GLOBAL ENERGY LTD . .AND ANR. versus M/S. ADANI EXPORTS LTD. AND ORS.

Citation: [2005] 3 S.C.R. 1108 · Decided: 03-05-2005 · Supreme Court of India · Bench: R.C. LAHOTI · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
GLOBAL ENERGY LTD . .AND ANR. 
• 
v . 
MIS. ADANI EXPORTS LTD. AND ORS. 
MAY 3, 2005 
B 
[R.C. LAHOTI, CJ. AND G.P. MA THUR, J.] 
Contract: 
Notice inviting tenders-Condition for depositing Earnest Money-State/ 
C Central Government and Public Sector Undertakings exempted from the 
condition-Party not holding requisite licence for the work challenged the 
condition of the tender-High Court by its interim order granted liberty to the 
party to participate in tender process with condition to deposit the Earnest 
money by famishing .Bank Guarantee or Bankers Cheque within 3 days of 
D opening of tender-Order of Single Judge set aside by Division Bench of High 
Court-On appeal, held: Order of Single Judge was illegal and amounted to 
totally altering the notice inviting tenders-Terms of invitation to tender are 
not open to-judicial scrutiny the same being in the realm of contract, unless 
they are wholly arbitrary, discriminatory or actuated with malice-Party also 
not holding requisite licence for the work-The exemption in favour of State/ 
E Central Government and Pu6lic Sector Undertakings is based on rationale 
criteria-Government is always treated as a separate 'class-Code of Civil 
Procedure, 1908-0rder XXVJJ Rule 8A. 
State electricity Board issued notice inviting tenders for sale of its 
F surplus power to different State Electricity Boards or Power UCilities 
through Power Trading Agencies. With every quotation Earnest Money 
was required to be paid. However, the Central/State Government 
Organisations and Public Sector Undertakings were exempted from 
submission of Earnest Money. The total unit of power intended to be 
traded by the electricity Board was 1471 million units. For trading over 
G I 000 million units of power, licence of category 'F' was required. Appellant 
possessed an interim licence of category 'A' on the basis of order passed 
by High Court. Appellant-Company challenged the condition requiring 
submission of Earnest Money and prayed for direction to the Board to 
accept and evaluate their bid without deposit of Earnest Money. 
H 
1108 
GLOBAL ENERGY LTD. v. ADANI EXPORTS LTD. 
1109 
Single Judge of High Court passed interim order granting liberty A 
to the appellant to participate in the tender process in response to the 
notice inviting tenders, subject to the condition of their depositing the 
earnest money by furnishing a Bank Guarantee or Bankers' cheque by a 
particular date (i.e. within 3 days after the tender was opened). Letters 
Patent appeals filed by respondent-Company was allowed by Division B 
Bench of High Court. 
In appeal to this Court, appellant contended that condition requiring 
deposit of Earnest Money by Power Utilities other than Central/State 
Government and Public Sector Undertakings was discriminatory and 
illegal; that its tender being higher than that of respondent-Company C 
would bring more profit to the Electricity Board. 
Respondent-Company contended that a clause regarding deposit of 
Earnest Money in the notice inviting tender cannot be altered or changed 
by Court, the said clause being in the realm of contract; and that appellant 
was not technically qualified to be awarded the contract for sale of D 
electricity, in absence of possessing requisite licence. 
Dismissing the appeals, the Court 
HELD : 1. Single Judge of High Court has completely altered the 
notice inviting tenders in two ways. It allowed the appellants to participate E 
in the tender process without depositing any earnest money. Secondly, once 
the tenders are opened, the relative position of each bidder is known and 
the appellants would have avoided depositing any earnest money, had they 
felt that their bid was not competitive and there was no chance of getting 
the contract. (1114-E-FI 
2.1. Clause 5.1 of notice inviting tenders clearly provided that every 
quotation must accompany earnest money in the form of demand draft 
F 
or pay order. Deposit of some amount of earnest money is a normal 
condition of tender. The object is that only such parties who are financially 
sound and are serious in getting the work or tontract should make a bid. G 
Normally, State/Central Government Organizations or Central or State 
Public Sector Undertakings would not make a bid unless they are serious 
in getting the work. The shareholding of the Government (State or 
Central) in any Public Sector Undertakings is afways more than 50 per 
cent. They cannot be equated with a company whose net worth may be

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