Legal Headline: Debarment for bona fide clerical error in bid submission held disproportionate and arbitrary.

In brief

The question

1. Whether the debarment of the Petitioner for a period of one year due to a bona fide clerical error in a bid submission is constitutionally valid under Article 226

The court held

The Court held that the debarment order was arbitrary and unsustainable in law

It also directed

It quashed the impugned order dated 10-12-2025. However, to balance the equities regarding the administrative costs incurred by SECL due to the re-tender, the Court directed the Petitioner to pay Rs. 1,00,000/- as compensation to Respondent No. 2 within four weeks. The petition was allowed subject to this payment

01Facts

The Petitioner participated in an e-tender floated by South Eastern Coal Fields Limited (SECL) on 12-12-2024 for coal transportation and loading services

pp. 2-3

Due to a clerical error on the GeM portal, the Petitioner entered a reverse value (14.99% instead of 85.01% of base value), leading to an abnormally low bid that emerged as L-1

p. 3

On 24-03-2025, prior to the opening of price bids, the Petitioner notified the Respondents of the mistake via email, followed by a formal letter on 13-04-2025

p. 3

Despite these clarifications, SECL issued a show-cause notice and subsequently passed an order on 10-12-2025 debarring the Petitioner from future tenders for one year

p. 4

02Issues

i.1. Whether the debarment of the Petitioner for a period of one year due to a bona fide clerical error in a bid submission is constitutionally valid under Article 226

pp. 4-5

ii.2. Whether the administrative action of debarment satisfied the principles of proportionality and natural justice

pp. 5-6

03Law Applied

The Court applied the principles of administrative law, specifically the "Wednesbury unreasonableness" test and the doctrine of proportionality

p. 5

Fundamental rights under Article 19(1)(g) of the Constitution of India were invoked regarding the right to carry on business

p. 5

The Court observed that debarment is equivalent to "civil death" and must be reserved for cases involving fraud, misrepresentation, or deliberate misconduct, rather than bona fide errors

pp. 4-5

Furthermore, the court looked at Clause 17 of the Tender Conditions (TCC) regarding the modification and withdrawal of bids

p. 5

04Reasoning

The Court analyzed the distinction between a deliberate breach of contract and a human clerical error. It noted that the Petitioner had proactively informed the authorities of the mistake before the price bids were even opened, negating any mala fide intent or fraud

pp. 5-6

While the Respondents argued that the Petitioner's withdrawal necessitated a complete re-tendering process causing administrative inconvenience, the Court found that the penalty of debarment was grossly disproportionate to the "bona fide human error"

p. 6

The Court reasoned that since there was no evidence of manipulation, treating the error as a contractual breach warranting the professional "civil death" of the firm was an irrational exercise of administrative discretion

p. 6