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IN THE HIGH COURT OF GAUHATI, ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH
MANISH CHOUDHURY, J.
Arup Sinha, son of Amalendu Sinha - Petitioner
Versus
The Power Grid Corporation of India Limited, represented through its Chairman and Managing Director/CMD and Ors. – Respondents
Writ Petition (C) No. 1367 Of 2022
Decided On : 18-01-2024
Mistake - Auction Process - Selling Agency Agreement - 7.6. - Inspection Period - Bid History - Reserve Price - EMD - Refund - Bona Fide Mistake - Loss - Abandonment - Forfeiture - Equity - Certainty - Transparency
Fact of the Case:
The petitioner participated in an auction process for ACSR Lapwing Conductor and mistakenly quoted a bid value of Rs. 2,00,001/-per metric ton instead of Rs. 20,001/-per metric ton. The respondent confirmed the auction process and demanded the balance bid value and EMD. The petitioner sought relief and refund, claiming a bona fide mistake.
Finding of the Court:
The court found that the bid value quoted by the petitioner was not unreasonably high, considering the prices fetched in other auction processes for identical materials. The court also held that the petitioner's mistake could have been avoided with ordinary care and diligence, and his actions led to the abandonment of the auction process, causing loss to the respondent.
Issues: The main issues were the validity of the petitioner's claim of a bona fide mistake, the obligation to disclose the reserve price, the forfeiture of the pre-bid EMD amount, and the impact of the petitioner's actions on the auction process and the respondent's loss.
Ratio Decidendi: The court emphasized the importance of transparency and certainty in auction processes, and held that the petitioner's mistake did not entitle him to relief. The court also highlighted the obligation to exercise ordinary care and diligence to avoid mistakes in auction participation.
Final Decision: The court dismissed the writ petition, finding it bereft of merits and ordered no cost to be paid.
JUDGMENT :
The petitioner has preferred the instant writ petition under Article 226 of the Constitution of India seeking setting aside and quashing of a Sale Intimation Letter dated 21.02.2022 issued by the respondent no. 4 to the petitioner whereby the petitioner had been informed that the petitioner’s bid against the auctioned lot of ACSR Lapwing Conductor, Lot no. 1 containing 1368.66 Metric Tons at his quoted bid value of Rs. 2,00,001/-per metric ton had been accepted, thereby, asking the petitioner to deposit the balance bid value. The petitioner has also sought for a direction in the nature of Mandamus to the respondent authorities to refund a sum of Rs. 34,49,000/-which the petitioner had deposited as pre-bid Earnest Money Deposit [EMD] to participate in the auction process initiated by an Auction Notice bearing no. MSTC/GHY/POWERGRID CORPORATION OF INDIA LTD/4/Veluguri P.O. Kathiatoli/21-22/30843. The petitioner has also sought for a relief in the form of a direction to restrain the respondent authorities from initiating any further penal action in terms of Clause 2 of the Auction Bid Document.
2. In order to understand the nature of controversy involved in the case, the necessary and relevant facts can be delineated, in brief, as follows :
3. By an Auction Notice bearing no. MSTC/GHY/POWERGRID CORPORATION OF INDIA LTD/4/Veluguri P.O. Kathiatoli/21-22/30843 [‘the Auction Notice’, for short], the respondent no. 4, M/s MSTC Limited had initiated an auction process for the purpose of auctioning a lot named and styled as Lot no. 1 of ACSR Lapwing Conductor, which was lying at Bihapukhuri I Store, Village – Bihapukhuri, Biswanath Chariali, District – Biswanath, Assam. As per the Auction Notice, Lot no. 1 contained 1368.66 metric tons of ACSR Lapwing Conductor. An Inspection Period from 01.02.2022 to 19.02.2022 was provided for the prospective bidders to inspect Lot no. 1. The proposed auction materials were offered for sale on ‘as is where is’ basis Ex-Works owners. The owners of the proposed auction materials, that is, ACSR Lapwing Conductor was M/s Power Grid Corporation of India Ltd [PGCIL]. The Auction Notice further mentioned that the quantity [Nos., Kg., MT, etc.] indicated against the materials where unit of measurement [UOM] was Lot were purely indicative and without any guarantee and the seller would not entertain any complaint from the buyer for any deficiency in quantity or for recovery of the whole or part of the money or any loss of profit/interest/damages and otherwise. It was further indicated that the seller was not liable to weigh such items while delivery.
4. The Auction Notice further indicated that a participant bidder had to have a pre-bid EMD amount of Rs. 34,49,000/- and such pre-bid EMD amount was required to be deposited in the pre-bid wallet at least one day prior to the day of e-auction. Meaning thereby, no one was eligible to participate in the said auction process, initiated by the Auction Notice under reference, if he did not have a pre-bid EMD amount of Rs. 34,49,000/- in the pre-bid wallet.
5. The petitioner who has claimed to be a reputed contractor dealing in lifting of scrap materials and selling them thereafter, decided to participate in the auction process initiated by the Auction Notice. In order to be eligible to participate in the auction process for Lot no. 1 which had indicated about the pre-bid EMD amount of Rs. 34,49,000/-, the petitioner transferred an amount of Rs 36,61,000/- to his EMD wallet on 19.02.2022.
6. As per the Auction Notice, the auction process was to commence at 11-00 hours on 21.02.2022 and was to close at 16-30 hours on 21.02.2022.
7. In the writ petition, it has been projected that when the auction process commenced on 21.02.2022, the petitioner took part in the same and at one point of time, he quoted a bid value of Rs. 2,00,001/-per metric ton. The petitioner has claimed that at a later point of time, but during the live auction process, the petitioner realized
The obligation to exercise ordinary care and diligence to avoid mistakes in auction participation, and the importance of transparency and certainty in auction processes.
E-auction – Mistake in bid – While undertaking exercise of judicial review of matters relating to tenders, court has to strike a fair balance between interests of Government, which is always expected....
Presence of an arbitration clause would oust jurisdiction under Article 226.
A bidder cannot claim EMD refund due to an inadvertent error in a bid amount when sufficient safeguards exist in the bidding process to prevent such mistakes.
The main legal point established in the judgment is that a sale made pursuant to a public auction can only be set aside if there is evidence of fraud, irregularity, or inadequacy in the auction proce....
The highest bidder is not entitled to the issuance of a Regular Letter of Allotment unless the bid is accepted by the competent authority. The rejection of the bid by the competent authority must be ....
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