Even If Financial Evaluation Was Flawed, Public Interest Must Prevail: Delhi High Court Upholds UIDAI’s Rejection of Lowest Bid in Aadhaar Tender

“Though the Aadhaar Authority did not strictly follow the RFP’s evaluation clauses, its decision to disqualify the L-1 bidder was not arbitrary but compelled by overriding public interest” - In a crucial ruling Delhi High Court dismissed a writ petition challenging the disqualification of a bid in a government tender for Aadhaar document verification services. The Bench comprising Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela held that even if the Financial Evaluation Committee (FEC) did not fully comply with the Request for Proposal (RFP), the disqualification of the petitioner on account of an “abnormally low” quote was legally sustainable and justified in larger public interest.

The petitioner had sought to set aside UIDAI’s decision rejecting its financial bid – which had been declared L-1 – on the grounds of being “abnormally low”. The Court, while acknowledging procedural lapses, found that “none of the other bidders were willing to match the petitioner’s rates, and hence the tender process would have failed if the petitioner’s bid had been accepted.”

The ruling addresses two competing legal tensions: strict compliance with tender conditions versus the practical need to ensure execution of public projects through a viable bidding process.

"Rate per Packet Quoted by L-1 Was So Low That It Threatened the Entire Tender Process" – Court Recognises Functional Compulsion for Rejection of Bid

“When none of the other bidders were willing to match the ‘rate per packet’ of ₹1.92 for Packet-1 quoted by the petitioner, the entire tender stood frustrated… the authority had no other option” – Delhi High Court

The core legal issue in the case was whether UIDAI could lawfully disqualify a bid for being “abnormally low” when such a ground was not expressly enumerated in the disqualification clauses of the RFP.

The petitioner, Writer Business Services Pvt. Ltd., had quoted ₹1.92 for Packet-1 (digital document verification) and ₹4.55 for Packet-2 (physical verification). It scored 96.5% in the technical evaluation, the highest among all bidders, and was declared L-1 under the Quality-cum-Cost Based Selection (QCBS) methodology.

However, UIDAI’s Financial Evaluation Committee rejected the financial bid, stating the price was “abnormally low”, and citing concerns that the petitioner misunderstood the scope and complexity of the digital verification process. The petitioner challenged this, arguing that:

“Clause 2.1.19 of the RFP, which enumerates grounds for disqualification, does not mention 'abnormally low bid'—thus the disqualification is ultra vires.”

The Court rejected this contention, clarifying:

“The question is not whether the disqualification was based on ‘abnormally low’ pricing, but that no other bidder agreed to match the discovered rate, which made the petitioner’s bid commercially nonviable for the purpose of awarding the multi-vendor contract envisaged in the RFP.” [Para 46]

In what could be a defining holding on bid viability in public tenders, the Court emphasized that the purpose of the tender itself would have been defeated if other vendors could not match the petitioner’s quote, particularly since the project required at least four vendors under Clause 2.4.5 of the RFP.

Court Admits Evaluation Method Was Flawed – But Declines Relief Due to Larger Public Interest

“Even though the procedure was not strictly adhered to, we find no reason to interfere… public interest clearly outweighs any irregularity”

The Court acknowledged that UIDAI did not follow its own financial evaluation criteria in full spirit. Clause 2.4.3(c) of the RFP mandated equal weightage to Packet-1 and Packet-2 in determining the commercial score, which was not followed in the petitioner’s case. The FEC had considered only the ₹1.92 quote for Packet-1 while declaring the bid "abnormally low", ignoring the Packet-2 quote of ₹4.55.

This led the Court to candidly admit:

“Though the FEC has apparently not correctly followed the conditions of Clauses 2.4.3 and 2.4.4 of the RFP, yet… it appears to us that the FEC had no choice other than to reject the financial/commercial bid of the petitioner in the interest of the tender process as also in public interest.” [Para 41]

Citing Pace Digitek Pvt. Ltd. v. BSNL, the Court stressed that public interest in implementing large-scale, national projects such as Aadhaar-related services must take precedence, especially when the tender process had already progressed and contracts were awarded.

It further warned against “interference at this stage,” observing:

“Any interference at this stage may not be in the larger public interest. The Aadhaar Authority has already awarded the contract, and it is being implemented.” [Para 44]

Technical Expertise of Evaluation Committees Not to Be Supplanted by Judicial Review

“Courts cannot replace the views of technical experts with their own—especially when committees have deliberated in detail”

The Court also rejected the petitioner’s suggestion that UIDAI failed to consider its clarifications seriously. Justice Gedela noted:

“The petitioner was afforded ample opportunity to explain and justify the objections raised… the FEC dealt with each and every reason/explanation offered by the petitioner minutely.” [Para 44]

Reinforcing the limited scope of judicial review in government contracts, the Court ruled:

“This Court cannot substitute or supplant the view taken or opinion rendered by the TEC/FEC with its own… the rate quoted by the petitioner, the time projected for execution, the ratio of assignments—all fall outside the Court’s domain.” [Para 45]

Petitioner’s Reliance on Procurement Manual and Prior Contracts Rejected as Irrelevant

The petitioner had relied on Clause 7.5.7 of the Manual for Procurement of Goods to argue that in cases of abnormally low bids, the authority could have sought additional security rather than disqualification. But the Court dismissed this argument as inapplicable, stating:

“The rejection was not because the bid was merely low, but because the project could not proceed if no other vendor matched that low rate… the core issue was not risk, but tender viability.” [Para 46]

The Court also noted that the petitioner’s prior execution of similar contracts at lower rates did not bind UIDAI to accept its bid in perpetuity.

Procedural Purity Must Yield to Practical Necessity Where Public Interest Demands

Summing up, the Delhi High Court held that while UIDAI failed to strictly apply its own financial evaluation formula, the decision to reject the petitioner’s bid was justified given the structural requirement of engaging multiple vendors and the refusal of other bidders to match the discovered rate.

“Balancing the controversy, though there has been a display of some error, we do not find any paramount public interest that may impel this Court to interfere… We are unable to grant any discretionary relief.” [Para 43, quoting Pace Digitek]

The writ petition was accordingly dismissed.

Date of Decision: 14 October 2025