The Supreme Court has set aside a High Court judgment that disqualified a bidder for submitting an Earnest Money Deposit (EMD) through a Fixed Deposit instead of a Demand Draft.
A Bench of Justice Sanjay Kumar and Justice K. Vinod Chandran delivered the judgment on May 20, 2026, in RR Constructions and Infrastructure India Pvt. Ltd. v. Gayatri Ventures and Ors. Justice K. Vinod Chandran authored the judgment.
High Court Had Disqualified Bidder
The appellant challenged the High Court’s order that disqualified it from the tender process. The High Court held that out-of-State bidders had to submit EMD through a Demand Draft.
The High Court also relied on an earlier judgment that treated Demand Draft submission as mandatory under similar tender conditions.
Appellant Claimed Demand Draft Was Optional
Senior Advocate Amit Anand Tiwari, appearing for the appellant, argued that the tender conditions did not make Demand Draft mandatory.
He submitted that the appellant furnished a Fixed Deposit in the name of the Tendering Authority itself. The Tender Scrutiny Committee had initially declared the appellant qualified.
The appellant also argued that authorities later issued another disqualification notice. However, the company did not respond within 48 hours because the High Court had already disqualified it.
State Admitted FDRs Were Accepted
Senior Advocate Dama Sesadhri Naidu, appearing for the State, admitted that authorities regularly accepted Fixed Deposit Receipts from out-of-State bidders.
The State also acknowledged that the Tendering Authority later found that submission of an FDR could not lead to disqualification.
Meanwhile, Senior Advocate Gagan Gupta, appearing for the sixth respondent, argued that the appellant suppressed facts regarding the later disqualification.
Tender Related To Water Resources Project
The Water Resources Department issued the tender for construction of the Head Work of Lamti Feeder Minor Tank Scheme.
The estimated project value stood at ₹13.72 crore.
The appellant quoted ₹120 crore in its financial bid, while the sixth respondent quoted ₹149 crore. Authorities accepted the sixth respondent’s bid only after disqualifying the appellant.
Supreme Court Examines Tender Clauses
The Court examined Clauses 2.13 and 2.15 of the tender document relating to EMD submission.
Clause 2.13(b) stated that out-of-State bidders “may submit” EMD through bank draft.
The Supreme Court held that the word “may” clearly indicated an optional requirement and not a mandatory one.
The Bench also noted that Clause 2.15 used similar language regarding renewal of Demand Drafts.
Fixed Deposit Qualified As Interest-Bearing Security
The appellant argued that its Fixed Deposit qualified as an “Approved Interest Bearing Security” under Clause 2.13(a)(iv).
The Supreme Court accepted this argument.
The Court rejected the State’s claim that the word “approved” required special government approval. It held that the clause broadly referred to interest-bearing securities, which included Fixed Deposits.
The appellant had submitted a Punjab National Bank Fixed Deposit in favour of the Executive Engineer, Water Resources Division, Chhuikhadan, Chhattisgarh.
Supreme Court Sets Aside High Court Order
The Supreme Court held that the High Court misread the tender conditions.
It ruled that the appellant stood qualified on opening of Envelope A, just as the Tendering Authority had originally declared.
Accordingly, the Court set aside the High Court judgment.
Court Leaves Subsequent Disqualification Open
The Court then examined the later disqualification linked to Envelope B.
The State argued that the appellant failed to respond to a notice within 48 hours regarding pre-bid qualification requirements.
The appellant replied that responding would have been pointless because the High Court had already disqualified it.
The Supreme Court accepted this explanation. It held that the appellant could not be blamed for missing the deadline under those circumstances.
Appellant Allowed To Approach Tendering Authority
The Supreme Court allowed the appellant to approach the Tendering Authority within 48 hours from upload of the judgment.
The Court permitted the appellant to challenge the later disqualification and rely on representations already submitted.
However, the Bench clarified that it had not expressed any opinion on the appellant’s qualification regarding Envelope B.
The Court ultimately allowed the appeal, set aside the High Court judgment, and disposed of pending applications.
