Honest mistake: MHC directs TN society to refund Telangana association's bid amount

CHENNAI: The Madras High Court directed the Tamil Nadu Civil Supplies Corporation to return Rs 4.50 crore, which was forfeited from the Hyderabad Agricultural Cooperative Association (HACA), controlled by the Telangana Government, for quoting a tender bid with a discrepancy for the supply of toor dal.

Justice D Bharatha Chakravarthy referred to a judgment of the Supreme Court which held that "when an innocuous mistake is apparent in a tender, based on the principles of proportionality, it was held that the entire earnest money deposit (EMD) need not be forfeited, even if such a clause exists in the tender documents a token amount may be deducted while the remainder of the EMD is ordered to be returned" and directed the TNCSC to return the remainder amount to the multi-state cooperative society administered by the Telangana Government, within eight weeks.

The HACA, which engages in supplying edible and non-edible items to the government and its associated departments, moved the petition challenging the order passed by the TNCSC forfeiting the EMD for quoting tender with discrepancy as per the clause of the tender.

It participated in a bid floated by the TNCSC to supply 60 thousand metric tonnes of indigenous and imported toor dal.

The society claimed it submitted the bid amount within the September 9, 2024 deadline. The HACA-quoted sum was Rs 1,47,000 per MT for imported toor dal and Rs 1,52,000 per MT for indigenous toor dal. However, when the TNCSC opened the e-tender, it indicated that the petitioner had quoted Rs 66,000 per MT for both varieties of toor dal.

Per the tender clause, the tenderer must remit Rs 5.11 crore as EMD, which will be converted as part of the security deposit (SD) for the successful bidder to execute the work and be returned only after the contract was fulfilled.

HACA contended it was a mistake and communicated that no one could supply such a huge quantity of toor dal with the quoted money. Refusing to accept HACA's stand, the TNCSC forfeited the EMD. Challenging that the society moved the HC, contending that the order was arbitrary, unreasonable, and excessive and sought the HC's direction to quash the same and consequently direct to refund of Rs 5.11 crore (EMD).

After hearing the case, the judge held that it could be safely concluded that the quoted price was a genuine mistake and allowed the TNCSC to forfeit Rs 61,50,000 (12.02 per cent of EMD), which would be fair and reasonable. The judge directed the TNCSC to refund the balance sum of Rs 4.50 crore to the petitioner society.