WP(C) 5184/2010 BEFORE THE HON’BLE MR. JUSTICE B.P. KATAKEY The process for settlement of Berbhangi Chora Fishery, amongst others, w as initiated by the Managing Director of Assam Fishery Development Corporation L td. (in short the Corporation) by issuing the notice inviting tender (in short N IT) dated 06.04.2010 fixing 22.04.2010 as the last date for submission of tender with certain conditions stipulated in the tender notice, amongst others, requir ing the tenderers to deposit 15% of the minimum value fixed by the Corporation f or the first year as earnest money and also submission of tenders in the prescri bed form, to be obtained from the Corporation’s office, wherein certain informat ion including the information relating to the name of the bank, call deposit num ber and date of the call deposit submitted towards the earnest money deposit wer e required to be furnished. The petitioner, the respondent No.3 and 6(six) other s submitted their tenders quoting different amount. While the petitioner offered Rs.1,71,777/- per year, the respondent No.3 offered Rs.1,65,000/- per year. The other tenderers offered the amount, which are less than the offers of the petit ioner and the respondent No.3. The petitioner made the earnest money deposit in the form of demand draft. The respondent No.3 deposited the earnest money in the form of call deposit. Though the tender papers submitted by the petitioner and the respondent No.3 were found to be in order in all other respect except the de posit of the earnest money in the form of demand draft by the petitioner, the se ttlement of the fishery for a period of 7(seven) years was made in favour of the respondent No.3 with effect from the financial year 2010-11 vide order dated 07 .06.2010, rejecting the offer of the petitioner on the ground that his tender pa per was found to be defective for making earnest money deposit in the form of de mand draft. Hence the present petition. 2. I have heard Mr. A.K. Sarma, learned counsel for the petitioner, Dr. B. Ahmed, learned standing counsel appearing for the respondent Nos.1 and 2 and Mr. D.K. Sarma, learned counsel appearing for the respondent No.3. 3. Referring to the conditions in the NIT and also the prescribed form in w hich the tender paper is to be submitted by a tenderer, it has been submitted by the learned counsel for the petitioner that the tender paper submitted by a ten derer can be rejected as defective only if there is violation of the conditions of the NIT or the detailed terms and conditions supplied by the Corporation and not otherwise. In the case in hand, according to the learned counsel, there was neither any stipulation in the NIT nor in the detailed terms and conditions supp lied by the Corporation requiring deposit of earnest money in any form like the call deposit, demand draft, bankers cheque, etc. and hence the petitioner’s tend er papers cannot be rejected on the ground that the earnest money was deposited in the form of demand draft issued by a bank, by taking advantage of a stipulati on in the prescribed form supplied by the Corporation where the name of the bank issuing the call deposit as well as the call deposit number and date are requir ed to be mentioned. The learned counsel submits that such stipulation in the for m cannot be treated as a condition for submission of tender papers having not be en specifically mentioned in the terms and conditions of the tender, more so, wh en there is no indication relating to cancellation of the tender papers submitte d by any tenderer, if such earnest money is not deposited in the form of call de posit. The learned counsel further submits that even assuming that there is requ irement for making the earnest money deposit in the form of call deposit, such r equirement being not essential condition of eligibility but merely ancillary or subsidiary with the main object to be achieved by the condition, the tender pape rs submitted by the petitioner cannot be rejected on the ground of making deposi t of earnest money in the form of demand draft issued by the bank, as the object sought to be achieved by taking earnest money deposit would not be defeated in making such deposit in the form of bank demand draft issued in favour of the Cor poration. It has also been submitted that it is evident from the records produce d by the learned standing counsel of the Corporation that the earnest money depo sited by the respondent No.3 has been encashed within 1(one) month from the date of issuance of the settlement order in his favour and as such the demand draft submitted by the petitioner could have also been encashed by the respondent Corp oration, even if the time limit of 6(six) months extendable by another 6(six) mo nths is attached to the demand draft, which would not have put the Corporation i n any difficulty or in any disadvantageous position in accepting the demand draf t deposited by the petitioner towards the earnest money. The learned counsel, th erefore, submits that the ground on which the petitioner’s tender papers has bee n rejected is not tenable in law and as such the order of settlement made in fav our of the respondent No.3 may be set aside and the Corporation may be directed to settle the fishery in favour of the petitioner, he being the highest bidder. The learned counsel in support of his contention has placed reliance on the deci sion of the Apex Court in G.J. Fernandez Vs. State of Karnataka & ors. reported in (1990)2 SCC 488, in Poddar Steel Corporation Vs. Ganesh Engineering Works & o rs. reported in (1991)3 SCC 273, in Tata Cellular Vs. Union of India reported in (1994)6 SCC 651 and on a Single Bench judgment of this Court in Benjamin Lalrin awma Vs. State of Mizoram & ors. reported in 2005(3) GLT 580. 4. Dr. Ahmed, learned standing counsel appearing for the respondent Nos.1 a nd 2 on the other hand supporting the decision of the respondent Corporation to settle the fishery in question in favour of the respondent No.3, by rejecting th e tender paper submitted by the petitioner on the ground of the same being defec tive for non-submission of earnest money in the form of call deposit, has submit ted that it is evident from the prescribed form in which the tender is to be sub mitted by a bidder that such earnest money is required to be deposited in the fo rm of call deposit and not in any other form and as such, such condition has to be fulfilled by a tenderer. According to the learned standing counsel it is open to the respondent Corporation to put reasonable condition in the NIT and such c ondition must be complied with by the tenderer and unless such conditions are co mplied with the bid of such tenderer cannot be treated as valid. It has also bee n submitted that such condition was put in the form keeping in view the fact tha t while demand draft or the bankers cheque issued by a bank is valid only for a period of 6(six) months extendable by another 6(six) months and thereafter those cannot be revalidated, there is no validity period attached to the call deposit issued by a bank and as such in a given case if the process of settlement could not be completed within a period of 6(six) months or 1(one) year, the responden t Corporation has to ask the tenderer to submit a fresh bank draft unlike in the case of call deposit. The learned counsel, therefore, submits that to avoid all such eventualities a decision was taken by the respondent Corporation to accept the earnest money deposit in the form of call deposit and not otherwise, which condition having not been fulfilled by the writ petitioner, the settlement was n ot offered to him, though his bid was higher than the bid of the respondent No.3 , the tender paper having been found to be defective. 5. Mr. Sarma, learned counsel appearing for the respondent No.3 supporting the arguments advanced by the learned standing counsel for the respondent Corpor ation also submits that since it is the prerogative of the respondent Corporatio n to put any reasonable condition in the NIT, any such condition has to be compl ied with. Referring to the form in which the offer by a tenderer is to be submit ted, the learned counsel submits that all the tenderers were specifically inform ed that the earnest money is to be deposited in the form of call deposit and not otherwise and such a condition having been put, the Corporation is bound by suc h condition and cannot accept the offer of a tenderer who did not furnish the ea rnest money in the form of call deposit. Mr. Sarma, learned counsel further subm its that the petitioner knew about such condition and despite that did not submi t the earnest money in the form of call deposit and therefore cannot subsequent turn around and challenge the decision of the respondent Corporation to award th e contract in favour of the respondent No.3 by rejecting the tender paper submit ted by him as defective. Mr. Sarma further submits that the scope of judicial re view of such administrative action, in exercise of the jurisdiction under Articl e 226 of the Constitution of India, is very limited and in the case in hand, sin ce all the tenderers were informed about the requirement of furnishing the earne st money in the form of call deposit, this Court would not interfere with the de cision of the respondent Corporation in rejecting the tender paper submitted by the petitioner for non-submission of earnest money in the form of call deposit. It has also been submitted that the writ petition, apart from the above ground a lso deserved to be dismissed on the ground of delay as the same has been filed a fter more than 3(three) months from the date of issuance of the order of settlem ent in favour of the respondent No.3. Mr. Sarma in support of his contention has placed reliance on the decision of the Apex Court in Ramana Dayaram Shetty Vs. The International Airport Authority of India & ors. reported in AIR 1979 SC 1628 , in Directorate of Education & ors. Vs. Educomp Datamatics Ltd. & ors. reported in (2004)4 SCC 19 and of his Court in Purbottar Trade & Marketing Cooperative S ociety Ltd. & ors. Vs. State of Assam & ors. reported in 2000(2) GLT 145, in Jab ed Ali & anr. Vs. State of Assam & ors. reported in 2002(1) GLT 281, in Bikash B ora Vs. State of Assam & ors. reported in 2003(2) GLT 485, in Raja Das Vs. Assam Fisheries Devp. Corpn. & ors. reported in 2005(3) GLT 544 and in Benjamin Lalri nawma Vs. State of Mizoram & ors. reported in 2005(3) GLT 580. 6. The learned counsel for the petitioner, in reply to the submission made by the learned counsel appearing for the respondents, while reiterating the subm issions advanced by him, has also submitted that the writ petition is not suffer ed from vices of delay as the petitioner on coming to know about the order of se ttlement dated 07.06.2010, which does not disclose the reason for which his bid was rejected, filed application seeking information under the Right to Informati on Act, 2005 which was supplied to him on 06.08.2010 disclosing the reason for r ejection of his tender paper and thereafter on 16.09.2010 he filed the writ peti tion challenging the decision of the respondent Corporation in awarding the cont ract in favour of the respondent No.3. 7. I have considered the submissions of the learned counsel for the parties , perused the pleadings and also the records of settlement produced by the learn ed standing counsel of the respondent Corporation. 8. As noticed above, the petitioner offered the highest amount of Rs.1,71,7 77/- per year as against the offer of respondent No.3, which was Rs.1,65,000/- p er year in respect of the fishery in question. The offer of other tenderers were less than the amount offered by the petitioner and the respondent No.3. The pet itioner’s tender paper was found to be defective on the ground that the earnest money was not deposited in the form of call deposit but was deposited in the for m of demand draft from a nationalized bank though his offer was higher than the offer of the respondent No.3. According to the respondents since there is a cond ition to make such deposit in the form of call deposit, the same has to be compl ied with. 9. The notice inviting tender dated 06.04.2010 issued by the Managing Direc tor of the respondent Corporation provides for purchasing the prescribed form, i n which the tender is to be submitted, along with detailed terms and conditions of the tender on payment of Rs.100/-. The petitioner and the respondent No.3 acc ordingly purchased the form along with the detailed terms and conditions of the tender from the respondent Corporation and submitted their bids. In the detailed terms and conditions it has been stipulated that the offer by the tenderer is t o be made in the form supplied by the Corporation and it should be accompanied b y the documents/ information mentioned in clause 4 of the terms and conditions. One of the requirements in clause 4 is that the tenderer has to furnish the earn est money to the tune of 15% of the minimum value fixed by the Corporation for t he first year. There is no stipulation relating to the form in which such earnes t money is to be deposited like the call deposit, bank draft or bankers cheque. In clause 5 of such detailed terms and conditions of the tender, the said positi on has been reiterated requiring the tenderer to furnish the earnest money to th e tune of 15% of the minimum value fixed by the Corporation for the first year w ith further stipulation that the unsuccessful bidder would be refunded the earne st money deposit and in case of the successful bidder the same would be refunded subject to fulfillment of the conditions of settlement. There is also a stipula tion for forfeiture of the earnest money in the eventualities stipulated in clau se 5.4 of the detailed terms and conditions. In the prescribed form in which the tenderer is to submit his offer, there is a mention in clause 4(ka) to furnish the call deposit number and date as well as the name of the bank issuing such ca ll deposit. In the prescribed form there is also no indication that the earnest money, only in the form of call deposit, would be accepted and not otherwise. 10. The purpose of taking the earnest money deposit is to ensure the sinceri ty of a tenderer to perform the contract in case of awarding the same and in cas e he is defaulted in carrying out his part of the contract, the said amount is f orfeited so that the authority awarding the contract do not suffer any loss for such default of the tenderer. The earnest money is a part of the purchase price and the same is forfeited when the transaction falls through by reason of the de fault or failure on part of the tenderer. The whole purpose of taking the earnes t money, as discussed above, being to ensure the faithful completion of the cont ract and when the record reflects that it is the pursued practice of the respond ent Corporation to encash the earnest money deposited by a successful tenderer a nd to credit the same in Corporation’s account, subject to the refund on complet ion of the contract or forfeiture, as the case may be, there is no significance whether the earnest money deposit is made in the form of call deposit or demand draft, though the period of validity of the bank draft may be 1(one) year, as th e Corporation is not expected to sit over the matter of settlement of a fishery for a period of 1(one) year from the date of issuance of the tender notice. In t he case in hand, the tender notice was issued on 06.04.2010, the order of settle ment was made in favour of the respondent No.3 on 07.06.2010 and the earnest mon ey deposited by the successful bidder, namely, the respondent No.3 was encashed and credited to the account of the respondent Corporation on 03.07.2010 i.e. wit hin 3(three) months from the date of issuance of the tender notice and 1(one) mo nth from the date of issuance of the order of settlement. Therefore, the respond ent Corporation would not have been put to any disadvantageous position had the earnest money furnished by the petitioner, who was the highest bidder, in the fo rm of bank demand draft, been accepted, as the same also could have been encashe d and deposited in the Corporation’s account within the time limit attached to s uch bank draft, as normally done by the Corporation in the matter of settlement. The Corporation in that case would not have suffer any loss of revenue as the p etitioner’s offer was higher than the offer of the respondent No.3. 11. It is no doubt true that if the authority stipulates any condition in th e NIT, those are required to be fulfilled and it cannot deviate from such condit ions unless of course those are essential conditions of eligibility and not mere ly ancillary or subsidiary with the main object to be achieved by such condition . In case any condition stipulated in the NIT is merely ancillary or subsidiary with the main object to be achieved by such condition, it is open to the authori ty to deviate from and not to insist upon the strict compliance of the condition in appropriate cases, as opined by the Apex Court in G.J. Fernandez(supra) and Poddar Steel Corporation(supra). 12. In the case in hand, as discussed above, there is no stipulation in the detailed terms and conditions of the NIT supplied to the petitioner as well as t o the respondent No.3 and other bidders that the earnest money has to be deposit ed only in the form of call deposit and not in any other form. The prescribed fo rm supplied by the respondent Corporation, in which the offer has to be submitte d by the tenderer, also does not stipulate that such earnest money has to be fur nished in the form of the call deposit though it requires furnishing certain inf ormation relating to the call deposit. Such information as sought for in the for m cannot be treated as terms and conditions of the NIT, having not stipulated so in the detailed terms and conditions supplied to the tenderers, more so, when t here is no stipulation that non-furnishing of the earnest money in the form of c all deposit entails disqualification. 13. It is by now well-settled that the scope of judicial review would also a pply to the exercise of contractual powers by the Government bodies in order to prevent arbitrariness or favouritism, however, with inherent limitations in exer cise of such power of judicial review. While the State or the instrumentality of the State is the guardian of its finance, it is expected to protect the financi al interest of the State or the instrumentality. The State or its instrumentalit ies, however, in the matter of exercise of contractual power, have to keep in vi ew the principles laid down under Article 14 of the Constitution. The terms of t he invitation of the tender is also not open to judicial scrutiny, unless those are arbitrary, unreasonable and tailor made to favour a particular tenderer, bec ause the invitation to tender is in the realm of contract and the Government mus t have freedom of contract, meaning thereby a fair play in the joints is a neces sary concomitant for an administrative body functioning in an administrative sph ere or quasi-administrative sphere. Such decision, however, must not only be tes ted by the application of Wednesbury principle of reasonableness but must be fre e from arbitrariness and not affected by bias or actuated by mala fides. [Tata C ellular(supra) and Educomp Datamatics(supra)] 14. As discussed above, there was no stipulation either in the NIT or in the detailed terms and conditions of the NIT about requirement of furnishing the ea rnest money in the form of call deposit only and as such non-furnishing of the e arnest money in the form of call deposit cannot be the ground for rejection of t he tender submitted by a tenderer, as has been done in the case in hand. In Raja Das (supra) this Court has held that for rejection of a tender on the ground of non-fulfillment of the conditions, such conditions have either to be put in the NIT or in the guideline framed by the Corporation for settlement of fishery. In the said case the decision to reject the tender of a tenderer on the ground tha t the tenderer did not put his signature in the tender papers in presence of the Gazetted Officer and counter signed the same by such Gazetted Officer, has been interfered with as such a condition was neither put in the NIT nor in the guide line framed by the Corporation for settlement of the fishery. In Benjamin Lalrin awma (supra) this Court has held that a tender paper not submitted in the prescr ibed form cannot be rejected unless a condition in the NIT relating to submissio n of the bid in the prescribed form only is stipulated. It has, however, been he ld that all the essential terms and conditions of the NIT has to be fulfilled to adjust an offer of a tenderer as valid. The decisions rendered by this Court in Purbottar Trade & Marketing Cooperative Society Ltd.(supra), in Jabed Ali (supr a) and in Bikash Bora being based on different facts are applicable in the facts and circumstances of this case and hence not discussed. 15. The contention of the learned counsel appearing for the respondents that the writ petition suffers from vices of delay also cannot be accepted as the pe titioner on coming to know about the order of settlement dated 07.06.2010, which does not disclose the reason for rejection of tender submitted by him, filed ap plication on 02.08.2010 under Right to Information Act, 2005, for supply of the information and accordingly the respondent Corporation on 06.08.2010 supplied th e information relating to the reason for rejection of his tender paper and withi n 1‰ months from the date of receipt of such information, the petitioner filed t he writ petition challenging the settlement made in favour of the respondent No. 3. It is no doubt true that the Court would refused to exercise its discretion u nder Article 226 of the Constitution of India and would not grant the relief to the writ petitioner even if he is entitled to the same, if the writ petition suf fers from vices of undue delay or latches. In Ramana Dayaram Shetty(supra) the A pex Court keeping in view the facts involved in that case refused to grant the r elief though it was found that the action of the respondent authority was arbitr ary. The principle laid down by the Apex Court in the said decision, however, is not applicable in the facts and circumstances of this case. 16. In view of the above, the impugned order dated 07.06.2010 passed by the Managing Director of the Corporation