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SC RULING ON CLERICAL ERRORS IN HIGH-VALUE GOVERNMENT CONTRACTS

by | Feb 17, 2025

ASPECTS DETAILS
Case Name M/S. ABCI INFRASTRUCTURES PVT. LTD. vs. UNION OF INDIA & OTHERS
Introduction The case revolves around a clerical error in a bid submitted by M/S ABCI Infrastructure Pvt. Ltd. for a Border Road Organisation (BRO) project. The Supreme Court adjudicated on whether BRO was justified in accepting the erroneous bid and forfeiting the bank guarantee.
Factual Background BRO invited bids for a Rs. 1,504.64 crore twin-tunnel project at Shinkun La Pass. ABCI mistakenly quoted Rs. 1,569 instead of Rs. 1,569 crores due to a typographical error. Despite notifying BRO immediately, BRO insisted on accepting the erroneous bid and later encashed the bid security of Rs. 15.04 crores. ABCI’s plea before the Himachal Pradesh High Court was dismissed.
Legal Issues
  • Whether a bid with an apparent clerical error can be enforced by BRO.
  • Whether BRO’s insistence on accepting the erroneous bid was legally justified.
  • Whether forfeiture of the bank guarantee was valid under contract law principles.
Applicable Law
  1. Section 20 of the Indian Contract Act, 1872 – Mistakes as to essential facts render an agreement void.
  2. Judicial precedents – Cited cases from India and the US on rectifying errors in bid submissions.
Analysis The Supreme Court held that ABCI’s mistake was evident, and BRO’s refusal to acknowledge it led to unnecessary litigation. The court referred to past judgments where bidders were allowed to rectify mistakes before a contract was executed. The proportionality principle was applied to ensure fairness.
Conclusion The Supreme Court directed ABCI to pay Rs. 1 crore to BRO as a penalty for the error. BRO was ordered to return the encashed bank guarantee. The impugned High Court judgment was set aside.
Current Scenario A fresh tender was issued, and a new contract was awarded at a lower price (Rs. 1,290 crores instead of Rs. 1,351 crores). The case sets a precedent for handling clerical errors in high-value contracts.

CASE SUMMARY– M/S ABCI Infrastructure Pvt. Ltd. mistakenly quoted Rs. 1,569 instead of Rs. 1,569 crores in a BRO project bid. Despite promptly informing BRO, the organization insisted on enforcing the erroneous bid and encashed the security deposit. The Supreme Court ruled that the mistake was self-evident and criticized BRO’s rigid stance. Applying contract law principles and past precedents, the court ordered ABCI to pay Rs. 1 crore as a penalty but directed BRO to return the bank guarantee. The ruling emphasized equitable relief in bid errors and upheld fairness in contract enforcement.

“A mistake may be unilateral or mutual, but it is always unintentional. If it is intentional, it ceases to be a mistake.” 

SOURCE – SUPREME COURT OF INDIA

READ ALSO – SUPREME COURT GRANTS BAIL DUE TO PROLONGED TRIAL DELAY

 

 

 

 

Written By Nancy Sharma

I am Nancy Mahavir Sharma, a passionate legal writer and a judicial service aspirant who is interested in legal researching and writing. I have completed Latin Legum Magister degree. I have been writing from past few years and I am excited to share my legal thoughts and opinions here. I believe that everyone has the potential to make a difference.

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