A) ABSTRACT / HEADNOTE

This analysis examines M/s ABCI Infrastructures Pvt. Ltd. v. Union of India & Ors., Civil Appeal No. 2546 of 2025, decided by the Supreme Court of India on 14 February 2025 (Sanjiv Khanna, CJI). The dispute arises from an online tender by the Border Roads Organisation (BRO) for construction of long twin tunnels at Shinkun La Pass (estimated cost Rs. 1,504.64 crores) where the appellant’s financial bid, intended as Rs. 1,569 crores, appeared on record as Rs. 1,569/-.

The BRO treated the bid as valid, declared the appellant L-1, and then, upon the appellant’s attempt to withdraw or correct the error after the financial opening, declared the appellant a defaulter and encashed the bid security (bank guarantee) of Rs. 15,04,64,000/-. The High Court dismissed the appellant’s writ; the Supreme Court granted leave.

The Court applied principles under Section 20, Indian Contract Act, 1872 and equitable doctrines developed in West Bengal State Electricity Board v. Patel Engineering Co. and related authorities. It held that the quoted figure was a patent, self-evident error (not a mere opinion on value) making the bid incapable of performance for the works tendered. The Court rejected the appellant’s system-glitch plea but criticised BRO’s rigid conduct in refusing corrective, proportionate remedies and in precipitate invocation of the bank guarantee, thereby causing avoidable delay.

Balancing fault and proportionality, the Court ordered the appellant to pay Rs. 1 crore to BRO and directed return of the original bank guarantee on payment. The impugned High Court judgment was set aside and the appeal allowed.

Keywords: tenders; mistake of fact; patent error; bid security; bank guarantee; equitable relief; Section 20 Indian Contract Act; proportionality; bid withdrawal; online bidding.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The case turns on competing public-procurement imperatives: the sanctity and transparency of the tender process versus equitable relief where a bidder makes a patent clerical error in price. BRO invited online bids on 23.02.2023 for an extensive tunnel construction contract (estimated Rs. 1,504.64 crores, 48-month completion). Ten bidders submitted technical and financial bids; seven were technically qualified. On opening of financial bids (24.08.2023) the appellant was recorded as L-1 at Rs. 1,569/-, instead of the intended Rs. 1,569 crores.

The appellant promptly informed BRO (25.08.2023), sought withdrawal and correction, and maintained that the entry was a typographical or system error; BRO, however, insisted on justification and demanded detailed price analysis. Despite repeated communications by the appellant requesting cancellation of its L-1 status and return of the bid security, BRO declared the appellant a defaulter, addressed the bank to encash the bank guarantee on 16.09.2023, and issued a fresh tender thereby delaying the project.

The High Court dismissed the writ petition; the appellant appealed to the Supreme Court which examined whether equitable relief should be granted and whether forfeiture of the bank guarantee was justified. The Court applied Section 20, Indian Contract Act, 1872 and the exceptions and equitable principles articulated in West Bengal State Electricity Board v. Patel Engineering Co. and subsequent authorities, balancing promptness of the bidder, obviousness of the mistake, the bidder’s diligence, and the contracting authority’s conduct.

The Court concluded the error was patent and self-evident, the appellant had promptly acted, and BRO’s rigid process aggravated delay; equitable redress in the form of proportional monetary consequence (payment of Rs. 1 crore) and return of bank guarantee was appropriate.

D) FACTS OF THE CASE

The BRO floated a large, complex tender on 23.02.2023 for two-lane twin tunnels at Shinkun La Pass with an estimated cost of Rs. 1,504.64 crores and a bid security of Rs. 15.04 crores. Ten bidders uploaded online technical and financial bids on 03.06.2023; seven were technically qualified. On 24.08.2023 financial bids were opened. The appellant’s financial quote appeared as Rs. 1,569/-, and it was recorded as L-1. The appellant asserts it had in fact quoted Rs. 1,569 crores but a typographical error or system glitch truncated the zeros.

On 25.08.2023 the appellant informed BRO of the mistake and sought rectification or withdrawal. Instead of accepting the mistake as patent, BRO (by letter dated 26.08.2023) demanded detailed justification for the implausible price by 31.08.2023. The appellant repeatedly wrote (including 07.09.2023 and 12.09.2023) requesting non-forfeiture and return of the bank guarantee. BRO, however, wrote to the appellant’s bank on 16.09.2023 declaring the appellant a defaulter and directing encashment of the guarantee for Rs. 15,04,64,000/-.

The appellant filed a writ in the Himachal Pradesh High Court (CWP No. 6658 of 2023) which was dismissed on 07.10.2023. BRO cancelled the earlier notice and issued a fresh tender; the later lowest bidder was Rs. 1,290 crores (financial bids opened 09.01.2024). The appellant challenged the High Court order in the Supreme Court. The Supreme Court acknowledged the appellant’s mistake but also held BRO’s handling was unduly legalistic and contributed to project delay; a proportional remedy (payment Rs. 1 crore and return of BG on payment) was directed and the appeal allowed.

E) LEGAL ISSUES RAISED

i. Whether a patent clerical error in the price component of an online financial bid (truncation from Rs. 1,569 crores to Rs. 1,569/-) attracts equitable relief permitting withdrawal or correction of the bid?

ii. Whether Section 20, Indian Contract Act, 1872 applies to an unilateral mistake in a public tender and if so whether the error here voids any agreement?

iii. Whether the contracting authority (BRO) was justified in declaring the appellant a defaulter and in encashing the bank guarantee where the bidder had promptly communicated the mistake?

iv. What is the scope of judicial intervention (proportionality/equity) where both the bidder and authority share lapses that delayed procurement?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsel for the Petitioner / Appellant submitted that the financial entry of Rs. 1,569/- was a patent clerical error and not an expression of the bidder’s actual commercial intention. They contended the mistake was discovered immediately on opening and communicated to BRO on 25.08.2023, demonstrating promptness. The appellant argued the error could be attributed to a technical/system glitch or typographical omission and that equity requires corrective relief when the mistake is obvious and rectifiable.

The appellant asked that the bank guarantee not be encashed and that either the original bid be corrected to Rs. 1,569 crores or the security be returned. They further argued BRO’s insistence on detailed price justification and subsequent declaration of default without reasonable inquiry was disproportionate and caused avoidable delay.

G) RESPONDENT’S ARGUMENTS

The counsel for Respondent submitted that the appellant alone was responsible for the erroneous bid entry (failure to exercise ordinary care) and that system-glitch plea was unsustainable because other bidders uploaded successfully. BRO maintained that it followed rules and fairness required enforcing bid security where the apparent bidder had failed to execute the contract. Respondents argued that allowing correction after opening would breach transparency, create prejudice to other bidders, and invite manipulation; therefore encashment of the bank guarantee was justified. They stressed adherence to tender conditions and procedural sanctity.

H) RELATED LEGAL PROVISIONS 

i. Section 20, Indian Contract Act, 1872 — agreement void if both parties under mistake as to a matter of fact essential to the agreement; explanation that erroneous opinion as to value is not a mistake of fact.

ii. Principles of equitable relief in case of unilateral patent mistake as articulated in West Bengal State Electricity Board v. Patel Engineering Co. (2001) 2 SCC 451.

iii. Doctrine of proportionality and judicial restraint in review of commercial decisions (referenced in Coimbatore District Central Cooperative Bank).

iv. Comparative jurisprudence on patent bid errors (Moffett v. Rochester; Hearne v. New England Marine Ins.; Spina Asphalt).

H) JUDGEMENT 

The Court accepted that a mistake had occurred but analysed whether relief in equity was permissible and what remedy proportionately addresses competing public-interest considerations. Applying Section 20 and the well-settled exceptions in West Bengal State Electricity Board v. Patel Engineering Co., the Court emphasised that relief is available where the mistake is patent, self-evident, the bidder acts promptly, and equity is not otherwise defeated.

The figure Rs. 1,569/- for a Rs. 1,504.64 crores contract was manifestly unrealistic; the error therefore qualified as patent. The Court rejected the appellant’s system-glitch as a principal cause (noting others uploaded successfully) but did not allow BRO to exploit formality by rigidly declaring default and invoking the BG without seeking a practical remedy.

The Court found BRO culpable for a rigid, overly legalistic approach: instead of declaring the bid non est and proceeding sensibly, BRO required detailed justification, cancelled the notice, invoked BG and issued a fresh tender, thus generating delay. The Court balanced the equities: the appellant’s fault in failing to add zeros was admitted; BRO’s procedural inflexibility and error of approach aggravated project delay.

Applying proportionality, the Court ordered the appellant to pay Rs. 1 crore as consequence of the error. Upon such payment BRO was directed to return the original bank guarantee/demand draft of Rs. 15.04 crores within one week. The High Court order was set aside and appeal allowed. No order as to costs.

a. RATIO DECIDENDI

The operative ratio is threefold:

(1) Where a bid contains a patent error that is self-evident on its face, and the bidder promptly notifies the authority on discovery, equitable relief may be available subject to fairness to other bidders and procurement integrity;

(2) Section 20 does not bar equitable relief merely because the error relates to value (explanation to s.20), but the mistake must not be merely an erroneous opinion; a manifest clerical error that makes performance impossible is different;

(3) Judicial relief must be proportionate where both bidder and authority share failures, the remedy should apportion consequences rather than impose unduly harsh forfeiture.

Applying these principles, the Court allowed limited monetary consequence and directed restitution of the bank guarantee on payment, balancing contractual sanctity with equity and public interest.

b. OBITER DICTA 

The Court observed that mistakes by authorities should also be addressed practically; an authority’s insistence on hyper-technical compliance when a mistake is obvious may itself cause unjustified delay. The opinion stressed that prompt communication by the bidder and immediate remedial steps are critical to secure equitable relief. The Court noted that system-error pleas will be scrutinised in light of surrounding circumstances (e.g., whether other bidders uploaded successfully).

The decision reiterated judicial restraint in commercial matters yet emphasised that equity and proportionality can moderate the harshness of procedural penalties where fairness and transparency can be preserved. The Court referenced foreign jurisprudence for persuasive value but confined the outcome to domestic procurement context.

c. GUIDELINES

i. Where a bid contains an obvious/patent clerical error the procuring authority should consider declaring the bid non est or permit correction/withdrawal if prompt notice is given, preserving fairness to other bidders.

ii. An authority should not precipitously declare a bidder as defaulter and encash bid security without first evaluating the obviousness of the error and exploring proportionate corrective steps that avoid procurement delay.

iii. A bidder claiming mistake must act promptly and provide contemporaneous communications showing the error was reported immediately after discovery.

iv. System-error pleas must be supported by credible technical evidence; the fact that other bidders successfully uploaded bids is a relevant circumstance.

v. Courts exercising review in tender disputes must apply proportionality apportioning consequences where both parties’ conduct contributed to the impasse rather than enforcing automatic forfeiture that defeats equitable outcomes.

I) CONCLUSION & COMMENTS

The judgment strikingly balances two public goods: procurement integrity and equitable fairness. It confirms that while procedural sanctity in tenders is vital to prevent fraud and protect competing bidders, automatic and inflexible forfeiture of bid securities where a patent clerical mistake is promptly disclosed may be disproportionate. The Court’s approach is pragmatic: it recognises the appellant’s admitted clerical failure yet curtails BRO’s legalistic exploitation by directing a calibrated monetary consequence (Rs. 1 crore) and restitution of the larger bank guarantee on payment.

For practitioners, the case underscores the importance of immediate notification on discovery of a mistake, meticulous record-keeping of all communications with the authority, and readiness to produce technical proof if system errors are pleaded. For contracting authorities, the judgment is a caution: procedural rules should be applied with common sense; where an error is obvious corrective administrative steps including declaring the bid non est, permitting withdrawal, or seeking a proportionate remedy may better serve the public interest than punitive automatic forfeiture.

The ruling reaffirms established precedent (notably West Bengal State Electricity Board v. Patel Engineering Co.) while emphasising proportionality as the touchstone of judicial review in procurement disputes.

J) REFERENCES

a. Important Cases Referred

i. West Bengal State Electricity Board v. Patel Engineering Company Limited and Others, (2001) 2 SCC 451; [2001] 1 S.C.R. 352.
ii. Moffett, H. and C. Co. v. Rochester, 178 U.S. 373 (1900).
iii. Hearne v. New England Marine Ins. Co., 22 L. Ed. 395.
iv. Spina Asphalt Paving Excavating Contractors, Inc. v. Borough of Fairview, 304 N.J. Super. 425.
v. M/s Omsairam Steels & Alloys Pvt. Ltd. v. Director of Mines and Geology, BBSR & Ors., 2024 INSC 520.
vi. Coimbatore District Central Cooperative Bank v. Coimbatore District Central Cooperative Bank Employees Association and Another, (2007) 4 SCC 669; [2007] 5 S.C.R. 430.

b. Important Statutes Referred

i. Indian Contract Act, 1872, Section 20 (Mistake of fact).