Facts of the Case

Gandharva Infrastructure and Projects Ltd. participated in a tender floated by Respondent No. 3 for construction of a pre-engineered steel building for a Master Control Facility at Bhopal, submitting its bid of Rs. 16,92,35,282.70 on 25.07.2019 along with an Earnest Money Deposit (EMD) of Rs. 28,02,000. Ten days after submission, on 05.08.2019, the appellant claimed it had inadvertently omitted the GST component from its quoted rates and sought to revise its bid upward to Rs. 19,45,87,340. The very next day, Respondent No. 3 issued a work order accepting the original bid amount. The appellant continued seeking modification and, when its price change was not accepted, eventually failed to fulfil contract conditions; the work order was cancelled on 13.11.2019 and 100% of the EMD was forfeited. A learned Single Judge dismissed the appellant's writ petition challenging this forfeiture, leading to the present intra-court appeal (LPA).

Issues Involved

  1. Whether the appellant could withdraw/modify its bid after the work order had been issued, on the ground that GST had been inadvertently excluded.
  2. Whether forfeiture of 100% (rather than 50%) of the EMD was justified under the tender conditions.

Petitioner's Arguments

  • The exclusion of GST from the quoted rate was an inadvertent clerical mistake, and the appellant should have been permitted to revise its bid.
  • Under Clause 16 of the Notice Inviting Tender, only 50% of the EMD could be forfeited for modifications not acceptable to the Department, not the full 100%.

Respondent's Arguments

  • The work order was issued the day after the appellant's bid was submitted and before any request for modification could be entertained; the sanctity of the tender process required the quoted price to be honoured.
  • The appellant, a public limited company experienced in the field, could not treat exclusion of GST as an innocent afterthought once a work order had already issued on its original bid.

Court Order / Findings

  • The Division Bench held that once the work order was issued, the question of withdrawing from the tender did not arise, and the appellant's theory of inadvertent GST-exclusion was an afterthought.
  • It found the appellant, being an experienced corporate bidder, had participated in the tender process with 'open eyes', and relied on West Bengal Electricity Board v. Patel Engineering Co. Ltd. to hold that the sanctity of a submitted tender bid must be respected.
  • The Court upheld the forfeiture of 100% of the EMD as justified in the facts of the case and dismissed the LPA, affirming the Single Judge's decision.

Important Clarification

GST features in this case only as the disputed component of the bid price — the ruling is fundamentally about tender law (bid sanctity and EMD forfeiture), not GST law itself. Bidders should take away that claiming an 'inadvertent' omission of GST from a quoted price, after a work order has already been issued on that price, is unlikely to be accepted as grounds to revise the bid or avoid EMD forfeiture.

Sections Involved

  • Central Goods and Services Tax Act, 2017 (GST component of tender pricing, referenced only as the disputed bid element)
  • Notice Inviting Tender — Clause 16 (EMD forfeiture provisions, contractual, not statutory)

Decision – In Favour of

Decided in favour of the Respondents (Union of India and tendering authority) — the appeal was dismissed and the 100% EMD forfeiture upheld.

Case Details

  • Court: High Court of Delhi at New Delhi
  • Case No.: LPA 623/2023 and C.M. Nos.46314-46315/2023
  • Coram: Hon'ble the Chief Justice Satish Chandra Sharma and Hon'ble Mr. Justice Sanjeev Narula
  • Date of Decision: 06.09.2023

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