Judgment ( 1. ) PETITIONER has sought following reliefs in this petition : " (i) Honble High Court be pleased to quash the tender notice as published in the new paper Nai Duniya, Indore on 7-10-2004 to the extent it imposed conditions as a pre-condition for issuance of tender form and also to the extent it provides condition of deposit of Earnest Money alongwith application form for issuance of tender form. (ii) Honble High Court be pleased to declare that the action of the respondents is arbitrary unlawful and void. (iii) Honble High Court be pleased to direct the respondents to allow the petitioner to participate in the tender evaluation process by issuing tender form to the petitioner without satisfying three conditions laid down and without having to deposit Earnest Money alongwith application form. (iv) Honble High Court be pleased to declare that the action of the respondents in imposing the unlawful conditions denies the precious right of the petitioner to participate in the tender evaluation process despite being fully eligible under CPWD Works Manual 2003. (v) Any other relief to which in the facts and circumstances, the petitioner be found entitled may also kindly be granted in favour of the petitioner. " ( 2. ) PETITIONER is a proprietor of M/s. Krishna Construction and is registered as Class III (c) category of contractor of Central Public Works Department (hereinafter referred to as cpwd ). In this regard, respondent No. 4 has issued an office order (Annexure P-1), dated 14-10-2003 showing aforesaid enlistment of petitioner in Class III (Civil) category contractor. Para 2 of the order provides that he shall be eligible to submit tenders up to the limit of Rs. 40 lacs to Central Zone for the works falling within State of M. P. and Chhattisgarh. This enlistment is valid for the period of five years from the date of issuance of the order. Para 3 (a) and (b) provides that petitioner shall be required to deposit earnest money with each tender as per terms and conditions of the tender/agreement. Security deposit will be recovered from his bills in accordance with the rules in force from time to time. CPWD has issued a Works Manual in the year 2003 compiling various orders issued by the department. Para 16. 5. 1 of the Manual prescribes a pre-qualification of contractors which is applicable in the contracts of more than Rs. Security deposit will be recovered from his bills in accordance with the rules in force from time to time. CPWD has issued a Works Manual in the year 2003 compiling various orders issued by the department. Para 16. 5. 1 of the Manual prescribes a pre-qualification of contractors which is applicable in the contracts of more than Rs. two crorcs or Rs. five crores as the case may be. ( 3. ) PARA 17. 10 provides procedure for issuing tender documents to non-registered contractors. Para 17. 10 (a) specifically provides that for works costing upto Rs. two crores, tender shall be issued only to CPWD contractors with effect from 1-1-2003. Para 17. 10 (b) provides that for works costing over Rs. two crores and upto Rs. five crores, tender shall be issued to all contractors who have satisfactorily executed three similar works. In Para 5. 7 of the petition, it is stated by the petitioner that petitioner has undertaken civil works as building construction, transportation of construction material, laying of pipelines, repairs and maintenance of civil construction for CPWD since the last more than 10 years. There is no complaint against petitioner or his work. It is also stated that the petitioner has never committed any default on financial side or on the construction side. Petitioner completed the works undertaken by him within time limit prescribed with the satisfaction of the respondents without any complaint. ( 4. ) IN daily newspaper Nai Duniya, Indore, respondents issued a notice inviting tenders (Annexure P-4) in respect of work of maintenance of CPWD store at Indore and Karera for cartage of cement. The estimate cost of work shown in the NIT is Rs. 35,86,060/ -. Last date for submission of application form was shown as 19-10-2004 and date of opening of tender was shown as 25-10-2004. Subsequently, the date for issuance of tender form was extended upto 24-11-2004. ( 5. ) THE grievance of the petitioner is that in the NIT, the conditions, which are enumerated, are causing prejudice to the petitioner and virtually petitioner has been ousted from the field of consideration. The terms objected by the petitioner arc as under : (1) The tenderers have satisfactorily executed three similar works each of value Rs. 15. 00 lacs in the period of last five years (Similar works shall mean only carriage works ). The terms objected by the petitioner arc as under : (1) The tenderers have satisfactorily executed three similar works each of value Rs. 15. 00 lacs in the period of last five years (Similar works shall mean only carriage works ). (2) The tenderers should also produce documentary proof of having ownership of at least 4 truck for issue of tender forms. (3) The tenderers prior to acceptance of the lowest will have to deposit Rs. 5. 00 lacs as a FDR valid for 12 months from schedule Bank in the name E. E. and the same will be kept in Division Office till completion of the work. It will be in addition to earnest money and performance guarantee of the tender. This money shall be adjusted against loss of material by the contractor if any. Petitioner contended that these arc contrary to the provisions of CPWD Works Manual, 2003 which provides that for enlisted contractor, no condition shall be prescribed for issuance of tender form. It is also contended that the entitlement for issuance of tender form was only to the persons who are registered/enlisted with CPWD as the cost of work was less than Rs. two crores. Laying down aforesaid pre-conditions for issuance of tender form has no nexus with the object to be achieved and this has prevented the petitioner from participating in the process of tender as the petitioner is not in a position to satisfy first two conditions. The third condition has also been challenged by the petitioner on the ground that no such pre-condition is required to be satisfied by the enlisted contractor as he has already submitted a solvency certificate of Rs. 25 lacs at the time of registration/enlistment. ( 6. ) PETITIONER also challenged that condition of pre-deposit of Rs. 71,721/- at the time of filing application for issuance of tender form, is an undue restriction for issuance of tender form. Deposit of earnest money always relates at the time of submission of tender with the department and not at the time of application for obtaining tender form. The cost of tender form is Rs. 500/and only on payment of Rs. 500/-, tender form should be made available. ( 7. ) RESPONDENTS on notice, filed return. In short, the contentions of respondents arc as under : (a) That, the NIT has been issued for specialized work for carriage of material. The cost of tender form is Rs. 500/and only on payment of Rs. 500/-, tender form should be made available. ( 7. ) RESPONDENTS on notice, filed return. In short, the contentions of respondents arc as under : (a) That, the NIT has been issued for specialized work for carriage of material. As per Para 17. 3 of CPWD Works Manual, it is provided that in order to obviate difficulty to get competitive rates in respect of all specialized jobs, it is necessary that the tenders for specialized work should be issued to the. firms concerned which deal in the items of work and are enlisted separately in accordance with rules given in Appendix 20. (b) Para 17. 4. 2 of CPWD Works Manual provides that the tender paper should be issued only after ascertaining from the contractors their expertise and experience in the specialized field concerned. (c) As per aforesaid provisions, NIT was issued specifying certain eligibility criteria such as execution of other similar work each of value of Rs. 15 lacs in the period of last three years. (d) So far as requirement of ownership of trucks is concerned, it is stated that respondents arc getting cement on DGS and D rates, which allows 20-30 days time for lifting of cement from designated factory. Very often trucks are not available in the market during harvesting seasons or for other reasons and the cartage contractor do not get trucks from market on hire. Therefore, the cartage contractor should have his own minimum 4 trucks so that there is no delay in transportation of cement. Respondents are getting consignment at a time about 700-1000 MT and accordingly criteria of ownership of four trucks has been fixed in the NIT. (e) So far as condition of fixed deposit receipt of Rs. five lacs is concerned, this is in addition to earnest money and performance guarantee of the tender. This money is required to be adjusted against loss of material by the contractor during transportation, if any. The value of cement to be carted is about 25 lacs. In order to safeguard the interest of the respondents, amount of Rs. 5 lacs has been fixed. This money is required to be adjusted against loss of material by the contractor during transportation, if any. The value of cement to be carted is about 25 lacs. In order to safeguard the interest of the respondents, amount of Rs. 5 lacs has been fixed. (f) About depositing of earnest money with application for issuance of tender form, it is contended that the Director General of CPWD vide memorandum No. DGW/con/193, dated 29-6-2004 has issued such direction which is mandatory for every applicant applying for issuance of lender form. ( 8. ) PETITIONER filed rejoinder to the return and contended that contentions raised in the return are contrary to the CPWD Works Manual and virtually it is depriving the registered/enlisted CPWD contractors from the work. Condition of depositing earnest money at the time of filing application is unjust and unreasonable. When an amount of Rs. 500/- is recovered for the issuance of the tender form then there is no question of depositing earnest money at the time of application for issuing tender form. The condition is harsh. If applicant, on going through the tender form, decides not to submit any offer for contract, then the aforesaid deposit of earnest money is futile. Apart from this, earnest money is to be deposited alongwith offer. Until and unless some offer is made, respondents can not insist for the deposit of earnest money alongwith application for issuance of tender form. The stand taken by the respondents is contrary to provisions of CPWD Works Manual and the aforesaid condition deserves to be quashed. ( 9. ) RESPONDENTS have filed additional return in this case and reiterated the same which were raised in the return. It is also stated in the additional return that six persons submitted their applications for the issuance of tender form and except petitioner all other persons fulfilled conditions of NIT. The conditions are applicable to all intending tenderers whether they are registered with CPWD or arc specialised agencies. As the petitioner is having experience of performance of only one work of similar nature but is not having experience of satisfactorily executed three similar works each value of Rs. 15 lacs in the period of five years, petitioner does not possess four trucks in his ownership and he has not submitted earnest money alongwith application, petitioner is not entitled to participate in the tender. 15 lacs in the period of five years, petitioner does not possess four trucks in his ownership and he has not submitted earnest money alongwith application, petitioner is not entitled to participate in the tender. Respondents have placed reliance on the Apex Court judgment in Shapers Construction (P) Ltd. v. Airport Authority of India, (1996) 10 SCC 760 and Single Bench judgment of this Court in Jagjit Singh Lamba v. Union of India and Ors. , in W. P. No. 5139 of 1996, decided on 11-3-1997, a copy of which is filed on record as Annexure R-6. At the time of hearing of arguments, learned Counsel for petitioner submitted that so far as condition No. 3 about deposit of additional Rs. five lacs by way of FDR is concerned, he is not pressing this relief in this petition, but except this for other three conditions, he is pressing this petition. ( 10. ) TO appreciate the contentions of the petitioner, firstly two conditions may be seen which provide for execution of three similar works of value of Rs. 15 lacs in the period of last five years and petitioner should produce documentary proof of having ownership of at least four trucks are concerned, controversy in respect of first contention has been set at rest by the decision of this Court in Jagjit Singh Lamba (supra) wherein Honble D. M. Dharmadhikari, J. , learned Single Judge, as He then was, held : "6. The contention advanced on behalf of the petitioner is that the condition of experience of carting of 4000 M. Ts. of cement per year in the last three years is arbitrary and eliminates fair competition for the work tendered. 7. The other contention advanced is that the impugned instruction conferring an implied power on the authorities even to refuse tender form is also arbitrary and negation of Article 14 of the Constitution of India as opportunity to obtain the work on the basis of lowest tender is denied at the discretion of the authorities. 8. Mrs. Indira Nair, learned Counsel appears for respondent Nos. 1 to 3 representing the Telecommunication Department and Union of India. It is submitted that the condition of experience has been laid down to ensure the financial and working capability of the tenderers and to avoid possibility of non-fulfilment of the contract. 8. Mrs. Indira Nair, learned Counsel appears for respondent Nos. 1 to 3 representing the Telecommunication Department and Union of India. It is submitted that the condition of experience has been laid down to ensure the financial and working capability of the tenderers and to avoid possibility of non-fulfilment of the contract. So far as the power to non-issue tender forms contained in the instruction in the tender notice, the reply is that it has to be reasonably understood as meaning that where a tenderer Prima facie does not fulfil the conditions of the lender, issuance of tender form may be refused. 9. Shri Ravindra Shrivastava, learned Counsel who appears for respondent No. 4, also supported the stand taken on behalf of respondent Nos. 1 to 3. He pointed that the petitioner did not possess the requisite experience for the past three years of carting 4000 M. Ts. of cement per year and the said fact is apparent from the certificates which he had produced. The copies of the same are on record as Annexures R-l and R-4 with the return of respondent Nos. 1 to 3. 10. On consideration of the material and submissions made by the learned Counsel for the parties, in the opinion of this Court, no case is made out to interfere with the award of contract to respondent No. 4. It has not been disputed that the petitioner did not possess the requisite experience of carting in the past three years, as is apparent from the certificate (Annexure R-l) and the letter addressed by him Annexure R-4. As far as the validity of the condition of experience is concerned, the respondents appear to be right in their submission that such a condition is necessary to ensure financial and working capability of the tenderers and to limit the competition between competent tenderers. For the same reason, no objection can be raised to the instructions under which the authorities could withhold issuance of tender form where prima facie the intending tenderer does not fulfil the requisite qualification of experience. [see-; Shapers Construction Company v. Airport Authority, (1996) 10 SCC 760 ]. 11. This Court does not find that any discriminatory or unjust treatment was meted out to the petitioner. The petition has no force and is hereby dismissed. There shall be no order as to costs. [see-; Shapers Construction Company v. Airport Authority, (1996) 10 SCC 760 ]. 11. This Court does not find that any discriminatory or unjust treatment was meted out to the petitioner. The petition has no force and is hereby dismissed. There shall be no order as to costs. " Condition of experience is reasonable and can not be said to be arbitrary. In Jagjit Singh Lambas case (supra), this Court has considered this point and decided it. I also found no merit in the contention of petitioner in this regard. ( 11. ) SO far contention of petitioner about condition that tenderer should have ownership of four trucks is arbitrary, is concerned, said condition appears to be reasonable. Contention of the respondents is that they are getting cement on DGS and D rates and for lifting the cement, respondents arc getting 20-30 days time. Respondents have also noticed that sometime trucks arc not available in the market on hire and in those circumstances, there is difficulty to the contractor to transport the cement in fixed time. Quantity which the respondents are getting is in between 700 and 1000 MTs. Considering the consignment of 700 to 1000 MTs at one time, respondents have imposed the condition of ownership of four trucks with the tenderer which appears to be reasonable and does not call for any interference by this Court. ( 12. ) NOW, the question whether condition in the NIT for depositing Rs. 71,721 as earnest money alongwith application for issuance of tender form is concerned, is justified or arbitrary, may be seen. The NIT specifically says that tenders are called from the eligible contractors and specialised agencies which are approved by CPWD. Petitioner being enlisted contractor in category III (e) by the respondents is entitled to perform Works upto Rs. 40 lacs under the respondents though the work in tender is a specialised job of carriage of material, but when the petitioner is registered contractor is entitled to obtain tender form on due application on eligibility. Tender form is costing Rs. 500/ -. To apply for tender form imposition of condition that earnest money should be deposited alongwith application is apparently arbitrary and has no nexus with any requirement. The person who is eligible or deeming himself eligible as per criteria as fixed in the NIT or CPWD works manual will only get tender form. Tender form is costing Rs. 500/ -. To apply for tender form imposition of condition that earnest money should be deposited alongwith application is apparently arbitrary and has no nexus with any requirement. The person who is eligible or deeming himself eligible as per criteria as fixed in the NIT or CPWD works manual will only get tender form. Cost of tender form as stated in the NIT is Rs. 500/- which is non-refundable. The person who gets the tender form, after going through conditions of the tender will decide whether he has to apply for the contract or not. Apart from this respondents have enumerated three other conditions in the NIT which specifies the criteria even for the issuance offender form. But imposition of this condition at the time of the application itself is apparently arbitrary and untenable. Only justification shown in the reply is that this condition was enumerated because of some order issued by the Director General, CPWD. Except this, no justification has been shown in the return for demanding aforesaid earnest money at the time of applying tender form. Earnest money is paid by the contractor to bind himself to perform the contract. It represents a guarantee that the contract will be fulfilled or in other words it is given to bind the contractor. It is part of the purchase price when the transaction is carried out. It may be forfeited when the contract fails though by reason of default or failure of the contractor. It may be forfeited by other side if any default is made by the contractor in performance of obligation under the contract. The Apex Court considering this question in H. C. Mills v. Tata Air Craft, AIR 1970 SC 1986 , has laid down following principles regarding earnest money : (1) It must be given at the moment at which the contract is concluded. (2) It represents a guarantee that the contract will be fulfilled or, in other words, "earnest" is given to bind the contract. (3) It is part of the purchase price when the transaction is carried out. (4) It is forfeited when the transaction falls through by reason of the default or failure of the purchaser. (5) Unless there is anything to the contrary in the terms of the contract, on default committed by the buyer, the seller is entitled to forfeit the earnest. ( 13. (4) It is forfeited when the transaction falls through by reason of the default or failure of the purchaser. (5) Unless there is anything to the contrary in the terms of the contract, on default committed by the buyer, the seller is entitled to forfeit the earnest. ( 13. ) RECENTLY, the Apex Court in Videocon Properties Ltd. v. Dr. Bhalchandra Laboratories, (2004) 3 SCC 711 , considered the nature and character of earnest money deposit, held thus: " (14 ). . . . . . The further aspect that requires to be noticed is as to the nature and character of earnest money deposit and in that context the distinguishing features, which help to delineate the differences, if any. The matter is not, at any rate, res Integra. In (Kunwar) Chiranjit Singh v. Har Swarup (AIR 1926 PC 1), it was held that the earnest money is part of the purchase price when the transaction goes forward and it is forfeited when the transaction falls through, by reason of the fault or failure of the purchaser. This statement of law had the approval of this Court in Maula Bux v. Union of India ( AIR 1970 SC 1955 ). Further, it is not the description by words used in the agreement only that would be determinative of the character of the sum but really the intention of parties and surrounding circumstances as well, that have to be looked into and what may be called an advance may really be a deposit or earnest money and what is termed as "a deposit or earnest money" may ultimately turn out to be really an advance or part of purchase price. Earnest money or deposit also, thus, serves two purposes of being part payment of the purchase money and security for the performances of the contract by the party concerned, who paid it. " There is no iota of doubt that earnest money is always for the performance of the contract. The person who participated in the bid alongwith his offer is under an obligation to deposit earnest money for the due performance of his offer. The earnest money remains with the other party so that in case of default of the conditions of the contract or non-performance of the contract, it may be forfeited. The person who participated in the bid alongwith his offer is under an obligation to deposit earnest money for the due performance of his offer. The earnest money remains with the other party so that in case of default of the conditions of the contract or non-performance of the contract, it may be forfeited. The earnest money is sought to be adjusted or appropriated in that regard or is to be refunded to the contractor after due performance of the contract. But in the present case earnest money is being asked at the time of filing an application for issuance of tender form. The application for issuance of tender form is neither an offer nor the applicant can bind himself for any prospective offer merely by purchasing tender form. After purchasing tender form he is having discretion cither to make his offer or not. After going through its terms and conditions, if he makes offer, which on acceptance, binds him. But merely by purchase of tender form will not bind the purchaser of tender form in any manner. Demanding of earnest money at the time of application for the purchase of tender form is apparently arbitrary and without any reason. Respondents could not point out any justified reason for imposing such a condition at the time of application for purchase of tender form. In these circumstances, aforesaid condition is untenable under the law and is, hereby, quashed. ( 14. ) IN the result, condition Nos. (1) and (2), as stated hereinabove, in respect of having experience of satisfactory execution of three similarly works of value of Rs. 15 lacs each and the contractor should produce documentary proof of having ownership of four trucks arc concerned, these conditions are found to be reasonable and accordingly writ petition challenging aforesaid two conditions has no merit. So far as condition No. (3) as it relates to demand of additional deposit of Rs. 10 lacs as a FDR is concerned, said condition has not been challenged/pressed during the course of arguments and no decision is needed in this regard. But so far as condition about deposit of earnest money of Rs. 71,721/- at the time of application to purchase tender form is concerned, petition has merit and accordingly it is allowed. Said condition is quashed. Respondents are directed not to insist to deposit of earnest money of Rs. But so far as condition about deposit of earnest money of Rs. 71,721/- at the time of application to purchase tender form is concerned, petition has merit and accordingly it is allowed. Said condition is quashed. Respondents are directed not to insist to deposit of earnest money of Rs. 71,721/- alongwith application for issuance of tender form, if the applicant is otherwise eligible for applying for issuance of tender form. ( 15. ) IN the result, this writ petition is allowed in part as indicated hereinabove with no order as to costs.