1991 (5) TMI 240 - SC - Indian Laws

Whether Diesel Locomotive Works had no authority to waive the technical literal compliance of clause 6 of the notice? . Held that - Appeal allowed. In the instant case the certified cheque of the Union Bank of India drawn on is own branch must be treated as sufficient for the purpose of achieving the object of the condition and the Tender Committee took the abundant caution by a further verification from the bank. In this situation it is not correct to hold that the Diesel Locomotive Works had no authority to waive the technical literal compliance of clause 6 specially when it was in its interest of not to reject the said bid which was the highest. Therefore set aside the impugned judgment and dismiss the writ petition of the respondent no. 1 filed before the High Court.

Summary

Issues:
1. Validity of tender acceptance based on earnest money compliance.
2. Interpretation of tender conditions regarding payment methods.
3. Authority of Tender Committee to waive technical irregularities in tender submissions.

Analysis:
1. The case involved a dispute over the acceptance of a tender for the disposal of Ferrous Scrap by the Diesel Locomotive Works, Indian Railways. The respondent challenged the decision, arguing that their tender was wrongly rejected due to a lack of earnest money compliance. The High Court upheld the rejection of the respondent's tender but found fault with the appellant's tender for not complying with the specified payment method condition.

2. The appellant contended that their tender, offering the highest amount for the Ferrous Scrap, was valid despite the use of a Banker's Cheque from Union Bank of India instead of the State Bank of India as required. The appellant argued that the Banker's Cheque was equivalent to cash, supported by verification from the bank, and that the Tender Committee had the authority to accept the tender despite the technical non-compliance.

3. The Supreme Court analyzed the nature of tender conditions, distinguishing between essential eligibility criteria and ancillary requirements. Referring to precedent cases, the Court emphasized that authorities issuing tenders have discretion to waive technical irregularities that do not affect the main objective of the conditions. The Court highlighted the importance of achieving the intended purpose of the tender conditions and upheld the Tender Committee's decision to accept the appellant's tender, considering the Banker's Cheque as fulfilling the payment requirement.

4. Relying on legal principles regarding payment methods and previous judgments, the Court concluded that the certified cheque from Union Bank of India, verified by the bank, was sufficient to meet the tender condition's purpose. The Court held that the Tender Committee had the authority to waive the technical non-compliance in the payment method, especially when accepting the appellant's bid was in the best interest of the Diesel Locomotive Works. Consequently, the Supreme Court allowed the appeal, dismissing the respondent's writ petition and awarding costs to the appellant.