The independent system operator (ISO) is a key element in the deregulated structure with one of the responsibilities of transmission congestion management (CM). The ISO opts market based solutions to manage congestion receiving bids from generation companies (GENCOs) as well as distribution companies (DISCOMs) to reschedule their generation and relocate demand. The nodal prices increases during the congestion hours and the demand response to nodal prices will be an effective tool for the control of congestion. In this paper, demand response-based CM has been proposed for a mix of pool and bilateral electricity market model. The linear bid curves have been considered for demand bids to respond to the congestion in the network. The bilateral demand has been obtained with minimum deviations in their preferred schedule. The impact of flexible alternating current transmission system (FACTS) devices viz static var compensator (SVC) and thyristor controlled series compensator (TCSC) has also been considered for demand management during congestion. Multi-line congestion cases have been considered to study the impact on demand response without and with FACTS devices. The proposed approach has been tested on the IEEE 24 bus test system.