Determination of Unreasonably Low Bid as Non-Responsive Prejudicial to Public Interest in Strategic Projects

The High Court of Himachal Pradesh on October 7, 2023, dismissed a writ petition in the matter of ABCI Infrastructure Pvt. Ltd. v. Union of India and Ors. [MANU/HP/1842/2023], holding that the petitioner’s contention of bid manipulation by the system was unsustainable and the forfeiture of bid security was valid. Even though the bid was unreasonably low and generally considered non-responsive, the project was of strategic importance to the country and withdrawal of the bid was prejudicial to public interest on account of the delay in execution of the project and consequent cost escalation.

In the instant case, the Border Road Organization under the Ministry of Defence issued a notice inviting bids for the design and construction of Tunnels with an estimated project cost of Rs. 1504.64 crore. The petitioner had made an online bid of 1569.00 and was ranked as the lowest bidder.

The petitioner claimed that they had intended to upload a bid of 1569 crores and the glitch came to their attention only at the time of the declaration of the results of the financial bid. The petitioner also contended that when the estimated project cost itself was Rs. 1504 crores, the tender document cost was Rs. 1, 60, 000 and the bid security was Rs. 15, 04, 64, 000, it was completely illogical for the respondents to consider the bid as a valid value bid as it was not financially feasible to implement the project with the said figure. The petition challenged the declaration of the petitioner as a defaulter and sought non-encashment of the bid security.

The respondents contended that the system displayed the value quoted in both figures as well as in words and therefore there was a willful default on behalf of the bidder. In addition, there was no malfunction of the web portal, which was also being used by most of the Government departments to bring transparency to the tendering system. Further, irrespective of the reason behind the abnormally low rate quoted by the bidder, it would cause a delay in the commencement of the work, which would also lead to an escalation in costs and be detrimental to national security due to its strategic nature.

While holding that the bid security submitted was liable to be forfeited, the High Court noted that if the plea of the petitioner regarding the technical glitch was in fact correct, none of the bidders submitting their financial bids on the same date would have been able to upload their bids. Further, the contention of data manipulation was unsustainable.

Regarding the request for the treatment of the bid as non-responsive, the Court noted that the petitioner had themselves indicated that their bid be treated as virtually withdrawn and as per the terms of the RFP, the petitioner shall be deemed to have acknowledged and confirmed the loss that would be suffered by the Authority on account of the withdrawal of a bid. Therefore, the forfeiture of the bid security was valid.

The Court also noted that time was of essence in the project floated by the respondents and starting the bidding process afresh would cause inevitable delay in the commencement of the project which would be detrimental to national security and be prejudicial to the public interest which is greater than any loss to the petitioner.