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judgement
2024-07-17
Subject: Administrative Law - Public Procurement
The case involved a bidding process for a mining lease of the Orahuri manganese and iron ore block in
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.
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.
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.
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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....
A genuine mistake in bid calculation can warrant reconsideration and potential revocation of the bid.
Court upheld the necessity of auctioning property to maximize sale proceeds, dismissing a direct sale request.
The obligation to exercise ordinary care and diligence to avoid mistakes in auction participation, and the importance of transparency and certainty in auction processes.
Duty of court is to confine itself to question of legality.
Presence of an arbitration clause would oust jurisdiction under Article 226.
The court has the authority to extend time for payment in e-auction cases under Article 226 of the Constitution, despite statutory limitations.
The highest offer received in the public auction should be accepted as a fair value unless there are allegations of fraud, collusion, etc.
The highest bid among all valid and complete bids, which is above the reserve price, should be accepted in a bidding process, and any laxity or dereliction of duty in processing the bids may lead to ....
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