Andhra HC (Pre-Telangana)
M/S. Jyothi Krishna Engineers vs State Bank Of Hyderabad, Rep. By The ... on 27 November, 1992
Equivalent citations: AIR1993AP327
ORDER
1. This writ petition has been filed for a direction to the respondent to declare that the petitioner's bid is the lowest and the work of construction of branch building at Latur should be allotted to it by the issuance of a mandamus.
2. In response to a tender notice issued by the respondent, the petitioner submitted its tender. Sealed tenders were invited for the construction of the branch building of the respondent at Latur, Latur District, Maha-rashtra State. Tender notice prescribed the last date for submitting the tender documents as 27-7-1992. Accordingly, the petitioner submitted its tender on the said date together with earnest money deposit for a sum of Rs. 63,260/- in the form of "Term Deposit Receipt". According to the petitioner it was a regular tenderer for State Bank of Hyderabad and awarded work on earlier occasions and on all the earlier occasions, earnest money deposit was made by it in the form of "Term Deposit Receipt". According to the affidavit filed in support of the writ petition, petitioner's tender is the lowest. Even so, it's tender was not accepted on the ground that the 'term deposit receipt' was submitted instead of demand draft as required in the conditions of tender. There is no difference between demand draft and term deposit receipt and, therefore, rejecting the tender on that ground alone is not sustainable. It was also stated in the affidavit that all this has happened due to the fact.that the respondent wanted to give the work to another tenderer of their choice and that the respondent is making attempts to get the approval of the Executive Committee on 23-10-1992 of its acceptance of tender of another. Therefore, this writ petition is filed for the reliefs mentioned above.
3. Counter is filed on behalf of the respondent refuting emphatically all the allegations made in the affidavit regarding the awarding of work to another tenderer of their choice as well as that the rejection of the tender of the petitioner is on a silly pretext and that they have been making attempts to get the approval of the Executive Committee of the acceptance of the tender of another etc.
4. It was specifically mentioned in the counter that the petitioner has not complied with clause 12 of the conditions of the tender relating to earnest money and security deposit. While the said clause obligated the petitioner to deposit an amount of Rs. 63,260/- in the form of bank draft for a period of 90 days, the petitioner deposited only a "term deposit receipt" and that the deposit is repayable after 46 days with interest at the rate of 12% per annum and that the said term deposit receipt is not payable to anybody. It only recites "receipt from the Chief Manager (Premises), State Bank of Hyderabad, in A/c of M/s. Jyothi Krishna Engineers". The money covered by the "term deposit receipt" is not placed at the disposal of the respondent unconditionally. Having regard to the above, the tender of the petitioner is not in compliance with the conditions of tender as stated above and therefore, the rejection of the tender of the petitioner is in accordance with the conditions of tender, as the earnest money deposit is not in consonance with clause 12.
5. The short question that arises for decision in this case is, whether submitting 'term deposit receipt' for a sum of Rs. 63,260/- towards earnest money deposit can be held to be in substantial compliance of clause 12 of the terms and conditions of the tender notice.
6. Having regard to the facts mentioned both in the affidavit filed in support of the writ petition as well as the counter and the material placed before this Court, it is manifest that the petitioner's tender was rejected on the ground that the earnest money deposit was not by way of Demand Draft, but in the form of "Term Deposit Receipt"
7. It is stated before me that four tenders were received, pursuant to the tender notice, for a sum of Rs. 36,79,624/-, Rs. 34,00,531 /-, Rs. 30,85,486/- and Rs. 29,99,914/-. Petitioner's tender is the lowest being Rs. 29,99,914/-. In the normal course, the tender of the petitioner, being the lowest, would have been accepted, but for the fact that the petitioner submitted along with the tender papers 'term deposit receipt' instead of demand draft towards earnest money deposit.
8. Sri B. V. Subbaiah, learned counsel appearing for the petitioner contended that there is no difference between demand draft and term deposit receipt. Primary object of the earnest money deposit is to ensure that the contractor starts the work when his tender is accepted and in case of failure to do so, the earnest money deposit will be forfeited. This condition of the terms of invitation to tender is not an essential one. It is only ancillary or subsidiary to the main object of the contract. Strict compliance of such a term need not be insisted upon and that will not give the authorities a power to reject the tender which is otherwise valid. In other words, the contention is that the earnest money deposit itself is for the purpose of making the contractor to start the work after the contract is awarded and if he does not start the work, the same can be forfeited. Instead of submitting the amount of earnest money deposit in the form of demand draft, the petitioner deposited "Term Deposit Receipt" which is, in substantial compliance of the terms and conditions of invitation to tender. In support of this contentiop, the learned counsel for the petitioner relied upon a decision in T.V. Subhadra Amma v. Kerala Board of Revenue, . In that case, one of the conditions is that the tender document should be accompanied by demand draft. However, the applicant therein submitted pay order instead of demand draft. While considering that aspect, the learned Judge held that there was hardly any distinction between pay order and demand draft and that pay orders are as effective as demand drafts and constitute sufficient compliance with the requirement of the rule.
9. Learned counsel for the petitioner also relied upon another judgment in M/s. B.D. Yadav & M.R. Meshram, E&C v. Administrator, AIR 1984 Bom 351. In this case, the earnest money was required to be deposited in the form of a call deposit or demand draft or National Savings Certificate as per the tender notice. However, second respondent therein deposited 'Time Deposit Receipt' which was pledged to the Office of the Development Engineer along with the tender forms. Question arose whether the earnest money deposit by way of 'Time Deposit Receipt' amounts to substantial compliance of the tender notice which mandated that the same should be in the form of call deposit or demand draft or National Savings Certificate. While dealing with this question, the learned Judges of the Division Bench stated as follows (at page 356):
"We think a distinction must be made, where tenders are invited subject to certain conditions, between the conditions which are essential to the performance of the contract and conditions which are ancillary or subsidiary to the main object of the contract."
It was further stated:
"Similar is the situation in regerd to the non-payment of the earnest money in the manner in which it was required. The deficiency is undoubtedly there. The question is whether that deficiency relates to a non-essential (an essential -- ?) character of the tender or its non-essential part. If it related to the essential part of the tender work, then following the rule enunciated by the Supreme Court, it would not have been possible for the authority to accept the tender. It is an entirely different matter where the conditions which are not entirely fulfilled in accordance with the requirements related to an unessential part of the tender. We think, therefore, that in the present case, non-compliance related to only ancillary and subsidiarymatters of th tender, and did not refer and relate to the essential character of the contractor work to be undertaken. Consequently, they should be ignored and would not interfere with the consideration of such a tender. The tender, therefore, of respondent 2 was entitled to be taken into consideration and was rightly taken into consideration."
10. Learned counsel for the petitioner further relied upon the judgment of the Supreme Court in Poddar Steel v. Ganesh Engineering, . In the said case, clause 6 of the tender notice required the tender to be accompanied by earnest money deposit by cash or by demand draft drawn on State Bank of India, while the appellant therein along with the tender document submitted a cheque of the Union Bank of India drawn on its own branch. Learned Judges of the High Court felt that there is a defect in tendering the earnest money deposit and the same is not in strict compliance of clause 6 of the tender notice. On that ground the High Court allowed the writ petition. While dealing with the said question, learned Judges of the Supreme Court, after referring to the decisions of Kerala and Bombay High Courts referred to supra, and AIR 1984 Bom 351, stated as follows (at p. 1580):
"It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the State Bank the clause No. 6 of the tender notice was not obeyed literally, but the question is as to whether the said non-compliance deprived the Diesel Locomotive Works of the authority to accept the bid. As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories -- those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases."
It was further stated (at page 1581) -
"In the present case the certified cheque of the Union Bank of India drawn on its 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."
These decisions clearly lay down that the terms and conditions of tender notice can be classified into two. One is essential conditions of eligibility and the other is ancillary or subsidiary to the main object to be achieved by the condition. So far as conditions of eligibility are concerned, they cannot be waived and must be strictly complied with, while the other conditions which are ancillary or subsidiary need not be literally complied with. The form of making earnest money deposit is not an essential eligible condition. It is only ancillary or subsidiary condition. It is meant for the purpose of making the contractors start the work after giving the contract to him. Any deficiency therein can be waived and the tenderer, if he is the lowest shall not be pin-down for literal compliance of the said condition. Applying the principles laid down by the above decisions to the facts of the present case, I am of the opinion, the rejection of the petitioner's tender only on the ground that the earnest money deposit required to be made pursuant to the conditions of invitation to tender was made not by way of demand draft, but by way of 'term deposit receipt' and that too for a period of 46 days and not covering a period of 90 days, is not valid.
11. Sri C. Poornaiah, learned counsel for the respondent contended that the term deposit receipt was also not drawn favouring the bank, but it was issued as though the money is received from the Chief Manager (Premises), State Bank of Hyderabad in A/c of M/s. Jyothi Krishna Engineers. Therefore, the Chief Manager is holding the amount in the account of M/s. Jyothi Krishna Engineers and the amount is not unconditionally placed at the disposal of the bank. He also contended that it was given only for 46 days making it repayable after 46 days with interest at the rate of 12% per annum, and not for a period of 90 days.
12. On the other hand, learned counsel for the petitioner stated that, that is the usual form in which the term deposit receipt is taken, and to indicate from which account the amount is taken, it was mentioned as in A/c of M/s. Jyothi Krishna Engineers and it was taken for 46 days and thereafter interest accrues thereon and not that it has to be repaid immediately after 46 days with interest. All these contentions once again are in the realm of ancillary and subsidiary conditions. It is not necessary to pin-down any person in that regard to the letter of the Rule. It is true that the column "payable" is blank. Respondents herein could have asked the petitioner to fill up that blank. It is a term deposit receipt issued by State Bank of India, and as submitted by the learned counsel for the petitioner, interest runs after the expiry of 46 days. Therefore, it doesnt mean that the life of the term deposit receipt is 46 days only. The argument on behalf of the respondent is highly technical. Having regard to the fact that the petitioner's tender is the lowest, these technicalities, if any, could have been waived and the petitioner given an opportunity to rectify the same.
13. It was next contended by the learned counsel for the respondent that this Court cannot grant "any mandamus directing the respondent to accept the tender of the petitioner and at best, this Court can only direct the respondent to consider and decide the matter in the light of relevant conditions. For this proposition, the learned counsel for the respondent relied upon a judgment in Munindra Nath Upadhyaya v. State of U.P., . In the said case, Supreme Court stated that the mere fact that the applicant is the highest bidder at the auction of the right to collect toll on the bridge "Sanjay Setu" over Betwar River, by itself is not conclusive as to his entitlement to be awarded the privilege and he should comply with the other conditions such as status certificate, solvency etc. Therefore, the learned Judges stated that it is not right in issuing mandamus straightway to accept the highest bid. In the present case, the only ground on which the tender of the petitioner was not accepted by the respondent is that the earnest money was not deposited in the form of demand draft, but deposited in the form of 'term deposit receipt' and that too for 46 days and the "payable" column is blank etc. Since it is the only ground on which the petitioner's lowest tender was not accepted by the respondent, this contention may not hold good.
14. I must make it very clear that the allegations made by the petitioner in the affidavit filed in support of the writ petition that the respondent rejected the tender on "silly pretext" and that it is done to award work to "another tenderer of their choice" and such other allied allegations, are wholly unjustified and there is not even an attempt to prove the same.
15. Having regard to the above, the writ petition is allowed and the respondent is directed to accept the lowest tender submitted by the petitioner by accepting the "term deposit receipt" as in substantial compliance, of the condition 12 of the terms and conditions of the invitation to tender. If there is any formality to be complied with by the petitioner, it can be asked to do so in that regard including filling up the "payable" column in the term deposit receipt by the authority concerned in accordance with law at the instance of the petitioner. The parties are directed to bear their own costs.
16. Petition allowed.