The Court did not award the contract outright: the appellant's financial bid must be opened and considered alongside the other bids, and the tender finalised under the remaining conditions. The ruling decides only that the rejection ground was perverse.
- Case
- Hardev Construction Private Limited v. Union of India & Ors.
- Court
- Supreme Court of India
- Decision
- Citation
- 2026 INSC 1110
- Bench
- J. B. Pardiwala; K. Vinod Chandran
- Judgment by
- K. Vinod Chandran
- Case numbers
- Civil Appeal arising out of SLP (C) No. 25855 of 2026
- Outcome
- Appeal allowed; the Patna High Court's affirmation of the bid rejection is set aside; the appellant's financial bid is to be opened and evaluated with the others.
The judgment
On 12 October 2026, in a judgment authored by Justice K. Vinod Chandran, the Supreme Court set aside the rejection of Hardev Construction Private Limited's bid for a railway EPC project. The bid had been rejected — and the rejection affirmed by a Division Bench of the Patna High Court — solely because the bidder did not physically produce the 'original' of its bid security, as Clause 2.20.6(ii) of the Request for Proposal required. The problem: the bid security had been paid through the Railways' own e-payment gateway, and the digital receipt had been scanned and uploaded with the bid.
'We are convinced that here, there is a clear perversity;' the Court held: for an e-payment, demanding the original is 'an impossibility', because the money has already gone into the respondents' coffers and they have full control over it. 'Rigid adherence to the letter of a document cannot be countenanced, especially when there is a clear impossibility in compliance of the same.'
The tender and the rejection
The project was the 'Engineering Procurement and Construction (EPC) of Construction of guide bunds, Launching Aprons and Associated River Protection Works etc. in connection with Bikramshila-Katareah New Line Rail Link Project on EPC Mode' — Bid/Package No. ECR-CAO-C-S-EPC-05-25-26 dated 6 January 2026. The appellant's bid was rejected only for non-submission of the original of the bid security; its financial bid was never opened because it had failed the technical stage at the inception.
Clause 2.20.6 of the RFP allowed bid security in several forms — bank guarantee, account payee demand draft, fixed deposit receipt, banker's cheque, or e-payment through the authority's gateway — and Clause 1 required a scanned copy to be uploaded on the e-procurement portal. Clause 2.20.6(ii) added that the instrument must be delivered physically, in person, to the nominated official. The appellant's case was simple: with an e-payment there is no 'original' to deliver — the payment had already reached the Railways' account and the digital receipt was uploaded.
Why the demand was perverse
The Court agreed with the appellant 'especially looking at the various forms in which the Bid Security can be furnished'. For a bank guarantee, demand draft, fixed deposit receipt or banker's cheque, physical delivery makes sense: unless the original reaches the authority, it cannot exercise a lien on the security. That is why the clause requires the scanned copy at application stage and the original later with the nominated official.
For an e-payment, the logic inverts: 'the money was deposited to the account of the respondents and there is nothing further required to be produced insofar as the e-payment made, especially when the digital payment receipt had been uploaded along with the bid document.' The Railways relied on Prakash Asphaltings and Toll Highways (India) Ltd. v. Mandeepa Enterprises ((2026) 4 SCC 310) for the proposition that the awarder best understands tender documents and courts should defer. The Court distinguished it: that case warned against ignoring tender words, but also carved out an exception for 'mala fide and perverse understanding or appreciation' of the documents — and this, the Court held, was a case of clear perversity.
The relief: evaluation, not award
The impugned order was set aside — but the Court did not simply hand the contract to the appellant, despite the operative paragraph's broad language. Because the appellant's counsel informed the Court that the e-portal deposit had been refunded after the rejection, the Court gave a calibrated direction: respondents 1 and 2 must facilitate a fresh e-payment within two weeks (or, if there is technical difficulty, the appellant must submit the security in another form within a further two weeks), and only then 'the appellant's financial bid shall be opened to be considered along with the other bids and the tender finalized, in accordance with the other tender conditions stipulated.'
The appellant had also argued that its financial bid was far lower than the successful tenderer's and that the rejection caused loss to the exchequer — but since the financial bid was never opened, there was, as the ASG pointed out, no opportunity to compare. That comparison will now happen on the merits of the bids.
BANTHRY ANALYSISFor law students
This is a compact lesson in reading tender conditions purposively rather than literally. The Court's method is worth imitating: first, identify the purpose of the clause (for physical instruments, enabling the lien); then test each permitted mode of compliance against that purpose. Where a mode already satisfies the purpose — the money is in the authority's account — insisting on the form is not strictness but perversity.
Second, note how the Court handles the 'deference to the awarder' line of cases. Prakash Asphaltings is not overruled or even criticised; it is absorbed — the Court locates the exception inside the cited authority itself ('mala fide and perverse understanding'). That is a recurring Supreme Court technique: win the precedent battle by reading the opponent's authority more carefully than the opponent did. Finally, observe the relief: setting aside a rejection does not equal awarding the contract. Courts restore the process to the stage before the illegality and let the remaining conditions run their course.
READING PROMPTSQuestions for a closer reading
- Why is physical production of an 'original' sensible for a bank guarantee or demand draft but impossible for an e-payment — and how did the Court use that difference?
- In Prakash Asphaltings, the Court said constitutional courts should defer to the tender awarder's understanding of tender documents. What exception did this judgment carve out of that deference?
- What is the precise relief granted — and why is it not a direction to award the contract to the appellant?
