Court rules Fixed Deposit is valid bid security, overturns tender rejection.

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Case Name

SLT Infracon Pvt. Ltd. vs. The State of Tripura and others (High Court of Tripura)

WP(C) 391/2022

Date: 1st June 2022

Key Takeaways

• Tender conditions must be interpreted as per the latest corrigendum: The court emphasized that any amendments or corrigenda to the original tender document override earlier clauses.
• Wider interpretation of bid security instruments: The use of the word “like” in the tender clause meant that similar instruments (including Fixed Deposits) were acceptable, not just those specifically listed.
• Administrative errors can’t override substantive compliance: The court found that a typographical error in referencing the wrong clause did not justify rejecting the bid.
• Practical approach to public procurement: The court prioritized the intent and purpose of bid security—ensuring seriousness of bidders—over rigid technicalities.

Issue

Was the rejection of SLT Infracon Pvt. Ltd.’s bid for submitting a Fixed Deposit as bid security, instead of a Bank Guarantee, justified under the amended tender conditions?

Facts

• Parties: SLT Infracon Pvt. Ltd. (the petitioner) and the State of Tripura (the respondent).
• Background: The State of Tripura invited bids for a public works contract. The tender originally required bid security in the form of a Bank Guarantee.
• Corrigendum: On March 15, 2022, a corrigendum was issued, amending the bid security clause (Clause 1.2.4) to allow several forms of offline payment instruments, including “Deposit at Call receipt, Demand Draft, Banker’s Cheque, or Bank Guarantee.”
• Bid Submission: SLT Infracon submitted a Fixed Deposit (FD) in the name of the Executive Engineer, NH Division Kumarghat, as bid security.
• Rejection: The tender committee rejected the bid, stating it was “technically non-responsive” for not submitting a Bank Guarantee, referencing Clause 2.20.1 (which had been deleted by the corrigendum).
• Legal Challenge: SLT Infracon challenged this decision in the High Court, arguing that the corrigendum allowed for FDs as valid bid security.

Arguments

Petitioner (SLT Infracon Pvt. Ltd.)

• The corrigendum deleted the requirement for a Bank Guarantee and allowed for other forms of bid security, including FDs.
• The FD was made out in the name of the correct authority and met the security requirements.
• The rejection was based on a clause (2.20.1) that no longer applied due to the corrigendum.

Respondent (State of Tripura)

• The tender clause listed only four acceptable instruments: Deposit at Call receipt, Demand Draft, Banker’s Cheque, or Bank Guarantee.
• The word “like” should be interpreted restrictively, limiting acceptable instruments to those specifically listed.
• The FD did not meet the exact requirements of the tender document.

Key Legal Precedents

• No specific case laws or precedents are cited by name in the judgment.
• Exact Section/Rule Numbers Referenced:
• Clause 1.2.4 of the tender document: This clause, as amended, was central to the dispute.
• Clause 2.20.1 of DNIT (RFP): This clause was referenced in the rejection but had been deleted by the corrigendum.

Judgement

• Decision: The High Court ruled in favor of SLT Infracon Pvt. Ltd.
• Reasoning: The court found that the corrigendum allowed for various forms of bid security, including FDs, and that the rejection based on the deleted clause was erroneous. The use of the word “like” in the clause meant that similar instruments were acceptable.
• Order: The court set aside the tender committee’s decision, directed the authorities to accept the FD as valid bid security, and ordered them to proceed with the tender process.

FAQs

Q1: Why was SLT Infracon’s bid initially rejected?

A: The bid was rejected because the company submitted a Fixed Deposit as bid security instead of a Bank Guarantee, which the tender committee claimed was required.

Q2: What did the corrigendum change?

A: The corrigendum deleted the strict requirement for a Bank Guarantee and allowed for other forms of bid security, including Deposit at Call receipt, Demand Draft, Banker’s Cheque, or Bank Guarantee.

Q3: Did the court accept the Fixed Deposit as valid bid security?

A: Yes, the court held that the Fixed Deposit was a valid form of bid security under the amended tender conditions.

Q4: What happens next for SLT Infracon?

A: The authorities must now accept SLT Infracon’s bid and proceed with the commercial bid opening and further tender process.

Q5: Does this case set a precedent for future tenders?

A: While not a binding precedent, the case clarifies that tender conditions must be interpreted in light of any corrigenda, and that similar instruments to those listed may be acceptable if the language allows.