RR Constructions and Infrastructure India Pvt. Ltd. v. Gayatri Ventures
Background
RR Constructions bid for a state government irrigation tender (Chhattisgarh Water Resources Department) but was disqualified because it submitted its Earnest Money Deposit (EMD) as a Fixed Deposit (FD) instead of a Demand Draft (DD), which the Chhattisgarh High Court held was mandatory for out-of-state bidders. As a result, the tender was awarded to the next-lowest qualifying bidder, Gayatri Ventures, whose financial bid (Rs. 149 crore) was significantly higher than RR Constructions' bid (Rs. 120 crore). RR Constructions appealed to the Supreme Court, arguing the tender conditions made a Demand Draft optional, not mandatory, and that a Fixed Deposit was an equally valid form of "Approved Interest Bearing Security" under the tender clauses.
Decision Breakdown
The Supreme Court examined the actual wording of the tender's EMD clauses and found that the words "may submit" in Clauses 2.13(b) and 2.15 made submission of a Demand Draft optional rather than mandatory for out-of-state bidders, and that a Fixed Deposit qualified as an "Approved Interest Bearing Security" under Clause 2.13(a)(iv). It rejected the State's argument that "approved" required a specific government approval, holding the word simply described the interest-bearing nature of the security. The Court therefore set aside the High Court's judgment and restored the appellant's qualification at the technical-bid (Envelope A) stage, while expressly declining to disturb a separate, later disqualification of the appellant at the Envelope B stage, leaving that issue open for the appellant to pursue with the tendering authority.
Lesson Learnt
In tender disputes, courts will interpret eligibility conditions strictly by their actual wording: permissive language like "may" cannot be treated as creating a mandatory requirement, and bidders should not be disqualified on conditions the tender document itself does not impose as compulsory.