Supreme Court Allows Bidder to Rectify Mistaken Bid in E-Auction, Orders Fresh Auction

Background

The case involved a bidding process for a mining lease of the Orahuri manganese and iron ore block in Odisha . The appellant, a company, had participated in the e-auction process and submitted the highest bid of 140.10%, which it claimed was a result of a bona fide human error. The appellant sought to rectify the mistake, but the authorities refused to allow it, leading the appellant to file a writ petition in the High Court, which was dismissed.

Arguments

The appellant argued that the bid of 140.10% was a clear mistake, as the previous highest bid was only 104.05%, and the minimum increment required was 0.05%. The appellant claimed that it had made multiple attempts to inform the authorities of the mistake, but its calls went unanswered. The respondents, on the other hand, argued that the e-auction process had attained finality and the appellant could not be allowed to reopen it.

Court's Analysis and Reasoning

The Supreme Court acknowledged that while courts should generally be reluctant to interfere in commercial matters, the present case warranted intervention. The court found that the appellant had acted promptly to inform the authorities of the mistake and sought rectification, and that the e-auction platform did not provide any option for the bidder to cancel or rectify a mistaken bid.

The court applied the principles laid down in the Patel Engineering Co. Ltd. case, which allowed for equitable relief in cases of bona fide mistakes. The court also considered the doctrine of proportionality, finding that the forfeiture of the entire security deposit of over ₹9 crore would be a disproportionate punishment for the appellant's mistake.

Decision

The Supreme Court quashed the impugned communication and directed the respondents to conduct a fresh e-auction. However, to maintain a balance between the interests of the state and the private party, the court ordered the appellant to pay ₹3 crore to the first respondent within a month, with ₹2.75 crore to be used for expenses related to the auction process and the remaining ₹25 lakh to be used for charitable purposes.

The court's decision highlights the need for a fair and balanced approach in dealing with mistakes in public procurement processes, while also emphasizing the importance of bidders exercising due care and diligence in such high-stakes commercial transactions.