Case Note & Summary
This case arose from a writ petition under Article 226 of the Constitution of India filed by a proprietary concern engaged as a contractor for public sector works, seeking a direction to the respondent Union of India through Central Railway to consider an amended bank guarantee submitted after the bid submission deadline. The respondent had floated a tender for civil works in the Pune-Satara section, requiring a bid security of Rs. 64,91,600 in the form of a bank guarantee valid for 90 days beyond the tender validity period. The petitioner submitted its bid on 4th March 2025 along with a bank guarantee valid until 30th July 2025, which was less than the required validity. The petitioner misinterpreted the tender condition, believing the 90 days was from the closing date of the tender. After its bids in other similar tenders were rejected due to the same issue, the petitioner realized the mistake on 21st April 2025 and immediately on 24th April 2025 submitted an amended bank guarantee with validity until 30th September 2025. No response was received from the respondent, and the petitioner apprehended that its bid would be rejected. The main legal issue was whether the High Court could issue a writ of mandamus directing the respondent to consider the amended bank guarantee when the original guarantee did not meet the tender condition, but the mistake was bona fide, promptly rectified, and the bids had not yet been opened. The petitioner argued that no prejudice would be caused to the respondent and that it had executed other works without demur. The respondent contended that the tender conditions were mandatory and could not be waived, and the petitioner should have been careful. The Court analyzed the matter relying on the principle of equitable relief for genuine mistakes in bids before contract formation, citing with approval the American Jurisprudence as quoted in West Bengal State Electricity Board vs. Patel Engineering Co. Ltd. & Ors. The Court held that the petitioner had acted promptly upon discovering its bona fide mistake, and since the bids had not been opened and no contract awarded, no prejudice would be caused to the respondent. Accordingly, the writ petition was allowed, and the respondent was directed to consider the amended bank guarantee submitted on 24th April 2025.
Headnote
A) Constitutional Law - Writ Jurisdiction - Article 226 of the Constitution of India - High Court can grant equitable relief to a bidder who made a material mistake of fact in bid submission, if the bidder acts promptly upon discovering the mistake and requests opportunity to rectify before any formal contract is entered into, and no prejudice is caused to the public authority (Paras 9-12). B) Tender Law - Bid Security - Bank Guarantee Validity - In tender for public works, if a bidder submits a bank guarantee with validity less than stipulated due to a bona fide interpretation error and corrects it immediately after realizing the mistake before bids are opened and no contract awarded, the authority must consider the amended guarantee in the interest of justice and to avoid rejection of an otherwise qualified bidder (Paras 9-12).
Issue of Consideration
Whether the High Court under Article 226 can direct the respondent to consider the amended bank guarantee submitted after the bid submission deadline but before bids are opened, when the original bank guarantee's validity was less than required by tender conditions, and the petitioner promptly corrected the mistake without any prejudice to the respondent.
Final Decision
Writ petition allowed; respondent directed to consider the amended bank guarantee submitted by the petitioner on 24th April 2025.
Law Points
- Legal points not extracted
- Equitable relief for mistake in bid
- prompt rectification of error
- no prejudice to public authority
- Article 226 of Constitution of India
- mandamus for consideration of amended bank guarantee
