Court rules in favor of company & director in EMD payment dispute with Municipality

The court found in favor of the petitioners, a company and its director, in a dispute over the mode of payment for Earnest Money Deposit (EMD) in a civil construction tender process issued by Botad Municipality. The court ruled that the petitioners' submission of Fixed Deposit Receipt (FDR) instead of Demand Draft (DD) for EMD payment was a minor deviation caused by the municipality's oversight, not intentional non-compliance. The court ordered the Municipality to consider the petitioners qualified for the tender process, allowing them to proceed with their financial bids alongside other qualified contractors.

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Issues Involved:
- Dispute over the mode of payment for Earnest Money Deposit (EMD) in a civil construction tender process.

Detailed Analysis:

1. Factual Background and Tender Process:
- The petitioners, a company registered under the Companies Act, and its director engaged in civil construction activities participated in a tender issued by Botad Municipality.
- The tender notice did not specify the mode of payment for the tender fee and EMD, creating confusion.
- Petitioners faced issues with the online form accepting only Fixed Deposit Receipt (FDR) details instead of Demand Draft (DD) for EMD payment.

2. Legal Arguments by Petitioners:
- Petitioners argued that the confusion was due to the system not accepting DD and the 120-day validity requirement for DD, which banks could not provide as per RBI directives.
- Cited a Supreme Court case where a similar technical deviation in payment mode was not considered a breach of essential tender conditions.

3. Opposing Arguments by Respondent:
- Respondent argued that the tender notice explicitly required EMD payment through DD only, and petitioners breached this essential condition by submitting FDR.
- Relied on legal precedents emphasizing the importance of complying with essential tender conditions.

4. Court's Analysis and Decision:
- The main tender notice did not specify the mode of EMD payment, while the online tender notice mentioned DD as the mode.
- The petitioners' confusion arose due to the system's acceptance of FDR details and the 120-day DD validity requirement, which banks could not fulfill.
- Court noted that the petitioners' deviation was minor and due to the municipality's oversight, not intentional non-compliance.
- Emphasized that disqualifying petitioners for a technical variation would have led to disqualifying all tenderers who could not meet the 120-day DD validity requirement.
- Differentiated the case from precedents where non-compliance was intentional or significant, concluding that petitioners' disqualification was not justified.

5. Final Judgment:
- Ordered the Municipality to consider the petitioners qualified for the tender process, subject to meeting all other requirements.
- Directed the opening and consideration of their financial bids along with other qualified contractors.
- Disposed of the petitions accordingly, permitting direct service.

This detailed analysis of the judgment highlights the key legal arguments, court's reasoning, and the final decision regarding the dispute over the mode of EMD payment in a civil construction tender process.

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