Facts of the Case

The Government of Uttar Pradesh invited an e-tender for operationalising Mobile Veterinary Units (MVUs) under the Livestock Health & Disease Control Scheme. The petitioner, Ziqitza Health Care Ltd., submitted bids for all five tender packages.

The tender required submission of an Earnest Money Deposit (EMD) in accordance with Clause 12(c) of the tender conditions. Instead of furnishing Fixed Deposit Receipts (FDRs) drawn in favour of the Director, Disease Control & Farms, Department of Animal Husbandry, Uttar Pradesh, the petitioner submitted two Term Deposit Receipts issued in its own name, though lien-marked in favour of the department.

During technical evaluation, the Tender Evaluation Committee declared the petitioner's bid non-responsive on the ground that the EMD did not satisfy Clause 12(c). Aggrieved by the rejection, the petitioner approached the Allahabad High Court seeking quashing of the rejection order and permission to participate in the financial bid process.

Issues Involved

  1. Whether a lien-marked Fixed Deposit Receipt issued in the bidder's own name satisfies the requirement of Clause 12(c) relating to Earnest Money Deposit.
  2. Whether the Tender Evaluation Committee acted arbitrarily while rejecting the petitioner's technical bid.
  3. Whether the High Court should interfere with the interpretation of tender conditions adopted by the tendering authority under its writ jurisdiction.

Petitioner's Arguments

  • The petitioner contended that the FDRs were duly lien-marked in favour of the Director, Disease Control & Farms, making them fully secure for the department.
  • It was argued that the State Bank of India had confirmed creation of lien and clarified that only the concerned department could encash the deposits.
  • According to the petitioner, the lien-marked FDR substantially fulfilled the requirement of Clause 12(c).
  • The petitioner further submitted that the respondents had sought clarification regarding the EMD and, had they found the explanation unsatisfactory, they ought to have permitted rectification before rejecting the bid.
  • It was also argued that rejection of the bid was arbitrary and intended only to exclude the petitioner from the tender process.
  • Reliance was also placed upon provisions of the Negotiable Instruments Act to contend that the lien-marked deposit adequately protected the tendering authority.

Respondent's Arguments

The State opposed the writ petition and submitted that:

  • Clause 12(c) clearly required the EMD instrument itself to be drawn in favour of the Director, Disease Control & Farms, Department of Animal Husbandry, Uttar Pradesh.
  • The petitioner's Term Deposit Receipts were issued in its own name and therefore did not satisfy the mandatory tender condition.
  • Merely creating a lien did not convert the deposit into an instrument payable directly to the department.
  • The deposits remained non-negotiable and continued to be operated in the petitioner's name.
  • In the event of forfeiture, the department would not be able to recover the amount directly from the bank without depending upon the petitioner, defeating the very object of the EMD condition.
  • The respondent further submitted that identical standards had been uniformly applied to all bidders and there was no arbitrariness or discrimination.

Court Order / Findings

The Allahabad High Court dismissed the writ petition and upheld the decision of the Tender Evaluation Committee.

The Court held that:

  • Clause 12(c) expressly required the EMD instrument to be drawn in favour of the Director, Disease Control & Farms, Department of Animal Husbandry, Uttar Pradesh.
  • The petitioner's FDRs were admittedly issued in its own name and only lien-marked in favour of the department.
  • A lien-marked deposit is materially different from an FDR issued directly in favour of the tendering authority.
  • Acceptance of such an instrument would amount to rewriting the tender conditions, which is impermissible.
  • Courts exercising judicial review cannot substitute their own interpretation for that adopted by the tendering authority unless the decision is arbitrary, mala fide or perverse.
  • The petitioner failed to establish any arbitrariness, discrimination or mala fides in the evaluation process.
  • The tendering authority, being the author of the tender document, is the best person to interpret its conditions.

Accordingly, the writ petition was dismissed and the interim protection granted earlier was vacated. The State was permitted to proceed with the tender process in accordance with law.

Important Clarification

  • A Fixed Deposit Receipt issued in the bidder's own name, even if lien-marked in favour of the Government department, does not automatically satisfy a tender condition requiring the EMD instrument to be drawn in favour of the tendering authority.
  • Courts will ordinarily not interfere with the interpretation of tender conditions adopted by the procuring authority unless there is clear arbitrariness, mala fides or violation of statutory provisions.
  • The judgment reiterates the limited scope of judicial review in contractual and tender matters and reinforces the principle that essential tender conditions must be strictly complied with.

Sections / Clauses Involved

  • Clause 12(c) of the Tender Document (Earnest Money Deposit – EMD)
  • Uttar Pradesh Procurement Manual – Clause 14.12
  • Articles 14 & 226 of the Constitution of India
  • Principles governing Judicial Review in Tender Matters
  • Negotiable Instruments Act, 1881 (arguments raised by petitioner)

Link to download the order -

https://mytaxexpert.co.in/uploads/1782967477_111compressed.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.