Supreme Court Quashes High Bid in Mining Lease e-Auction, Orders Fresh Auction and Penalty. Supreme Court finds error in 140.10% bid to be a genuine mistake, mandates a fresh e-auction while imposing a Rs 3 crore penalty on appellant for lack of due care.

Case Note & Summary

Granted leave to appeal against the judgment of the High Court of Orissa, which dismissed the writ petition of the appellant who had mistakenly placed an exorbitant bid in an e-auction for a mining lease. The Supreme Court acknowledged the human error and found the forfeiture of the security deposit to be punitive and disproportionate. The court quashed the impugned communication and allowed a fresh e-auction while directing the appellant to pay Rs 3 crore to the first respondent.

Introduction and Background

Leave granted. Appeal against the High Court of Orissa’s judgment dismissing the appellant's writ petition.

Parties Involved

Director of Mines and Geology, Bhubaneshwar (1st Respondent) MSTC Ltd. (2nd Respondent) State of Odisha (3rd Respondent)

Factual Matrix

Tender document for e-auction of mining lease floated on 9th January 2023. Appellant submitted fees and bid security in compliance with tender requirements. E-auction process and technical bids outlined under the Mineral Auction Rules, 2015.

E-Auction Process and Error

Auction scheduled for 21st March 2023 with a Floor Price of 84.00%. Auction lasted almost seven hours, with the appellant mistakenly bidding 140.10% instead of 104.10%. Appellant’s immediate attempt to rectify the mistake through calls and emails.

Response from the First Respondent

Rejection of appellant's request for bid rectification. Impugned communication declaring the appellant as the Preferred Bidder.

High Court Proceedings

Appellant's writ petition dismissed, holding the appellant bound by its bid.

Appellant’s Grounds for Appeal

Bona fide human error. No reasonable businessman would intentionally bid 140.10%. Disproportionate punishment of security deposit forfeiture.

Respondents’ Arguments

E-auction process attained finality, and rectification not permissible.

Supreme Court’s Analysis

Examination of the e-auction process. Human error and lack of rectification options in the system. Reference to past judgments and the doctrine of proportionality.

Conclusion and Orders

Quashing the impugned communication. Allowing a fresh e-auction. Appellant directed to pay Rs 3 crore, with specific appropriations. Setting aside the High Court’s judgment and partly allowing the appeal.