Bombay High Court
Polycab Wires Private Limited, Mumbai vs The State Of Maharashtra And Others on 14 October, 2014
Author: R.M.Borde
Bench: R.M.Borde, V.K.Jadhav
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IN THE HIGH COURT OF JUDICATURE OF BOMBAY
BENCH AT AURANGABAD
WRIT PETITION NO.7843 OF 2014
Shah Investments, Financials,
Developments & Consultants Pvt.Ltd.,
& Control Automation Projects Pvt.Ltd.,
The Companies incorporated under the
Laws of India, through its Manager &
P.A. Holder, Minex s/o Jayantilal Shah,
age: 57 years, Occ: Pvt. Service,
R/o C/o Dalal Desai & Kumana,
Union Co-op. Insurance Building,
2nd Floor, 23, Sir P.M. Road,
Fort, Mumbai-400 001. Petitioner
Versus
1 The State of Maharashtra,
through Principal Secretary,
Urban Development Department,
Mantralaya, Mumbai-400 032.
2 The Commissioner,
Aurangabad Municipal Corporation,
Aurangabad.
3 Elektron Lighting Systems Pvt.Ltd.,
9, Rajasthan Udyog Nagar,
GT, Karnal Road, Delhi-110033,
through its Director,
Vikas Vasudeo Chaitanya,
R/o 217, Sector C, N-1, CIDCO,
Aurangabad-431 003.
4 M/s Paragon Cable India,
a partnership firm,
having its office at 9,
Rajasthan Udyog Nagar,
GT, Karnal Road,
Delhi - 110033.
5 Aurangabad Municipal
Corporation, Aurangabad. Respondents
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Mr.S.U.Kamdar, Senior Counsel with Mr.P.M.Shah, Senior Counsel
i/by Mr.F.R.Tandale, Mr. Nahush Shah, Mr.Satyajeet Vakil and Mr.
Y.S.Kamdar, advocates for the petitioner
Mr.K.M.Suryawanshi, A.G.P. for Respondent No.1.
Mr.V.A.Thorat, Senior Counsel i/by Mr.A.M.Karad, advocate for
Respondents No.2 & 5.
Mr.R.N.Dhorde, Senior Counsel i/by Mr.N.B.Suryawanshi, &
Mr.Amit Dayal, advocates for Respondents No.3 & 4.
WITH
WRIT PETITION NO.8211 OF 2014
Polycab Wires Private Limited,
A Company incorporated under the
Companies Act, 1956, having its
registered office at Polycab House,
771, Pandit Satwalekar Marg,
Mahim (W), Mumbai-400 016,
through its Company Secretary
Mr.Subramaniam Sai Narayana,
age: 59 years. Petitioner
Versus
1 The State of Maharashtra,
through Principal Secretary,
Urban Development Department,
Mantralaya, Mumbai-400 032.
2 The Commissioner,
Aurangabad Municipal Corporation,
Aurangabad.
3 Elektron Lighting Systems Pvt.Ltd.,
9, Rajasthan Udyog Nagar,
GT, Karnal Road, Delhi-110033, Respondents
Mr.R.F.Totala, advocate with Shri Amit Vyas, advocates for the
petitioner.
Mr.K.M.Suryawanshi, A.G.P. for Respondent No.1.
Mr.N.B.Khandare, advocate for Respondent No.2.
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Mr.R.N.Dhorde, Senior Counsel i/by Mr.N.B.Suryawanshi, &
Mr.Amit Dayal, advocates for Respondent No.3.
CORAM : R.M.BORDE &
V.K.JADHAV, JJ.
Reserved on : 09th October, 2014
Pronounced on : 14th October, 2014.
JUDGMENT (Per R.M.Borde, J.):
1 Since both the petitions raise common question for adjudication, both the petitions are considered together and are being disposed of by this common judgment.
2 Heard. Rule. Rule made returnable forthwith and heard finally by consent of learned Counsel for respective parties.
3 In Writ Petition No.7843 of 2014, presented by Shah Investments, Financials, Developments & Consultants Pvt. Ltd., & Control Automation Projects Pvt. Ltd., challenge is raised to the decision taken by Aurangabad Municipal Corporation to declare the petitioner disqualified on consideration of technical bids and further declaring Respondent No.3 as L-1 Contractor. Whereas, in Writ Petition No.8211 of 2014 apart from seeking to quash the decision declaring concerned petitioner disqualified on opening the technical bid, a further relief is sought in the nature of issuance of writ of certiorari for quashing the decision awarding contract to Respondent No.3 in pursuance to the Tender Notice-2014-2015 No.16-14-66/14/AMC/E-Tender.
4 Petitioner in Writ Petition No.7843 of 2014 is registered ::: Downloaded on - 20/10/2014 23:48:13 ::: {4} wp784314.odt under the Companies Act. Respondent No.3 is a Company who has participated in the tender process like that of the petitioner. It is the contention of the petitioner that Respondent No.2 has erroneously declared Respondent No.3 as eligible L-1 Contractor and incorrectly and illegally declared the petitioner Company ineligible while considering the technical bids.
5 Petitioner in W.P. No.8211 of 2014 is a Company incorporated under the Companies Act and is a manufacturer of cable wires and lighting equipments, etc., having turn over of Rs.3800 Crores for the last financial year. It is contended that said petitioner is ISO 9001:2008, ISO 14001: 2004, OHSAS 18001:2007 Company and is one of India's leading Cables & Wires Company, with a successful track record over last 4 decades.
6 Both the petitioners are challenging the decision adopted by the Municipal Corporation holding them disqualified to participate in the tender process from and onwards the stage on opening of technical bids and holding Respondent No.3 eligible as L-1 contractor and awarding contract in favour of Respondent No.3.
7 The Municipal Corporation, Aurangabad, invited tenders for design, supply, erection, testing and commissioning of LED street lighting fixtures; for replacement of existing street lights of 40, 70, 150, 250 W, HPSV / MH / MV and 4x24 w, 2x24 w, ES fittings by 20 to 150 watt LED fittings and refurbishment of Street lighting infrastructure in Aurangabad City area. The class of contractors eligible to participate are manufacturers / Class-A ::: Downloaded on - 20/10/2014 23:48:13 ::: {5} wp784314.odt Electrical Contractors. Number of fittings required is 40,000. The period of BOT contract is eight years with extended guarantee period of two years for installation of LED fixtures. As per the tender notice, the tender forms were made available from 01.08.2014 to 20.08.2014 and pre-bid conference, as per earlier programme, was prescribed as 12.08.2014. The period for submission of bids was later on extended up to 28.08.2014. The pre-bid meeting was held on 12.08.2014.
8 The relevant terms and conditions, contained in Clause 1.1 of the tender document, are quoted as below:
1.1 Terms and conditions:-
1 Manufacturers of LED Lights OR Registered Class A Electrical Contractors and are eligible to participate in the Tender.
2 The Class A Electrical Contractors (Lead Partner) may only participate by having a Joint Venture agreement with the Manufacturer of LED Light Fittings.
3 The Manufacturer of LED Light fittings (Lead Partner) may form a Joint Venture with Class A Electrical Contractor.
4 The Manufacturer of LED Lights (Lead Partner) may form a Joint Venture with another Manufacturer of Electrical items, provided that the Lead Partner hs entered into a MOU with a Class A Electrical Contractor towards execution of the tendered BOT project.
5 The Bidder should have achieved a minimum turnover of Rs.25 crores in each of the three preceding financial years, total 75 crores in three years.::: Downloaded on - 20/10/2014 23:48:13 :::
{6} wp784314.odt 6 Attested true copies of Sales Tax/VAT registration, Manufacturing certificate & DD for EMD to be submitted along with tender papers.
7 The Commissioner, Municipal Corporation, Aurangabad, reserves all the right to Accept or reject any of the tenders without assigning any reasons thereof.
8 Rates should be quoted inclusive of all taxes.
9 Conditional tender will not be accepted.
10All offered Material should be as per relevant IS/PWD specifications.
11 Before quoting the tender the bidder should have conducted the Survey of the existing City Infrastructure.
12 Work should be completed within stipulated time limit i.e. within one year from the date of work order, termed as the Project Execution Period, exclusive of the Commencement/Preparatory Period to be offered by the Bidder, which should not be more than Three months.
13 Installation of 25% of the LED Fixtures shall be completed within first Three Months of the Execution Period & in lieu of the timely completion of work, the designated tendered EMI payment to Contractor shall commence from the Fourth month till the end of the BOT period. In case the said installation of 25% of the LED fittings, i.e. 10,000 Nos. is completed in the fourth month, then payment of EMI shall commence from Fifth Month & so forth.
14 Bidder may be a Joint Venture of maximum two companies/firms to jointly meet the commercial and technical conditions.
::: Downloaded on - 20/10/2014 23:48:13 :::{7} wp784314.odt 15 The Contractor shall work towards getting the Carbon Credits by completing all formalities thereof & the benefits of the same shall be available to the Contractor & AMC shall issue NOC if required.
16 To ensure administrative & logistic control, the Contractor shall set up a facility in Aurangabad, with a maximum of 5000 sq.ft.
space to maintain stocks & supplies.
17 The amount of Earnest Money Deposit shall be refunded to the successful bidders after the Work Order is awarded to the successful bidder. In case of successful bidder, the EMD deposit shall be refunded on receipt of the prescribed Security Deposit. In case the successful bidder does not complete the agreement bond & deposit the security deposit, the EMD shall be forfeited by AMC.
18 Submission of Tender does not indicate that Tenderer is qualified for awarding the Contract.
19 The Tenderer shall submit detailed information regarding status of its firm (i.e. proprietary, partnership, private ltd., public limited or LLP) & also produce attested copies thereof. The Tenderer should also specify the authorized person who shall be transacting with AMC (Power of Attorney holder & necessary Board Resolution thereof). In case of JV bidder, the complete details as sought above to be furnished for both the JV Partners & Power of Attorney for authorized person to be jointly signed by the Partners/Directors of both the parties forming the JV.
20 Right is reserved to revise or amend the contract documents fully or part thereof prior to the date notified or further amended for the receipt of the Tender. Such deviations or ::: Downloaded on - 20/10/2014 23:48:13 ::: {8} wp784314.odt amendments if any shall be communicated to the Tenderer in the form of corrigendum or through Website.
21 The work is to be executed within AMC limits.
22 Tenders once submitted shall not be taken back. If the Tenderer wishes to withdraw the Tender, then the EMD shall stand forfeited.
9 Sub-clause (20) of Clause 1.1 stipulates that the right is reserved to revise or amend the contract document fully or part thereof prior to the date notified or further amended for the receipt of the Tender. Such deviations or amendments if any shall be communicated to the Tenderer in the form of corrigendum or through Website. It is stipulated that the scope of work for the infrastructure is specified in Part B of the Abstract of Estimate. The price bid is incorporated in Part A of the Abstract of Estimate and Part-B is also an Abstract of Estimate and the contractor is supposed to specify his readiness to execute the work at a definite percentage below or above the estimated work given in the Abstract of Estimate Part B and readiness to receive payments thereof through EMIs for the BOT period. The consolidated EMI offered in the Price bid for Final evaluation is inclusive of the payments towards specifications in Part A and Part B. Part C is the evaluation of energy cost and Part D is guarantee towards performance of LED fixtures after completion of BOT period to complete the total lifetime of fixtures for 10 years, subject to L70 Lumen depreciation norms. The bidder is expected to quote the price offered for LED fixtures mainly for the guarantee period and number of fixtures is specified as 40000. The bidder is expected to specify the price bid for final evaluation which contains ::: Downloaded on - 20/10/2014 23:48:13 ::: {9} wp784314.odt specifications, EMI offered for BOT period towards recovery of payment for the work covered in the scope of Part A and Part B of Abstract of Estimates.
10 The petitioners contend that Respondents were duty bound to specify the reasons for holding them disqualified to participate in the tender process at the stage of opening of technical bids. Since no reasons are communicated, act of the Respondent-Corporation in its failure to communicate the reasons is violative of the directions issued by the Central Vigilance Commissioner (CVC) in office order No.15/3/05.
11 The tender of bid submitted by the petitioner in Writ Petition No.7843/2014 has been thrown out of consideration for several reasons, which are quoted as below:
(1) As per the terms and conditions, a bidder shall be manufacturer of LED lights or registered Class-A electrical contractor.
(2) Class-A electrical Contractors (Lead Partner) may only participate by having a Joint Venture agreement with the Manufacturer of Led Light fittings.
(3) It is permissible for the Manufacturer of LED lights (Lead Partner) to form a Joint Venture with another Manufacturer of Electrical Items, provided that the Lead Partner has entered into MOU with a Class-A Electrical Contractor towards execution of tendered ::: Downloaded on - 20/10/2014 23:48:13 ::: {10} wp784314.odt BOT project.
(4) The bidder should have achieved a minimum turn over of Rs.25 crores in each of the three preceding Financial Years, total 75 crores in three years.
12 It is contended that the petitioner does not fulfill the requirements provided under clause 1.1 of the tender document.
Neither the petitioner nor the Joint Venture partner is a manufacturer of LED lights and none of them is a registered Class- A contractor. There is no statement made in the petition to the effect that either the petitioner or Joint Venture partner is a manufacturer of LED lights. It is also observed that the bidder has not achieved a minimum turn over of Rs.25 Crores in each of the three preceding financial years. As such, on both the counts, petitioner is disqualified to participate in the tender process. The third ground raised is that the petitioner ought to have submitted minimum 30 pieces of different types of samples for the purposes of testing. However, the petitioner has tendered less number of samples of LED lights and fixtures. It is also contended that fixtures of Bajaj, Phillips, Crompton or Maharashtra PWD approved makes are required to be submitted. However, the petitioner has submitted samples of E-Smart Company. It is also contended that whatever samples tendered by the petitioner also failed laboratory test conducted by the Government Engineering College, Aurangabad.
13 Although the petitioner has contended that reasons ::: Downloaded on - 20/10/2014 23:48:13 ::: {11} wp784314.odt assigned for rejection of his technical bid are devoid of substance, however, we are not satisfied with the argument advanced by the petitioner in that regard. The terms and conditions specified in clause 1.1 of the tender notice provide that only manufacturers of LED lights or registered Class-A electrical contractors are eligible to participate in the tender process. The petitioner is neither the manufacturer of LED lights nor registered Class-A electrical contractor. There is no contention raised in the petition anywhere that the petitioner is a manufacturer of LED lights nor any evidence is placed on record to substantiate this contention.
14So far as turn over of the bidder is concerned, admittedly, petitioner does not fulfill the requirement of achieving minimum turn over of Rs.25 Crores in each of the three preceding Financial years. Our attention is invited to the audited statements placed on record by the petitioner for the year 2010-2011 onwards wherein it is specifically recorded that the Company has not carried out any manufacturing or trading activity during the year under audit and does not have any stocks. Such a finding is recorded in the auditor's reports dated 05.09.2011, 05.09.2012, 05.09.2013 and 04.07.2014. It is also not disputed that the petitioner has failed to submit minimum 30 pieces of different types of samples LED lights and fixtures.
15 The petitioner contends that the condition incorporated in the tender document is not mandatory for the reason that there are only two classes of illumination as per the National Lighting Code and he has supplied required number of samples which are sufficient for testing. The contention raised by ::: Downloaded on - 20/10/2014 23:48:13 ::: {12} wp784314.odt the petitioner is not acceptable for the reason that classes of illumination as per the National Lighting Code require different samples for conducting laboratory test. The conditions specified in the tender document has admittedly not been adhered to by the petitioner. Apart from this, the tender document requires that fixtures of Bajaj, Phillips, Crompton or Maharashtra PWD approved makes are required to be submitted. However, the petitioner has submitted samples of E-Smart Company. The petitioner contends that he was assured by the officials of the Corporation that fixtures of a reputed Company would be accepted, provided that petitioner provides for a guarantee of the product.
16 The contention raised by the petitioner has been specifically denied by the City Engineer, who has tendered his affidavit on record. It is also pointed out that it has been clarified during the pre-bid meeting held on 12.08.2014 that only Maharashtra PWD approved makes and products of tender listed reputed Companies are allowed. The petitioner, as such, does not qualify since he has not provided for the fixtures of the Companies mentioned in the tender document or the Maharashtra PWD approved makes.
17 In this regard, a reference can be made to a judgment in the matter of Michigan Rubber (India) Ltd. Vs. State of Karnataka & others, reported in 2012 AIR (SC) 2915. It is held by the Apex Court that the State Governments are legally competent to formulate an appropriate policy for choosing a sole or more manufacturers in order to fulfill the object of affixation of security plates. The relevant observations are contained in paragraph 15 of ::: Downloaded on - 20/10/2014 23:48:13 ::: {13} wp784314.odt the judgment, which, in turn, makes a reference to the judgment in the matter of Association of Registration Plates Vs. Union of India & others, reported in (2005) 1 SCC 679:
"15 While considering the above submissions, the three-Judge Bench held as under:
"38 In the matter of formulating conditions of a tender document and awarding a contract of the nature of ensuring supply of high security registration plates, greater latitude is required to be conceded to the State authorities. Unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, tender conditions are unassailable. On intensive examination of tender conditions, we do not find that they violate the equality clause under Article 14 or encroach on fundamental rights of the class of intending tenderers under Article 19 of the Constitution. On the basis of the submissions made on behalf of the Union and State authorities and the justification shown for the terms of the impugned tender conditions, we do not find that the clauses requiring experience in the field of supplying registration plates in foreign countries and the quantum of business turnover are intended only to keep indigenous manufacturers out of the field. It is explained that on the date of formulation of scheme in Rule 50 and issuance of guidelines thereunder by the Central Government, there were not many indigenous manufacturers in India with technical and financial capability to undertake the job of supply of such high dimension, on a long-term basis and in a manner to ensure safety and security which is the prime object to be achieved by the introduction of new sophisticated registration plates."
The decision taken by the Respondent-Corporation of ::: Downloaded on - 20/10/2014 23:48:13 ::: {14} wp784314.odt holding the petitioner disqualified to participate in the tender process at the stage of scrutinizing technical bids, therefore, cannot be said to be erroneous.
18 So far as case of petitioner in Writ Petition No.8211 of 2014 is concerned, it is not a matter of dispute that the petitioner-
Company is a manufacturer of Cables and Wires. It has not been stated in the writ petition that the petitioner Company is a manufacturer of LED lights. Apart from this fact, as per the terms and conditions of the tender, offers were invited for providing installation and maintenance from reputed manufacturers of LED Street Lights or registered Class-A electrical contractors for replacement of existing fixtures. The contractors, under the terms of tender, are expected to utilise the fixtures of Bajaj, Phillips and Crompton or Maharashtra PWD approved makes. In the pre-bid meeting of tender process on 12th August, 2014 also, it was specified that, fixtures of reputed Companies or Maharashtra PWD approved makes shall have to be utilised. The petitioner has provided for the fixtures which are not as per the specifications and those were not approved by the Maharashtra PWD. The petitioner has been rightly held disqualified during the scrutiny of technical bids.
19 So far as samples provided by the petitioner for laboratory test is concerned, those were not found to be answering the specifications during the trial conducted by the Department of Electrical Engineering, Government Engineering College. A report has been submitted by the said college on 30.08.2014. The samples provided by the concerned bidder were not forwarded for ::: Downloaded on - 20/10/2014 23:48:13 ::: {15} wp784314.odt field test since those do not answer specifications mentioned in the tender document. The petitioner, as such, cannot claim that he has been wrongly disqualified.
20 The challenge raised by the petitioners in respect of acceptance of offer of Respondent No.3, however, needs a careful scrutiny. Although petitioners were considered disqualified during scrutiny of documents at the stage of opening of technical bids, still challenge raised by the petitioners to the decision rendered by the Corporation in accepting offer of Respondent No.3 can be taken into consideration.
21 It is contended by Respondent No.3 that since petitioners have been held disqualified, they cannot question acceptance of bid of Respondent No.3. The contention is devoid of substance in view of the decision rendered by the Supreme Court in the matter of Ramana Dayaram Shetty Vs. International Airport Authority of India and others, reported in AIR 1979 SC 1628. In paragraph 9 of the judgment, the Supreme Court has observed thus:
"9 That takes us to the next question whether the acceptance of the tender of the 4th respondents was invalid and liable to be set aside at the instance of the appellant. It was contended on behalf of the 1 st and the 4th respondents that the appellant had no locus to maintain the writ petition since no tender was submitted by; him and he was a mere stranger. The argument was that if the appellant did not enter the field of competition by submitting a tender, what did it matter to him whose tender was accepted; what grievance could he have if the tender of the 4 th respondents was wrongly accepted. A person whose ::: Downloaded on - 20/10/2014 23:48:13 ::: {16} wp784314.odt tender was rejected might v ery well complain that the tender of someone else was wrongly accepted, but it was submitted, how could a person who never tendered and who was at no time in the field, put forward such a complaint? This argument, in our opinion, is misconceived and cannot be sustained for a moment. The grievance of the appellant, it may be noted, was not that his tender was rejected as a result of improper acceptance of the tender of the 4 th respondents, but that he was differentially treated and denied equality of opportunity with the 4th respondents in submitting a tender. His complaint was that if it were known that non-fulfillment of the condition of eligibility would be no bar to consideration of a tender, he also would have submitted a tender and competed for obtaining a contract. But he was precluded from submitting a tender and entering the field of consideration by reason of the condition of eligibility, while so far as the 4th respondents were concerned, their tender was entertained and accepted even though they did not satisfy the condition of eligibility and this resulted in inequality of treatment which was constitutionally impermissible. This was the grievance made by the appellant in the writ petition and there can be no doubt that if this grievance were well founded, the appellant would be entitled to maintain the writ petition. The question is whether this is in law and the acceptance of the tender of the 4th respondents was vitiated by any legal infirmity."
22 The contention raised by the petitioners in respect of alleged wrongful acceptance of bid of Respondent No.3 deserves consideration.
23 It is contended that Respondent No.3 does not fulfill the terms and conditions recorded in paragraph 1.1 of the tender notice and as such, are ineligible to participate in the tender process. Respondent No.3 claims to be manufacturer of LED ::: Downloaded on - 20/10/2014 23:48:13 ::: {17} wp784314.odt lights. Sub-clause (1) of Paragraph 1.1 of terms and conditions provides that the Manufacturers of LED Lights Or Registered Class A Electrical Contractors are eligible to participate in the tender process. Sub -clause (4) provides that the Manufacturer of LED Lights (Lead Partner) may form a Joint Venture with another Manufacturer of Electrical Items, provided that the Lead Partner has entered into a MOU with a Class A Electrical Contractor towards execution of the tendered BOT project.
24 It is contended by petitioners that Respondent No.3 claims to be a Lead Partner of the Joint Venture. The Joint Venture agreement entered into between Respondent No.3 M/s Elektron Lighting Systems Private Limited and M/s Paragon Cable India, is placed on record of Writ Petition No.8211 of 2014 at page
276. Respondent No.3 M/s Elektron Lighting Systems Private Limited and its share holding consists of one Vikas Nagpal and his wife Anjana Nagpal. The Joint Venture partner of Respondent No.3 M/s Paragon Cable India is a manufacturer of electrical wires and cables. M/s Paragon Cable India also has two partners i.e. Mr. Vikas Nagpal and Mrs.Anjana Nagpal, his wife. The Joint Venture agreement is registered on 19th August, 2014, the day on which online tender form came to be submitted by Respondent No.3. The Joint Venture agreement is signed on behalf of M/s Elektron Lighting Systems Private Limited i.e. Respondent No.3 by Mr.Vikas Nagpal, whereas, his wife has put signature on behalf of M/s Paragon Cable India. It is contended that since the Lead Partner has formed a Joint Venture with the manufacture of electrical items, it was necessary for them to associate with Class A Electrical Contractor for execution of tendered BOT project. The ::: Downloaded on - 20/10/2014 23:48:13 ::: {18} wp784314.odt Joint Venture has not entered into memorandum of understanding with Class A Electrical Contractor and copy thereof has not been placed on record. It is, thus, contended that Respondent No.3 does not fulfill the terms and conditions incorporated in sub- clause (4) of Clause 1.1 of the terms and conditions of the tender notice and as such, is ineligible to participate in the process.
25 It is true that manufacturer of LED lights and Class A electrical contractors are eligible to participate in the tender process and that Class A contractor may participate by having a joint venture agreement with the Manufacturer of LED Light fittings; or the Manufacturer of LED light fittings may form a Joint Venture with Class A Electrical Contractor. However, if the Manufacturer of LED Lights (Lead Partner) forms a joint venture agreement with another Manufacturer of Electrical Items, it is necessary that the Lead Partner has to enter into a MOU with a Class A Electrical Contractor towards execution of tendered BOT project.
26 In the instant matter, there is no such memorandum of understanding (MOU) placed on record nor it has been contended by Respondent No.3 or Respondent-Municipal Corporation that such a memorandum of understanding is entered into and tendered.
27 Apart from this, it is pointed out that Respondent No.3 has committed another technical breach in its failure to submit attested copies of VAT Returns of the bidder to establish turnover of the bidder.
::: Downloaded on - 20/10/2014 23:48:13 :::{19} wp784314.odt 28 It is contended that Respondent No.3 has not tendered attested copies of VAT Returns, which is a mandatory requirement of sub-clause (1)(c) of Clause 1.2 of the terms and conditions. It has further been pointed out that since the successful bidder i.e. Respondent No.3 has failed to submit attested copies of VAT Returns, the technical bid submitted by concerned Respondent ought to have been rejected. It has been pointed out that so far as the Joint Venture of Respondent No.3 is concerned, turnover of the Joint Venture is above Rs.25 Crores in each of the three preceding financial years, total 75 Crores in three years. If the details are perused, turnover of Respondent No.3, during financial years 2010-2011, 2011-2012 and 2012-2013 is 'Zero', whereas, turnover of Respondent No.3 for 13-14 independently, is Rs.1,30,41,143/-. It does appear that since there was no turnover of Respondent No.3 during the three preceding financial years commencing from 2010 onwards, attested copies of VAT Returns of the bidder to establish the turnover have not been presented. Whatever may be the reason, it has not been controverted that there is contravention of sub-clause (1)(c) of Clause 1.2 of the terms and conditions in respect of submission of tender and its accompaniments and said breach has not been viewed seriously by the Respondent- Corporation.
29 A very serious lapse has been pointed out by the petitioners in respect of violation of sub-clause (1)(i) of Clause 1.2 of the terms and conditions. The said condition records that in case a bidder submits the Price Offer along with the technical bid, the Tender Bid shall be treated as withdrawn and EMD forfeited.
::: Downloaded on - 20/10/2014 23:48:13 :::{20} wp784314.odt 30 Respondent No.3 has submitted a letter to the Commissioner, Aurangabad Municipal Corporation on 19th August, 2014, the day on which simultaneously, tender offer was presented. It is informed by Respondent No.3 to the Municipal Corporation that the Company is participating in the tender of LED Street lights due to be opened on 21.08.2014 and there are certain additional suggestions for consideration of the Commissioner. The suggestions are in the nature of financial offer. Respondent No.3 offered to implement online Internet based Control & Monitoring of the Street Lights from the Switching point. It is informed that suitable systems shall use GSM based modems to control the switching ON & OFF of the street lights to be installed in each Control Panel. Though the cost of such system is quite high, however, the bidder is offering to implement the solution at a reduced price of Rs.36,000/- per Control Panel along with recurring cost of GSM communication and & software to online monitor it, provided the Exclusive Advertising rights for all the Street Light Poles are extended to the bidder. It is further recorded that stipulated number of Control Panels is about 1200, as per the tender. In case it is decided to implement the Technology online Control System,the panels can be reduced to 600 as the Switching Point system load shall get substantially reduced.
It is further suggested that the bidder may offset the cost of reduced Control Panels by using Online Technology without burden to AMC. It is further informed that in case due to logistic issues, the Street Lighting cannot be controlled by the proposed 600 Panels, then whatever additional number of panels may be required, cost for the same shall be ::: Downloaded on - 20/10/2014 23:48:13 ::: {21} wp784314.odt borne by the AMC. It is also offered to provide additional guarantee period from two years to four years, if required by AMC on the same terms of Cost as per Part D, on payment of Rs.95/-
per fixture per month.
31 It is revealed that guarantee for a period of two years has been offered by Respondent No.3 under the tender document on payment of Rs.95/- per fixture per month. This aspect has been disclosed even before opening of technical bids by transmitting letter on 19.08.2014 by Respondent No.3. The financial offer in the form of providing modern technology has been made simultaneously along with tender offer, which is a substantial breach of tender condition, referred to above. It is also to be noted that guarantee period under the terms is for two years, whereas, BOT period is eight years. The additional offer, in the form of maintaining the system for two years, is made by Respondent No.3 on 19.08.2014 by tendering a letter to the Commissioner, Municipal Corporation, before opening of technical bids, which is a substantial violation of the tender condition.
32 Another objection is in regard to change in the terms of tender. The Municipal Corporation has invited offers from reputed Manufacturers of LED street lights or registered Class A Electrical contractors for replacement of existing electrical fittings by LED fittings to achieve defined illumination levels and saving total energy of minimum 40% to 50% for providing installation and maintenance of the same as on BOT basis, for a period of 8 years, inclusive of comprehensive maintenance. Under the terms itself, extended guarantee period of installed LED fixtures is two years.
::: Downloaded on - 20/10/2014 23:48:13 :::{22} wp784314.odt As has been recorded above, Respondent No.3, along with submission of online tender document itself, offered the Corporation additional guarantee period of two years so as to make it total 4 years on payment of Rs.95/- per fixture per month, which itself is a financial offer in the technical bid by Respondent No.3.
33 The Committee constituted by the Commissioner to scrutinize the tender documents opened technical bids of all the three contractors on 28.08.2014. It was found that petitioners in both the petitions do not fulfill the terms and conditions and as such, technical bid of both the petitioners came to be rejected. The technical bid of Respondent No.3 has been accepted and thereafter on 30.08.2014, the meeting of Committee for scrutiny of documents was held in the presence of Respondent No.3. Respondent No.3, on 02.09.2014, submitted additional proposal. Respondent No.3 offered to provide monitoring and controlling Street Lights by GSM/CDMA based Online Web based Systems through switching points, on free of cost basis to AMC in lieu of extending the exclusive advertising rights for the Street Light Poles for the BOT period. It was further informed that in the event of diverse electrical circuits, it may; not be possible to control the City Street Lights by 600 Panels and, therefore, it was confirmed that reduction in numbers of Control Panels, if any, would be made strictly to suit City Lighting conditions. It is further informed that reduction in number of control panels may be adjusted against any additional work of equivalent value for any item under the contract. The bidder also confirmed the offer to extend Additional Guarantee Period from two years to four years to enable the AMC to utilize the installed LED street light fixtures for a period of total ::: Downloaded on - 20/10/2014 23:48:13 ::: {23} wp784314.odt 12 years at the cost of Rs.95/- per fixture per month for the extended period on the terms and conditions applicable to Part D. 34 Thus, there is a revised proposal offering revision in the terms and conditions communicated to the Commissioner, Municipal Corporation on 19.08.2014 i.e. the day on which tender document itself was submitted. Under the tender conditions, the BOT period is eight years, whereas, additional guarantee period is two years which has been extended by further two years at the cost of Rs.95/- per fixture per month, which would be an additional financial burden on the Municipal Corporation.
35 Part B, item no.7 of the tender document is in respect of Supply, Erection and Commissioning and Comprehensive Maintenance over the BOT Period, of Street Light Control Panels; and number of panels is prescribed under item no.7(a), (b) and (c) to the extent of 1200. The cost is quoted at Rs.30,000/-, Rs.20,000/- and Rs.15,000/- per panel respectively, which comes to Rs.3,00,00,000/-, Rs.20,00,000/- and Rs.15,00,000/-, respectively, total Rs.3,35,00,000/- and Respondent No.3 has offered 20% above the estimated rate given in Part B Abstract of Estimate. Thus, estimated number of panels is 1200, whereas, in view of revised offer, number of panels would be reduced to 600. There is no reflection of reduction of proportionate amount, which has been taken into consideration for calculating the EMI payable to Respondent No.3, although while computing EMI, cost of 1200 panels is taken into consideration. Under the revised offer, Respondent No.3 has suggested to reduce number of panels and this suggestion has been accepted to reduce number of panels ::: Downloaded on - 20/10/2014 23:48:13 ::: {24} wp784314.odt from 1200 to 600. This aspect has neither been reflected in the Work Order or in the contract executed between the Corporation and Respondent No.3.
36 There are several deficiencies in the tender document of Respondent No.3 itself. Although in the communication dated 19.08.2014, while submitting the tender document. it was informed that the cost of control panel is more than Rs.36,000/- per panel, it has neither been verified by the Corporation nor an opportunity has been given to other bidders to provide for update estimates nor market rates of such system were verified by the Corporation. Respondent No.3 has vaguely communicated that cost of such system is quite high, however, the bidder is prepared to offer it at reduced cost of Rs.36,000/- per panel. Even if it is assumed that the Corporation has entered into negotiations and persuaded him to provide the system free of cost, in lieu thereof, Respondent No.3 has been offered exclusive advertising rights for the street light poles for the BOT period, providing for such exclusive advertising rights on the street light poles, during BOT period, was not at all part of tender document. It has not been clarified that what income was generated in the past from giving advertising rights or what was the expected income of the Corporation from such source. The calculation of amount has neither been made by the Corporation nor such calculation has been recorded either in the affidavit or informed to the Court.
37 Apart from this, nature of advertising rights has also not been specified. It has not been clarified as to what would be the size of advertising display, whether such advertising display ::: Downloaded on - 20/10/2014 23:48:13 ::: {25} wp784314.odt would be an electronic display or merely a simple hoarding. The Corporation, without specifying the details, has given away exclusive advertising rights for the street light poles for BOT period. The confirmation of offer dated 02.09.2014, on the same day itself, by the Commissioner is beyond the scope of tender work. It has also to be noted that there are no details provided either in the offer or while accepting such offer. The modification in the terms of offer is done in a hasty manner and without collecting any material and without detailed investigation.
38The Corporation has hurriedly taken a decision probably for the reason that the Commissioner was under the orders of transfer and orders were issued by the State Government on 01.09.2014 and that the Commissioner was to be relieved from the post on 03.09.2014 afternoon. The process of negotiations, finalisation of the contract, approval of the Standing Committee, issuance of Work Order and execution of the agreement, has been done hurriedly on 2nd and 3rd September, 2014.
39 The Committee, under the Chairmanship of Commissioner, has considered technical, financial price bid and has approved the bid submitted by Respondent No.3 and revised terms and conditions in the meeting conducted on 02.09.2014 at 4.00 p.m. After recording decision of accepting price bid of Respondent No.3, the Commissioner has proceeded to submit the proposal for approval to the Standing Committee. It is stated that meeting of the Standing Committee was held on 03.09.2014 and by way of emergency agenda item, subject of according approval to the decision of acceptance of bid of Respondent No.3 was placed before ::: Downloaded on - 20/10/2014 23:48:13 ::: {26} wp784314.odt the Standing Committee for consideration. The proposal tendered by the Commissioner to the Standing Committee does not incorporate the item of offsetting cost of 600 control panels. In terms of adoption of revised offer made by Respondent No.3, it is stated that the Standing Committee has adopted a Resolution of approving the proposal tendered by the Commissioner, in its meeting dated 03.09.2014 itself. The Resolution adopted by the Standing Committee also does not reflect the aspect regarding offsetting cost of 600 control panels.
40It is to be noted that decision was taken by the Commissioner in respect of accepting bid of Respondent No.3 including revised bid for extended period of maintenance contract and issuance of advertising rights for street light poles in favour of Respondent No.3 for BOT period, on 02.09.2014. The proposal was forwarded in a hurried manner for placing the same before the Standing Committee in the meeting which was scheduled on the next day i.e. 03.09.2014. The proposal was actually approved by the Standing Committee as it is without verifying any defects therein and it has to be noted that the work order has also been issued on the same day as well as a written agreement has also been executed on the same day in hurried manner. It is to be noted that neither the proposal of the Commissioner nor resolution of the Standing Committing or the Work Order or the agreement reflect issue of offsetting cost of 600 control panels. The whole process has been completed by the Commissioner in most hurried manner and presumably because, he was under the orders of transfer from the State Government from 01.09.2014. In most hurried manner, matter was placed before the Standing Committee ::: Downloaded on - 20/10/2014 23:48:13 ::: {27} wp784314.odt on 03.09.2014. On the same day, approval was secured and without wasting time, simultaneously, work order came to be issued to Respondent No.3 as well as agreement has also been signed and from the record itself, it is revealed that the Commissioner was relieved and charge was handed over to the new incumbent on 3rd September itself in the afternoon session. This unusual hurry coupled with all the deficiencies pointed out above, speaks volume and cast a thick shadow of doubt on the whole process.
41Petitioners have also contended although as per the amount quoted in the tender bid i.e. price bid for final evaluation, total amount of Part A + Part B is arrived at Rs.112,21,68.080/- in respect of Respondent No.3, he has quoted EMI for 96 months at Rs.2,72,00,000/-. It is contended that total amount mentioned in Part A + Part B is all inclusive and any other item, such as interest on the amount, is not liable to be considered while computing the EMI. Although much debate has taken place on the issue, we are not inclined to accept the contention of petitioners in that regard. It is for the concerned contractor/bidder to offer EMI for the BOT period, which may either be accepted by the Corporation or may not be accepted.
42 Learned Counsel appearing for Respondents, relying on the judgment in the matter of National Thermal Power Corporation Limited Vs. Ansaldo Caldaie Boilers India Private Limited and another, reported in (2012) 4 SCC 471, contended that it must be presumed that the employer is conscious about competence of the tenderer. In the reported matter, technical bid of ::: Downloaded on - 20/10/2014 23:48:13 ::: {28} wp784314.odt Respondent therein was rejected on the question as to whether in the case of joint venture undertaking it was essential that the qualified steam generator manufacturer also had to be the manufacturer of the evaporator or whether could function as a facilitator and whether the steam generator had to be designed for constant pressure or for variable pressure, as required by the appellant. It was observed that evaporator is an integral part of the steam generator and decision in that regard ultimately vest with the employer. The employer who is ultimate user of the generator, must be presumed to be conscious of competence of the tenderer to "provide" the evaporator in keeping with the required specifications. It was ruled that it is not for the Courts to interpret provisions of the concerned clauses.
43 Placing reliance on the judgment in the matter of Sanjay Kumar Shukla Vs. Bharat Petroleum Corporation Limited and others, reported in (2014) 3 SCC 493, it is contended that the Court must be vigilant against agitation of private disputes under writ jurisdiction when there is no improper exercise of power on the part of public authority concerned. Caution has to be exercised while exercising extraordinary jurisdiction in contractual matters since serious consequences entails as a result of entertainment of writ petition. Reliance is placed on the judgment in the matter of Raunaq International Ltd Vs. I.V.R. Construction Ltd., reported in (1999) 1 SCC 492. In paragraphs 9, 10 and 11 of the judgment, it is record thus:
"9 The award of a contract, whether it is by a private party or by a public body or the State, is ::: Downloaded on - 20/10/2014 23:48:13 ::: {29} wp784314.odt essentially a commercial transaction. In arriving at a commercial decision, considerations which are of paramount importance are commercial considerations. These would be:
(1) the price at which the other side is willing to do the work;
(2) whether the goods or services offered are of the requisite specifications;(3)
whether the person tendering has the ability to deliver the goods or services as per specifications.
When large works contracts involving engagement of substantial manpower or requiring specific skills are to be offered, the financial ability of the tenderer to fulfill the requirements of the job is also important;
(4) the ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality;
(5) past experience of the tenderer and whether he has successfully completed similar work earlier;
(6) time which will be taken to deliver the goods or services; and often;
(7) the ability of the tenderer to take follow-up ::: Downloaded on - 20/10/2014 23:48:13 ::: {30} wp784314.odt action, rectify defects or to give post-contract services.
Even when the State or a public body enters into a commercial transaction, considerations which would prevail in its decision to award the contract to a given party would be the same. However, because the State or a public body or an agency of the State enters into such a contract, there could be, in a given case, an element of public law or public interest involved even in such a commercial transaction.
10 What are these elements of public interest? (1) Public money would be expended for the purposes of the contract. (2) The goods or services which are being commissioned could be for a public purpose, such as, construction of roads, public buildings, power plants or other public utilities. (3) The public would be directly interested in the timely fulfillment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. Poor quality of work or goods can lead to tremendous public hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in redoing the entire work - thus involving larger outlays of public money and delaying the availability of services, facilities or goods e.g. a delay in ::: Downloaded on - 20/10/2014 23:48:13 ::: {31} wp784314.odt commissioning a power project, as in the present case, could lead to power shortages, retardation of industrial development, hardship to the general public and substantial cost escalation.
11 When a writ petition is filed in the High Court challenging the award of a contract by a public authority or the State, the Court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the Court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost for more than any saving which the court would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the court is satisfied that there is a substantial amount of public interest, or the transaction is entered into mala fide, the court should not intervene under Article 226 in disputes between two rival tenderers."
44 It is contended on behalf of Respondents that there is ::: Downloaded on - 20/10/2014 23:48:13 ::: {32} wp784314.odt no public interest involved in entering into commercial transaction.
The Court's intervention may considerably delay the project and is likely to escalate the cost and as such, interference shall be avoided.
45 We are of the considered opinion, for the reasons recorded by us above, that in order to safeguard public interest, interference is necessary to be caused in the hasty decision taken by the Corporation. Apart from the decision being hasty, it is taken without being mindful of the consequences and with a view to suit financial interest of Respondent No.3 only.
46 Referring to paragraph 19 of the judgment in the matter of Sanjay Kumar Shukla (supra), it is contended that it is necessary to reiterate the need of caution sounded by the decision referred in the judgment, in view of serious consequences that the entertainment of a writ petition in contractual matters, unless justified by public interest, can entail. Delay in judicial process that seems to have become inevitable could work in different ways. Deprivation of the benefit of a service or facility to the public;
escalating costs burdening the public exchequer and abandonment of half completed works and projects due to the ground realities in a fast-changing economic/market scenario are some of the pitfalls that may occur.
47 It is appropriate to note that we are mindful of the limitations in the matters of causing interference in the contractual matters. However, we are of the considered opinion that for the reasons recorded above, decision of the employer, in ::: Downloaded on - 20/10/2014 23:48:13 ::: {33} wp784314.odt the instant matter, Aurangabad Municipal Corporation, is vitiated on account of non transparency, change in the terms and conditions of the contract, showing extraordinary favour to Respondent No.3 and offering benefits without making financial assessment and above all, an extremely hasty decision by the Head of the Institution i.e. the Commissioner of the Corporation even after receipt of orders of transfer and action of completing the whole process of taking a decision, making recommendation to the Standing Committee, securing decision of the Standing Committee, issuance of Work Order and execution of agreement on one and the same day.
48 Lastly, we may quote observations of the Supreme Court in the matter of Ramana Dayaram Shetty Vs. International Airport Authority of India and others, reported in AIR 1979 SC 1628. In para 21 of the judgment, it is observed thus:
"21 This rule also flows directly from the doctrine of equality embodies in Article 14. It is now well settled as a result of the decisions of this Court in E.P. Rayappa v. State of Tamil Nadu MANU/SC/0380/1973 : (1974) ILLJ 172 SC and Maneka Gandhi v. Union of India, MANU/SC/0133/1978 : (1978) 2 SCR 621, that Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. It requires that State action must not be arbitrary but must be based on some rational and relevant principle which is non discriminatory : it must not ::: Downloaded on - 20/10/2014 23:48:13 ::: {34} wp784314.odt be guided by any extraneous or irrelevant consideration, because that would be denial of equality. The principle of reasonableness and rationality which is legally as well as philosophically an essential element of equality or non- arbitrariness is protected by Article 14 and it must characterise every State action, whether it be under authority of law or in exercise of executive power without making of law. The State cannot, therefore, act arbitrarily in entering into relationship, contractual or otherwise with a third party, but its action must conform to some standard or norm which is rational and non-discriminatory."
49 For the reasons recorded above, decision taken by Respondent-Corporation of accepting bid of Respondent No.3/ a Lead Partner of the Joint Venture, together with decision of the Standing Committee, Work Order issued on 03.09.2014 and consequential agreement executed on the same day, stand quashed and set aside.
50 Both the petitions are allowed partly to the above extent. Pending Civil Applications do not survive and stand disposed of accordingly.
51 Rule is made absolute to the above extent. There shall be no order as to costs.
::: Downloaded on - 20/10/2014 23:48:13 :::{35} wp784314.odt 52 A request is made on behalf of Respondent No.3 to grant stay to the execution and operation of the judgment to enable the parties to approach the Supreme Court. It shall be noted that after presentation of the petitions and while issuing notice on 09.09.2014, Respondent-Corporation was orally directed to maintain status quo in the matter. The contract work awarded to Respondent No.3, thus, has not resumed. In this view of the matter, no interim order, as requested by Respondent No.3, need be issued. Oral request made, in that respect, stands rejected.
R.M.BORDE
V.K.JADHAV
JUDGE JUDGE
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