Ceigall India vs NHAI Bid Security Dispute

The Delhi High Court recently dealt with an important issue concerning tender disputes in the case of M/S Ceigall India Limited vs National Highways Authority of India & Others decided on 13 August 2025. The case revolved around whether a typographical error committed by a bidder while submitting its financial bid could be treated as a bona fide mistake or whether it should attract penal consequences, including forfeiture of bid security.

The petitioner, Ceigall India, challenged the actions of the National Highways Authority of India (NHAI) after its bid for the Sambalpur Bypass project in Odisha was declared non-responsive. The project, valued at over Rs. 1,086 crores, required bidders to furnish a bid security of Rs. 10.87 crores. Ceigall submitted its bid in figures as Rs. 1220,00,00,000 (Rs. 1220 crores) but inadvertently mentioned in words “Rupees One Thousand Two Hundred Twenty only”, omitting the word “crores.” This discrepancy led NHAI to treat the bid amount as Rs. 1220/-, a figure entirely unfeasible for the scale of work involved. Subsequently, NHAI proceeded to forfeit 5% of the bid security and initiated steps for encashment.

Ceigall immediately clarified its position on 26 and 27 March 2025, explaining that the omission was a typographical error and affirming its willingness to execute the project at Rs. 1220 crores. Despite this, NHAI insisted on enforcing the tender condition that required the amount in words to prevail in case of inconsistency, justifying forfeiture under Clause 2.20.7(a) of the Request for Proposal (RFP).

The Court examined whether such an error should be treated as inadvertent and bona fide. It referred extensively to two recent Supreme Court decisions: Omsairam Steels and Alloys Pvt. Ltd. vs Director of Mines and Geology (2024) and ABCI Infrastructures Pvt. Ltd. vs Union of India (2025). In both cases, bidders had committed critical errors in quoting figures, leading to disproportionate penal consequences. The Supreme Court had applied the doctrine of proportionality, recognizing that while bidders are expected to exercise utmost care, mistakes that are clearly unintentional cannot attract severe penalties that would cause undue hardship or result in commercially absurd outcomes.

Applying these principles, the High Court found that Ceigall’s error was inadvertent and bona fide. It noted that NHAI could have easily identified the mistake, given the size and nature of the project, and sought clarification from the bidder. Instead, it chose to impose a penalty without exercising discretion. The Court observed that both parties had made inadvertent errors and that strict enforcement in such a situation would not serve public interest.

Accordingly, the Court quashed NHAI’s communications dated 27 and 29 March 2025, which had directed forfeiture of the bid security. However, applying proportionality, it directed Ceigall India to deposit Rs. 15 lakhs with NHAI as a cautionary measure, to reinforce the need for diligence in tender submissions. The Court also clarified that no further penal action, such as debarment, would follow from this incident.

The case is significant as it underscores the balance courts seek to maintain between upholding the integrity of the tender process and preventing disproportionate hardship caused by genuine mistakes. It reaffirms that while tenderers must exercise the highest level of care, public authorities are also expected to act reasonably and proportionately when dealing with such errors.