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TMI Blog2024 (7) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... rned from the records, is that: I. The third respondent floated a tender document for e-auction of mining lease of, inter alia, Orahuri manganese and iron ore block on 09th January, 2023. II. To participate in the process to follow, the appellant submitted the requisite fees of Rs 5,00,000/- (Rupees five lakh only). Thereupon, the appellant was permitted to submit its online bid. III. Clause 14 of the tender document mandated the submission of Bid Security in a sum of Rs 9,12,21,315/- (Rupees nine crore twelve lakh twenty-one thousand three hundred and fifteen only) in the form of a bank guarantee in favour of the first respondent, which too the appellant complied with on 17th February, 2023. IV. The Mineral Auction Rules, 2015 MA Rules, promulgated under the Mines and Minerals (Development and Regulation) Act, contemplate a two-round process - (i) submission of technical bids and initial price offers; and (ii) selection of technically qualified bidders for participation in the e-auction. Per requirements of the e-auction, the qualified bidders have to propose their Final Price Offer, over and above the Floor Price, with each bidder being allowed to make a higher bid by a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "*** In response to the email, with regards to rectification of the mistake during the auction of Orahuri Manganese & Iron ore block, it was verified at the MSTC portal that no other bidder has submitted 24.05% prior to your bid and the last bid submitted as 140.10% by your firm on the same was closed as Final Price Offer. As such, since the e-auction process for Orahuri Manganese & Iron ore has already been completed. As I have been directed to inform you that the request for rectification of last bid is not acceptable and hence the request is hereby rejected being devoid of any merit. ***" IX. Vide letter dated 24th March, 2023 impugned communication , the first respondent informed the appellant of its bid of 140.10% having been accepted, being the highest bid, and that it was declared as the Preferred Bidder. In view of rule 10 of the MA Rules stipulating that the preferred bidder is required to deposit the first instalment of the upfront payment within fifteen days of such declaration, failing which, the security deposit would stand forfeited, the appellant was directed to deposit Rs 3,64,88,526/- (Rupees three crore sixty four lakh eighty eight thousand five hund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant's failure to deposit the first instalment of the upfront payment of Rs 3,64,88,526/- (Rupees three crore sixty four lakh eighty eight thousand five hundred twenty six only), as threatened vide the impugned communication, is a disproportionate punishment sought to be inflicted on it for what was a bona fide human error. b) The appellant is being forced to accept an exorbitant, unrealistic and unsustainable bid of 140.10%, which the appellant never intended to make. c) Notwithstanding the error being entirely human and inadvertent in nature, the e-auction platform offered no scope for rectification of any error. The system merely allowed the appellant to see its bid figure in words, mistaken though it may have been, but there existed no method for correction or cancellation of the bid. 7. Per contra, Mr. Prakash Ranjan Nayak, learned counsel for the respondents submitted that the e-auction process had attained finality, and the appellant could not be allowed to reopen the same for what it claims was a mistake on its part. 8. We have heard learned counsel for the parties and perused the impugned judgment as well as the other materials on record. 9. The first respondent, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out......The Courts must realize their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. As laid down in the judgments cited above the courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give 'fair play in the joints' to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer" ( emphasis ours ) 14. Thus, it is evident that while undertaking the exercise of judicial review of matters relating to tenders, the court has to strike a fair balance between the interests of the Government, which is always expected to advance the financial interests of the State, and private entities. As observed by this Court, not every small mistake must be per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of equity. There, the bidders had merely informed the State authorities of the alleged mistake in their bid more than two months after the same was announced in front of all the bidders who responded to the tender. 18. The present case notably has certain features on facts, which makes it distinguishable from the case in Patel Engineering Co. Ltd. (supra). Here, it is not disputed that the appellant made multiple calls to the first respondent immediately upon realising that it had committed an error., Specific averments made by the appellant are present in the pleadings that upon realisation of its mistake, telephone calls were made to the first respondent, as well as to the helpline numbers of the second respondent, both of which went unanswered. The respondents, in their counter affidavit, have not specifically denied the said averments; hence, by application of the doctrine of non-traverse, the aforementioned averments are deemed to have been admitted by the respondents. 19. The appellant's bona fide intent to rectify the error or mistake is also evident from the email dated 21st March, 2023, which was sent at 08.17 PM being exactly two hours after the e-auction process ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he error or mistake, acted promptly in informing the authority concerned for rectification of the bid; and (v) the MA Rules governing the e-auction process does neither provide any method for a bidder to withdraw the mistaken bid, nor does the e-auction method seem to provide any recourse for rectification or allow a bidder to quit the process without jeopardizing its right as regards a forfeiture of the Bid Security. In such a factual matrix, holding the appellant accountable to what is evidently an extravagant bid erroneously or mistakenly offered, as compared to the immediately preceding bids, would seem to us to be unconscionable, on facts. 22. We can safely conclude, having regard to the trend of rate of enhancement of bid by the appellant [i.e., the appellant enhanced the prevailing bid 47 (forty seven) out of 137 (one hundred thirty seven) times and its enhancement ranged between 0.05% and 2.00%] and the fact that the bidders were playing safe by marginally increasing the prevailing bid price to test each other leading to increase of the Floor Price from 84.00% to a highest of 104.05% after 7 (seven) hours of bidding, the appellant did not intend to enhance the bid by 36.05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment norms or unfairness, arbitrariness or unreasonableness. It is not permissible to use a 'sledgehammer to crack a nut'. As has been said many a time, 'where paring knife suffices, battle axe is precluded'." ( emphasis ours ) 24. If the balancing test is applied to the factual matrix of the present case, it is as clear as daylight that the forfeiture of the entirety of the appellant's security deposit worth Rs 9,12,21,315/- (Rupees nine crore twelve lakh twenty one thousand three hundred and fifteen only) as against evident human error, which has not been shown to even border on mala fides, or knowingly done, is punitive. The enforcement of an otherwise commercially unviable bid, with the forfeiture of the deposit hanging over the appellant's head akin to a sword of Damocles, can hardly be said to be in either party's best interests. Perhaps, the respondents could consider to provide a cross check and affirmation, from the party, to avoid human errors and mistakes. 25. However, we would be remiss in not observing that the e-auction in question was a competitive bidding process which demanded a high degree of caution and care on the part of the appellants. As was noted ..... 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