Calcutta High Court (Appellete Side)
The Eastern Coalfields Ltd. And Others vs M/S. S.N. Chatterjee & Co. And Others on 19 February, 2020
Author: Sanjib Banerjee
Bench: Sanjib Banerjee
1
06
19.02.2020
Ct. No. 06
ssd
MAT 992 of 2019
with
CAN 6776 of 2019
The Eastern Coalfields Ltd. and others
Vs.
M/s. S.N. Chatterjee & Co. and others
with
MAT 1059 of 2019
with
CAN 7270 of 2019
The Eastern Coalfields Ltd. and others
Vs.
M/s. D.N.B. Transport and others
with
MAT 630 of 2019
with
CAN 4697 of 2019
M/s. Ahlad Dutta and another
Vs.
M/s. D.N.B. Transport and others
with
MAT 631 of 2019
with
CAN 4698 of 2019
M/s. Ahlad Dutta and another
Vs.
M/s. S.N. Chatterjee & Co. and others
Mr. Bhaskar Prasad Banerjee
...for the appellants.
Mr. Probal Kumar Mukherjee
Mr. Suhrid Sur
...for the appellants in MAT 630 of 2019
& MAT 631 of 2019.
Mr. Srijib Chakraborty
Mr. Sunny Nandy
2
Mr. Suryaneel Das
...for the writ petitioner/respondent
nos.1&2.
The manner in which the appeals by the private party is presented raises serious doubts as to the efficacy of the judgment and order impugned and the methodology adopted therefor. However, a short interjection from the writ petitioner-respondent has resolved the issue.
The four appeals arise out of an order dated April 5, 2019. The principal order was passed on WP 6706 (W) of 2019 and similar orders were passed in the related matters. The matter pertains to tenders invited by Eastern Coalfields Limited for transportation of sand and filling of pits or voids by sand. The procedure adopted now by the coal companies is a departure from what was practised earlier. Previously, the technical bids would be opened first to assess the eligibility of the bidders before the financial bids would be opened to discover the best eligible tenderer. Nowadays, irrespective of the status of the bidder, the lowest bid is opened first and the credentials of such bidder checked and if such bidder is found to be ineligible, the bid of the second lowest is taken up and scrutinised and so on.
In the present case, there was a procedure for reverse auction that was to be followed. A base price was quoted by 3 employer ECL. The bidders had to quote with reference to such base price. The writ petition came to be instituted on the allegation that the private appellant in two of the matters here had colluded with another private party in respect of the two tender processes so as to bring about a situation where the reverse auction could not be held and the private appellant was left behind as the lowest bidder.
Ordinarily, when a base price is indicated, it is expected that quotations would be received which would hover around such base price. In the present case, in respect of the two tender notices, the sixth respondent to the writ petition quoted 39% less than the base price in one case and about 40% lower than the base price in the other case. The procedure that was to be followed in either case was for all the financial bids to be opened and the price quoted by L-1 to be indicated for bidders to be afforded a chance to match the price offered by L-1 or better the same.
The exact procedure is indicated at Clause 11 of the tender papers in either case and it appears that the highest bidder is eliminated and the other bidders are invited to bid with reference to the bid of L-1, without the identity of L-1 being disclosed. The bid is conducted online. Upon any new L-1 being identified, the technical bid of such bidder would be 4 scrutinised and if such bidder is found ineligible, the same exercise would be conducted for L-2 under the reverse auction process and even to L-3 and so on, if necessary. The procedure has been crudely described here. It described in a detailed manner in the tender papers.
What is of importance is that the procedure contemplates a second bidding process which has to take place and all bidders other than the highest bidder or the joint highest bidder whose bid has been received later are entitled to participate in the second bidding process.
If L-1 as per the original bidding quotes an absurdly low price, no serious bidder would participate in the reverse auction process. In such a scenario, the original bids would stand and, on the basis of the prices as quoted in the original bids, the selection would be made.
There may be a genuine perception that complicated processes have been introduced for extraneous considerations by officials of the coal companies so that there is sufficient ambiguity and scope for discretion and interpretation and, thus, avenues for personal aggrandisement.
Indeed, if the reverse auction process is made mandatory after revealing the amount quoted by L-1 but not 5 requiring further quotations to be made with reference to L-1 if the price quoted is, say, more than 20 per cent below the base price, the process may succeed. Also, if the highest is eliminated and the rest are permitted to indicate their revised bids without reference to the price quoted by L-1 (though such price is revealed), a genuine bidder may be identified. If the original L-1 quotes an absurdly low price, such bidder would not remain in the fray if a deterrent by way of the forfeiture of a substantial amount is stipulated.
In terms of the process which was in place in the present case, once it was discovered that a bidder had put in a bid which was about 39% or 40% lower than the estimated cost, no other bidder was interested in bidding such absurd rate and the reverse auction process failed. Thus, what was originally bid by the bidders remained and, upon L-1 being eliminated in the technical process, the second lowest bidder obtained the work order by default.
There was sufficient basis to the writ petitioner's complaint that the writ petitioner had been denied the second chance to participate in the auction process. If truthful and realistic bids had been made by all, once the value of L-1 was revealed, every other bidder would attempt to match or go below L-1 in its eagerness to obtain the work by quoting the 6 price which would result in the work being awarded to it at a price that would be less remunerative, but remunerative none the less.
On the basis of the material that was before the Single Bench, appropriate conclusions have been drawn. In certain cases no affidavit is required to arrive at the correct conclusion, particularly when the facts speak out as they did in the present case. It is understandable that the revised L-1 has appealed, but it is astonishing that ECL is also in appeal when its poor process has resulted in such a mess.
Since it was the private appellant herein who stood to benefit from the process upon the original L-1 quoting an absurd low price, an adverse inference could have been drawn against the private appellant; but the private appellant herein could not have been condemned without being afforded a chance to explain that the private appellant may not have had any truck with the original L-1 in either case. It is equally possible that the original L-1 and L-3 may have conspired, but the private appellant herein accidentally put in a bid which placed the private appellant in the position of L-
2. To such extent, the private appellant is justified that even though the needle of suspicion pointed towards the private appellant, without other material being called for, the private 7 appellant could not have been conclusively established as having conspired and connived with the original L-1 to defeat the second bidding.
However, the same logic does not hold good for the coal company appellant. The many matters in court pertaining to the coal companies indicate that there is something utterly rotten in these coal companies and repeated orders of court have not able to cleanse the dark insides of the coal companies. Instead of the coal company in the present case trying to improve its system so that its tender process cannot be hijacked or sabotaged, as was obviously done in this case, the coal company is in appeal and merely wasting time and money even as the work remains suspended.
No useful purpose would be served by remanding the matter for a fresh consideration and there is no use chasing any red herring. In respect of both the tender processes, the coal company will eliminate the highest bidder under the original process and will invite the other bidders to participate in a reverse auction by referring to the price offered by the original L-2. The coal company will ascertain whether those eligible to participate in the reverse auction in terms of this order are interested in participating in such process. Such exercise should be completed within a fortnight 8 from date. The matter should be reported to the court when it appears a fortnight hence. The coal company should make every endeavour to set the reverse auction on a date immediately after two weeks from today so that in the event the participants are available such reverse auction can be conducted and the real L-1 identified thereupon. If, however, the remaining eligible bidders show no interest or the number of bidders falls below three, the processes have to be cancelled and held afresh.
The matter will appear a fortnight hence.
Urgent certified website copies of this order, if applied for, be made available to the parties upon compliance with the requisite formalities.
(Sanjib Banerjee, J.) (Kausik Chanda, J.)