Case Note & Summary
The appellant, RR Constructions and Infrastructure India Pvt. Ltd., an out-of-State bidder, was disqualified by the High Court for submitting a Fixed Deposit (FD) as Earnest Money Deposit (EMD) instead of a Demand Draft (DD), as required by the tender conditions for out-of-State bidders. The appellant challenged this disqualification before the Supreme Court. The appellant argued that the tender condition was optional and that the FD was in the name of the Tendering Authority, which provided equivalent security. The 6th respondent contended that the appeal had become infructuous as the financial bid had been opened and its bid accepted, and also alleged suppression of a subsequent disqualification. The State admitted that in practice, FDRs were accepted from out-of-State bidders. The Supreme Court held that the requirement for a DD was directory, not mandatory, based on the consistent practice of the State. The court set aside the High Court's judgment and allowed the appeal, but directed the appellant to respond to the subsequent disqualification within 48 hours, with the Tendering Authority to decide within one week thereafter.
Headnote
A) Tender Law - Interpretation of Tender Conditions - Mandatory vs Directory - Requirement for out-of-State bidders to submit EMD by Demand Draft (DD) - The court held that the condition was directory, not mandatory, as the State had consistently accepted Fixed Deposit Receipts (FDRs) from out-of-State bidders in practice. The appellant's disqualification based on submission of a Fixed Deposit was set aside. (Paras 2-6) B) Tender Law - Earnest Money Deposit - Fixed Deposit vs Demand Draft - The court found that the appellant had furnished a Fixed Deposit in the name of the Tendering Authority, which was equivalent to a Demand Draft in terms of security. The High Court's reliance on a prior judgment was misplaced as the facts were distinguishable. (Paras 2-6) C) Tender Law - Suppression of Facts - Subsequent Disqualification - The court noted that the appellant had not disclosed a subsequent disqualification, but held that since the appeal was being allowed on the primary issue, the appellant should be given an opportunity to respond to the subsequent disqualification within a specified time. (Paras 3-6)
Issue of Consideration
Whether the requirement for out-of-State bidders to submit Earnest Money Deposit (EMD) by way of Demand Draft (DD) is mandatory or directory, and whether the appellant's submission of a Fixed Deposit (FD) instead of a DD justified disqualification.
Final Decision
Appeal allowed. Impugned judgment of High Court set aside. Appellant to respond to subsequent disqualification within 48 hours; Tendering Authority to decide within one week thereafter.
Law Points
- Interpretation of tender conditions
- Mandatory vs directory requirements
- Earnest Money Deposit
- Fixed Deposit vs Demand Draft
- Judicial review of tender disqualification
