Recently, the Supreme Court stepped in to examine whether a contractor could be disqualified merely for submitting an Earnest Money Deposit through a Fixed Deposit instead of a Demand Draft. The dispute arose from a Chhattisgarh infrastructure tender where a company’s substantially lower bid was rejected at the technical stage, triggering a larger question on whether authorities could convert an optional tender condition into a compulsory requirement by interpretation alone.
The controversy began when the Water Resources Department of Chhattisgarh floated a tender for the construction of the “Head Work of Lamti Feeder Minor Tank Scheme.” The Appellant company had quoted nearly ₹120 crore, far below the successful bidder’s ₹149 crore offer. However, despite initially being found technically qualified, the company was later disqualified because it had submitted the EMD through a Fixed Deposit Receipt instead of a Demand Draft, being an out-of-State bidder.
Counsel for the Appellant argued that the tender conditions themselves permitted multiple forms of EMD, including “Approved Interest Bearing Security,” under which the submitted Fixed Deposit clearly fell. The State, during the hearing, also admitted that Fixed Deposit Receipts had been accepted in similar cases involving out-of-State bidders.
The Division Bench of Justice Sanjay Kumar and Justice K. Vinod Chandran found fault with the High Court’s interpretation of the tender clauses, holding that the word “may” used in the document could not be read as “shall.” The Court observed, “The word ‘may’ is also employed in Clause 2.15 and hence it is only in the nature of an option and not a mandatory condition.”
Stressing that the Appellant had furnished a valid Fixed Deposit in favour of the tendering authority itself, the Bench held that the disqualification was inconsistent with the express terms of the tender document.
Consequently, the Apex Court set aside the High Court’s decision, restored the Appellant’s qualification at the technical stage, and permitted the company to approach the Tendering Authority within 48 hours regarding its subsequent disqualification linked to another stage of the tender process.
Case Title: RR Constructions and Infrastructure India Pvt. Ltd. Vs. Gayatri Ventures and Ors.
Case No.: Special Leave Petition (C) No.37099 of 2025
Citation : 2026 Latest Caselaw 405 SC
Coram: Hon’ble Mr. Justice Sanjay Kumar, Hon’ble Mr. Justice K. Vinod Chandran
Advocate for the Petitioner: Sr. Adv. Amit Anand Tiwari, AOR Devyani Gupta, Adv. Pranjal Mishra
Advocate for the Respondent: Sr. Adv. Gagan Gupta, Sr. Adv. Dama Seshadri Naidu, AOR Shantanu Krishna, AOR Ravinder Kumar Yadav, A.A.G. Bishwajit Dubey, Adv. Standing Counsel. Vinayak Sharma, Adv. Padmesh Mishra, Adv. Vasvikta Bhardwaj, Adv. Anant Prakash, Adv. Shikher Deep Aggarwal, Adv. Yashvardhan Shah, Adv. Vivek Sharma, Adv. Sahil Sood
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