Supreme Court allows re-auction due to typographical error in mining bid
Justices Sanjeev Khanna & Dipankar Datta [15-07-2024]

Read Order: M/s OMSAIRAM STEELS & ALLOYS PVT. LTD v. DIRECTOR OF MINES AND GEOLOGY, BBSR & ORS [SC- CIVIL APPEAL NO. OF 2024]

LE Correspondent

New Delhi, July 15, 2024:The Supreme Court has set aside an order of the Orissa High Court and allowed re-auction of a mining lease due to a typographical error made by the highest bidder, M/s Omsairam Steels & Alloys Pvt. Ltd.

The case arose out of an e-auction conducted by MSTC Ltd. on behalf of the Director of Mines and Geology, Bhubaneshwar for the Orahuri manganese and iron ore block. The appellant, Omsairam Steels, had submitted the highest bid of 140.10% in the auction that lasted for nearly 7 hours. However, the company claimed this was an inadvertent mistake, as it had intended to bid only 104.10%, just 0.05% above the previous highest bid of 104.05%. Omsairam Steels immediately informed the authorities about the error and sought rectification. However, its request was denied as the auction had already concluded. The company then approached the Orissa High Court, but its writ petition was dismissed.

The Supreme Court held that the appellant had acted promptly in informing the authorities about the mistake. It noted that the e-auction system provided no scope for a bidder to correct or cancel the bid in case of an error. Forcing the appellant to honor an unsustainable bid of 140.10% would be unconscionable. Applying the doctrine of proportionality, the apex court held that forfeiting the appellant's bid security of Rs. 9.12 crore for a human error would be a disproportionate punishment. At the same time, it observed that experienced bidders are expected to exercise great care to prevent such situations.

The Apex Court quashed the impugned order and allowed the authorities to conduct a fresh auction. It directed the appellant to pay Rs. 3 crore, out of which Rs. 2.75 crore would be appropriated towards revenue loss and other costs, and Rs. 25 lakh would be spent on tribal welfare in the concerned district. The civil appeal was thus partly allowed.