Gauhati High Court
WP(C)/1367/2022 on 18 January, 2024
Author: Manish Choudhury
Bench: Manish Choudhury
Page No.# 1/16
GAHC010037862022
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WRIT PETITION (C) NO. 1367/2022
Arup Sinha, aged about 37 years, son of Amalendu
Sinha, resident of Village - Nakhalagrant, P.O.
Jagiroad, District - Morigaon, Assam, Pin - 782410,
Assam.
..................Petitioner
-VERSUS-
1. The Power Grid Corporation of India Limited, A Public
Sector Enterprise/ Statutory Corporation
incorporated under the Companies Act, 1956 as
public limited company, majority stake being owned
by The Government of India, and represented
through its Chairman and Managing Director/CMD,
With Its Registered Offices Sited at B-9, Qutab
Institutional Area, Katwaria Sarai, New Delhi-110016.
2. The Manager, Power Grid Corporation of India Ltd.,
NEA HVDC, Monal Tower Building, 6th Floor, Dispur,
Guwahati-781006.
3. The Manager, Power Grid Corporation of India Ltd.,
North Eastern Region, Dongtieh, Lower Nongrah,
Lapalang, Shillong-793006, Meghalaya.
Page No.# 2/16
4. MSTC Limited, a mini-Ratna Public Sector Undertaking
under the administrative control of the Ministry of
Steel, Government of India and represented by its
Chief Manager, F & A, BSNL Exchange Building,
Beltola, Basistha Road, Wireless, Guwahati, Pin-
781038.
...................Respondents
Advocates :
Petitioner : Mr. R.J. Das, Advocate
Respondent nos. 1 - 3 : Mr. N.C. Das, Senior Advocate
Mr. A. Das, Advocate
Respondent no. 4 : Ms. P. Baruah, Advocate
Date of Hearing, Judgment & Order : 18.01.2024
BEFORE
HON'BLE MR. JUSTICE MANISH CHOUDHURY
JUDGMENT & ORDER [ORAL]
The petitioner has preferred the instant writ petition under Article 226 of
the Constitution of India seeking setting aside and quashing of a Sale Intimation
Letter dated 21.02.2022 issued by the respondent no. 4 to the petitioner
whereby the petitioner had been informed that the petitioner's bid against the
auctioned lot of ACSR Lapwing Conductor, Lot no. 1 containing 1368.66 Metric
Tons at his quoted bid value of Rs. 2,00,001/- per metric ton had been
accepted, thereby, asking the petitioner to deposit the balance bid value. The
Page No.# 3/16
petitioner has also sought for a direction in the nature of Mandamus to the
respondent authorities to refund a sum of Rs. 34,49,000/- which the petitioner
had deposited as pre-bid Earnest Money Deposit [EMD] to participate in the
auction process initiated by an Auction Notice bearing no.
MSTC/GHY/POWERGRID CORPORATION OF INDIA LTD/4/Veluguri P.O.
Kathiatoli/21-22/30843. The petitioner has also sought for a relief in the form of
a direction to restrain the respondent authorities from initiating any further
penal action in terms of Clause 2 of the Auction Bid Document.
2. In order to understand the nature of controversy involved in the case, the
necessary and relevant facts can be delineated, in brief, as follows :-
3. By an Auction Notice bearing no. MSTC/GHY/POWERGRID CORPORATION
OF INDIA LTD/4/Veluguri P.O. Kathiatoli/21-22/30843 ['the Auction Notice', for
short], the respondent no. 4, M/s MSTC Limited had initiated an auction process
for the purpose of auctioning a lot named and styled as Lot no. 1 of ACSR
Lapwing Conductor, which was lying at Bihapukhuri I Store, Village -
Bihapukhuri, Biswanath Chariali, District - Biswanath, Assam. As per the Auction
Notice, Lot no. 1 contained 1368.66 metric tons of ACSR Lapwing Conductor. An
Inspection Period from 01.02.2022 to 19.02.2022 was provided for the
prospective bidders to inspect Lot no. 1. The proposed auction materials were
offered for sale on 'as is where is' basis Ex-Works owners. The owners of the
proposed auction materials, that is, ACSR Lapwing Conductor was M/s Power
Grid Corporation of India Ltd [PGCIL]. The Auction Notice further mentioned
that the quantity [Nos., Kg., MT, etc.] indicated against the materials where unit
of measurement [UOM] was Lot were purely indicative and without any
Page No.# 4/16
guarantee and the seller would not entertain any complaint from the buyer for
any deficiency in quantity or for recovery of the whole or part of the money or
any loss of profit/interest/damages and otherwise. It was further indicated that
the seller was not liable to weigh such items while delivery.
4. The Auction Notice further indicated that a participant bidder had to have
a pre-bid EMD amount of Rs. 34,49,000/- and such pre-bid EMD amount was
required to be deposited in the pre-bid wallet at least one day prior to the day
of e-auction. Meaning thereby, no one was eligible to participate in the said
auction process, initiated by the Auction Notice under reference, if he did not
have a pre-bid EMD amount of Rs. 34,49,000/- in the pre-bid wallet.
5. The petitioner who has claimed to be a reputed contractor dealing in lifting
of scrap materials and selling them thereafter, decided to participate in the
auction process initiated by the Auction Notice. In order to be eligible to
participate in the auction process for Lot no. 1 which had indicated about the
pre-bid EMD amount of Rs. 34,49,000/-, the petitioner transferred an amount of
Rs 36,61,000/- to his EMD wallet on 19.02.2022.
6. As per the Auction Notice, the auction process was to commence at 11-00
hours on 21.02.2022 and was to close at 16-30 hours on 21.02.2022.
7. In the writ petition, it has been projected that when the auction process
commenced on 21.02.2022, the petitioner took part in the same and at one
point of time, he quoted a bid value of Rs. 2,00,001/- per metric ton. The
petitioner has claimed that at a later point of time, but during the live auction
Page No.# 5/16
process, the petitioner realized that he had mistakenly quoted the bid value,
which was not the price he intended to offer for Lot no. 1 containing ACSR
Lapwing Conductor. In order to correct the same, the petitioner stated to have
informed the Nodal Officer of the respondent no. 4 at exactly 16-30 hours by
way of an e-mail stating that a mistake had occurred on his part in that he had
mistakenly offered a price of Rs. 2,00,001/- per metric ton instead of Rs.
20,001/- per metric ton. The petitioner has claimed that he had sent the e-mail
for the purpose of modification of his offer from Rs. 2,00,001/- per metric ton to
Rs. 20,001/- per metric ton. The petitioner has alleged that instead of
responding to his said e-mail and subsequent correspondence made with M/s
PGCIL authorities immediately thereafter, the respondent authorities, more
particularly, the respondent no. 4 by the impugned Sale Intimation Letter dated
21.02.2022, sent at 22-35 hours, had confirmed the auction process arbitrarily
and irresponsibly. The petitioner has stated that aggrieved by such action on the
part of the respondent authorities, the petitioner is compelled to approach this
Court by the instant writ petition seeking the reliefs, mentioned above.
8. I have heard Mr. R.J. Das, learned counsel for the petitioner; Mr. N.C. Das,
learned Senior Counsel assisted by Mr. A. Das, learned counsel for the
respondent nos. 1 - 3; and Ms. P. Baruah, learned counsel for the respondent
no. 4.
9. Mr. Das, learned counsel for the petitioner has submitted that the bid value
of Rs. 2,00,001/- per metric ton was quoted by the petitioner mistakenly. It is
his submission that the petitioner intended to offer a bid value of Rs. 20,001/-
per metric ton. But the bid value got quoted at Rs. 2,00,001/- per metric ton
Page No.# 6/16
erroneously. By referring to the e-mail, shown to be sent on 16-30 hours on
21.02.2022 to the respondent no. 4, Mr. Das has submitted that as soon as the
petitioner realized the mistake, claimed to be bona fide, he had immediately
informed the respondent no. 4 that his bid should be considered at Rs. 20,001/-
per metric ton. Mr. Das has further submitted that the matter was also brought
to the notice of the authorities in M/s PGCIL by another e-mail of even date,
sent at 07-16 p.m. The petitioner had also requested the respondent authorities
to look into the matter and to take necessary steps to invalidate and cancel his
offer/bid for the said auction process because of the mistake in quoting the bid
value. Mr. Das has further submitted that if the impugned Sale Intimation Letter
is given effect to, the petitioner would be visited with severe adverse
consequences in the form of forfeiture of the pre-bid EMD amount of Rs.
34,49,000/- as he had not deposited the EMD amount within a period of 7
[seven] days from 21.02.2022, as stipulated in the impugned Sale Intimation
Letter dated 21.02.2022. Mr. Das has submitted that the fact that the bid value
quoted by the petitioner at Rs. 2,00,000/- per metric ton was unreasonable,
irrational and abnormally high would be evident merely be making a comparison
with the market prices of identical materials.
10. The respondent sides have submitted in similar lines. Mr. Das, learned
Senior Counsel appearing for the respondent nos. 1 - 3 has submitted that the
auction process initiated by the Auction Notice was conducted by the
respondent no. 4 as the Selling Agent of M/s PGCIL pursuant to an Agreement
executed on 30.11.2019 between M/s PGCIL on one part and M/s MSTC Ltd. on
the other part. By the said Agreement, the respondent no. 4, M/s MSTC Ltd. has
been engaged as the Selling Agent for sale of all movable/immovable items and
Page No.# 7/16
all surplus, condemned/scrap/obsolete materials etc. as well as equipments,
plants, machineries, properties and miscellaneous articles, etc. of M/s PGCIL
through the website of the respondent no. 4. Mr. Das has submitted that the
terms and conditions as regards engagement of the respondent no. 4 as a
Selling Agent have been clearly mentioned in the said Agreement, which is valid
for a period of 5 [five] years. It is his contention that the plea raised by the
petitioner that he had, by mistake, quoted the price of the Lot at Rs. 2,00,001/-
per metric ton is not acceptable in view of the then prevailing market rates of
such kind of ACSR Lapwing Conductor [scrap]. By referring to the various
figures/rates which were fetched in a nos. of auction processes conducted and
concluded either prior to 21.02.2022 or subsequent to 21.02.2022, he has
submitted that the rate at Rs. 2,00,001/- per metric ton was not an
unreasonable, irrational and abnormally high figure. The learned counsel for the
respondents have submitted that sufficient safeguards were provided in the
auction website of the respondent no. 4 for the bidders in that even after
quoting a bid value, the bidders gets another message in the form of a pop-up
displaying the offered bid value in figures as well as in words and the bidder has
to confirm in the system thereafter that he would want to proceed with the said
offered bid value. It is only after the bidder gives a confirmation to the bid value
he had quoted earlier, the system records the figure. The petitioner after
quoting the bid value at Rs. 2,00,001/- per metric ton at the first instance, had
confirmed the same bid value when the bid value was shown again in figures as
well as in words in the system. Thus, the question of bona fide mistake or
unintentional mistake cannot be a factor in the case in hand as after
confirmation a bidder was not permitted to withdraw his offer.
Page No.# 8/16
11. Mr. Das, learned counsel for the petitioner has submitted, in reply, that it is
imperative in an auction process to have a reserved price and such reserved
price is to be fixed prior to commencement of the auction process and also has
to be intimated to the proposed bidders. In support of his such contention, Mr.
Das has referred to two Judgments of the High Court of Judicature at Madras in
W.P. No. 29701 of 2012 [M/s Hameed Enterprises vs. the Registrar, Indian
Institute of Technology and another], decided on 18.09.2014, and W.A. no.
1378 of 2014 [The Registrar, Indian Institute of Technology vs. M/s Hameed
Enterprises], decided on 28.01.2015 and arising out of W.P. no. 29701 of 2012.
12. I have duly considered the submissions of the learned counsel for the
parties and have also gone through the materials brought on record by the
parties through their pleadings. I have also gone through the afore-mentioned
two decisions referred by the petitioner's side.
13. The Auction Notice was published by the respondent no. 4, M/s MSTC Ltd.
From the Agreement dated 30.11.2019, enclosed to the affidavit-in-opposition
of the respondent nos. 1 - 3, it is noticed that the same is a Selling Agency
Agreement having a validity period of 5 [five] years from the date of signing of
the Agreement. As per the said Selling Agency Agreement, M/s MSTC Ltd. has
been engaged as the Selling Agent for sale of the PGCIL's movable/immovable
items and all surplus, condemned/scrap/ obsolete materials and secondary
arising [ferrous and non-ferrous] as well as equipments, plants, machineries,
properties and miscellaneous articles, etc. through MSTC's Auction website :
www.mstcecommerce.com. As per the Agreement, M/s PGCIL is the Principal
and M/s MSTC Ltd. is the Selling Agent. It has been further laid down that M/s
Page No.# 9/16
MSTC has to arrange disposal of the materials primarily through e-auction via
their website : www.mstcecommerce.com. According to Clause 7.6., a reserve
price is to be fixed and entered by the Principal [with its secret password] in the
website, which is accessible only by the designated authorised officer of the
Principal and none else, for the disposable material. In case the reserve price is
not entered by the Principal prior to commencement of the auction, the lots for
which the reserve price have not been entered shall stand automatically
withdrawn by the system. In the case in hand, the auction process had
commenced, meaning thereby, a reserve price had been fixed for Lot no. 1 prior
to commencement of the auction process. Other than bald contention, the
petitioner has not been able to bring anything on record to indicate that an
obligation was cast on the Principal/Selling Agent to disclose the reserve price to
the intending bidders.
14. The Auction Notice had provided for an Inspection Period, which was from
01.02.2022 to 19.02.2022, for the intending bidders to inspect the materials of
Lot no. 1 containing about 1368.66 Metric Tons of ACSR Lapwing Conductor,
which were to be auctioned on 'as is where is' basis. It was mentioned in the
Auction Notice that the seller would not entertain any complaint from the buyer
for any deficiency in quantity and the auction was on no complaint basis. It was
further indicated that the materials were to be sold on the assumption that the
bidders had inspected the same and were in the know how about what they
were buying, irrespective of whether they had first inspected the materials or
not.
15. From the bid history of the auction process, held and concluded on
Page No.# 10/16
21.02.2022, placed before the Court by Mr. Das, learned Senior counsel
appearing for the respondent M/s PGCIL authorities, it is noticed that Auction
process started with receipt of the first bid of Rs. 1/- at 11-35-01 hours. The e-
auction process was forward auction in which bidding started with the lowest
possible offered bid value and the bid value increased gradually. Subsequent to
the first bid, seven more bids were received. The petitioner entered into the
bidding process as 9th bidder at 13-27-52 hours by quoting the bid value of Rs.
2,00,001/- per metric ton. The bid previous to the petitioner was at Rs. 1,000/-
per metric ton at 13-27-49 hours. Ms. Barua, learned counsel appearing for the
respondent no. 4 has also placed a document dated 27.03.2023 issued by the
Branch Manager, M/s MSTC Ltd., Guwahati which also indicates that the bid
previous to the petitioner was received on 13-27-49 hours and the bid value of
offered by the said bidder was Rs. 1,000/- per metric ton.
16. In order to examine as to whether the bid value quoted by the petitioner
at Rs. 2,00,001/- per metric ton of Lot no. 1 containing ACSR Lapwing
Conductor can be termed as unreasonable, irrational and abnormally high or
not, the prices fetched in the auction processes held for identical material i.e.
ACSR Lapwing Conductor can be looked into as the same can be a safe guide.
ACSR stands Aluminum Conductor Steel Reinforced. From the case papers, more
particularly, Annexure-III of the counter affidavit of the respondent nos. 1-3, the
details of three other auction processes, held and concluded for identical
materials i.e. ACSR Lapwing Conductor can be noticed. One of such auction
processes was held on 03.12.2021, that is, prior to the auction process in the
case in hand, for 273 MT of ACSR Lapwing Conductor. The said auction process
fetched a price of Rs. 1,91,000/- per metric ton. Another auction process for
Page No.# 11/16
identical materials i.e. ACSR Lapwing Conductor for 243.41 metric ton was held
and concluded on 22.02.2022, that is, just one day after the auction process in
the case in hand and the said auction process fetched a price of Rs. 2,00,004/-
per metric ton, which is slightly higher than the price quoted by the petitioner
herein. In another auction process held and concluded on 24.02.2022 for ACSR
Lapwing Conductor, the price fetched was Rs. 1,91,148/- per metric ton and the
auction process was for 1452.56 metric ton.
17. During the pendency of the writ petition and after disinclination on the part
of petitioner to deposit the balance EMD amount within the period stipulated in
the impugned Sale Intimation Letter, another auction process for auctioning the
Lot no. 1 was undertaken on 14.09.2022. The respondent nos. 1-3, by their
additional affidavit, have brought to the notice of the Court that by issuance of
another Auction Notice, the Lot no. 1 containing the quantity of 1368.66 metric
tons of ACSR Lapwing Conductor was made part of another auction process,
subsequent to disinclination on the part of the petitioner to deposit the balance
EMD and initiated during the pendency of the writ petition. The said auction
process was closed after receipt of the highest bid at Rs. 1,70,002/- per metric
ton. Subsequent to the conclusion of the said auction process, the highest
bidder deposited the entire amount of Rs. 27.37 crores for the materials for Lot
no. 1, which was earlier part of the auction notice where the petitioner took
part.
18. By looking at the prices fetched for identical materials i.e. ACSR Lapwing
Conductor in the three auction processes held on 03.12.2021, 22.02.2022 and
24.02.2022 and in the subsequent auction process held on 14.09.2022 in
Page No.# 12/16
respect of Lot no. 1 after non-conclusion of the auction process initiated by the
Auction Notice under reference, it is not possible, by any stretch, to take a view
that the bid value quoted by the petitioner, allegedly by mistake, at Rs.
2,00,001/- per metric ton was unreasonable, irrational and abnormally high one.
Rather, the figure at Rs. 20,001 per metric ton which the petitioner has claimed
that he intended to offer for ACSR Lapwing Conductor, is an unreasonable,
irrational and abnormally low one and by no stretch, it can be said that the said
figure quoted is relatable to the ACSR Lapwing Conductor, contained in Lot no.
1.
19. There is another aspect which does not go to support the plea raised by
the petitioner that his quoting of the figure at Rs. 2,00,001/- per metric ton was
due to a bona fide mistake. The stand taken by M/s MSTC Ltd. is to the effect
that the auction portal provides a completely automated, transparent and
unbiased platform for the bidders buying auction items. As per the system
installed for the auction processes, which are stated to be automated, as soon
as a participant bidder quotes a bid value during the live auction process, the
said bidder gets a message in the form of a pop-up displaying the bid value in
words as well as in figures. After display of the pop-up, a bidder has to confirm
in the system that he wants to proceed further with the said bid value. It is only
after confirmation of the bid value, quoted and displayed in the system both in
words as well as in figures, by the bidder the system registers the same. Once
the bid gets registered in the system it is treated that the bidder is ready to pay
the bid value entered by him. It is the further stand of the respondents that
once registered, a bid cannot be withdrawn/modified by sending any e-mail or
correspondence either to M/s MSTC Ltd, the Selling Agent or to M/s PGCIL, the
Page No.# 13/16
Principal within the live auction period or any period thereafter. From the above,
it is evident that the auction portal has provided sufficient safeguards to a
bidder to ascertain about the bid value offered by him and thereafter, the bidder
gets another opportunity either to confirm the pop-up message generated
automatically by the auction portal or not to confirm. Therefore, it was not a
single opportunity for the petitioner as a bidder to quote a bid value. Rather,
there were two opportunities for the petitioner as a bidder in the said auction
process - firstly, to offer a bid value at the first instance; and secondly, after the
pop-up message, showing the bid value both in words and in figure, to confirm
or not to confirm the bid value he had offered at the first instance.
20. It was one of the conditions in the Auction Notice that a bidder who had
been successful in the auction process, had to submit the Earnest Money
Deposit within a period of 7 [seven] days from the date of Sale Intimation
Notice for accepted lots. It was further stipulated that in case of failure to pay
the EMD amount within the stipulated period for an auction process in case of
lots for which a deposit of a pre-bid EMD amount was a condition precedent
such pre-bid EMD amount would be forfeited. By the impugned Sale Intimation
Letter dated 21.02.2022, the petitioner was informed that the material value of
Lot no.1 for the Auction Notice dated 17.02.2022 for which he had emerged
successful was Rs. 2,73,73,337/- and he was required to deposit the said
amount as per the terms and conditions of the Auction Notice. The petitioner
has sought relief in the form of refund of the pre-bid EMD amount of Rs.
34,49,000/- on the ground of equity and bona fide mistake. It is well settled
that equity follows the law and where a mistake might have been avoided by
the exercise of ordinary care and diligence on the part of the bidder and where
Page No.# 14/16
the bidder can by exercise of ordinary care and diligence could have avoided the
mistake, such a bidder is not entitled for any relief on the ground of equity. Any
mistake such as the one projected by the petitioner, should have been
discovered with exercise of ordinary care and diligence.
21. The petitioner has also contended that by abandonment of the auction
process initiated by the Auction Notice under reference which had been
abandoned due to disinclination on the part of the petitioner to deposit the EMD
amount and by the conclusion of the subsequent auction process for the same
Lot no. 1, held and concluded on 14.09.2022, the respondent authorities did not
suffer any loss. The respondents have taken a stand that had the auction
process initiated by the earlier Auction Notice been concluded on the basis of
the bid value offered by the petitioner at Rs. 2,00,001/- per metric ton the same
would have fetched a higher differential amount of Rs. 1.4 crore. Such a plea of
the petitioner that the respondent authorities have not suffered any loss is not
to be countenanced as it is due to the action on the part of the petitioner, as
have been delineated hereinabove, the auction process initiated by the earlier
Auction Notice could not be brought to a logical conclusion. By quoting a bid
value of Rs. 2,00,001/- per metric ton at 13-27-52 hours, the petitioner had, on
one hand, stopped the other bidders from taking further part in the auction
process and thereafter, by his failure to deposit the balance amount as per the
Sale Intimation Letter and his failure to abide by the terms and conditions of the
Auction Notice, had compelled the respondents to initiate a fresh auction
process for the same Lot no. 1 after a period of about 7 [seven] months. It was
condition of the Auction Notice that failure to deposit the balance EMD amount
would lead to forfeiture of the pre-bid EMD amount. The petitioner had failed to
Page No.# 15/16
deposit the balance EMD amount and any order to refund of the pre-bid EMD
amount would not only amount to rewarding a defaulting bidder but would also
affect the aspects of certainty, definitiveness and transparency, required to be
maintained in an auction process.
22. The two decisions of the High Court of Judicature at Madras relied on by
the petitioner's side is in respect of an e-Auction process wherein the petitioner
after depositing a pre-bid EMD participated in the said auction process. The
petitioner therein has contended that he quoted a bid value of Rs.
1,22,42,002/-, instead of Rs. 12,24,202/-, mistakenly in the said auction
process. It was contended that the same had resulted into quoting an
astronomically high figure as the same materials were sold through a
subsequent E-auction process for Rs. 45.52 lakhs. On perusal of the decisions, it
is noticed that the Selling Agent had no independent power to confirm the bid
of the petitioner and its action was subject to approval of the Principal, that is,
the owner of the materials auctioned. The Court had found that there was no
approval to the bid of the petitioner by the Principal, after it was provisionally
accepted by the Selling Agent. In the intra-court appeal directed against the
judgment of the learned Single Judge, the Division Bench had considered the
aspect as to whether the price quoted by the petitioner therein was abnormally
high and whether the said price was much more than the value of the scraps in
comparison to the prices quoted by other bidders and fetched in the subsequent
auction process and as to whether the price quoted by the writ
petitioner/appellant therein was a genuine mistake. In the case in hand, the
figures fetched in four other auction processes for identical materials, that is,
ACSR Lapwing Conductor have already been found to be nearer to the bid value
Page No.# 16/16
quoted by the petitioner herein @ Rs. 2,00,001/- per metric ton. The fact
situation obtaining in the said two decisions relied on by the petitioner's side,
are not found applicable to the case in hand and as such, the said two decisions
are of no assistance to the case of the petitioner.
23. In view of the discussion made and for the reasons assigned above, this
Court is not persuaded to arrive at a view that the petitioner is entitled to any of
the reliefs, sought for in the writ petition. Consequently, the writ petition is
found to be bereft of any merits and is liable to be dismissed. It is accordingly
dismissed. There shall, however, be no order as to cost.
JUDGE
Comparing Assistant
