Abnormally low bid: Delhi HC upholds UIDAI decision to disqualify bidder from audit of Aadhaar enrolment

The Delhi High Court on Tuesday upheld the Unique Identification Authority of India’s (UIDAI) decision to reject the lowest bid submitted by Writer Business Services Pvt Ltd for the audit and quality check of Aadhaar enrolment and update applications. [Writer Business Services Vs UIDAI].

A Bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela dismissed the company’s petition challenging its disqualification.

The Court held that while an “abnormally low bid” is not by itself a standalone ground for rejection, UIDAI was justified in refusing the bid since no other shortlisted vendor was willing to match the quoted rate.

“The question is not as to whether the disqualification was predicated on ‘abnormally low’ bid but the fact that no other bidder agreed to match the rate per packet… propelled the Financial Evaluation Committee to abstain from considering the financial bid,” the Court said

UIDAI had issued a Request for Proposal (RFP) in November 2022 for quality check and audit work related to Aadhaar enrolment and update records. The work was divided into two categories — digital verification with documents (Packet-1) and physical verification without online matching (Packet-2).

Writer Business Services, which had previously executed similar contracts for UIDAI since 2017, secured the highest technical score of 96.5% and was initially declared L-1 after quoting ₹1.92 per packet for Packet-1 and ₹4.55 per packet for Packet-2.

However, UIDAI’s Financial Evaluation Committee (FEC) found the ₹1.92 quote to be “abnormally low” and sought clarifications from the bidder. Despite two rounds of responses, the FEC concluded that the rate was unworkable and would jeopardise the tender’s viability. The contract was eventually awarded to Tech Mahindra Ltd, which quoted a significantly higher price.

The High Court analysed clauses 2.4.3 to 2.4.5 of the RFP and held that while UIDAI may have erred in evaluating only Packet-1 instead of giving equal weightage to both packets, the rejection of Writer’s bid was not arbitrary.

The Court observed that the tender design envisaged multiple service providers and required other shortlisted bidders (L-2, L-3, L-4) to match the “discovered rate” quoted by L-1. Since none of them agreed to match Writer’s rate, the tender process could not proceed at that price.

“In case no other bidder would be able to match the price of the petitioner, the entire tender process shall be rendered nugatory and frustrated,” the Bench noted.

It added that UIDAI’s decision was taken in the interest of preserving the tender’s competitive structure and ensuring project feasibility.

The Court reiterated that its jurisdiction in contractual matters under Article 226 of the Constitution is limited to examining the decision-making process and not the merits of the administrative decision itself.

The judges noted that Writer had been given adequate opportunity to explain and justify its quote through letters dated July 23 and August 7, 2023, and that the Financial Evaluation Committee had considered each clarification in detail before rejecting the bid.

Hence, the Court dismissed the petition and said UIDAI’s decision was a rational, good-faith administrative action taken to ensure the tender’s viability. Since the contract had already been awarded and was under implementation, further interference would not serve any public interest.

Writer Business Services was represented by Senior Advocate Sandeep Sethi with advocates Achyuth Ajith Kumar, Shyam Gopal, Sumer Seth and Riya Kumar.

UIDAI was represented by Senior Advocate Darpan Wadhwa with advocates Shraddha Deshmukh, Utkarsh, Sanchit Singh, Divita Vyas, Rakesh Kumar (SPC) and Sunil.

[Read Judgment]