Point of Law: Presence of an arbitration clause would oust jurisdiction under Article 226.

JUDGMENT :

V.G. ARUN, J.

1. The petitioner, a proprietory concern, is engaged in the business of trading of industrial machinery, spare parts, ferrous and non-ferrous scrap etc. The respondent No. 2, a public sector undertaking under the administrative control of the Ministry of Steel, Government of India, acted as facilitator and conducted an e-auction of the scrapped ammonia and urea plants and other scraps of the first respondent. The e-auction was conducted based on Ext.P1 published in the website. The petitioner remitted Rs. 2 Crores towards Earnest Money Deposit and was allowed to participate in the e-auction conducted on 27.10.2016. The process of bidding was conducted in such a manner that the bidders were allowed to raise the bid by a minimum amount of Rs. 25,000/- within seven minutes of the previous bid. In the auction conducted on 27.10.2016, the bid amount kept on increasing and the petitioner was leading most of the time. But, by about 3.29 p.m. one of the bidders hiked the offer to an exorbitant amount of Rs. 230,07,50,001/- (Rupees Two Hundred Thirty Crores Seven Lakhs Fifty Thousand and One only). On a mistaken impression that the amount quoted by that bidder was Rs. 23,07,50,001/- (Rupees Twenty Three Crores Seven Lakhs Fifty Thousand and One only), petitioner increased the bid offer by Rs. 2,50,000/-. Thereupon, the petitioner's employee copied the last highest bid reflected on the screen and pasted the same in the bidding column by adding Rs. 2,50,000/-. Thereupon, the petitioner's offer became Rs. 230,10,00,0001/- (Rupees Two Hundred Thirty Crores Ten Lakhs and One Only) instead of Rs. 23,01,00,0001/- (Rupees Twenty Three Crores One Lakh One only) which was the amount intended. Immediately, the mistake was noted and letters and e-mails sent to the senior officials of respondents 1 and 2, pointing out the mistake and seeking permission to withdraw the offer. Instead of responding to the repeated requests, second respondent issued Ext.P15 mail, informing that the petitioner's bid was accepted, subject to approval of the first respondent. Thereupon, the petitioner's representatives personally met the officials of the first respondent and submitted Exts.P16 to P18 representations, repeating the request to cancel the bid and refund the EMD. To the petitioner's dismay, as per Ext.P19 e-mail dated 25.11.2016, the second respondent directed the petitioner to deposit an amount of Rs. 23,00,00,000/- towards 10% of the bid amount within 7 days, for approving the bid and proceeding with the sale of the auctioned items. It was also informed that, in case of failure to make the payment, the petitioner's account with the second respondent would be deactivated. Once again, the petitioner pleaded for cancellation of the bid and refund of EMD. Surprisingly, without even adverting to the representations, the second respondent issued Ext.P23 e-mail on 07.02.2017, stating that the auction lot had been approved by the first respondent on 25.11.2016 and the last date for submitting 10% of the EMD being 02.12.2016, the petitioner's pre-bid EMD of Rs. 2 Crores was forfeited as per Clause 5.0(C) of the Special Terms and Conditions of the e-auction. According to the petitioner, forfeiture of its EMD amounts to unjust enrichment and is vitiated by arbitrariness and irrationality. The illegality committed against the petitioner would be evident from the fact that the same lot was subsequently auctioned for Rs. 22,42,00,0001/- i.e. less than 1/10th of the offer made by the petitioner mistakenly. Hence, this writ petition seeking the following reliefs:

“(a) That this Hon'ble Court be pleased to call for the record and proceedings pertaining to E-auction No. MSTC/BLR/THE FERTILIZERS AND CHEMICALS TRAVANCORE LTD. COCHIN DIVISION/5/KOCHI/16-17/10298 (Exhibit P1) and direct the Respondents to refund the EMD amount of Rs. 2,00,00,000 (Rupees Two Crores only) withheld under the tender along with interest at 9% p.a.

(b) In the alternative to praye