KRISHNA REDDY M V Vs. COMMISSIONERATE OF TENDERS

JUDGEMENT

(1.) This writ petition is filed questioning the arbitrary, illegal and unfair action of the respondent Nos.1 & 2 in rejecting the tender of the petitioner which is the lowest on the alleged ground that the petitioner had not paid the Earnest Money Deposit (EMD)-through a demand draft. The petitioner is a registered special class contractor. The third respondent had invited sealed tenders on 22-6-1994 from contractors for construction of a bridge across the river 'Nagavali' in Srikakulam town limits at convent junction. The petitioner along with six others, including the 4th respondent has submitted their tenders. As per the tender notice the EMD should be paid along with the application for tender schedule. As per column '4' of the tender notice EMD of a sum of Rs.l lakh should be paid. However, as per condition 8(A) of the tender conditions, the lumpsum deposit holders who have a permanent deposit of Rs.l lakh with the Department have to pay only a sum of Rs.75,000/- as EMD instead of Rs.l lakh. The petitioner who had deposited the lumpsum amount of Rs.l lakh, had submitted an application for tender schedule along with a sum of Rs.10,000/-by way of a demand draft,and a Bank Guarantee for the balance of Rs.65,000/-. The third respondent has opened the tenders on 26-8-1994 and found that the petitioner's tender is the lowest of all the seven tenderers. The third respondent by his letter dated31-8-1994has requested the Bank of Baroda, Asil Mitta Branch to issue a crossed demand draft for Rs.65,000/- in lieu of the Bank Guarantee furnished by the petitioner. The 3rd respondent by his letter dated 3-9-1994 has requested the petitioner to attend his office on or before 8-9-1994 for negotiations to reduce his rates for which the petitioner has promptly sent a reply on 6-9-1994 stating that he had quoted the lowest rates, and, therefore, he will not be able to reduce the rates any further. As the tender of the petitioner is the lowest, the third respondenthad recommended to award the contract to the petitioner. However, the 4th respondent was called for negotiations, and as he reduced his rates, he was awarded the contract. The petitioner made detailed representations to Respondent Nos.l & 2 on 20-10-1994 and 24-10-1994, but they did not evoke any response. Therefore, it is clear that the 4th respondent is favoured by awarding the contract, and as such the action of the respondents is arbitrary and mala fide. Hence the writ petition.

(2.) The second respondent filed a counter-affidavit. It is stated that the estimated cost of work is Rs. 5.45 crores. The petitioner had quoted his bid at Rs.6.31 crores; while the 4th respondent has quoted Rs.6.36 crores. There is a difference of Rs.5 lakhs between them. The petitioner had not paid the EMD in the shape of demand draft as stipulated in the tender notice. The third respondent is only the tender receiving authority. The deciding authority is the Commissionerate of tenders as the value of the tender is more than Rs.30 lakhs. As the petitioner did not follow the procedure for obtaining tender forms as per the tender notification, the petitioner's tender cannot be considered. The 3rd respondent by mistake had exchanged the Bank Guarantee given by the petitioner with a demand draft. The 3rd respondent had realised the mistake committed by the Circle Office in issuing tender schedule without proper EMD to the petitioner. As the petitioner's tender is not valid, the question of accepting his tender does not arise. The 4th respondent who is the next lowest tenderer was invited for negotiations and he had agreed to reduce his tender by Rs.5 lakhs bringing it on par with the tender filed by the petitioner at Rs.6.31 crores. The 2nd respondent had followed thejudgment in Writ Appeal No.1067 of 1994 and the guidelines therein while considering the tenders in question. Therefore, there is no flaw in the procedure adopted by the second respondent and no favour is shown to the 4th respondent. In view of the judgment in Writ Appeal No.1067 of 1994, this writ petition is not maintainable, and it has to be dismissed. The 4th respondent has also raised more or less the same contentions as raised by the 2nd respondent.

(3.) Sri M.V. Ramana Reddy, the learned Senior Advocate appearing for the petitioner contends that a distinction should be drawn between essential conditions of the tender and ancillary conditions. Relying on a decision of the Supreme Court reported in Poddar Steel Corpn. vs. Ganesh Engineering Works, the learned Senior Advocate contends that essential conditions relate to eligibility, while other conditions are merely ancillary or subsidiary in nature. EMD is only an ancillary condition and is not an essential condition. In the said decision, the Supreme Court has observed that although under the terms of tender notice the EMD should be deposited by cash or through a demand draft on State Bank of India, payment of the same by Banker's cheque issued by Union Bank of India could be treated as sufficient compliance of the terms. In view of the said authority, the learned Counsel contends that the deposit of EMD is not an essential condition and inasmuch as Bank Guarantee was furnished by the petitioner which was also encashed and converted into a demand draft by the 3rd respondent, the petitioner had fully complied with the said condition, and, therefore, rejection of tender of the petitioner is arbitrary. He has also relied on a decision of the Division Bench of Bombay High Court in M/s. B.D. Yadav & MR. Meshram, E. & C. us. Administrator to show that it is the duty of the Court to see whether non-compliance alleged was with regard to essential condition, or only an ancillary condition of the tender notice. It is a case where the tender notice required the Earnest Money Deposit shall be in the form of call deposit or bank draft or national savings certificates, the respondent No.2 therein made a deposit through a time deposit receipt which was pledged in the Office of the Development Engineer along with the tender forms.