Gujarat High Court Considers Challenge to Tender Disqualification for Insignificant Shortfall in Earnest Money Deposit. The court examined whether the rejection of a tender due to a minor shortfall in earnest money deposit violates the doctrine of substantial compliance, under Article 226 of the Constitution.

The petitioner, a construction firm, filed a writ petition under Article 226 of the Constitution of India challenging the rejection of its tender bid for demolition work due to a shortfall of Rs.180 in the Earnest Money Deposit.

The petitioner sought a writ of mandamus to quash the disqualification order dated 15.12.2025, direct the respondent authorities to award the contract to the petitioner, and restrain respondent No.4 from starting work.

The petitioner's tender was disqualified by the respondent No.2 by letter dated 15.12.2025 on the ground that the Earnest Money Deposit was short by Rs.180, which was a violation of Clause 2 of the Tender Document.

No previous decisions mentioned; the matter was directly filed in the High Court.

Whether the rejection of the petitioner's tender for a shortfall of Rs.180 in the Earnest Money Deposit was illegal and in violation of the doctrine of substantial compliance? Whether the respondent authorities ought to have allowed the petitioner to rectify the deficit under Clause 23.4(ii) of the Tender Document? Whether the action of disqualification was arbitrary, disproportionate, and mala fide?

The petitioner argued that the shortfall of Rs.180 was a trifling amount, a clerical error, and that the deposit of Rs.20,50,000 constituted substantial compliance, hence disqualification was disproportionate. The petitioner contended that Clause 16.3 of the Tender Document uses the term 'non-acceptable' which should be interpreted reasonably; a rounding difference does not render the bid security unacceptable. The petitioner submitted that Clause 23.4(ii) expressly allows the bidder to clarify qualification documents; the authorities could have asked for deposit of the deficit amount, and failure to do so made the clause redundant. The petitioner relied on the Supreme Court decision in Poddar Steel Corporation v. Ganesh Engineering Works (1991) 3 SCC 273, where it was held that an authority may waive technical irregularities of little significance and that tender conditions can be classified into essential and ancillary.

6. It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the State Bank the clause no. 6 of the tender notice was not obeyed literally, but the question is as to whether the said non-compliance deprived the Diesel Locomotive Works of the authority to accept the bid. As a matter of general proposition, it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories-those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigi...

The petitioner filed Special Civil Application No. 2177 of 2026 under Article 226 of the Constitution of India before the High Court of Gujarat at Ahmedabad. The court issued Rule on [date not mentioned], making it returnable forthwith. Learned Government Pleader waived service for respondents 1-3, and learned advocate for respondent No.4 waived service. The matter was heard by a Division Bench on 06/03/2026, and an oral judgment was pronounced. The text provided does not include the final operative part.

• Constitution of India: Article 226