WP(C) 1921/2007 BEFORE THE HON’BLE MR JUSTICE AFTAB H. SAIKIA JUDGMENT AND ORDER ( oral ) 1. Whether \The Call Deposits\ from Guwahati Co-operative Urban Bank (fo r short, ’the Bank’ ) in respect of submission of tender despite the specific condition for submitting the earnest money by way of NSC/KVP or by Fixed Deposi t Receipt (FDR), Term Deposit Receipt (T.D.R)/ Guarantee Bond of a Nationalized Bank can be accepted by the State Authority as an earnest money, is the limite d and short question to be answered in this writ petition. 2. In the instant case \Call Deposits\ from the Bank were submitted by the p etitioners as earnest money along with their respective / separate tenders for s ettlement of a contract as regards the supply of dietary and other articles und er different groups to various jails particularly, to the Superintendent Distr ict Jail, Mongaldoi and to the Superintendent, Central Jail, Guwahati. However, the State Authority rejected all such \ call deposits \ as earnest money being violative of the specific terms and conditions of the Notice Inviting Tender (f or short,\ the NIT\ ). 3. In the backdrop of this sole issue raised before this Court, this Court has to now consider the arguments so advanced by the learned counsel for the contesting parties. 4. Heard Mr. S.Kataki, learned counsel for the petitioners and also Mr. K.N .Choudhury, learned Addl. Advocate General, Assam assisted by Mr. J.Patowary, l earned counsel appearing for the official respondents. 5 Mr. Kataki, learned counsel for the petitioners has vehemently submitted that the entire process of rejecting the petitioners’ tenders on the sole groun d that they have deposited the \ Call Deposits\ of Bank instead of the stipulat ed conditions as laid down in the terms and conditions in the NIT, is absolutely arbitrary, discriminatory and violative of Article 14 of the Constitution of In dia and Section 23 of the Indian Contract Act. In order to drive home his submi ssions, the learned counsel has relied upon on the following Apex Court’s decis ions as well as the decision of this Court:- (1) AIR 1991 SC-1579 ( Poddar Steel Corporation Vs. Ganesh Engineering Works and others ) (1991) 3 SCC-273; (2) 2000(1) GLT-341 (Bidhu Bhushan Chowdhury & another Vs. Union of India & others ); (3) 2000 AIR SCW- 2030 Lt. Col. P.R. Chaudhury ( Retd) and others Vs. Mun icipal Corpn. of Delhi and others) ; (2000) 4 SCC - 572 (4) AIR 2003 SC- 250 ( Hindustan Times and others. Vs. State of U.P. and an other ) (2003) 1 SCC-591; (5) AIR 2005 SC-2653 ( Global Engineering Ltd. and others Vs. Advance Exports Ltd. and others (2005) 4 SCC-435); (6) AIR 2007 SC-437 ( M/S B.S.N. Joshi and sons Ltd. Vs. Nair Coa l Services Ltd. And others ); 6. The basic argument of Mr. Kataki is that the ’ Call Deposits’ present ed by the petitioners as earnest money in submitting their respective tenders p ursuant to the NIT dated 26.02.07 cannot be ignored and discarded as the same were being validly presented in terms of conditions laid down in the NIT. His s ubmission is that Clause 2(j) wherein a condition has been inserted that \No o ther form of remittance except the ones mentioned above will be acceptable as ea rnest money to that extent \ is violative of Article 14 of the Constitution of India and Section 23 of the Indian Contract Act and in the above premises, the impugned rejection of the tenders on the plea of deposit of earnest money by way of \Call Deposits\ is liable to be set aside and quashed. 7. In support of such rejection of the NIT on the sole ground of submission of \Call Deposits\ , Mr. Choudhury, learned Addl. Advocate General,Assam has s ubmitted that since the contract floated by the State by the NIT in question itself is a commercial transaction , a duty has been cast upon the State to a ct fairly and reasonably in such commercial transaction and as such insertion of consequential conditions especially in Clause 2(j) of the NIT to the effect that ’ No other form of remittance except the one mentioned above will be acce ptable as earnest money’ by way of deposit of NSC/KVP or by Fixed Deposit Receip t (FDR)/ Term Deposit Receipt (TDR)/Guarantee Bond of a Nationalized Bank, cann ot be said to be unreasonable or irrational so as to get secured earnest money . His simple case is that since the Government has entered into a commercial t ransaction , the authority has the right to secure the concerned Deposits as ea rnest money and to achieve such of object it is felt that the earnest money mus t be drawn in the form mentioned above including from a Nationalized Bank .In the instant case, the petitioners have deposited the ’Call Deposits’ as earnest money of the Bank instead of a Nationalized Bank which is basically in violat ion of the terms and conditions so stipulated in the NIT. 8 Mr. Choudhury, learned Addl. Advocate General, Assam has also relied upo n the following decisions: (1) AIR 1991 SC 1153 (G.B.Mahajan and other Vs. Jalgaon Municipal Council and others) (1991) 3 SCC-91 and (2) AIR 2000 SC- 801( Air India Ltd. Vs. Cochin International Airport ) (2000) 2 SCC- 617; 9 We have carefully considered the extensive arguments so advanced by the learned counsel for the parties and also meticulously scanned the materials mad e available on record including the pleadings exchanged by and between the parti es. 10. Both the Superintendents of Jail, District Jail, Mongaldoi as well as th e Superintendents of Central jail, Guwahati floated their respective NIT dated 26.2.07. In both the NITs, Clause 2 including (J) contemplates as under :- \ 2. The following procedures, terms and conditions are to be strictly adhere d to by the intending tenderers in submitting the tenders, failing which their tenders will be liable to be rejected. (a) Tenders must be submitted to the undersigned in prescribed Tender Form which will be available in the office of the undersigned on payment of Rs.500.00 (Rupees Five Hundred ) only by Cash and Money Receipt w ill be issued in the name of the intending tenderers who purchases the Tender Fo rm. Only the purchasers of Tender Form will be eligible for submitting tender. (b) Separate tenders must be submitted for separate Groups i n separate sealed covers addressed to the undersigned and marked as \ TENDER FOR SUPPLY OF ARTICLES OF GROUPS\A\ OR\B\ \C\( as the case may be ) on the top of each sealed cover. Unsealed tenders will be summarily rejected. ( c) Only one tender shall be submitted for one Group by any tenderer , and in case of submission of more than one tenders for the same Group by the s ame tenderer quoting different rates, all such tenders of the said tenderer for the said Group will be deemed as automatically rejected. ( d) Tenderers must quote rate for all articles of a Group as specifi ed in the Schedule, including the controlled commodities viz. Rice,Atta and Suga r, which will also be included in the comperative statement and taken into accou nt in determining the relative positions of the tenderers in terms of tender val ue for a particular Groups. In respect of LPG, the rate should be quoted only fo r profit margin per cylinder. If a tenderer omits to quote the rate/ rates ofany article/ articles of a particular Group as mentioned in the Schedule, the tende r for the said Group will be treated as incomplete and rejected. (e) Tenderers must quote only one rate for each article and any tender in whi ch more than one rates are quoted for the same article will be rejected. (f) Tenderers must quote their rates both in figures and words, failing whic h the tender will be rejected.The rates quoted should be inclusive of all taxes, duties.etc. Rate once submitted shall hold good for the entire period of contrac t, irrespective of the market rates being higher of any time and no representat ion for enhancement of rates in view of any increase in the market rates will b e entertained. (g) Any alteration, erasure or addition made in a tender must be initiated by the tenderer, failing which the tender will be rejected. Further no alteratio n or modification of rates will be allowed after a tender is submitted. (h) Any tender which is not duly signed by the concerned tenderer both in the Tender Form and in the rate schedule will be rejected. (i) Quoting of fictitious rate for any article, including any controlled co mmodity viz. Raice/Atta/Sugar may lead rejection of any tender at the discretion of the Inspector General of Prisons, Assam. (j) EARNEST MONEY equal to the amount specified below against each Group mu st be furnished with a tender by NSC/KVP or by Fixed Deposit Receipt (FDR), Ter m Deposit Receipt (T.D.R) Guarantee Bond of a Nationalized Bank each assigned i n favour of the undersigned failing which the tender will be rejected. Group’A’-Rs. 66.000/- ( Rupees Sixty Six thousand) only Group’B’-Rs. 4300/- ( Rupees Four thousand three hundred) only Group’C’-Rs. 14,600( Rupees Fourteen thousand Six hundred ) only Group’D’-Rs. 9,100/- ( Rupees Nine thousand one) only Group’E’-Rs. 3,700/- ( Rupees Three thousand seven hundred only Group’F’-Rs. 3,000/- ( Rupees Three thousand ) only. . In case of the tenderers belonging to Scheduled Tribes/ Scheduled Cas tes/ Other Backward Classes (ST/SC/OBC), the earnest money will be half of the abovementioned amount . The earnest money will have to be furnished separately f or each tender, and not collectively for different tenders. No other form of rem ittance except the ones mentioned above will be acceptable as earnest money.( em phasis supplied) Also any security deposit furnished by a tenderer in connection with any previous contract will not be acceptable as earnest money for a curren t tender.\ 11. Pursuant to the said NIT both the petitioners submitted their tenders bu t earnest money was deposited through ’Call Deposits’ from the Bank instead of NSC/KVP or by FDR,TDR/Guarantee Bond of Nationalized Bank as stipulated in the terms and conditions laid down in the NIT as stated above. 12. In paragraph-9 of the Plaint, the petitioners admitting the ’ Call Depos its’ from the Bank abovementioned have averred as under :- \ 9. That the petitioners beg to state that at the time of submission of Tender pursuant to the Tender Notice dtd. 26/02/2007, the petitioners have a pproached their Bank viz. The Guwahati Co-Operative Urban Bank Ltd. and the bank informed the petitioners that the ’Call Deposits’ is one type of guarantee bond for tender and the department concerned may realize the amount of ’ Call Deposi ts’ at any time. Accordingly, the petitioners obtained the ’Call Deposits’ equal to the amount specified against each group in the tender notice and submitted t he ’Call Deposits’ issued by the Guwahati Co-operative Urban Bank Ltd. along wit h the respective tenders of the petitioners as earnest money on bona fide belief that the ’Call Deposits’ will be accept as earnest money for the purpose of ten der.\ 13. From an ordinary reading of this paragraph-9 along with the con ditions so stipulated in Clause 2(j), it transpires that the petitioners have n ot submitted their ’Call Deposits’ although \ Call Deposits\ are not called fo r as earnest money in strict adherence to the terms and conditions prescribed therein. In other words, ’Call Deposits’ were submitted by the petitioners not ever from a Nationalized Bank but from the Bank which is not declared as Nati onalized Bank till date. 14. Now let us examine the propositions of law laid down in those cited c ases so relied upon by Mr. Kataki, learned counsel for the petitioner. 15. In Poddar Steel Corporation’s case (supra) in inviting tender the autho rity put a condition in relevant Clause 6 to the effect that the deposit of ear nest money shall be made either in cash or by Demand Draft on the State Bank of India and since the payment therein was deposited by a certified cheque drawn on Union Bank of India instead the State Bank of India in terms of Clause 6 of the Tender Notice, the authority rejected such deposit for which the matter wa s carried to the Apex Court. It was ruled by the Supreme Court in paragraphs 6 a nd 8 that the certified cheque of the Union Bank of India so deposited by the ap pellant must be treated as sufficient for the purpose of achieving the object of the condition. 16. In arrived at such a decision, the Supreme Court in paragraph -6 observe d as under :- \6. & &The requirements in a tender notice can be classified into two catego ries-those which lay down the essential conditions as of eligibility and the oth er which are merely ancialliary or subsidiary with the main object to be achie ved by the condition. In the first cause the authority issuing the tender may b e required to enforce them rigidly. In the other cases it must be open to the a uthority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases. This aspect was examined by this Court i n C.J. Fernandez v. State of Karnataka’ a case dealing with tenders. Although not in an entirely identical situation as the present one,the observations in the judgment support our view.The High Court has, in the impugned decision, rel ied upon Ramana Dayaram Shetty v.International Airport Authority of India but h as failed to appreciate that the reported case belonged to the first category w here the strict compliance of the condition could be insisted upon. The authorit y in that case , by not insisting upon the requirement in the tender notice whi ch was an essential condition of eligibility, bestowed a favour of one of the bidders, which amounted to illegal discrimination. The judgment indicates that t he court clearly examined the nature of the condition which had been relaxed a nd its impact before answering the question whether it could have validly cond oned the shortcoming in the tender in question. This part of the judgment demons trates the difference between the two categories of the conditions discussed abo ve. However it remains to be seen as to which of the two clauses, the present ca se belongs.\ 17.. Coming to the decision of this Court in Bidhu Bhusan’s Case (surpra) , i t is seen that the respondent-authority therein issued public notice inviting t ender for the works in question by deposit of earnest money. However, since the petitioner therein in submitting such earnest money deposited the same in the name of wrong person and not in the name of the petitioner, on that count alone tender notice was rejected. Dealing with such issue so raised challenging such cancellation of the earnest money, this Court in paragraph-12 of the judgment o pined that such dispute was more or less not in substance and the same was curab le and accordingly, such rejection was rejected by this Court. 18. In Lt.Col.P.R.Chowdhury’s case ( supra ) in paragraphs-6 and 7 the Supre me Court dealing with the scope of Article 141 Constitution of India observed th at the law as interpreted by the Apex Court would not be brushed aside on the m ere assertion that it did not conform to the statutory provisions. 19. In Global Engineering’s . case ( supra) in paragraph -8 the Supreme Co urt opined that the deposit of some amount of earnest money was a normal conditi on of tender. The object was that only such parties who were financially sound and were serious in getting work of contract should make a bid otherwise any number of person who having no capacity financial or otherwise would like to ta ke a chance by making a bid. 20. In M/S B.S.N.Joshi’s Case (supra) the Apex Court in paragraph 63 relied upon the law laid down in Poddar Steel Corporation’s case (supra). 21. The judicial authorities so relied upon by the learned Additional Advoc ate General, Assam need consideration. 22. In G.B.Mahajan’s case( supra ) in paragraph 43 while discussing the sco pe of reasonableness in the administrative law, the Apex Court quoting the obser vation from a case of Associated Provincial Picture Houses Ltd. Vs.Wednesbury Corporation reported in 1948 1 KB-223 equivalent to 1947-2 All ER 680, disting uished the nature of reasonableness into two parts i..e. proper use and improper abuse of power. In the instant case relying on this decision, it is argued th at the action taken by the authority for asking earnest money through the mode o f payment from a Nationalized Bank was done in exercise of proper use of power a nd the same action was absolutely made in bonafide. It is strenuously argued t hat nowhere in the pleadings in the instant case the petitioners have ever alle ged any malafide or colourable exercise of power. 23. So far as the Air India’s case( supra) is concerned , in paragraph-7 t he Supreme Court held as under :- ; \7. The law relating to award of a contract by the State, its corporations and b odies acting as instrumentalities and agencies of the Government has been settl ed by the decision of this Court in Ramana Dayaram Shetty v. International Airpo rt Authority of India, Fertilizer Corpn. Kamgar Union(Regd) V. Union of India, CCE v. Dunlop India Ltd.,Tata Cellular v. Union of India ,Ramniklal N.Bhutta v. State of Maharastra and Raunag International Ltd. V. I.V.R Construction Ltd. Th e award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial tansaction. In arriving at a commercial decision considerations which are paramount are commercial consideration.The St ate can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it . Price need not always be the sole criteria for awarding a contract. It is fre e to grant any relaxation for bona fide reasons. If the tender conditions permi t such a relaxation. It may not accept the offer though it happens to be the hi ghest or the lowest. But the State, its corporation, instrumentalities and ag encies are bound to adhere to the norms, standards and procedures laid down by t hem andcannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision making process and inte rfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public dut y to be fair to all concerned. Even when some defect is found in the decision ma king process the court must exercise its discretionary power under Article 226 w ith great caution and should exercise it only on furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming pub lic interest requires interference, the court should intervene.\. 24. It is accepted that the contract so floated by the NIT is a commercial t ransaction and it is within the exclusive domain of the authority concerned to c hoose its own method to arrive at a decision. The State/ authority can fix it s own terms and conditions in inviting tenders and the same cannot be brought wi thin the parameter of judicial review. 25. The Apex Court in B.S.N Joshi’s case ( supra) categorically underlined the parameters and scope of judicial review in a contractual matter in paragr aph 68 as under :- \68. We are also not shutting our eyes to words the new principles of judici al review which are being developed: but the law as it stands now having regar d to the principles laid down in the aforementioned decisions may be summarized as under :- (i)If there are essential conditions, the same must be adhered to : (ii)If there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully : (iii). If, however a deviation to made in resolution to all the parties in r egard to any of such conditions, ordinariy agains a power of relaxation may be h eld to be existing : iv) The parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance of an other part of tender contract particularly when he was also not in a position to comply with all the conditions of tender fully, unless the court otherwise f inds relaxation of a condition which being essential in nature could not be rela xed and thus the same was wholly illegal and without jurisdiction : (v) When a decision is taken by the appropriate authority upon due considerat ion of the tender document submitted by all the tenderers on their own merits an d if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid d own, the same may not ordinarily be interfered with. (vi) The contractors cannot form a cartel, if despite the same, their bid s are considered and they are given an offer to match with the rates quoted by t he lowest tender, public interest would be given priority. (vii) Where a decision has been taken purely on public interest, the Court ordinarily should exercised judicial restraint.\ 26. Be it also noted herein that in the instant case, the specific consequen tial condition to the effect that \no other form of remittence except the ones mentioned in Clause 2(j) will be acceptable as earnest money\ has been known t o the tenderers including the petitioners and notwithstanding such condition, they, being well aware of the same , submitted the \ Call Deposits \ and tha t too not from a Nationalized Bank but from the Guwahati Urban Cooperative Ban k in clear violation of the terms and conditions as stipulated in the NIT. The fact situation so narrated in this writ petition , in the opinion of this Cour t, is absolutely separate and different from the facts and circumstances of thos e cases so relied upon by the learned counsel for the petitioners and the ratio of those judicial pronouncements cannot be made applicable in the case in han d. 27. In view of the above, this Court is of the firm opinion that the conditi on so stipulated in the NIT has been violated by the petitioners and as such, t he tenders submitted by the petitioners would be liable to be rejected. The imp ugned order is, therefore, not interfered with. 28. In view of what has been stated , discussed and observed above, this Co urt finds that this writ petition is devoid of any merit and the same stands di smissed. No costs.