Bid Rejected for Not Submitting the “Original” of an Online Payment? Supreme Court Calls It Perverse

Case at a glance: The Supreme Court has set aside the rejection of a construction company's railway tender bid for failing to physically submit the “original” bid security, when it had paid through the authority's own e-payment gateway. It held that demanding an original of an e-payment is demanding the impossible and that “rigid adherence to the letter of a document cannot be countenanced” in such a case.

The appellant bid for an EPC tender for guide bunds and river protection work on the Bikramshila–Katareah new rail line. It paid the bid security through the authority's e-payment gateway and uploaded the receipt, as the RFP required.

Its technical bid was rejected for not physically submitting the original bid security, and its financial bid, which was lower than another bidder's, was never opened. The Patna High Court upheld the rejection.

The Key Question Before the Court

Can a bid be rejected for not physically producing the original of a bid security paid electronically?

Substance Over Impossible Form

The Court explained that for a bank guarantee, DD, FDR or banker's cheque, the employer needs the original to enforce its lien, but with e-payment the money is already in the employer's account (para 8). Rejecting the bid for not producing an original of an e-payment was a clear perversity (para 10).

It distinguished Prakash Asphaltings and Toll Highways v. Mandeepa Enterprises, which concerned a mistaken financial quote and itself recognises exceptions for perverse readings of tender terms (para 9).

What the Court Actually Held

• The High Court order and the rejection were set aside.
• The authority must facilitate e-payment of the refunded bid security within two weeks, or the appellant may deposit it in another form within a further two weeks.
• The appellant's financial bid must then be opened and considered with the other bids, and the tender finalised under the tender conditions.

Why This Judgment Matters

• It curbs hyper-technical rejections in e-procurement.
• It aligns tender evaluation with digital payment realities.
• It clarifies the limits of Prakash Asphaltings.

What Should Advocates Take Away From the Judgment?

For Bidders' Counsel

• Show that the purpose of the tender condition is met by the e-payment.
• Challenge rejections that demand impossible compliance.

For Procurement Authorities

• Update RFP conditions to reflect electronic bid security.

Key Takeaways

Frequently Asked Questions

The judgment's wording is not fully consistent: one paragraph says the contract is to be awarded to the appellant, while the operative directions require its financial bid to be opened and evaluated with others.

An e-payment has no physical original; the money was already with the authority.

It must be redeposited by e-payment within two weeks, or in another form within a further two weeks.

Conclusion