Gujarat High Court
M/S Sterling And Wilson Private Limited vs Gujarat Metro Rail Corporation Gmrc Ltd on 26 September, 2022
Author: Aravind Kumar
Bench: Aravind Kumar, Ashutosh J. Shastri
C/SCA/19121/2022 ORDER DATED: 26/09/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 19121 of 2022
=============================================
M/S STERLING AND WILSON PRIVATE LIMITED
Versus
GUJARAT METRO RAIL CORPORATION GMRC LTD
=============================================
Appearance:
MR DEVANG NANAVATI, SENIOR ADVOCATE WITH MS MS PRACHITI
V SHAH(9990) for the Petitioner(s) No. 1
NANAVATI & NANAVATI(1933) for the Petitioner(s) No. 1
MR ANUJ K TRIVEDI(6251) for the Respondent(s) No. 1
=============================================
CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND
KUMAR
and
HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI
Date : 26/09/2022
ORAL ORDER
(PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR)
1. The petitioner has sought for quashing of the communications dated 30.07.2022, 17.08.2022 and 13.09.2022 'Annexure-B', whereby the tenders submitted by the petitioner has been declared to be non-responsive.
2. The respondent floated a tender on 21.02.2022 for Supply, Erection, Testing and Commissioning of Power Supply Receiving and Distribution System, 750 V DC- Third Rail Traction Electrification and SCADA System for Ahmedabad Metro Rail Project Phase-II. The Page 1 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 petitioner submitted its bid online on 04.06.2022 along with documents. On 30.07.2022, the respondent forwarded communication to the petitioner informing that the bid submitted by the petitioner is considered as non- responsive in terms of the clause 4.2(b) of Section III of Evaluation and Qualification Criteria (hereinafter referred to as 'EQC' for short). This was responded to by the petitioner on 31.07.2022 seeking clarification and basis on which the bid of the petitioner was considered as non- responsive. The respondent by communication dated 01.08.2022 forwarded a letter to the petitioner informing that the representation of the petitioner is being looked into. Thereafter on 17.08.2022, the respondent forwarded the impugned communication stating thereunder that as per tender clause No. 4.2(b) Key - activity D: TSS, the scope of specialized Sub-contractor shall be "supply and supervision" of erection, testing and commissioning of 600 V/750 V DC and above DC voltage TCC works. However, the Memorandum of Understanding between the petitioner and its consortium members Secheron SA Page 2 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 is limited to "supply" and therefore, the petitioner does not meet "must meet" tender criteria regarding key activity D:TSS.
3. The above communication triggered the petitioner to enter into another MoU with the said M/s.Secheron SA under which agreement, the clause 2 relating to scope of work came to be specifically excluded "supervision". Hence, the petitioner taking umbrage under the said fresh MoU, had entered into with the consortium member, forwarded a communication on 23.08.2022 to the respondent of this development and requested the respondent to re-consider the decision and this was followed by another communication dated 26.08.2022. The respondent authority vide communication dated 13.09.2022 informed the petitioner that bid was not meeting "must meet" tender criteria regarding key activity D:TSS and as such reiterated its earlier stand of petitioner being declared as non- responsive. Hence, this petition.
Page 3 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022
C/SCA/19121/2022 ORDER DATED: 26/09/2022
4. The respondent who is on caveat, has appeared and filed the reply affidavit denying the averments made in the petition and contending that the petition is not maintainable on the ground that no fundamental right of the petitioner is violated. It is also contended that the bid of the petitioner was rejected as it does not specify the eligibility cum qualification requirement. It is also contended that there is suppression of facts. It is also contended that tender is divided into three stages namely:
(a) Initial Filter cum Qualification
Requirement (IFCQR) Bid;
(b) Technical bid
(c) Price bid
5. It is contended that clauses 4.2(a) and 4.2(b) lay on the eligibility-cum-qualification criteria and said clauses have been incorporated. Having regard to the fact that the work involved is of a special nature and as such the tender document permitted the bidders to engage the Page 4 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 services of Special Sub-contractor for undertaking said work. Hence, contending that in view of clause 34.2 of Section I of Tender Document defining the expression Sub-contractor and the experience criteria is laid down in Clause 4.2(b), whereunder key activity is not only the experience which the bidders and/or their sub- contractors require to possess but the same is also part of the scope of work which the bidders and/or their Sub- contractors had to undertake, in the event of tender is awarded to them.
6. It is further contended that bidders are permitted to rely upon the experience of specialized Sub Contractor provided that the scope of the work of the specialized Sub-Contractor is clearly defined in MoU bidders and the Specialized Sub Contractor. By relying upon MoU submitted along with the bid would disclose that it was limited to the activity of supply and the activities of supervision, erection, testing and commissioning were specifically excluded and therefore, Page 5 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 all the requirements of tender except for "supply" were excluded and omitted by the petitioner in MoU with its Sub-Contractor and Sub-Contractor not being in position to work, test, commission and supervision over the same which was a mandatory requirement of the tender as well as the project work. It was found from the MoU submitted along with the bid to be in deviation to the tender requirement or in other words essential works have been omitted from the scope of the work under the MoU between the petitioner and its Sub-Contractor and is restricted only to supply and not the rest of the activities and it is found only in one of the 4 MoUs submitted by the petitioner. The same was held to be non-responsive. It is further contended that the petitioner does not have the necessary experience for execution of the activity prescribed under the Clause heading Key activity D, E, F of Clause 4.2(b) and as such it is contended that there is no error, much less one claimed in the petition. Hence, the respondent has prayed for dismissal of the petition. Page 6 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022
C/SCA/19121/2022 ORDER DATED: 26/09/2022
7. We have heard the arguments of Mr. Devang Nanavaty, learned Senior Advocate for the petitioner and Shri Anuj Trivedi, learned counsel for respondent.
8. It is contended by Mr. Devang Nanavaty, learned Senior Counsel appearing for the petitioner that the respondent committed serious error in declaring the bid of the petitioner as non-responsive and it smacks of arbitrariness, lacks bona fide and in breach of fundamental right of the petitioner. It is further contended that the respondent authorities have not extended any opportunity to the petitioner before declaring the bid of the petitioner as non-responsive and as such it is in violation of principles of natural justice. He would also submit that the respondent has misread the terms and conditions of its own tender documents and by drawing out attention to clause 4.2(b) of Section III of EQC which indicates the required experience to participate in tender process and one of the key activity being D:TSS stipulated the supply, supervision, erection, testing and commission of at least 5 traction Sub Station Page 7 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 of 600 V DC or above DC voltage etc. and a meaningful reading of the aforesaid clause only encompasses "supply and supervision" as experience and eligibility criteria of the bidders Sub-Contractor and not as the scope of the work. Hence, he would contend that decision of the respondent declaring the bid of the petitioner as non- responsive is, irrational, arbitrary and misinterpreting the terms and conditions of the tender.
9. He would draw the attention of the Court to the MOA dated 23.04.2022 entered into between petitioner and its sub-contractor whereunder in Clause (C), it is specifically included "Supply and Supervision" and virtually reiterated in Clause (D) of said MOA to the effect that the sub-contractor will be responsible for that particular scope of work mentioned in "C" above and the mere omission of the same in clause 2.1 describing scope of work by striking of "as per clause (C) &" was only a typographical error which cannot be construed as erasing the earlier clause. He would also contend that even Page 8 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 otherwise the subsequent MOA or fresh agreement entered into on 18.08.2022 between petitioner and its sub-contractor has also brought within its sweep the expression 'supervision' and vide Clause 2.1 and also incorporating the expression "erection, testing and commissioning of power supply 750V DC traction electrification for Ahmedabad Metro Rail Project Phase-2 xxxxx" and as such the defect if any stands cured and therefore there was no substantial change which could be construed as going to the root of the matter and thereby depriving the petitioner from participating in further tender process. He would also submit that the respondent committed a serious error in not taking into consideration the relevant documents produced by the petitioner to indicate the sub-contractor being fully capable of erecting, commissioning, supervising and testing and as such the rejection of the bid of the petitioner has been non-responsive is erroneous and liable to be quashed. He would submit that the very same petitioner along with very same sub-contractor has submitted similar bids in Page 9 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 respect of similar projects at Bengaluru Metro Rail Corporation Project, Kochin Metro Rail Corporation Project, Delhi Metro Rail Project and Mumbai Metro Rail Corporation Project which has not been taken note of though highlighted in the representation submitted on 23.08.2022. Hence, he has prayed for the petition being allowed. In support of his submissions, he has relied upon the following judgments :
(i) 2022 SCC Online SC 574
(ii) 2021 SCC Online SC 1141
10. On the other hand, Shri Anuj Trivedi, learned counsel appearing for the respondent has reiterated the contentions raised in the reply affidavit and would submit that the petitioner having submitted the bid enclosing the documents which disclosed that the consortium partner was not having the requisite agreement with the petitioner indicating thereunder that the sub-contractor had also agreed for commissioning, testing, erecting and supervising, the respondent has rightly arrived at a Page 10 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 conclusion that the bid offered by the petitioner was non- responsive as it did not meet the criteria prescribed under Clause 4.2(b). Hence, he has submitted that there is no error committed by the respondent. He would draw the attention of the Court to Clause 29.4 to contend that if a bid is not substantially responsive to the requirements of the bid documents, the employer namely the respondent would be empowered to reject the same and it cannot be made good by supplementing the reasons or by filing fresh documents as it is impermissible. He would also draw the attention of the Court to Annexures-R3, R4 and R5 submitted by the very same petitioner which MOA had been entered into between petitioner and its sub- contractors (other than Secheron SA) which clearly indicate the scope of the specialized sub-contractors took within its sweep of such sub-contractors possessing the proven experience of supply, erection, testing and commissioning which expression and words were conspicuously absent in the MOA dated 23.04.2022 (Annexure-R6) entered into between petitioner and Page 11 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 Secheron SA disclosing that under the heading scope of work namely Clause 2.1 the expression "as per Clause (C) &" referable to the said clause in the very same agreement had been deleted. He would contend that in other words the scope of commissioning, testing, erecting and supervising was absent in the MOA entered into between petitioner and Secheron SA and same cannot be supplemented by fresh agreement entered into by petitioner with the said Secheron SA at a later date that too after submission of the bid and also after being intimated of the bid of the petitioner being non- responsive by communications dated 30.07.2022 and 17.08.2022. In support of his submissions, he has relied upon following judgments :
(i) Agmatel India Pvt. Ltd. Vs Resoursys Telecom and others, reported in (2022) 5 SCC
362.
(ii) National High Speed Rail Corporation Ltd. vs. Montecarlo Ltd and another, reported in (2022) 6 SCC 401.
(iii) State of Punjab and others vs. Meher Din, reported in (2022) 5 SCC 648.
Page 12 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022
(iv) Bharat Coking Coal Ltd. And others vs. Amr Dev Prabha and others, reported in (2020) 16 SCC 759.
(v) Consortium of Titagarh Firema Adler SPA Titagarh Wagons Ltd vs Nagpur Metro Rail Corporation Ltd. reported in (2017) 7 SCC 486.
(vi) Bakshi Security and Personnel Services Pvt. Ltd vs. Devkishan Computed Pvt. Ltd. And others, reported in (2016) 8 SCC 446.
(vii) Vidarbha irrigation Development
Corporation and others vs. Anoj Kumar
Agarwala and others, reported in (2020) 17 SCC 577.
11. Having heard learned advocates appearing for the parties and on perusal of the records, we are of the considered view that following points would arise for our consideration :
(i) Whether the impugned communications dated 30.07.2022, 17.08.2022 and 13.09.2022 are liable to be set aside or upheld?
(ii) What order? Page 13 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022
12. At the outset, it requires to be noticed that the Hon'ble Apex Court in the matter of Government contracts and tenders in the case of M/s.NG Projects Limited vs. Vinodkumar Jain and others reported in (2022) 6 SCC 127, has held that the Courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. It has been further held :
"13. This Court sounded a word of caution in another judgment reported as Silppi Constructions Contractors v. Union of India and Ors.6, wherein it was held that the Courts must realize their limitations and the havoc which needless interference in commercial matters could cause. In contracts involving technical issues, the Courts should be even more 5 (2016) 16 SCC 818 6 2019 SCC OnLine SC 1133 reluctant because most of us in judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain . As laid down in the judgments cited above, the Courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference would cause unnecessary loss to the public exchequer. It was held as under:-
"19. This Court being the guardian of fundamental rights is duty bound to interfere Page 14 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 when there is arbitrariness, irrationality, mala fides and bias. However, this Court in all the aforesaid decisions has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear- cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts, but this discretionary power must be exercised with a great deal of restraint and caution. The Courts must realize their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. As laid down in the judgments cited above the courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer.
20. The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial Page 15 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 intervention in matters of contract involving the state instrumentalities; the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not sit like a court of appeal over the appropriate authority; the court must realize that the authority floating the tender is the best judge of its requirements and, therefore, the court's interference should be minimal. The authority which floats the contract or tender and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity. With this approach in mind, we shall deal with the present case." (Emphasis supplied)
14. In National High Speed Rail Corpn. Ltd. v. Montecarlo Ltd.7, this Court sounded a word of caution while entertaining the writ petition and/or granting stay which ultimately may delay the execution of the Mega projects. It was held as under:
"95. Even while entertaining the writ petition and/or granting the stay which ultimately may delay the execution of the Mega projects, it must be remembered that it may seriously impede the execution of the projects of public importance and disables the State and/or its agencies/instrumentalities from discharging the constitutional and legal obligation towards the citizens.
Therefore, the High Courts should be extremely careful and circumspect in exercise of its discretion while entertaining such petitions and/or while granting stay in such matters.Page 16 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022
C/SCA/19121/2022 ORDER DATED: 26/09/2022 Even in a case where the High Court is of the prima facie opinion that the decision is as such perverse and/or arbitrary and/or suffers from mala fides and/or favouritism, while entertaining such writ petition and/or pass any appropriate interim order, High Court may put to the writ petitioner's notice that in case the petitioner loses and there is a delay in execution of the project due to such 7 2022 SCC OnLine SC 111 proceedings initiated by him/it, he/they may be saddled with the damages caused for delay in execution of such projects, which may be due to such frivolous litigations initiated by him/it. With these words of caution and advise, we rest the matter there and leave it to the wisdom of the concerned Court(s), which ultimately may look to the larger public interest and the national interest involved."
*** *** ***
22. The satisfaction whether a bidder satisfies the tender condition is primarily upon the authority inviting the bids. Such authority is aware of expectations from the tenderers while evaluating the consequences of non-performance. In the tender in question, there were 15 bidders. Bids of 13 tenderers were found to be unresponsive i.e., not satisfying the tender conditions. The writ petitioner was one of them. It is not the case of the writ petitioner that action of the Technical Evaluation Committee was actuated by extraneous considerations or was malafide.Therefore, on the same set of facts, different conclusions can be arrived at in a bona-fide manner by the Technical Evaluation Committee. Since the view of the Technical Evaluation Committee was not to the liking of the writ petitioner, such decision does not warrant for interference in a grant of contract to a successful bidder.
*** *** ***
26. A word of caution ought to be mentioned herein that any contract of public service should not be interfered with lightly and in any case, Page 17 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 there should not be any interim order derailing the entire process of the services meant for larger public good. The grant of interim injunction by the learned Single Bench of the High Court has helped no-one except a contractor who lost a contract bid and has only caused loss to the State with no corresponding gain to anyone.
27. We also find that multiple layers of exercise of jurisdiction also delay the final adjudication challenging the grant of tender. Therefore, it would be open to the High Courts or the Hon'ble Chief Justice to entrust these petitions to a Division Bench of the High Court, which would avoid at least hearing by one of the forums."
13. At the same time, it has to be noticed that the power to reject the bids cannot be exercised arbitrarily merely because it has the power to do so. Any arbitrary exercise of power to reject the bids has been held to be violative of Article 14. The Hon'ble Apex Court in the case of Union of India and others vs. Dinesh Engineering Corporation and another, reported in 2001 (8) SCC 491 has held :
"15. Coming to the second question involved in these appeals, namely, the rejection of the tender of the writ petitioner, it was argued on behalf of the appellants that the Railways under clause 16 of the Guidelines was Page 18 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 entitled to reject any tender offer without assigning any reasons and it also has the power to accept or not to accept the lowest offer. We do not dispute this power provided the same is exercised within the realm of the object for which this clause is incorporated. This does not give an arbitrary power to the Railways to reject the bid offered by a party merely because it has that power. This is a power which can be exercised on the existence of certain conditions which in the opinion of the Railways are not in the interest of the Railways to accept the offer. No such ground has been taken when the writ petitioner's tender was rejected. Therefore, we agree with the High Court that it is not open to the Railways to rely upon this clause in the Guidelines to reject any or every offer that may be made by the writ petitioner while responding to a tender that may be called for supply of spare parts by the Railways. Mr. Iyer, learned senior counsel appearing for the EDC, drew our attention to a judgment of this Court in Sterling Computers Ltd. etc. v. M/s. M & N Publications Ltd. & Ors. (1993 1 SCC 445) which has held :
"Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bona fide manner although not strictly following the norms laid down by the courts, such decisions are upheld on the principle laid down by Justice Holmes, that courts while judging the constitutional validity of executive decisions must grant certain measure of freedom of "play in the joints" to the executive."Page 19 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022
C/SCA/19121/2022 ORDER DATED: 26/09/2022
16. But then as has been held by this Court in the very same judgment that a public authority even in contractual matters should not have unfettered discretion and in contracts having commercial element even though some extra discretion is to be conceded in such authorities, they are bound to follow the norms recognised by courts while dealing with public property. This requirement is necessary to avoid unreasonable and arbitrary decisions being taken by public authorities whose actions are amenable to judicial review. Therefore, merely because the authority has certain elbow room available for use of discretion in accepting offer in contracts, the same will have to be done within the four corners of the requirements of law especially Article 14 of the Constitution. In the instant case, we have noticed that apart from rejecting the offer of the writ petitioner arbitrarily, the writ petitioner has now been virtually debarred from competing with the EDC in the supply of spare parts to be used in the governors by the Railways, ever since the year 1992, and during all this while we are told the Railways are making purchases without any tender on a proprietary basis only from the EDC which, in our opinion, is in flagrant violation of the constitutional mandate of Article 14. We are also of the opinion that the so-called policy of the Board creating monopoly of EDC suffers from the vice of non- application of mind, hence, it has to be quashed as has been done by the High Court."
14. In the matter of Agmatel India Pvt. Ltd. (supra), the Hon'ble Apex Court has held that scope of Page 20 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 judicial review in contractual matters and particularly in relation to process of interpretation of tender document, the Court would prefer to keep restraint inasmuch as the author of the tender document is taken to be the best person to understand and appreciate its requirement. It has been held :
"26. The above-mentioned statements of law make it amply clear that the author of the tender document is taken to be the best person to understand and appreciate its requirements; and if its interpretation is manifestly in consonance with the language of the tender document or subserving the purchase of the tender, the Court would prefer to keep restraint. Further to that, the technical evaluation or comparison by the Court is impermissible; and even if the interpretation given to the tender document by the person inviting offers is not as such acceptable to the Constitutional Court, that, by itself, would not be a reason for interfering with the interpretation given."
15. In the case of National High Speed Rail Corporation Ltd. (supra), it is held that if clauses of the tenders are known at the beginning of the tender stage, the tenderer would be estopped from either assailing the Page 21 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 said clause or the condition and the consequential orders passed thereon as being illegal or malafide. It has been further held :
"44. Under the circumstances, the High Court has committed a grave error in holding that Clauses 28.1 and 42.5 are patently illegal, more particularly, in absence of any challenge to the same and also on the ground that once the original writ petitioner participated having knowledge of the aforesaid clauses in the ITB, thereafter it was not open for the original writ petitioner to challenge the same. The original writ petitioner was knowing right from the very beginning with respect to the confidentiality clause contained in Clause 28 and that grounds on which the Bids of unsuccessful Bidders are not selected shall be communicated only after a final decision to award the contract is communicated under Clause 42. If the original writ petitioner was aggrieved either it would not have participated and/or ought to have challenged such clauses before participating in the tender process. Under the circumstances, the impugned judgment and order passed by the High Court holding Clauses 28.1 and 42.5 as patently illegal cannot sustain and the same also deserves to be quashed and set aside.
45. Before we part, we deem it proper to express few words of caution to the High Courts while entertaining the writ petitions challenging the tender process midway and/or while interfering with the tender process in the contracts, more particularly, with respect to the Page 22 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 contracts/projects funded by the foreign countries and with respect to the Mega project like the present one. Before entertaining the writ petition with respect to such Mega projects funded by the foreign countries, one has to appreciate that funds of such Mega projects by the foreign country is followed by a detailed discussion between the Prime Ministers of both the countries and to strengthen bilateral cooperation in the rail sector. The foreign country is ready to invest/fund such a huge amount on non- negotiated terms and the Bid Documents are prepared by the foreign financial agency/country in accordance with the latest version of the Standard Bidding Documents. These investments from developed nations are made on the basis of non-negotiated terms and conditions, where the sole discretion as to what would be the conditions of the investments and on what terms the contractors would be chosen to implement the project, vests with the investor foreign developed nation. Considering the special peculiarities of such foreign sovereign fundeddevelopment contracts, which can be envisaged and exist only due to the availability of the investment and willingness of the foreign sovereign country to finance such infrastructure project, the said contracts assume the different characteristics. Therefore, there shall be different considerations so far as the judicial interference is concerned between the foreign funded contracts and the ordinary public works contracts funded from public exchequer."
16. Keeping these authoritative principles in mind, when we turn our attention to the facts on hand, it would Page 23 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 emerge from the records that the bid of petitioner has been held to be non-responsive in terms of Clause 4.2(b) of Section III of Evaluation and Qualification Criteria. Said clause reads as under :
"4.2(b) Specific Experience - For the above or any other contracts completed and under implementation as prime contractor (Single entity or joint venture/Consortium member), management contractor or sub contractor on or after the first day of the calendar year during the period stipulated in 4.2(a) above, a minimum construction experience in the following key activities (A+B+C+D+E+F) successfully completed :
Key Activity A : RSS Construction, supply, testing and commissioning of at least One (1) receiving substation with primary voltage of 66 KV and above; with use of AIS/GIS; along with other associated works.
Key Activity B: ASS Supply, installation, testing and commissioning of at least 9 auxiliary substations with primary voltage of 11 KV and above voltage or value of ASS system work of INR 10 Cr or more.
Key Activity C: Cabling supply, installation, testing, and commissioning of HV (11 kv or above) cable network system for minimum length of 11 RKM or value of HV cabling work of INR 16 Cr or more.Page 24 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022
C/SCA/19121/2022 ORDER DATED: 26/09/2022 Key Activity D: TSS Supply and supervision of erection, testing and commissioning of at least 05 traction sub stations of 600 V DC or above with the use of AIS /GIS or metro rail / suburban rail main line railways/mono rail/tramways/ or value of PSS system work of INR 34 Cr or more.
Key Activity E : SCADA Supply, erection, testing and commissioning of SCADA system for metro rail / suburban rail main line railways/mono rail/tramways/ for minimum length of 11 RKM or value of SCADA system work of INR 5 Cr or more.
Key Activity F: Third Rail Supply and supervision of erection, testing and commissioning of 600 V /750 V or above DC Third Rail traction electrification system for metro rail / suburban rail /mono rail/main line railway /tramways/ for minimum length of 11 RKM (22 TKM) (Composite rail) or value of Third Rail system work of INR 46 Cr or more."
17. A perusal of the expression in clauses (d), (e) and (f) above referred to would indicate that the emphasis is on "supply and supervision of erection, testing and commissioning". The aforesaid works being special in nature, the tender document permitted petitioner to engage services of special sub-contractors for undertaking such works. Clause 34.2 of section 1 of Page 25 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 the tender document defines the special sub-contractor as follows :
"34.2 "Specialized Subcontractor" is a subcontractor hired for specialized work as defined by the Employer in Section III -4.2 Experience. If no specialized work is specified by the Employer as such, subcontractors experience shall not be considered for Bids evaluation."
18. Thus, it would emerge from the above that experience criteria laid down in clause 4.2(b) would not only mandate that key activity is not merely restricted to the bidders but also extended to the sub-contractors and it is part of the scope of work which the bidder and/or their sub-contractors have to undertake in the event of tender being awarded to them.
19. An addendum came to be issued on 18.5.2022 which included additional notes under section 3 of the EQC which is at Sr.No.3 whereunder it is stated to the following effect:
"(v) In cases of specialized sub-contractor being proposed, the Main Contractor/ Page 26 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 Consortium/JV shall be fully liable for all obligations including that of the specialized sub-contractor. The specialized sub-contractor will continue to be liable for this scope of work in case the Main contractor/Consortium/JV defaults/falls. An MOU with the specialized sub-contractor needs to be submitted by the bidder clearly stating the above and defining the scope of the work of the specialized sub-
contractor."
20. Thus, it was mandatory on the part of the bidder to submit MoU/MoA entered into between itself with its sub-contractor which categorically indicates the scope of work of the sub-contractor. It is an essential term of the tender document inasmuch as the scope of work under clause 4.2(b) covers and encompasses the sub-contractor and the engagement of the sub-contractor being permitted, it would be imperative for the bidders to clearly provide the scope of work that the bidder has agreed to give its sub-contract. In other words, for the purpose of specific experience under clause 4.2 (b), the bidder is permitted to rely upon the experience of a Page 27 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 specialized sub-contractor, subject to the scope of work of specialized sub-contractor is clearly defined under MoU/MoA between the bidder and the specialized sub- contractor. It is this provision which is incorporated under the tender document enabled or empowered the bidder to submit the bid documents including the MoU/MoA entered with the sub-contractor to be furnished.
21. In the instant case, petitioner along with its bid has submitted MoA dated 1.6.2022 entered into with Synergy System and Solution, wherein at recitals it is stated that requirement of Key Activity-E with the specialized sub-contractor viz. Synergy System and Solution comply with 'supply, erection, testing and commissioning of SCAD system'. Clause 2 of the said MoA defining the scope of work clearly discloses the scope of work of sub-contractor would be as per clause
(c) referred to above therein and clause (c) indicates that the sub-contractor has proven experience in supply, Page 28 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 erection, testing and commissioning and it would be liable for all obligations of the contract and would be responsible for the scope of work mentioned in clause (c) therein.
22. Petitioner while submitting its bid with reference to Key Activity F; Third Rail which is also referable to clause 4.2 (b) has submitted MoA dated 5.5.2022 entered into with its sub-contractor M/s. Rail Tech ALU-SINGEN whereunder it is stated that specialized sub-contractor would comply with 'supply and supervision of erection, testing, commissioning' which is defined as sub-contract work. It is agreed under the said MoA with Rail Tech ALU-SINGEN would carry out sub- contract work in case the tender is awarded to it and the scope of work would be as per the sub-contract work by way of said MoA and recital clause 1.0 (a) of the said MoA, scope of work of sub-contractor of the petitioner has been clearly defined and the same is as per the tender requirement which included all the activities Page 29 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 therein. It is for this precise reason, respondent has not found any fault with MoA/MoU submitted by the very same petitioner in respect of Key Activity E and F of the very same clause 4.2 (b) relating to SEADA and Third Rail by virtue of the MoA entered into between the petitioner and its sub-contractor being in consonance with the tender specifications or tender conditions. Whereas with reference to Key Activity D - TSS, MoA dated 23.4.2022 submitted by the petitioner which has been entered with Scheron SA by the petitioner, it is agreed between the parties the requirement of Key Activity D that the specialized sub-contractor namely Scheron SA complies with supply and supervision of erection, testing and commissioning. However, clause 2 of the said MoA which defines 'the scope of work' as required under the tender document excludes from the scope of work the recitals found in clause (c) above therein. The words and expression 'as per clause (c) above' have been stuck off. In substitution to the same, scope of work has been merely restricted to 'supply of ...' Thus, MoA dated Page 30 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 23.04.2022 submitted along with tender bid would disclose that the contract entered into between petitioner and its sub-contractor Scheron SA was limited to the activity of supply and other activities like supervision, erection, testing and commissioning were specifically excluded from the said contract. Thus, the requirement of the tender document was not forthcoming from the MoA dated 23.04.2022 entered into between the petitioner and its sub-contractor. To put it differently, sub-contractor was only required to supply equipment and was not required to either erect, test, commission to the same and also supervise the same which was the essential requirement of the tender condition. In other words, these words were inconspicuous in the MoA entered into between the petitioner and the sub-contractor.
23. The very fact that the petitioner having understood the lacuna has tried to fill in the gap by entering into a fresh MoA on 18.08.2022, i.e. on the next day after the order of communication of rejection of the bid of the petitioner as being non-responsive being Page 31 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 forwarded by the respondent to the petitioner. In other words, the petitioner consciously knew of the essential requirement of the tender but seems to have ignored the same for the reasons best known. When the petitioner itself claims that it had submitted a similar tender and has been successfully in other States, it cannot be gainsaid by the petitioner that it was ignorant or not being conscious on this fact or the essential terms of the tender would not be mandatory but would only be directive. Hence, we are of the considered view that the contentions raised by the petitioner cannot be accepted. The Key Activity D: TSS and Key Activity F: Third Rail would indicate that the expression 'supply and supervision of erection, testing and commissioning...' with reference to traction sub-station and commissioning of 600 V / 750 V was in contemplation. Clause 2.2.5 of section VII, Part 2 of the tender document enumerates the scope of work for traction sub-station, which includes engineering, supply, installation, integration, testing, commissioning, etc. of various equipment. The essential Page 32 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 terms of the tender requirement viz. 'supervision, erection, testing and commissioning' being conspicuously absent in the MoA dated 23.04.2022 entered into between the petitioner and the sub-contractor Secheron SA, it cannot be held that the rejection of the petitioner being non-responsive as illegal or irrational.
24. Undisputedly, petitioner did not have necessary expertise for execution of the Key Activity D, E and F stipulated under clause 4.2(b) and for this obvious reason, it had entered into an MoA with the sub- contractor which was permissible and the scope of work envisaged under the MoA entered into between the petitioner and Secheron SA having not disclosed that it included commissioning, testing, and supervising and in the absence of petitioner possessing requisite expertise, the rejection of the bid of the petitioner as non-responsive is just and proper. In that view of the matter, we do not find any illegality in the impugned communication. Page 33 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022
C/SCA/19121/2022 ORDER DATED: 26/09/2022
25. Petitioner is a private limited company which had participated in the tender floated by the respondent for Supply, Erection, Testing and Commissioning of Power Supply Reserving and Distribution System, 750 V DC - Third Rail Traction Electrification and SCADA System for Ahmedabad Metro Rail Project Phase II. It was specifically indicated in clause 4.2 (b) of Section 3 of EQC that if any bidder is not meeting the qualifying requirements on its own, the bidder has the option of associating with a specialized contractor having relevant qualification. Based on the said clause in the tender document, petitioner had entered into a Memorandum of Agreement dated 23.04.2022 that a company called SCECHERON SA for pre-tender tie up on the premise that the said company met with the eligibility criteria prescribed under clause 4.2 (a) of Section 3 of EQC of the tender document. It is contended in the petition that the said company M/s. Secheron SA has executed on various projects in the past alongside, petitioner its sub- contractor Secheron SA have executed identical and/or Page 34 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 similar project in past who are declared technical compliant and responsive by other Metro Rail Authority across India. To substantiate the same, the certificate issued by various Metro Rail Corporation across India has been produced at Annexure-F collectively.
26. This Court, while examining the claim of the petitioner, has found that the Memorandum of Agreement which was relied upon by the petitioner viz. agreement dated 23.04.2022 under the head 'scope of work'. The words and expression 'as per clause (c) above' had been stuck off in the said agreement or in other words, the agreement entered into between the petitioner and Secheron SA, there was no scope for Secheron SA to undertake the work of supervision of erection, testing and commissioning of power supply, which was the essential term or condition of the tender. It has been further noticed that the petitioner after being intimated of its non-responsive had tried to enter into fresh agreement and accordingly had entered into such fresh agreement on 18.08.2022 and relied upon the same to cure the Page 35 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 defects by furnishing the said agreement subsequently which was found to be impermissible under the terms of the bid.
27. It was clear from Clause 4.2 (b) of the tender condition that for the purpose of specific experience as indicated thereunder, the bidder was permitted to rely upon the experience of a specialized sub-contractor, provided the scope of work of the specialized sub- contractor was clearly defined in an MOU between the bidder and the specialized sub-contractor. The said MOU was also to be submitted by the bidder along with its bid. In fact, the very same petitioner in furtherance of clause 4.2(b) had submitted its bid enclosing several agreements entered into with its sub-contractor for relying upon the experience. One such Memorandum of Agreement dated 01.06.2022 (Annexure-R3) entered into with M/s. Synergy System and Solution which was produced with bid disclosed said company had agreed under the "Key Activity-E" specified in the bid viz. that it would comply with 'Supply, Erection, Testing and Commissioning Page 36 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 of SCADA System'. Clause 2 of said Memorandum of Understanding defined 'the scope of work' as required under the tender document whereby it is categorically stated that scope of work would be as per recital - C of Memorandum of Agreement. In other words, the scope of work of the sub-contractor of the petitioner was clearly defined, which was as per the tender requirement and included all the activities. Likewise, with regard to 'Key Activity F Third Rail', it contained similar clause and as such petitioner had entered into Memorandum of Agreement with a sub-contractor viz. M/s. Rail Tech ALU- SINGEN on 05.05.2022 (Annexure-R4). Further, in respect of same activity, petitioner had also entered into Memorandum of Agreement dated 31.05.2022 (Annexure- R5) with M/s. Rehau Polymers Pvt. Ltd. The copies of the said Memorandum of Agreement has been produced by the respondent at Annexures-R3 to R5 and perusal of the same as already noticed hereinabove would disclose that it was in tandem with the tender condition viz. the specialised contractors with whom the petitioner had Page 37 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 entered into Memorandum of Agreement for possessing relevant qualification, which the petitioner did not possess was on account of tender condition enabling the bidders to enter into such Memorandum of Agreement and there has been pre-tender tie up and bidder can rely upon the experience of the specialized sub-contractor.
28. It is in the aforesaid background, petitioner claimed to have entered into similar agreement on 23.04.2022 (Annexure-R6) with M/s. Secheron SA with reference to 'Key Activity D : TSS' contending that it would meet the requirement prescribed of the tender conditions as noticed hereinabove. The words 'as per clause (c) above &' was stuck off in clause 2 under the head 'scope of work'. However, the scope of work was restricted to only 'supply'. It is in this background, this Court has accepted the plea of the respondent that Memorandum of Agreement executed between the petitioner and its sub-contractor was only limited to the activity of 'supply' and the activities of 'supervision, erection, testing and commissioning' which was also Page 38 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 within the scope of the tender condition had been specifically excluded from the purview of Memorandum of Agreement dated 23.04.2022. In other words, plea of the respondent that all the requirement of the tender document having been complied was not found or in other words, the essential term which was required to be found had stood excluded and/or omitted from the MOU entered into between petitioner and its sub-contractor. It is only on evaluation of the tender documents produced, respondent had found petitioner's ineligibility and same was communicated to petitioner by respondent vide letter dated 30.07.2022. In other words, MOU relied upon by petitioner clearly disclosed that said MOU suffered from deviation. It is only thereafter petitioner attempted to improve upon its bid and thereafter submitted a fresh Memorandum of Agreement dated 18.08.2022 executed between itself and the sub-contractor, by which time the last date of submission dated 06.06.2022 was already over and as such accepting of any new document by respondent did not arise. Petitioner who claims to be an Page 39 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 expert and who also claims to have undertaken similar projects and also having entered into similar MOUs with specialised agencies cannot feign ignorance of such technical terms being omitted from such MOUs it may have entered into with its sub-contractors, when the tender condition specifically disclosing that failure to meet the essential term of the tender would be disqualified at the initial stage of bid as being non- responsive. Knowing fully well of this factual aspect petitioner has approached this Court by filing the instant Special Civil Application and has perforced the respondent to defend its acts. We have been informed that cost or value of the work involved relating to the subject tender is to the tune of about Rs.600 Crore. In that view of the matter, we are of the considered view that principle of 'costs should follow the cause' would squarely be applicable. It has been held in R vs. Lord Chancellor [1998 (2) All England Report 755] that general rule 'cost will follow the event in judicial review proceeding' is squarely applicable to the facts on hand. Page 40 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 Having known that it did not possess the requisite expertise, petitioner relied upon the MOU dated 23.04.2022 (Annexure-R6), it had entered with the sub- contractor M/s. Secheron SA and relied upon the said MOU to contend that sub-contractor would meet the essential term of the tender which was required to be complied by the petitioner namely it possessed the expertise in 'supply, erection, commissioning, testing and supervising' but same had been stuck off under the said MOU dated 23.04.2022 (Annexure-R6). Petitioner had wantonly or intentionally attempted to mislead the respondent by furnishing this MOU (Annexure-R6). It is on account of such deficiency, the bid of the petitioner came to be held as non-responsive and to cure the said defect, petitioner entered into a fresh agreement on 18.08.2022. This itself would indicate that petitioner attempted to sneak into the tender process by suppression and as such it is liable to be mulcted with costs payable to the respondent as it had been made to defend its action and rightly so by expending its time and Page 41 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022 C/SCA/19121/2022 ORDER DATED: 26/09/2022 money, to stave off the attempt of the petitioner to get on to the board of tender process by suppressing the fact. Hence, we are of the considered view that the costs deserve to be awarded in the instant case in favour of the respondent for defending this proceedings.
For the reasons aforestated, we proceed to pass following ORDER Special Civil Application stands dismissed with costs of Rs.50,000/- payable by petitioner to respondent.
(ARAVIND KUMAR,CJ) (ASHUTOSH J. SHASTRI, J) GAURAV/BHARAT/AMAR Page 42 of 42 Downloaded on : Sun Dec 25 02:39:30 IST 2022