Writ jurisdiction maintains equitable oversight over disproportionate EMD forfeiture involving bona fide clerical errors.

In brief

The question

1. Whether the existence of an arbitration clause in the tender document acts as an absolute bar to the High Court exercising its writ jurisdiction under Article 226.

The court held

The High Court has the power to interfere in pre-contractual forfeitures involving patent errors under Article 226.

It also directed

The Court dismissed all appeals, affirming the Single Judge's order. It held that the TNCSC is entitled to retain only ₹61,50,000 as a penalty for the bidder's clerical negligence and must refund the balance amount of ₹4,50,00,000 to the Association.

01Facts

The TNCSC invited short e-tenders on 23.08.2024 for the procurement of 60,000 MT of Dal, requiring an Earnest Money Deposit (EMD) of ₹5,11,50,000/-.

p. 5

The Association submitted a bid on 09.09.2024, intending to quote roughly ₹1,47,000–₹1,52,000 per MT; however, due to a technical glitch or human error, the portal recorded a flat rate of ₹66,000 per MT.

p. 6

Realizing the error was unviable, the Association notified TNCSC via email within minutes of the bid opening on 14.09.2024.

pp. 6-7

TNCSC treated this as a withdrawal and forfeited the entire EMD on 10.01.2025.

p. 7

The Writ Court (Single Judge) relied on the principle of "genuine mistake" and ordered a partial refund, permitting TNCSC to forfeit only 12.02% (₹61,50,000) of the EMD. Both TNCSC and the Association appealed the Single Judge’s order.

pp. 4, 7-8

02Issues

i.1. Whether the existence of an arbitration clause in the tender document acts as an absolute bar to the High Court exercising its writ jurisdiction under Article 226.

p. 10

ii.2. Whether the TNCSC was justified in forfeiting the entire EMD amount despite the bidder claiming a bona fide clerical error reported immediately.

p. 11

iii.3. Whether the partial forfeiture of 12.02% of the EMD as ordered by the Single Judge was proportionate and legally sound.

pp. 13-14

03Law Applied

The Court primarily applied the principles governing the forfeiture of EMD as laid down in ABCI Infrastructure Pvt. Limited v. Union of India (2025) 6 SCC 813, which establishes that authorities cannot unjustly enrich themselves through EMD forfeiture when an error is clerical, immediately corrected, and causes no loss.

p. 7, 12

The Court also relied on Article 14 of the Constitution of India regarding the requirement of reasonableness and proportionality in State action.

pp. 10-12

Furthermore, it applied Rule 30 of the Tamil Nadu Transparency in Tender Rules, 2000, interpreting it through the lens of equity to prevent unconscionable penalties.

p. 12

04Reasoning

The Court reasoned that while Clause 23 provided for arbitration, writ jurisdiction is not divested where State action is patently arbitrary or unreasonable.

p. 10

On the merits, the Court found the bid of ₹66,000 per MT to be a "visual and operational absurdity" compared to market rates, confirming it was a genuine clerical slip rather than a strategic default.

p. 11

Since TNCSC moved to the L2 bidder within 48 hours without suffering financial loss or delay, a total forfeiture of ₹5.11 Crores was deemed "shockingly disproportionate" and "unconscionable".

p. 12

However, the Court maintained that the Association’s negligence triggered administrative costs and technical evaluations. Therefore, following the spirit of balancing public interest with equity, the Court found the Single Judge's decision to withhold ₹61,50,000 (12.02%) served as a necessary "cost assigned to the input negligence" to maintain the sanctity of the bidding process.

pp. 13-14