Case Note & Summary
The judgment concerns four writ petitions filed by construction companies against the State of Maharashtra and its officers. The petitioners had submitted tenders for construction works, but their bids were rejected on the ground that they had not submitted the earnest money deposit (EMD) along with the tender documents. The petitioners contended that they had submitted the EMD separately or that the requirement was not mandatory. The court examined the tender conditions and found that while submission of EMD was a requirement, the respondents had not given the petitioners any opportunity to explain or cure the alleged defect. The court held that the rejection was arbitrary and violative of principles of natural justice. It further held that the forfeiture of EMD was illegal. The court allowed the petitions, directed refund of the EMD amounts, and imposed costs on the respondents.
Headnote
A) Tender Law - Earnest Money Deposit - Rejection of Bid - The court considered whether rejection of bids for non-submission of EMD along with tender documents was valid - Held that the requirement of submitting EMD is a condition of tender, but the respondents had not provided any opportunity to the petitioners to cure the defect, and the rejection was arbitrary and illegal (Paras 5-10). B) Natural Justice - Opportunity of Hearing - The court held that before rejecting a bid for non-compliance with tender conditions, the tendering authority must give the bidder an opportunity to explain or cure the defect - Held that failure to do so violates principles of natural justice (Paras 7-9). C) Contract Law - Forfeiture of Earnest Money - The court examined whether the respondents could forfeit the EMD when the bids were rejected - Held that forfeiture is not permissible when the rejection itself is illegal, and the EMD must be refunded (Paras 10-12).
Issue of Consideration
Whether the rejection of the petitioners' bids for non-submission of earnest money deposit (EMD) along with the tender documents was legal and justified, and whether the respondents were entitled to forfeit the EMD.
Final Decision
The court allowed the writ petitions, quashed the rejection orders, directed refund of the earnest money deposit, and imposed costs on the respondents.
Law Points
- Tender law
- Earnest Money Deposit
- Rejection of bid
- Natural justice
- Opportunity to cure defects
- Section 4 of Maharashtra Public Works Department Manual
