Supreme Court Allows Bidder's Appeal, Directs Payment of Rs.1 Crore and Return of Bank Guarantee After Patent Clerical Error in Tender

A bench of Chief Justice Sanjiv Khanna and Justices Sanjay Kumar and K.V. Viswanathan heard an appeal by M/s ABCI Infrastructures Pvt. Ltd. challenging the Border Roads Organisation's (BRO) decision to treat the company as a defaulter, encash its bid security and refuse withdrawal of an evidently erroneous financial bid in a Rs.1,504.64 crore tunnel construction tender.

The Court allowed the appeal, set aside the Himachal Pradesh High Court order, and directed a measured remedy rather than complete forfeiture. The bench described the dispute as “an avoidable litigation” and found that while the appellant had made a clear clerical error in its financial bid, BRO adopted an “obdurate and overly legalistic stance,” contributing to delay. The Court rejected the appellant’s plea of a systemic server glitch but held that BRO’s conduct in insisting on accepting the manifestly unrealistic bid and thereafter encashing the bank guarantee was unjustified. The Court, in its reasoning, observed: “The present case does not fall under any exception, for the error or mistake in quoting a price of Rs.1,569/-, does not require any argument and cannot be debated as it is self-evident. A contract of this nature for an estimated value of more than Rs.1,500 crores spread over 48 months requiring construction of roads and tunnels of the length of more than 4 kilometres in a hilly terrain can never be executed for a mere Rs.1,569/-.” The bench directed the appellant to pay Rs.1 crore to BRO; upon receipt, BRO was to return the original bank guarantee or demand draft of Rs.15.04 crores within one week. The impugned High Court judgment was set aside and the appeal was allowed with no order as to costs.

Background BRO had invited bids on February 23, 2023 for design and construction of two-lane twin tunnels at Shinkun La Pass with an estimated cost of Rs.1,504.64 crores and a bid security of Rs.15.04 crores. Ten bidders, including the appellant, submitted online technical and financial bids on June 3, 2023. When financial bids were opened on August 24, 2023, the appellant appeared as L‑1 with a financial bid recorded as Rs.1,569 (instead of Rs.1,569 crores). The appellant immediately informed BRO on August 25 and repeatedly sought withdrawal and return of the bid security, attributing the error to a typographical mistake or technical issue. BRO, guided by its Evaluation Committee, asked the appellant to justify the quoted amount, later declared the appellant a defaulter, wrote to the appellant’s bank asking for encashment of the bank guarantee, and issued a fresh tender.

The appellant challenged BRO’s actions before the High Court of Himachal Pradesh, which dismissed the writ petition on October 7, 2023. The Supreme Court reviewed the legal position including Section 20 of the Indian Contract Act and precedents such as West Bengal State Electricity Board v. Patel Engineering Co. and subsequent authorities on equitable relief for bid mistakes. The Court reiterated established exceptions where relief may be denied—such as when a mistake could have been avoided by ordinary care, promptness is lacking, or tender rules were not followed—but found the present mistake to be “self-evident” and the consequences disproportionately harsh given BRO’s own handling of the matter. The Court observed that while the appellant erred in failing to add required zeros and the plea of a system glitch could not be accepted, BRO’s insistence on treating the bid as valid and encashing the guarantee without a pragmatic corrective step was unjustified. The Court noted that a fresh tender eventually produced a lower winning bid, mitigating BRO’s asserted prejudice. The final result was that the appeal was allowed, the High Court judgment was set aside, the appellant was ordered to pay Rs.1 crore, and BRO was directed to return the appellant’s bank guarantee on receipt.

Case No.: 2025 INSC 215 Case Title: M/s. ABCI Infrastructures Pvt. Ltd. v. Union of India and Others Appearances: For the Petitioner(s): Not indicated in the reported judgment For the Respondent(s): Not indicated in the reported judgment