Case Note & Summary
The case involved a dispute between M/s ABCI Infrastructures Pvt. Ltd. and the Union of India regarding a tender for the construction of twin tunnels at Shinkun La Pass. On 23.02.2023, the Border Road Organisation (BRO) invited bids for the project, with an estimated cost of Rs.1,504.64 crores. The Appellant submitted their bid on 03.06.2023, but due to a system error, their bid was recorded as Rs.1,569 instead of Rs.1,569 crores. Upon discovering the mistake on 24.08.2023, the Appellant promptly informed the authorities but faced resistance from BRO, which insisted on justifying the bid. The Appellant later requested to withdraw their bid, but BRO proceeded to forfeit their bank guarantee of Rs.15,04,64,000. The Appellant's writ petition was dismissed by the High Court, leading to the appeal before the Supreme Court. The court examined whether BRO was justified in accepting the erroneous bid and forfeiting the bank guarantee. It noted that the mistake was unilateral and self-evident, thus not falling under the provisions of the Indian Contract Act. The court criticized BRO for its rigid stance and failure to acknowledge the Appellant's genuine error, which contributed to delays. Ultimately, the court directed the Appellant to pay Rs.1 crore to BRO, with the return of the bank guarantee upon payment, and set aside the impugned judgment.
Headnote
A) Contract Law - Mistake in Bid - Unilateral Mistake - Indian Contract Act, 1872, Section 20 - The Appellant made a clear mistake in quoting the bid price as Rs.1,569 instead of Rs.1,569 crores, which was self-evident and could not be rectified. The court held that the mistake was not mutual and did not fall under Section 20, thus justifying the forfeiture of the bank guarantee (Paras 10-11). B) Tender Process - Justification for Bid Acceptance - Indian Contract Act, 1872 - The BRO's insistence on accepting the bid despite the clear error was flawed, as it ignored the practical approach needed to resolve such mistakes. The court emphasized that the delay was caused by BRO's refusal to acknowledge the Appellant's genuine error (Paras 12-13). C) Equitable Relief - Conditions for Granting Relief - The court noted that while mistakes can be rectified, the Appellant's error was clear and should have led to the bid being declared non est. The court directed the Appellant to pay Rs.1 crore to BRO, with the return of the bank guarantee upon payment (Paras 16-17).
Issue of Consideration
Whether BRO was justified in accepting the bid of Rs.1,569 and forfeiting the bank guarantee of Rs.15,04,64,000 due to the Appellant's failure to execute the agreement.
Final Decision
The Supreme Court allowed the appeal, set aside the impugned judgment, and directed the Appellant to pay Rs.1 crore to BRO. Upon receipt of this payment, BRO was to return the Appellant's original bank guarantee of Rs.15.04 crores within one week.
Law Points
- Mistake in bid
- Indian Contract Act
- 1872
- Section 20
- Equitable relief
- Tender process
- Bank guarantee encashment
