2015 (10) TMI 2690 - HC - Indian Laws

Qualification for tenders - Mode of depositing payment of EMD - disqualification only on account of tendering of EMD through FDR - Held that - The petitioners never intended to participate in the tender process without payment of EMD. Only the mode of depositing such amount was the cause of some confusion. As noted above, such confusion was possible on account of the inadvertent error on the part of respondent No.2 Municipality. Bona fides of the petitioners can be judged from the fact that they did deposit the entire amount; the mode alone being not to the satisfaction of the Municipality. We do not at all dispute the authority of the Municipality to insist on collecting the EMD in a particular mode and no other. If the issue was as clear as that, the petitioners could not have sought qualification without fulfilling such requirement in the manner insisted by the Municipality. However, when we find that ample confusion was possible that too, due to the conditions prescribed by the Municipality and when we also find that the condition of depositing EMD was satisfied, though the mode of such deposit, due to peculiar facts, varied from that specified in the tender conditions, we do not find that the action of the Municipality disqualifying the petitioners was justified. We have proceeded on the basis that the petitioners were disqualified only on account of tendering of EMD through FDR. In the result, respondent No.2 Municipality shall consider the petitioners qualified for being considered in the tenders in question, of course, subject to fulfillment of all other requirements. Their financial bids would be opened and would be considered in competition with other qualified contractors.

Summary

Issues Involved:
- Dispute over the mode of payment for Earnest Money Deposit (EMD) in a civil construction tender process.

Detailed Analysis:

1. Factual Background and Tender Process:
- The petitioners, a company registered under the Companies Act, and its director engaged in civil construction activities participated in a tender issued by Botad Municipality.
- The tender notice did not specify the mode of payment for the tender fee and EMD, creating confusion.
- Petitioners faced issues with the online form accepting only Fixed Deposit Receipt (FDR) details instead of Demand Draft (DD) for EMD payment.

2. Legal Arguments by Petitioners:
- Petitioners argued that the confusion was due to the system not accepting DD and the 120-day validity requirement for DD, which banks could not provide as per RBI directives.
- Cited a Supreme Court case where a similar technical deviation in payment mode was not considered a breach of essential tender conditions.

3. Opposing Arguments by Respondent:
- Respondent argued that the tender notice explicitly required EMD payment through DD only, and petitioners breached this essential condition by submitting FDR.
- Relied on legal precedents emphasizing the importance of complying with essential tender conditions.

4. Court's Analysis and Decision:
- The main tender notice did not specify the mode of EMD payment, while the online tender notice mentioned DD as the mode.
- The petitioners' confusion arose due to the system's acceptance of FDR details and the 120-day DD validity requirement, which banks could not fulfill.
- Court noted that the petitioners' deviation was minor and due to the municipality's oversight, not intentional non-compliance.
- Emphasized that disqualifying petitioners for a technical variation would have led to disqualifying all tenderers who could not meet the 120-day DD validity requirement.
- Differentiated the case from precedents where non-compliance was intentional or significant, concluding that petitioners' disqualification was not justified.

5. Final Judgment:
- Ordered the Municipality to consider the petitioners qualified for the tender process, subject to meeting all other requirements.
- Directed the opening and consideration of their financial bids along with other qualified contractors.
- Disposed of the petitions accordingly, permitting direct service.

This detailed analysis of the judgment highlights the key legal arguments, court's reasoning, and the final decision regarding the dispute over the mode of EMD payment in a civil construction tender process.