The Supreme Court has held that a bidder cannot be disqualified merely because it furnished an Earnest Money Deposit (EMD) through a Fixed Deposit (FD) instead of a Demand Draft (DD), where the tender conditions did not make the DD requirement mandatory. 

The bench of Justice Sanjay Kumar and Justice K. Vinod Chandran ruled that the language of the tender document provided an option rather than an obligatory condition and restored the qualification of RR Constructions and Infrastructure India Pvt. Ltd. in relation to the technical evaluation stage. 

The dispute arose from a tender issued by the Water Resources Department for the “Construction of Head Work of Lamti Feeder Minor Tank Scheme,” carrying an estimated value of approximately ₹13.72 crore. RR Constructions had challenged a High Court judgment that disqualified it because the company, being an out-of-state bidder, had submitted the EMD in the form of a Fixed Deposit instead of a Demand Draft. The High Court had relied upon an earlier decision involving similar conditions and concluded that a DD was mandatory for out-of-state participants. 

Before the Supreme Court, the appellant argued that the tender conditions did not mandate a DD and that the FD submitted was in favour of the tendering authority itself. It was further contended that the tender scrutiny committee had initially found the company qualified and that later disqualification proceedings arose separately. 

The State itself acknowledged before the Court that, as a matter of accepted practice, Fixed Deposit Receipts had been accepted even in the case of out-of-state bidders. It also admitted that the appellant’s disqualification on the basis of submitting an FD had later been reconsidered and found unsustainable. 

The Supreme Court closely examined the tender clauses dealing with EMD submission. The Court noted that Clause 2.13(a)(xiii) referred to bank drafts for out-of-state tenderers, while Clause 2.13(b) used the words “may submit,” indicating flexibility rather than compulsion. Similarly, Clause 2.15 also employed the term “may,” reinforcing the conclusion that DD submission was optional and not mandatory. 

The Bench further observed that the appellant had submitted an FD issued by Punjab National Bank in favour of the Executive Engineer of the Water Resources Division. The Court accepted the argument that the FD qualified as an “Approved Interest Bearing Security” under the relevant clause of the tender document and rejected the State’s interpretation that the term “approved” required any special governmental approval. 

An important factual aspect also noted by the Court was the financial impact of the disqualification. The appellant had submitted a bid of approximately ₹120 crore, whereas the sixth respondent’s bid stood at approximately ₹149 crore and was accepted only because of the appellant’s exclusion. 

The case also involved a subsequent dispute concerning a separate disqualification at the Envelope-B stage related to pre-bid qualification certification requirements. However, the Supreme Court clarified that it was not expressing any opinion on that issue and confined itself to the EMD controversy. The Court nevertheless permitted the appellant to approach the tendering authority within 48 hours to raise contentions against the later disqualification. 

Allowing the appeal, the Supreme Court set aside the High Court judgment and affirmed the appellant’s qualification at the Envelope-A stage.

Case Details

Case Title: RR Constructions And Infrastructure India Pvt. Ltd. Versus Gayatri Ventures And Ors.

Citation: JURISHOUR-1315-SC-2026

Case No.: Special Leave Petition (C) No.37099 of 2025

Date: 20/05/2026

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