The Supreme Court has held that a bid cannot be rejected for non-submission of an original bid security document where the security has been furnished through an e-payment gateway and the digital payment receipt has been uploaded with the bid.
A Bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran passed the judgment while allowing an appeal filed by Hardev Construction Private Limited against the Union of India and others.
The dispute arose from a tender for the construction of guide bunds, launching aprons and associated river protection works for the Bikramshila-Katareah New Line Rail Link Project. The appellant’s bid was rejected for failure to physically submit the original bid security, as required under Clause 2.20.6(ii) of the Request for Proposal. The Patna High Court upheld the rejection.
The appellant submitted that the bid security had been paid through the e-payment gateway and that the digital payment receipt had been scanned and uploaded along with the bid. The respondents contended that the tender conditions expressly required physical submission of the original document.
The Court observed that physical submission of an original instrument, such as a bank guarantee, demand draft or fixed deposit receipt, was necessary to enable the respondents to exercise a lien over the security. However, in the case of e-payment, the money had already been transferred to the respondents’ account, leaving nothing further to be produced in that regard.
Finding a clear perversity in the rejection, the Court held that rigid adherence to the letter of a tender document could not be countenanced where compliance was impossible. It observed that, unlike other forms of bid security, an amount paid electronically was already under the respondents’ control.
The Court accordingly set aside the Patna High Court’s order and directed that the contract be awarded to the appellant. Since the bid security amount had been refunded after rejection of the bid, the respondents were directed to facilitate its payment through e-payment within two weeks. If technical difficulties arose, the appellant would be required to submit the amount in another form within a further two weeks.
Upon submission of the bid security, the appellant’s financial bid shall be opened and considered alongside the other bids, and the tender finalised in accordance with the remaining tender conditions.