In RR Constructions and Infrastructure India Pvt. Ltd. v. Gayatri Ventures and Ors. (2026 INSC 514), the Supreme Court addressed a tender dispute regarding the mandatory nature of the form of Earnest Money Deposit (EMD). The High Court had disqualified the appellant, an out-of-State bidder, for submitting an EMD via a Fixed Deposit (FD) instead of a Demand Draft (DD). The Supreme Court set aside this decision, ruling that the tender conditions used the word “may,” making the submission of a DD an option rather than a mandatory requirement. Consequently, the Court restored the appellant’s qualification regarding the technical bid (Envelope A) and provided a window for the appellant to contest a subsequent disqualification on other grounds.
Summary of the Case
- The Tender and Disqualification
- Project: The Water Resources Department in Chhattisgarh invited tenders for the “Construction of Head Work of Lamti Feeder Minor Tank Scheme,” with an estimated project value of approximately Rs. 13.73 crores.
- The Conflict: The appellant, based outside the State, submitted their EMD as a Fixed Deposit from Punjab National Bank. While the Tendering Authority initially found the appellant qualified, the High Court later disqualified them, holding that out-of-State bidders were mandatorily required to submit a Demand Draft.
- Financial Impact: The appellant’s financial bid was Rs. 120 Crores, significantly lower than the 6th respondent’s bid of Rs. 149 Crores, which had been accepted only due to the appellant’s disqualification.
- Supreme Court’s Legal Interpretation
- “May” vs. “Shall”: The Court examined Clauses 2.13(b) and 2.15 of the tender document, which stated that out-of-State bidders “may submit” a Demand Draft. The Court held that the use of “may” denotes an option, not a mandatory condition.
- Approved Security: The Court found that a Fixed Deposit qualifies as an “Approved Interest Bearing Security” under Clause 2.13(a)(iv). Therefore, providing an FD was a valid method of submitting the EMD.
- Procedural Fairness: The Court noted that the High Court’s interpretation was not sustainable based on the specific terms of the tender document.
- The “Envelope B” Complication
- A second disqualification occurred regarding “Envelope B” (the pre-bid qualification certificate) while the High Court’s initial disqualification was still in effect.
- The State argued the appellant had failed to respond to this second notice within the required 48 hours.
- The Supreme Court ruled that the appellant could not be faulted for failing to respond while they were already legally disqualified by the High Court.
- Final Direction The Supreme Court allowed the appeal, setting aside the High Court’s judgment and affirming the appellant’s qualification for “Envelope A”. To ensure justice, the Court granted the appellant 48 hours from the uploading of the judgment to approach the Tendering Authority to contest the subsequent disqualification regarding “Envelope B”.
2026 INSC 514
Rr Constructions And Infrastructure India Pvt. Ltd. V. Gayatri Ventures And Ors.(D.O.J. 20.05.2026)




