Tamil Nadu Civil Supplies corporation, (TNCSC) vs HYDERABAD AGRICULTURAL CO-OPERATIVE ASSOCIATION LT

2026:MHC:2288
W.A.No.2108 of 2025 etc.
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 22.06.2026
DELIVERED ON : 25.06.2026
CORAM :
THE HONOURABLE MR. SUSHRUT ARVIND DHARMADHIKARI,
CHIEF JUSTICE
AND
THE HONOURABLE MR.JUSTICE G.ARUL MURUGAN
WA No s . 2108, 2448, 3823 and 3825 of 2025
and CMP N os .15985, 18846, 31413, 31422 of 2025 and 789 of 2026
WA No. 2108 of 2025:
The Tamil Nadu Civil Supplies Corporation,
(TNCSC), rep. by the Managing Director,
Having head office at
Poonamalee High Road,
Chennai Metro Rail Limited (CMRL)
Admin Building, Koyambedu,
Chennai - 600 107.
Appellant(s)
Vs
Hyderabad Agricultural Co-operative
Association Ltd
Rep by its Authorized Representative,
Gujjete Narsing Rao, A Registered Society
under the Multi State Cooperative Office
nd
At No.5-10-193, 2 Floor, HACA Bhavan,
(Opp Public Gardens), Hyderabad,
Telangana - 500 004.
Respondent(s)
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2026:MHC:2288
W.A.No.2108 of 2025 etc.
WA No.2448 of 2025:
Hyderabad Agricultural Co-operative
Association Ltd
Rep by its Authorized Representative,
Gujjete Narsing Rao, A Registered Society
under the Multi State Cooperative Office
nd
At No.5-10-193, 2 Floor, HACA Bhavan,
(Opp Public Gardens), Hyderabad,
Telangana - 500 004.
Appellant(s)
Vs
The Tamil Nadu Civil Supplies Corporation,
(TNCSC), rep. by the Managing Director,
Having head office at
Poonamalee High Road,
Chennai Metro Rail Limited (CMRL)
Admin Building, Koyambedu,
Chennai - 600 107.
Respondent(s)
W.A.No.3823 of 2025:
The Tamil Nadu Civil Supplies Corporation,
(TNCSC), rep. by the Managing Director,
Poonamalee High Road,
Chennai Metro Rail Limited (CMRL)
Admin Building, Koyambedu,
Chennai - 600 107.
Appellant(s)
Vs
Central Government Employees Consumer
Co-operative Society Ltd.,(KendriyaBhandar)
Rep by its Manager, J Parvathy,
Central Revenue Quarters, 15th Main Road,
Anna Nagar West, Chennai - 600 040.
Respondent(s)
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2026:MHC:2288
W.A.No.2108 of 2025 etc.
WA No. 3825 of 2025
The Tamil Nadu Civil Supplies Corporation,
(TNCSC), rep. by the Managing Director,
Poonamalee High Road,
Chennai Metro Rail Limited (CMRL)
Admin Building, Koyambedu,
Chennai - 600 107.
Appellant(s)
Vs
National Federation of Farmers Procurement
Processing and Retailing Cooperatives of
India Ltd (NACOF), Rep by State Manager,
N Gurusamy, Nos.5/1 and 5/2, “A” 1st Floor
Gopala Menon Road, Kodambakkam,
Chennai - 600 024.
Respondent(s)
PRAYER in W.A.Nos.2108 and 2448 of 2025 : Appeals filed under
Clause 15 of the Letters Patent to set aside the order dated
25.03.2025 passed by the learned Single Judge in WP.No.6223 of
2025.
PRAYER in W.A.No.3823 of 2025 : Appeal filed under Clause 15 of the
Letters Patent to set aside the order dated 27.6.2025 passed by the
learned Single Judge in WP.No.20865 of 2025.
PRAYER in W.A.No.3825 of 2025 : Appeal filed under Clause 15 of the
Letters Patent to set aside the order dated 27.6.2025 passed by the
learned Single Judge in WP.No.20863 of 2025.
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2026:MHC:2288
W.A.No.2108 of 2025 etc.
For Appellant
in W.A.No.2108, 3823
and 3825 of 2025
and Respondent in
W.A.No.2448 of 2025
Mr. Vijay Narayan
Advocate General
assisted by Mr.D.Ravichander,
Standing Counsel
For Appellant in
W.A.No.2448 of 2025
and Respondent in
W.A.No.2108 of 2025
Mr.Srinath Sridevan
Senior Advocate
for M/s.Chandini Pradeep Kumar
For Respondent in
W.A.Nos.3823 and
3825 of 2025
Mr.Avinash Wadhwani
COMMON JUDGMENT
THE CHIEF JUSTICE
W.A.Nos.2108 and 2448 of 2025 are filed under Clause 15 of
the Letters Patent to set aside the order dated 25.03.2025 passed
by the learned Single Judge in W.P.No.6223 of 2025. The former
appeal was filed by the Corporation and the latter by the bidder.
2. W.A.Nos.3823 and 3825 of 2025 are filed by the
Corporation under Clause 15 of the Letters Patent to set aside the
order even dated 27.6.2025 passed by the learned Single Judge in
W.P.Nos.20865 and 20863 of 2025, whereby the learned Single
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2026:MHC:2288
W.A.No.2108 of 2025 etc.
Judge followed the earlier order dated 25.03.2025 in W.P.No.6223
of 2025.
3. For the sake of clarity and convenience, the facts in
W.A.No.2108 of 2025 are narrated as a lead case to dispose of all
these appeals.
4. W.A.No.2108 of 2025 arises out of the impugned order
dated 25.03.2025 passed by the learned Single Judge in
W.P.No.6223 of 2025. By the said order, the learned Single Judge
disposed of the writ petition filed by the Hyderabad Agricultural Co-
Operative Association Ltd (for brevity, ‘ the Association '), directing
the Tamil Nadu Civil Supplies Corporation (for brevity, ‘ the
Corporation ') to refund a sum of Rs.4,50,00,000/- out of the total
Earnest Money Deposit (EMD) of Rs.5,11,50,000/-, while permitting
the Corporation to forfeit a sum of Rs.61,50,000/-.
5.1. The facts in a nutshell are that the Corporation invited
short e-tenders vide Notification dated 23.08.2024 for the
procurement of 60,000 Metric Tonnes of various varieties of Dal (Tur
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2026:MHC:2288
W.A.No.2108 of 2025 etc.
Dal/Canadian Yellow Lentils) for distribution under the Special Public
Distribution System (Special PDS). Clause 6 of the Tender
Document mandated the submission of an Earnest Money Deposit
(EMD) of Rs.5,11,50,000/-. Clause 6 specifically enumerated the
situations under which the EMD would be liable for forfeiture, which
included a tenderer withdrawing or backing out after acceptance, or
failing to sign the contract.
5.2. The Association, a co-operative society controlled by the
Government of Telangana, participated in the e-tender and
submitted its bid on the online portal on 09.09.2024 at 10:55 AM.
The Association intended to quote a rate of Rs.1,47,000/- per
metric tonne for imported Tur Dal and Rs.1,52,000/- per metric
tonne for indigenous Tur Dal. However, upon the opening of
financial bids on 14.09.2024, the Association discovered that its
quote was reflected on the online e-procurement portal as a flat
rate of Rs.66,000/- per metric tonne for both varieties. Realizing
that a figure of Rs.66,000/- per metric tonne was completely
unviable and dramatically detached from prevailing market realities,
the Association immediately sent emails and a formal letter to the
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2026:MHC:2288
W.A.No.2108 of 2025 etc.
Corporation within minutes, namely at 12:26 PM and 12:40 PM on
14.09.2024, reporting the patent discrepancy and attributing it to a
technical glitch or an inadvertent input error.
5.3. The Corporation, treating this quick disclaimer as a
default/withdrawal from the process, issued a Show Cause Notice
on 23.09.2024. Despite extensive explanations and regret letters
from the Association indicating a lack of mala fide intent, the
Corporation passed an order dated 10.01.2025 forfeiting the entire
EMD amount of Rs.5,11,50,000/- on the grounds that the under-
quoting disrupted and delayed the tender finalization.
5.4. The Association approached the writ court. The learned
Single Judge, relying on the principles laid down by the Supreme
1
Court in ABCI Infrastructure Pvt. Limited v. Union of India , held
that the price quote was a genuine mistake. However, attributing
the source of the mistake to the Association's input mechanism, the
learned Single Judge directed a partial forfeiture of 12.02%
1 (2025) 6 SCC 813
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2026:MHC:2288
W.A.No.2108 of 2025 etc.
(amounting to Rs.61,50,000/-) and ordered a refund of the
remaining Rs.4,50,00,000/-.
6.1. Learned Advocate General appearing on behalf of the
Corporation submits that the writ petition ought to have been
dismissed in limine because Clause 23 of the Tender Conditions
provides an alternate and efficacious remedy through Arbitration.
Disputed questions of fact regarding whether there was a technical
glitch or human error cannot be resolved in writ jurisdiction under
Article 226 of the Constitution of India.
6.2. He further submitted that the forfeiture was strictly
carried out in accordance with Clause 6(ii) of the Tender Conditions
and guided by Rule 30 of the Tamil Nadu Transparency in Tender
Rules, 2000 [for brevity, ‘the Rules’]. The learned Single Judge
erred in relying on ABCI Infrastructure Pvt. Limited (supra), in as
much as that case pertained to an infrastructure project, whereas
the present contract involves the time-sensitive procurement of
food commodities for the Special PDS, impacting essential services
to family cardholders where delays cause massive public
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2026:MHC:2288
W.A.No.2108 of 2025 etc.
inconvenience. He hastened to add that in the case before the
Supreme Court, there was no arbitration clause and the said
contract was not governed by statutory rules.
7.1. Learned Senior Counsel appearing on behalf of the
Association submitted that a price quote of Rs.66,000/- per metric
tonne, when market prices were double that value, cannot be
classified as a conscious "offer" or "bid". Since there was no real
meeting of minds or intentional offer, the question of "withdrawing"
or "backing out" under Clause 6(ii)(a) does not arise.
7.2. It is further submitted that immediately upon noticing the
error, the Association informed the Corporation within minutes. The
Corporation seamlessly awarded the tender to the second lowest
bidder (L2) as early as 16.09.2024 and there was no disruption in
supply, financial loss or delay.
7.3. It is also submitted that while ABCI Infrastructure Pvt.
Limited (supra) contemplated a nominal/rough deduction of around
6% in equity, the learned Single Judge doubled that ratio to 12.02%
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2026:MHC:2288
W.A.No.2108 of 2025 etc.
without any rational mathematical basis or finding of damages,
which is highly punitive against a State-controlled co-operative
society.
8. We have heard the learned counsel appearing on both
sides, scrutinized the documents on record and evaluated the
governing rules alongside relevant Supreme Court precedents.
9. The Corporation strongly urged that the presence of an
arbitration clause under Clause 23 of the tender document acts as
an absolute bar to writ jurisdiction. We cannot subscribe to this rigid
view. It is a well-settled constitutional canon that the existence of
an alternate remedy or an arbitration clause does not divest the
High Court of its discretionary powers under Article 226 of the
Constitution of India, especially when the action of a State
instrumentality is under challenge for patent arbitrariness,
unreasonableness, or violation of Article 14 of the Constitution of
India.
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2026:MHC:2288
W.A.No.2108 of 2025 etc.
10. The issue here is not a complex assessment of work
measurements or breaches arising during the lifetime of a running
contract, but rather the constitutional validity of a pre-contractual
administrative order forfeiting a massive sum, for a genuine
mistake, which was brought to the notice of the Corporation within
minutes. Hence, the learned Single Judge was perfectly justified in
entertaining the writ petition.
11. A careful analysis of Clause 6 of the Tender Document
reveals that forfeiture of EMD is intended to act as a safeguard
against speculative bidding, strategic defaults, or malicious
walkouts that sabotage public procurement. In the present case,
the Association intended to bid around Rs.1.47 Lakhs and Rs.1.52
Lakhs per MT, but the portal recorded Rs.66,000/- per MT. Both
sides effectively agree that no rational supplier would ever
intentionally offer to supply premium split-husked Tur Dal at
Rs.66,000/- per MT in 2024. It was a visual and operational
absurdity. The Association disclaimed the error within minutes of
the bid opening, showing utmost transparency and bona fides .
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2026:MHC:2288
W.A.No.2108 of 2025 etc.
12. The Corporation relied heavily on Rule 30 of the Tamil
Nadu Transparency in Tenders Rules, 2000, arguing that the
framework mandates strict compliance and limits administrative
leniency. However, statutory tender rules must be read in alignment
with the overarching principles of equity and proportionality. The
Supreme Court in ABCI Infrastructure Pvt. Limited (supra) dealt
with bona fide administrative slips. The Supreme Court emphasized
that while public authorities must be protected from unreliable
bidders, they cannot enrich themselves unjustly by converting an
EMD mechanism into a windfall enforcement tool when an error is
genuinely clerical and immediately corrected without causing any
loss.
13. The facts show that the Corporation suffered zero delay or
disruption, it moved swiftly to the next valid bidder within 48 hours
(by 16.09.2024). Total forfeiture of Rs.5.11 Crores in the absence of
any financial loss would be unconscionable, shockingly
disproportionate, and violative of Article 14 of the Constitution of
India. Therefore, the Corporation’s appeal W.A.No.2108 of 2025
seeking absolute forfeiture must fail.
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2026:MHC:2288
W.A.No.2108 of 2025 etc.
14. Now, coming to the Association’s appeal (W.A.No.2448 of
2025) against the deduction of Rs.61,50,000/-, the Association
argued that since the mistake was genuine, even a 12.02%
deduction is completely arbitrary.
15. We must emphasize that public e-governance systems
depend entirely on the precision of the data inputs configured by
participants. When a bidder hits "submit" on an e-procurement
platform, it triggers an official administrative machinery, requiring
technical evaluation, scrutiny committees to assemble, and
institutional resources to be deployed. Unilateral clerical slips, even
when corrected instantly, force the public exchequer to expend
additional administrative hours resetting the tender parameters.
16. The learned Single Judge exercised a sound equitable
balancing act. While a full forfeiture would be punitively excessive, a
total exemption would diminish the institutional sanctity and serious
care required in public bidding. The withholding of Rs.61,50,000/-
serves as an appropriate cost assigned to the input negligence of
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2026:MHC:2288
W.A.No.2108 of 2025 etc.
the bidder, ensuring accountability without causing financial
devastation. We find no error apparent or perversity in the quantum
fixed by the learned Single Judge.
17. In view of the aforegiven reasons, we find that the
learned Single Judge has carefully balanced the public interest
responsibilities of the Corporation with the equitable rights of the
Association, which committed a bona fide mistake. The order
warrants no interference.
18. In the result, W.A.No.2108 of 2025 filed by the
Corporation is dismissed. W.A.No.2448 of 2025 filed by the
Association is also dismissed.
19. In W.A.Nos.3823 and 3825 of 2023 filed by the
Corporation challenging similar order, which permitted forfeiture of
8% of the EMD, identical arguments were advanced by the learned
Advocate General. The respondents in those appeals represented
by Mr.Avinash Wadhwani, learned counsel, adopted the arguments
of learned Senior Counsel appearing for the Association in
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2026:MHC:2288
W.A.No.2108 of 2025 etc.
W.A.Nos.2108 and 2448 of 2025. For the reasons given herein
above, W.A.Nos.3823 and 3825 of 2023 are also dismissed.
There shall be no order as to costs. Connected interim
applications stand closed.
(SUSHRUT ARVIND DHARMADHIKARI,CJ) (G.ARUL MURUGAN,J)
25.06.2026
Index : Yes
Neutral Citation : Yes
sasi
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2026:MHC:2288
W.A.No.2108 of 2025 etc.
THE HON'BLE CHIEF JUSTICE
AND
G.ARUL MURUGAN,J.
(sasi)
WA No s . 2108, 2448, 3823 and 3825 of 2025

25.06.2026
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