Posted On by &filed under High Court, Madhya Pradesh High Court.


Madhya Pradesh High Court
Omprakash Satyapal vs M.P. Electricity Board And Ors. on 1 August, 2000
Equivalent citations: AIR 2001 MP 199, 2001 (5) MPHT 367
Author: C Prasad
Bench: C Prasad


ORDER

C.K. Prasad, J.

1. Respondent Madhya Pradesh Electricity Board invited tender for purchase of scrap materials, Lot No. 70 contained 65 M.T. of Pulverizer M.S. Pipe and Bent scrap, Lot No. 76 contained 160 M.T. of Boiler Tube Steel Scrap and Lot No. 117 (1) contained 200 M.T. of Economizer Tube Coil Steel scrap. Petitioner as also respondent No. 3 submitted its tender for Lot No. 117 (1). Petitioner had also submitted tender for Lots No. 70 and 76. Tender of respondent No. 3 has been accepted by telegram dated 7-2-2000. Aggrieved by the same, petitioner has preferred this writ petition under Articles 226 and 227 of the Constitution of India and prays for quashing of the sale order in favour of respondent No. 3 in respect of Lots No. 70, 76 and 117 (1).

2. It is the assertion of the petitioner that along with its tender petitioner has not deposited 5% of its offered value towards earnest money. In reply to the aforesaid allegation of the petitioner, respondents No. 1 and 2 have stated in Paragraph 6 of the return as follows :–

“6. True it is that as per Clause 2 (amended) 5% of the value offered by a tenderer was to be deposited as Earnest Money. A total value offered by respondent No. 3 in respect of lot No. 70, 76 and 117(1) was Rs. 34,73,465/-. Five per cent (5%) of the total sum above referred comes to Rs. 1,73,673/- which amount was to be deposited by respondent No. 3 by way of Earnest Money. The respondent No. 3 submitted demand drafts for Rs. 1,67,000/-. The balance amount of Rs. 6,673/- was requested to be adjusted from the amount already available with the Board as refundable security deposit to the tune of Rs. 1,92,500/- vide letter dated 16-11-1999 which formed part of the tender submitted by respondent No. 3. Copy of the complete tender submitted by respondent No. 3 is filed herewith and marked as Annexure R-11. Under the circumstances, it cannot be said that the respondent No. 3 has not deposited the entire Earnest Money. The amount already available with the Board is adjusted, hence the condition of depositing Earnest Money stands fully satisfied.”

From the statement of respondents No. 1 and 2 referred to above, it is evident that respondent No. 3 has not deposited the entire earnest money by demand draft and a sum of Rs. 6,673/- was adjusted by respondents No. 1 and 2 which amount was available with the Board as refundable security deposit of respondent No. 3.

3. Mr. Kishore Shrivastava, appearing on behalf of the petitioner submits that according to the terms and conditions of the tender notice, a tenderer was required to deposit 5% of his offered value towards earnest money either in cash or by bank draft and admittedly respondent No. 3 having not deposited the total earnest money, its tender ought to have been rejected. Mr. Vivekanand Awasthy however, appearing on behalf of respondents No. 1 and 2 and Ms. Singhai appearing on behalf of respondent No. 3 submit that adjustment of the balance amount of Rs. 6,673/- from the amount of respondent No. 3 available with the Board as refundable security deposit; in sum and substance amounts to deposit of part of earnest money by way of cash and hence, it cannot be said that respondent No. 3 has not deposited the full earnest money.

4. In order to appreciate the rival submissions , it is apt to reproduce Clause 2.O of the terms and conditions of tender notice which read as follows :–

“2.O Earnest Money :–

The tenderer shall have to deposit 10% (later on reduced to 5%) of his offered value towards Earnest Money deposit for the bid.

2.1 The Earnest Money can be deposited in one of the following forms only :

a) In cash to be deposited with the Regional Accounts Officer (CAU), M.P.E.B., Jabalpur.

b) By bank draft to be drawn in favour of the Regional Accounts Officer (CAU), M.P.E.B., Jabalpur.

2.2 No offer will be accepted with “EAR
NEST MONEY DEPOSIT”. If on opening of
tender, it is revealed that BMB amount is
inadequate any other discrepancy is noted,
the tender shall be rejected and returned to
the tenderer.

2.3 It may be noted carefully that Earnest Money in the forms other than what is prescribed in Clause 2.1 above will not be accepted.

2.4 There is no exemption to any bidder from furnishing of required Earnest Money.

2.5 Bank Draft towards Earnest Money must be submitted in a separate envelope subscribing D.D. towards ‘Earnest Money’ against tender specification No. and due date. The amount of EMD should not be indicated on the cover of the envelope.”

A plain reading of the aforesaid provisions of the tender notice clearly contemplates deposit of earnest money either in cash or by bank draft. Clause 2.2 of the tender notice has specifically provided that offers shall not be accepted without earnest money and in case of opening of the tender it is found that earnest money deposit is inadequate, the tender shall be rejected. Here in the present case, according to the respondents’ own showing, the balance amount of earnest money which respondent No. 3 was required to deposit was adjusted from its refundable security, deposit. In that view of the matter, I am not inclined to accept the submission of the respondents that adjustment of this amount towards earnest money shall be deemed to be a cash deposit. I reject this submission of the respondents. According to respondents Nos. 1 and 2, refundable security deposit of Rs. 1,92,500/- of respondent No. 3 was lying, hence it could have submitted its tender without depositing a single farthing. This mode does not seem to be permissible in law.

5. Mr. Vivekanand Awasthy then submits that condition of deposit of earnest money in cash or by way of bank draft is not an essential condition of eligibility and respondents Nos. 1 and 2 are not bound to give effect to every terms mentioned in the tender notice in meticulous detail and is entitled to waive technical irregularity of little or no significance. His plea is that adjustment from the security deposit of respondent No. 3 towards the earnest money is an irregularity of no significance and respondents Nos. 1 and 2 being satisfied and having considered the tender of respondent No. 3, same is not fit to be interfered by this Court in exercise of its writ jurisdiction. In support of his submission, he has placed reliance on a Judgment of the Supreme Court in the case of Poddar Steel Corporation v. Ganesh Engineering Works, AIR 1991 SC 1579. My attention has been drawn to Paragraph 6 of the Judgment, which read as follows at page 1580 :–

“6. It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the State Bank 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.”

6. True it is that the theory of substantial compliance can be invoked in relation to essential condition of tender notice but the question is as to whether adjustment of amount towards the earnest money can be said to be substantial compliance of the essential condition of the tender notice. It is relevant here to state that it is not the stand of the respondents that deposit of earnest money is not an essential condition of the tender notice but their stand is that respondent No. 3 has substantially complied with the same.

7. Having heard learned counsels for the parties, I am of the opinion that adjustment of amount from the refundable security deposit towards the earnest money deposit cannot be said to be substantial compliance of the essential condition of the tender notice. Terms and conditions in relation to the earnest money has clearly stated that in case the earnest money deposit is inadequate, the tender shall be rejected. Respondent No. 3 has submitted its demand draft for Rs. 1,67,000/- which was short by Rs. 6,673/-. According to the respondents, refundable security deposit to the tune of Rs. 1,92,500/- of respondent No. 3 was outstanding against the Board and in ca’se the argument of respondents is accepted, then respondent No. 3 could have submitted its tender without depositing a single farthing. I am of the opinion that non-deposit of the entire earnest money and adjustment of balance earnest money from the security deposit of respondent No. 3 are not irregularity of technical nature or of no significance. That being the position, I am of the opinion that respondents Nos. 1 and 2 erred in considering tender of respondent No. 3.

8. In the case of M/s. Poddar Steel Corporation (supra) relied on by Sri Awasthy, one of the tenderer deposited the earnest money by way of certified cheque of the Union Bank of India drawn on its branch but according to the terms of the tender notice, it was required to be deposited either in cash or demand draft drawn on the State Bank of India. In the facts of the said case, the Supreme Court found that the authority had the right to waive the technical-literal compliance of the tender notice. Here in this case, I have found the irregularity not to be of technical nature or insignificant, hence the decision relied on is clearly distinguishable.

9. Mr. Awasthy, then, contends that Board being satisfied with the requirement of earnest money deposit, it is a matter between the Board and respondent No. 3 and petitioner has no locus-standi to challenge the same. I do not have the slightest hesitation in rejecting this submission of Sri Awasthy. True it is that statutory authority like any other person, can enter into contract with any person of its choice but this principle has its own inherent limitations and that is, its action cannot be arbitrary. I have found that the condition of deposit of earnest money is an essential condition and respondent No. 3 has not substantially complied the same. Hence consideration of the tender of respondent No. 3 is illegal and petitioner who is one of the tenderers has locus standi to challenge the award of tender in its favour in this writ petition.

10. Mr. Awasthy as also Ms. Singhai appeals to me for dismissal of the writ petition on the ground that respondent No. 3 having “invested huge amount for enabling it to perform the work and has almost at the verge of completing of performance,” relief sought for deserves to be declined.

11. Plea of respondent No. 3 in this regard is absolutely vague. Respondent No. 3 in its return has not specifically stated the date and amount which it has deposited. The work order is for sale of scrap materials and respondents ought to have stated the quantity of scrap material lifted and amount deposited by respondent No. 3. This has not been done. Further it is relevant here to state that tender of respondent No. 3 was accepted by communication dated 7th February, 2000. Even before the work order was placed, petitioner has filed the writ petition on 16-2-2000. It is only after the filing of the writ petition that respondents Nos. 1 and 2 have issued the work order. Earlier the writ petition was taken up on 12-5-2000, 6th July. 2000, 12th July, 2000 and 24th July, 2000, when the case was adjourned at the request of counsel for respondents Nos. 1 and 2. Respondents Nos. 1 and 2 have taken the chance to issue the work order during the pendency of the writ petition and respondent No. 3 the risk of investment. I had the occasion to consider this aspect of the matter in somewhat detail in the case of M.K.S. Engineering Pvt. Ltd. v. State of M.P., 2000 (1) JLJ 44, wherein, I have held as follows :–

“24. Here in the present case, as stated earlier, the petitioner rushed with the writ petition immediately after the Empowered Committee decided to award the contract to respondent No. 5. Delay in disposal of the case cannot be attributed in the hands of the petitioner. It is a systematic delay. Where a case stands over for argument on account of multiplicity of the business in the Court, the party ought not be prejudiced by that delay. “Actus Curlae Neminem Gravabit” i.e. “the act of the Court shall prejudice no man” is the maxim which guides our discretion. Hence I am not inclined to decline the relief of the petitioner on this ground.”

In circumstances like this, I am not inclined to decline the relief to the petitioner on the alleged ground of near completion of the work.

12. In the result, writ petition is allowed. Order of sale of scrap materials of Lots No. 70, 76 and 117(1) in favour of respondent No. 3 is quashed. In the facts and circumstances of the case, there shall be no order as to cost.


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