The Delhi High Court Bench comprising Chief Justice Devender Kumar Upadhyay and Justice Tushar Rao Gedela allowed a writ petition filed by M/s Ceigall India Limited (“Ceigall”), quashing the National Highways Authority of India’s (“NHAI”) decision to forfeit 5% of the bid security on the ground of an error in the bid amount entered in words, holding that a bonafide typographical error in the bid submission cannot justify the forfeiture of bid security.
Background
NHAI floated a Request for Proposal (“RFP”) in September 2024 for the construction of the Sambalpur Bypass project in Odisha under the Hybrid Annuity Mode, valued at Rs. 1086.73 crores. Ceigall submitted its bid on 04 March 2025, quoting Rs. 12,20,00,00,000 in figures. However, due to a typographical mistake, the bid in words read as “Rupees One Thousand Two Hundred Twenty only”, omitting the word “crores.”
When financial bids were opened on 25 March 2025, Ceigall immediately on 26 March 2025 clarified the error and confirmed that its intended bid was Rs. 1220 crores contending that there was no provision in the system to correct the error. Despite this clarification, NHAI vide letter dated 27 March 2025 proceeded to encash the Bid security for a sum of Rs. 54,35,000/- on the ground that Ceigall had submitted non-responsive bid. Aggrieved by this coercive action, Ceigall filed the present writ petition on 28 March 2025. Subsequently, on 29 March 2025, NHAI informed Ceigall that it was the lowest bidder and directed it to submit the requisite documents. It further notified that non-submission of documents within three days would attract blacklisting for five years.
Court’s Observations
The Court noted that the only issue for consideration was whether the error was bonafide and whether NHAI was justified in invoking the Clause 2.20.7(a) of RFP to forfeit the bid security amount.
After examining the tender conditions and precedents including Omsairam Steels and Alloys Pvt. Ltd. v. Director of Mines and Geology [(2024) 9 SCC 697] and ABCI Infrastructure Pvt. Ltd. v. Union of India [(2025) 6 SCC 813], the court held that “The error or mistake on the part of the petitioner is bonafide and inadvertent. A fortiori, the penal action as envisaged by NHAI appears to be unsustainable”.
The Court further noted that the case of Ceigall stood on a better footing than ABCI (supra). In ABCI, the bidder had sought to withdraw its bid upon discovering the error, whereas Ceigall not only immediately clarified the inadvertent error but also remained willing to honour its original bid and execute the project in accordance with the tender terms. The Court observed that despite the clarification dated 26.03.2025 by Ceigall, NHAI failed to consider the obvious impracticality of a bid for Rs. 1,220/- in a project worth over Rs. 1000 crores, nor did it seek any justification from the bidder before taking coercive action, as was done by the Border Roads Organisation (“BRO”) in ABCI (supra).
The Court also observed that NHAI itself committed a glaring error by directing the forfeiture of the bid security on 27.03.2025 and proceeding to encash it vide letter dated 29.03.2025, even while accepting the Ceigall’s bid at Rs. 1,220/- under Clause 1.2.7 of the RFP. Notably, the Ceigall had already clarified the inadvertent error on 26.03.2025. The Court remarked that it remains inexplicable why NHAI chose to initiate such penal action despite having accepted the Ceigall’s bid and, more importantly, after declaring the bid “non-responsive,” leaving no basis for any punitive measure at that stage. The Court thus concluded that while inadvertent and bona fide mistakes were made by both parties, the penal action taken by NHAI was unwarranted.
While setting aside NHAI’s decision to forfeit the bid security, the Court emphasized that the doctrine of proportionality needs to be made applicable and directed the Ceigall to deposit Rs. 15 Lakhs with NHAI as cautionary measure “to ensure that bidders exercise greater care while quoting bid prices”
Significance
The judgement advances the jurisprudence of fairness in public tenders by curbing administrative arbitrariness. In doing so, the Court reaffirms that equity and proportionality are integral to the exercise of contractual discretion by tender/state authorities.
In a connected writ petition captioned as Agrawala Infrabuild Private Limited vs NHAI, the Delhi High Court has rejected the contention of the Petitioner therein that once Ceigall was disqualified, then Agrawala Infrabuild should have been declared L1. Moreover, the Court upheld NHAI’s decision to cancel/annul the tender pursuant to judgement in Ceigall (supra), holding that the reasons for annulment need not be disclosed, however there must be underlying justification warranting annulment action.
Case Title: M/s Ceigall India Limited v. National Highways Authority of India & Anr.
Coram: Chief Justice Devender Kumar Upadhyay and Justice Tushar Rao Gedela
Date of Judgment: August 13, 2025
Case Details: W.P.(C) 4054/2025
Counsel for Petitioner: Mr. Sandeep Sethi, Sr. Adv. with Ms. Apara Mahishi, Mr. Anshuman Pande, Mr. Mrigank Behl and Mr. Sumer Dev Seth, Advs.
Counsel for Respondents: Mr. Manish K. Bishnoi and Mr. Khubaib Shakeel, Advs. for NHAI. Mr. Aditya Kumar and Ms. Ilanath, Advs. for R-2.