.6 allows bid security to be furnished as a bank guarantee, account payee demand draft, fixed deposit receipt, banker's cheque or by the authority's e-payment gateway, with a scanned copy uploaded on the e-procurement portal, and sub-clause (ii) requires the form in which it is furnished to be delivered in person to the nominated official. The appellant paid by e-payment into the respondents' account and uploaded the scanned digital receipt with its bid. A Division Bench of the Patna High Court affirmed the rejection. The appellant said that its financial bid was far lower than the successful tenderer's, which meant loss to the exchequer; the Additional Solicitor General for the Ministry of Railways said that clause 2.20.6(ii) specifically required the original and that the financial bid was never opened because the appellant failed at the technical stage; and the successful tenderer relied on Prakash Asphaltings and Toll Highways (India) Ltd. v. Mandeepa Enterprises to argue that courts should defer to the awarder's understanding of its tender documents.

Questions before the court

• Can a bid be rejected for not producing the original of the bid security when the security was paid through the authority's own e-payment gateway and a digital receipt was uploaded with the bid?

Why the court ruled this way

The Court agreed with the appellant (paragraph 8). For a bank guarantee, demand draft, fixed deposit receipt or banker's cheque the authority can exercise no lien unless the instrument is physically furnished, which explains why a scan is uploaded with the application and the original handed over later, but where the money was deposited into the respondents' account by e-payment nothing further remained to be produced, especially with the digital receipt uploaded with the bid (paragraph 8). Prakash Asphaltings concerned a toll-collection tender in which a bidder had quoted a paltry figure instead of the collection for the whole contract period and could not explain it away as an inadvertent per-day quote; it held that words in tender documents cannot be treated as superfluous, but it also recognised an exception for a mala fide or perverse understanding or application of the tender terms (paragraph 9). Here the bid was rejected only because an original was not produced, which was an impossibility, and that was a clear perversity: rigid adherence to the letter of a document cannot be countenanced where compliance is impossible, and for e-payment the money had already reached the respondents, who had full control over it (paragraph 10).

Controlling point

Rejecting a bid for failing to produce the original of bid security that was paid through the authority's e-payment gateway, with a digital receipt uploaded, is perverse and cannot be sustained.

Order and next steps

The Court set aside the impugned order. Its working directions in paragraph 12 record that the amount deposited on the e-portal had been refunded after the rejection, require the first and second respondents to facilitate e-payment of the bid security within two weeks, or, if there is a technical difficulty, to allow the appellant to pay in any other form within a further two weeks, and then provide that the appellant's financial bid is to be opened and considered along with the other bids and the tender finalised under the remaining tender conditions. The appeal was allowed with those directions and pending applications were rejected.

Practical implications

A bidder rejected for not producing a physical original of a payment that was made electronically to the authority can challenge the rejection, and an authority drafting tender conditions should confine any requirement of an original to instruments that actually have to be handed over.

Limits of this ruling

• The ruling concerns bid security paid through the authority's e-payment gateway; the Court noted that bank guarantees, drafts, deposit receipts and cheques still have to be physically furnished before a lien can be exercised. It did not decide on the merits of the bids. Paragraph 11 speaks of directing that the contract be awarded to the appellant, while paragraph 12, which sets out the steps, provides for the appellant's financial bid to be opened and considered with the other bids, and this note follows paragraph 12 for what happens next.