The Allahabad High Court has held that a tendering authority cannot cancel a tender at an advanced stage merely because it had wrongly fixed the Performance Bank Guarantee (ePBG) in the bid document. It held that the ePBG is a performance security with no bearing on a bidder's eligibility or ranking, and an error in it can be corrected without re-tendering.

The bench of Justice Shekhar B. Saraf and Justice Abdhesh Kumar Chaudhary held,

“Correcting the percentage upward, at the tendering authority's own admitted error, and at the volunteered instance of the petitioner, does not touch the essential fabric of the selection process. It is, in essence, curing an error of the author of the tender document, not amending a term that shaped the competitive field.”

Petitioner was declared the successful bidder with H-1 grade in a consultancy services tender published on the GeM portal. After approval, the Director General (Medical Health), Lucknow uploaded the contract on August 11, 2026, leaving only its signing. On 22.08.2026, the tender was cancelled citing “unavoidable circumstances”, which the petitioner challenged.

On instructions sought by the Court, the State disclosed for the first time that the ePBG had inadvertently been mentioned as 0.75% in the bid document instead of 3% to 5% required for GeM tenders. It was argued that raising the ePBG would be a material change contrary to Clause 2.3 of the RFP and would prejudice the other bidders. Petitioner undertook to deposit the shortfall and raise the ePBG to 5% of the contract value.

Noting that no issue of the petitioner's competence or lack of funds was raised, the Court held that the real question was whether the ePBG was an essential condition or an ancillary term.

Relying on Poddar Steel Corporation v. Ganesh Engineering Works, wherein it was held that deviation from ancillary conditions may be waived or corrected by the tendering authority, the Court held that the ePBG did not affect the evaluation on which the petitioner was declared H-1. It held that the authority could not make the petitioner suffer for its own mistake.

It further held that Clause 2.3 only lays down the procedure for amending the RFP and does not bar amendment.

Rejecting the plea of prejudice, the Court observed that a higher security from the successful bidder alone only adds to his burden. On the plea that the low ePBG may have deterred other bidders, it observed that a decrease might have prejudiced potential bidders, “but to say that increase in amount of ePBG would be prejudicial to the participants appears to be absolutely preposterous and without any basis.”

Holding that uploading the contract for signature created a legitimate expectation of its execution, the Court observed that,

“cancellation of the entire process, at this belated stage, on a ground that is both self-created and curable, defeats that legitimate expectation without any countervailing public interest, financial infeasibility, or impossibility of performance being pleaded or shown.”

Accordingly, the writ petition was allowed and the order dated 22.08.2026 was quashed. Petitioner was directed to deposit the deficit ePBG within one week, upon which the tender shall stand revived and the contract be made available for signature within two weeks.

Case Title: M/S Yuvaan Infotech Thru. Partner Ritvik Pandey v. State Of U.P. Thru. Addl. Chief Secy. Medical And Health Lko And 2 Others 2026 LiveLaw (AB) 750

Citation: 2026 LiveLaw (AB) 750

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