Petitioner was not disqualified in tender for giving EMD by way of FD not DD

Petitioner was not disqualified in tender for submitting EMD by way of Fixed Deposit in place of Demand Draft – SC 

In a recent judgment, the Hon’ble Supreme Court has held that Petitioner was not disqualified in tender for submitting EMD by way of Fixed Deposit in place of Demand Draft.

ABCAUS Case Law Citation:
5152 (2026) (05) abacus.in ITAT

In the instant case, the notice Inviting Tender was issued. The financial bid of the appellant though of less amount was rejected and a higher bid was accepted alleging disqualification of the appellant.

The bids were to be submitted in accordance with the tender document, in 3 envelopes termed Envelope A, B and C, the first two being the technical qualification and the last containing the financial bids. 

As per the condition of the Tender Document, the Earnest Money Deposit (EMD) had to be in one of the approved forms i.e. approved interest bearing security or Demand Draft of State Bank of India or scheduled Banks in case of tenderers of other States.

The appellant had provided the EMD in the form of a Fixed Deposit (FD) of the Punjab National Bank. However, the Tendering Authority declared the appellant as disqualified for not tendering EMD in the form of approved modes. However, on representation by the appellant, the Tendring Authority reversed the disqualification.

The selected bidder, challenged the decision of the Tendering Authority by filing a Writ Petition before the Hon’ble High Court. The High Court disqualified the appellant for reason of the EMD having been provided by way of a Fixed Deposit, when it was mandatory for out of State bidders to submit EMD in the form of DD.  The High Court also followed a judgment of Hon’ble Supreme Court, which on identical conditions found the submission of a DD mandatory for out of State bidders.

Before the Hon’ble Supreme Court the appellant contended that Sri the furnishing of EMD by a DD was optional and the appellant had furnished a FD in the name of the Tendering Authority itself.  The finding that furnishing of a DD was mandatory was not borne out from the specific terms of the tender document and even the Committee which scrutinizes the tenders had found the appellant to be qualified.

It was further submitted that there was a subsequent disqualification made by the Tendering Authority which, however, was not responded to within 48 hours’ time granted, since the appellant was already disqualified by the High Court.  It was prayed that the appellant may be granted time so as to contest the disqualification subsequently made.

The Hon’ble Supreme Court observed that though relevant clause specified bank draft of State Bank of India or scheduled Banks in case of tenderers of other States it was in the nature of an option which employed the words “may submit”.  Hence it was only in the nature of an option and not a mandatory condition. 

The Hon’ble Supreme Court further noted that the relevant clause spoke of Approved Interest Bearing Security. The word approved used was not to indicate any specific approval by the State Government, but loosely indicates Interest Bearing Security, which character a FD definitely has.

Accordingly, the Hon’ble Supreme Court opined that the impugned order of the High Court was not sustainable going by the specific terms of the tender document and hence the order of the High Court was set aside and it was upheld the qualification of the appellant on the opening of Envelope A as was declared by the Tendering Authority.

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