Calcutta High Court Protects Bidders: Inadvertent Errors in Tender Documents Cannot Lead to Forfeiture of Earnest Money
Court Says Mistaken Uploads Are Not Grounds for Penal Action Without Proof of Misleading Intent
Judgment Ensures Fairness in E-Auctions and Safeguards Genuine Bidders’ Rights
By Our Legal Correspondent
New Delhi: January 07, 2026:
On January 5, 2026, the Calcutta High Court delivered a significant judgment in the case of Shri Manoj Kumar Verma v. Union of India & Ors., ruling that inadvertent uploading of incorrect documents during an e-auction cannot justify forfeiture of earnest money deposits (EMD) unless authorities prove intent to mislead.
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The case arose when the petitioner’s bid for leasing railway parcel space was rejected and his earnest money of ₹7,45,321 was forfeited by the Railway Authority. Justice Smita Das De quashed the forfeiture order, directing the Railways to refund the amount, and emphasized that forfeiture is penal in nature and must satisfy tests of proportionality, fairness, and mens rea (intent to deceive).
Background of the Case
- Petitioner: Shri Manoj Kumar Verma, successful highest bidder in a railway e-auction.
- Error: Incorrect documents were uploaded inadvertently during the bidding process.
- Railway’s Action: Bid rejected and earnest money forfeited.
- Court’s Observation: Mistaken uploads without intent to mislead cannot justify forfeiture.
- Judgment: Railways directed to refund ₹7,45,321 to the petitioner.
Key Legal Principles Highlighted
- Forfeiture is Penal in Nature:
- It entails serious civil consequences.
- Cannot be imposed without proof of deliberate misconduct.
- Doctrine of Proportionality:
- Punishment must be proportionate to the offence.
- Inadvertent clerical errors do not justify harsh penalties.
- Fairness in Public Auctions:
- Authorities must distinguish between genuine mistakes and fraudulent intent.
- Transparency and fairness are essential to maintain trust in tender processes.
Implications of the Judgment
For Bidders
- Protection Against Arbitrary Penalties: Genuine bidders will not lose deposits due to clerical mistakes.
- Encouragement to Participate: More businesses may engage in e-auctions without fear of unfair forfeiture.
For Authorities
- Need for Clear SOPs: Railway and other government bodies must frame guidelines to handle inadvertent errors.
- Accountability: Officials must record findings of intent before imposing penalties.
For Tender Processes
- Strengthened Trust: Ensures fairness and transparency in public procurement.
- Reduced Litigation: Clear rules will minimize disputes between bidders and authorities.
Expert Opinions
- Legal Experts: Applaud the judgment for reinforcing principles of natural justice.
- Business Analysts: Say the ruling will encourage wider participation in government tenders.
- Policy Advocates: Urge authorities to adopt technology-driven checks to minimize document errors.
Comparative Global Practices
- United States: Courts often protect bidders from forfeiture unless fraud is proven.
- UK: Procurement law emphasizes proportionality and fairness in penalties.
- Singapore: Authorities distinguish between clerical mistakes and deliberate misrepresentation.
India’s ruling aligns with global best practices, ensuring fairness in competitive bidding.
Broader Significance
This judgment is not just about one bidder—it sets a precedent for all e-auctions and tender processes in India. As the government increasingly relies on digital platforms for procurement, inadvertent errors are inevitable. The ruling ensures that genuine mistakes are not punished as fraud, protecting bidders and strengthening confidence in public auctions.
Conclusion
The Calcutta High Court’s ruling in Shri Manoj Kumar Verma v. Union of India is a landmark in tender jurisprudence. By holding that inadvertent errors cannot justify forfeiture of earnest money, the Court has safeguarded bidders’ rights, reinforced fairness, and ensured proportionality in public procurement.
This judgment will likely influence future cases across India, prompting authorities to adopt clear SOPs and fair practices in handling tender disputes. For businesses and individuals, it is a reassurance that honest mistakes will not cost them their hard-earned money.
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