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Andhra Pradesh High Court
Judges : P.RAMAKRISHNAM RAJU
M.V.Krishna Reddy - Appellant
Versus
Government Of A.P. - Respondent
Decided On : 12-16-94
TENDER - EMD - DEMAND DRAFT - VALIDITY OF TENDER - ESTOPPEL - LEGITIMATE EXPECTATION - JUDICIAL REVIEW - ARBITRARINESS - MALA FIDE - WAIVER OF CONDITIONS - PRE-MATURITY OF WRIT PETITION - CONTRACT - FREEDOM OF CONTRACT - ADMINISTRATIVE DISCRETION - RELAXATION OF CONDITIONS - STRICT ADHERENCE TO TENDER CONDITIONS - REASONABLENESS - JUDICIAL INTERFERENCE.
Fact of the Case:
Petitioner, a registered special class contractor, challenged the rejection of his tender for the construction of a bridge, alleging that the rejection was arbitrary, illegal, and unfair as he had paid the Earnest Money Deposit (EMD) through a demand draft, which was accepted by the tender-receiving authority. The petitioner also contended that the tender-deciding authority erred in rejecting his tender on the ground of non-compliance with the tender conditions, as the EMD was only an ancillary condition and not an essential condition.
Finding of the Court:
The court held that the petitioner's tender was invalid as he had failed to comply with the tender conditions by furnishing a Bank Guarantee only instead of a demand draft as required thereunder. The court further held that the tender-deciding authority was justified in rejecting the petitioner's tender as it was not a valid tender. The court also held that the petitioner was not entitled to rely on the principle of estoppel or legitimate expectation as the tender proceedings were not finalized and the defect in the petitioner's tender was noticed during the scrutiny of the tender schedules.
Issues: 1. Whether the petitioner's tender was valid despite the non-compliance with the tender condition requiring a demand draft for EMD. 2. Whether the tender-deciding authority erred in rejecting the petitioner's tender on the ground of non-compliance with the tender conditions. 3. Whether the petitioner was entitled to rely on the principle of estoppel or legitimate expectation to challenge the rejection of his tender.
Ratio Decidendi: 1. The court held that the EMD is an essential condition of the tender and non-compliance with the tender condition requiring a demand draft for EMD rendered the petitioner's tender invalid. 2. The court held that the tender-deciding authority was justified in rejecting the petitioner's tender as it was not a valid tender. 3. The court held that the petitioner was not entitled to rely on the principle of estoppel or legitimate expectation as the tender proceedings were not finalized and the defect in the petitioner's tender was noticed during the scrutiny of the tender schedules.
Final Decision: The court dismissed the writ petition, holding that the petitioner's tender was invalid and that the tender-deciding authority was justified in rejecting the petitioner's tender.
( 1 ) THIS writ petition is filed questioning the arbitrary, illegal and unfair action of the respondent Nos. 1 and 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 and 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 an
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