PODDAR STEEL CORPORATION versus GANESH ENGINEERING WORKS AND OTHERS

Citation: [1991] 2 S.C.R. 696 · Decided: 06-05-1991 · Supreme Court of India · Bench: L.M. SHARMA · Disposal: Appeal(s) allowed

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

Judgment (excerpt)

A 
PODDAR STEEL CORPORATION 
V. 
GANESH ENGINEERING WORKS AND OTHERS. 
MAY 6, 1991 
B 
[LAUT MOHAN SHARMA AND M.M. PUNCHHI, JJ.] 
Constitution of India: Articles 226 and 136. 
Railway contract-Tender notice-Conditions-Payment of 
earnest money stipulated by cash or demand draft drawn on a specified 
bank-Acceptance of banker's cheque drawn on a bank other than the 
C stipulated bank-Validity of-Essential and ancilliary conditions-
Distinction between. 
The Diesel Locomotive Works, Indian Railways, invited tenders 
for disposal of one lot of Fer.rous scrap. One of the conditions 
D mentioned in the tender notice was that the earnest money shonld be 
deposited by cash or by demand draft drawn on the State Bank oflndia. 
The appellant, one of the intending purchasers, submitted his tender 
accompanied by a cheque of Union Bank of India drawn on its own 
branch. The tender of the appellant, being the highest, was accepted 
and tenders of respondent no. 1 and some others were rejected. The 
E 
Tender Committee had verified from Union Bank of India the bona fide 
of appellant's cheqne and then only decided to accept its tender. 
Respondent no. 1 filed a writ petition in the High Conrt challeng-
ing the rejection of its tender, and acceptance of appellant's tender on 
the gronnd that the latter did not comply with the necessary condition 
F 
for payment of earnest money with the tender. The appellant contended 
that it had snbstantially complied with the reqnirement by sending with 
its tender a banker's cheqne marked and certified by the Union Bank of 
India as good for payment. The High Court opined that respondent's 
tender was rightly rejected for failure to deposit the earnest money, but 
allowed the writ petition holding that the appellant also did not satisfy 
G 
the condition regarding payment of the earnest money since the cheque 
sent was from a bank other than the State Bank of India as stipulated, 
and as such the authorities had no power to accept appellant's tender. 
Aggrieved, the appellant preferred the appeal by special leave to this 
Court. 
H 
Allowing the appeal, this Court 
696 
.. 
\ 
. .J 
; 
PODDAR STEEL v. GANESH ENGINEERING 
697 
HELD: 1. As a matter of general proposition it cannot be laid 
down that an authority inviting tenders is bound to give effect to every 
term mentioned in the notice in meticulous detail, and is not entitled to 
waive even a technical irregularity of little or no significance. The 
requirement in a tender notice can be classified into two categorie~ 
those which lay down the essential conditions of eligibility, and the 
others which are merely ancilliary or subsidiary with tbe main object to 
be achieved by the condition. In the first case the authority issuing tbe 
tender may be required to enforce them rigidly. In the other cases it 
must be open to the authority to deviate from and not to insist upon the 
strict literal compliance of the condition in appropriate cases. [ 699E-G) 
2. In the instant c~, in submitting the cheque drawn on the 
Union Bank of India and not on the State Bank of India, the relevant 
condition of the tender notice was not obeyed literally; but tbe said 
cheque must be treated as sufficient for the purpose of achieving the 
object of the condition and the Tender Committee took the abundant 
caution by a further verification from the bank. In the situation it could 
not be said that the Diesel Locomotive Works bad no authority to waive 
the technical literal compliance of the clause, regarding manner of pay-
ment of earnest money especially when it was in its interest not to reject 
the said bid which was tbe highest. [699D-E; 700F-G) 
GJ Fernandez v. State of Karnataka & Ors., [1990] 2 SCC 488 
A 
B 
c 
D 
and Sita Ram Jhunjhunwala v. Bombay Bullion Association Ltd. & 
E 
Anr., [ 1965] 35 Company Cases 526, relied on. 
Ramana Dayaram Shetty v. International Airport Authority of 
India & Ors., [1979] 3 SCC 489; Spargo's Case, 1873 LR 8 Ch. App. 
407; Mis B.D. Yadav and M.R. Meshram v. Administrator of the City 
of Nagpur, AIR 1984 Bombay 351 and T. V. Subhadra Amma v. Kera/a 
F 
Board of Revenue and Others, AIR 1982 Kerala, 81, referred to. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2272 
of 1991. 
/ 
From the Judgment and Order dated 12.11.1990 of the Allaha-
G 
bad High Court in C.M.W.P. No. 11192 of 1990. 
Sunil Gupta and S. Sukumaran for the Appellant. 
Dr. Anand Prakash, B.K. Prasad and S.N. Sikka for the 
Respondents. 
H 
A 
B 
c 
D 
E 

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