Delhi High Court
Delhi Jal Board Contractors Welfare ... vs Delhi Jal Board & Ors. on 30 May, 2011
Author: Dipak Misra
Bench: Chief Justice, Sanjiv Khanna
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ LETTERS PATENT APPEAL NO. 509/2011
Date of order: 30th May, 2011
DELHI JAL BOARD CONTRACTORS
WELFARE ASSOCIATION ...... Appellant
Through, Mr. Chetan Sharma, Sr.
Advocate with Mr. Peeyoosh Kalra,
Advocate.
versus
DELHI JAL BOARD & ORS. ..... Respondents
Through
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE SANJIV KHANNA
1. Whether Reporters of local papers may be allowed to see the judgment? Yes
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in the Digest? Yes
DIPAK MISRA, CJ.:
C.M.No.10875/2011
This is an application for condonation of 72 days delay in
preferring the appeal. We have heard Mr. Chetan Sharma, learned
senior counsel along with Mr. Peeyoosh Kalra, learned counsel for the
petitioner on the question of condonation of delay.
2. Before issuing notice on the question of condonation of delay,
we think it appropriate to address whether there is justification, warrant
or merit in the appeal to issue notice. Thus, we proceed to deal with the
appeal on merits.
LPA No.509/2011 Page 1 of 13
3. Questioning the legal substantiality of the order dated 16 th
December, 2010 passed by the learned single Judge in W.P.(C)
No.8052/2010, the present intra-Court appeal has been preferred. The
appellant, namely, Delhi Jal Board Contractors Welfare Association
(Regd.), members of which are class-I contractors, preferred the writ
petition under Article 226 of the Constitution of India assailing the
empanelment and enlistment of fifth respondent, namely, M/s Vishal
Nimriti Pvt. Ltd. as a contractor under Delhi Jal Board (for short,
„DJB‟) on the ground that it did not meet the eligibility criteria under
Rule 11.1 and 14.0 of Rules for Enlistment of Contractors in DJB (for
brevity, „Rules‟). It was contended before the learned single Judge that
the said company was a new contractor, which did not have the
requisite experience since it had not executed necessary number and
magnitude of works as fixed under the eligibility criteria for
registration as a class-I contractor.
4. The said stand and stance was controverted by the fifth
respondent on the ground that a scheme of amalgamation has been
approved by the Bombay High Court under Sections 391 and 392 of
the Indian Companies Act, 1956 and as per which all contracts,
agreements, arrangements of whatsoever nature to which M/s
Permanent Prestress Pvt. Ltd. was a party or had benefit of, stood
transferred to the new entity and, therefore, there was no error in its
LPA No.509/2011 Page 2 of 13
empanelment. To bolster the said submission, reliance was placed on
the decision in New Horizons Ltd. Vs. Union of India (1995) 1 SCC
478, where the issue of past experience was the subject matter of lis
before the Apex Court. That apart, inspiration was drawn from the
decision in the case of Ganpati RV-Talleres Alegria Track Pvt. Ltd.
Vs. Union of India (2009) 1 SCC 589. On behalf of the present
appellant, an effort was made to distinguish the said decision before
the learned single Judge, but he has placed reliance on New Horizons
Ltd. (supra) and expressed the view that the writ petition was without
any substance and the nature of litigation was against the spirit of
Indian Competition Act, 2002. Being of this view, he dismissed the
writ petition.
5. Mr. Chetan Sharma, learned senior counsel appearing for the
appellant-association has raised the following contentions:-
(i) The Rule 11.1 has been erroneously interpreted by the learned
single Judge inasmuch as the experience that is envisaged under the
said Rule has to be satisfied by the contractor, but not by the
amalgamated entity.
(ii) The single Judge has totally lost sight of Rule 14.0, which
clearly lays a postulate that there cannot be a change in constitution of
a firm without prior approval of DJB. In the present case, such a thing
LPA No.509/2011 Page 3 of 13
has happened thereby disentitling the fifth respondent from being
enlisted.
(iii) The reliance placed on New Horizons Ltd. (supra) by the
learned single Judge is totally incorrect, for in the said decision their
Lordships have fairly stated that in the absence of experience by all the
constituents, experience of a newly emerged entity cannot be taken into
consideration.
(iv) DJB in pursuance of an application preferred by the petitioner
under the Right to Information Act, 2005 had clearly stated that the
respondent No.5 was not eligible for entitlement, but thereafter
reviewed the same in a laconic manner, which defies the basic
ingredients of administrative law inasmuch as it is incumbent on any
authority reviewing an order to ascribe reasons.
6. To appreciate the aforesaid submissions raised by the learned
senior counsel for the appellant, it is imperative to note that the fifth
respondent, namely, M/s Vishal Nimriti Pvt. Ltd., got a scheme of
amalgamation accepted by the Bombay High Court under the
Companies Act, 1956. As is perceptible, a stand was taken before the
learned single Judge that all contracts, agreements, arrangements,
which were granted in favour of M/s Permanent Prestress Pvt. Ltd.
would stand transferred to the new contractor i.e. the new amalgamated
entity. The said stand of the fifth respondent has not been negatived on
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facts. Thus, the question, which arises, is whether in view of this fact,
Rule 11.1 and Rule 14.0 would defeat the benefit of empanelment.
7. First we shall proceed to deal with the applicability of Rule 14.0
to the facts of the present case. Rule 14.0 deals with change in
constitution of a firm after it is registered. As Mr. Sharma, learned
senior counsel has laid enormous emphasis on the said clause, we think
it seemly to reproduce the same;
"Change in Constitution of Firm- The
contractor/firm shall not modify the existing
partnership or enter into any fresh partnership or
change the name of firm without the prior
approval of the enlistment authority. Such
proposal, if any, shall be submitted in advance
giving full details of the intended partnership/sole
proprietorship along with the draft partnership
deed/affidavit and documents as per Annexure-VI.
Any change in status of the contractor as an
„individual‟ or in constitution of the firm or
change in the name of firm without prior approval
of the enlistment authority will render the
contractor/firm liable to be removed from the
approved list of contractors."
On a perusal of Rule 14.0, we have no iota of doubt that the
same really gets applicable once a firm or company is registered.
Unless there is registration or empanelment, the said Rule is not
attracted.
8. Rule 11.1 of the Rules reads as under:-
"The criteria for experience, in case of enlistment,
shall be the completion of requisite number of
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works, as the case may be, or prescribed nature of
magnitude executed on independent contract basis
or as a builder during the last five years. The
works should have been executed in the same
name and style in which the enlistment is sought.
Enlistment of an individual in corresponding
category may also be done based on his technical
qualification in lieu of experience of completion of
works in last 5 years if provision exists in Table 1
of the Rules but other eligibility criteria remaining
the same."
9. On a plain reading of the aforesaid Rule, it is quite clear that the
experience of the requisite number of works is a condition precedent.
Thus, the only clause attracted to the field of empanelment is clause
11.1. Learned senior counsel has drawn our attention to certain aspects
which relate to the facts which he has obtained by way of information
under the RTI Act, 2005. Mr. Sharma, learned senior counsel has
drawn our attention to paragraph 49 of Annexure A-5 of the paper
book, specially, questions 3.1 and 3.2, which read as follow:-
"3.1 Whether M/s Vishal Nirmati registered
enlisted under category-I fulfills conditions as
mentioned at S.No.2.
3.2 Whether the firm submitted the details of
executed works, having been executed in the same
name and style in which the enlistment was sought
i.e. M/s Vishal Nirmal Pvt. Ltd."
10. Thereafter, learned senior counsel has drawn our attention to
Annexure A-7, which is the reply, given by the competent authority
LPA No.509/2011 Page 6 of 13
under the RTI Act. Reply given to questions 3.1 and 3.2 reads as
under:-
"M/s Vishal Nirmiti has been enlisted in class-I.
As per documents of the said firm, it was revealed
that three firms were amalgamated with M/s
Vishal Nirmiti Pvt. Ltd. by the order of Hon‟ble
High Court, Bombay dated 23-11-2007 and the
work experience of one of the amalgamated firm
i.e. M/s Permanent Prestress Pvt. Ltd. has been
considered by the Sub-Committee as well as
Enlistment Committee and the same was approved
by the competent authority (Copy enclosed). Now
as per CPWD/DJB norms, the enlistment case of
the above firms has been moved for review of the
competent authority."
11. Be it noted, thereafter an appeal was preferred and the
competent authority had passed the following order:-
"The above case was taken up for hearing today
i.e. on 17.5.2010. Appellant was present. From
Deptt. Side Sh. Harish Chander EO to CE(Dr.)
Proj-I was present. After carefully going through
the RTI application and the reply furnished by the
deptt. and hearing both sides, I direct that specific
reply in respect of Q No.3.1, 3.2 and 3.3(i) of
original RTI application may be provided to the
appellant within a week‟s time."
12. After the appellate authority passed the order, the DJB
proceeded to inform the petitioner in the form of reply as follows:-
"No. Further, the case was reviewed by the
competent authority after receipt of letter from
DJB Contractors Welfare Association (Regd.)
(copy attached)."
LPA No.509/2011 Page 7 of 13
13. Learned senior counsel has also invited our attention to the
meeting of DJB held on 23rd August, 2010. For the sake of
completeness, we think it appropriate to reproduce the same.
"In the last Board meeting held on
12.08.2010, one of the Members raised the issue
of registration of M/s Vishal Nimriti Pvt. Ltd. as
Class-I contractor. The issue arose in respect of a
preamble for the award of work of Shifting of
water mains falling in the alignment of proposed
Master Plan Road from Narela flyover to Western
Jamuna Canal (WJC) to the firm. Though the
Board finally agreed to award the work, yet it was
decided that the work order should only be issued
after completing the review of the enlistment of
the firm by the Enlistment Committee.
Accordingly, it would be prudent that the firm is
not considered for further participation in the
tenders till a final decision is taken in respect of
the enlistment of the firm as Class-I contractor."
14. Thereafter, vide Annexure A-11 dated 12th October, 2010, the
following order came to be passed:-
" It is in continuation to communication
from Member (WS) issued vide No.F-
53/DJB/M(WS)/2010-2304 dated 23.8.10
directing that M/s Vishal Nirmiti Pvt. Ltd. be not
considered for participation in the tenders till a
final decision is taken in respect of enlistment of
the firm as Class-I contractor.
On review of the matter by the Enlistment
Committee and as approved by the competent
authority, since the initial enlistment of the firm;
namely, M/s Vishal Nirmriti Pvt. Ltd. as Class I
contractor has been found in order, the
communication as referred to above is withdrawn.
This is being issued with the approval of
competent authority."
LPA No.509/2011 Page 8 of 13
15. Learned senior counsel would contend that the application of the
fifth respondent has been treated to be an order by the reviewing
authority, but no reasons have been given. There is no adjudication of a
lis or adjudication of disputes between two parties, but this was a case
for determining the eligibility criteria for empanelment. It does not
necessarily grant or award contract. That apart, it clearly states that
enlistment committee has reviewed the matter and has been approved
by the competent authority. In certain cases ascribing of reasons may
be the necessity, but if the reasons are perceptible from the factual
matrix that is available to the Court on that score, the order is not to be axed.
We are inclined to think as we find, when the new entity came into existence
and the company namely, M/s Permanent Prestress Pvt. Ltd. had the
requisite experience which has not been disputed either in facts or law, the
same can be taken into consideration. In this connection, we may refer with
profit to paragraph 39 of New Horizons (supra), which reads as follows:-
"39. On behalf of the respondents reliance has
been placed on the decision of the Delhi High
Court in Paharpur Cooling Towers Ltd., v.
Banbaigon Refinery and Petrochemicals Ltd.
wherein it has been held that the expression
"tenderer should possess such experience" would
mean the experience of the tenderer itself and not
that of its collaborator. It has been pointed out that
SLP (C) No. 1484 of 1994 filed against the said
judgment has been dismissed by this Court by
order dated 28-1-1994. It has been urged that on
the same logic the experience of a shareholder
would not be included within the expression
"experience of the tenderer". We fail to appreciate
the relevance of this judgment. There can be no
LPA No.509/2011 Page 9 of 13
comparison between a collaborator who has no
stake in the business of the company and a
constituent of a company, such as NHL,
constituted as a joint venture, wherein the
constituents in the joint venture have a substantial
stake in the success of the venture."
16. On a perusal of the aforesaid paragraph, it is clear as day that
what is required is the stake of the joint venture company. In the said
case, the Apex Court was dealing with the concept of joint ventures
and in the present case when there is amalgamation of the two entities
which have merged with each other and become one, we are disposed
to think that the entire conception as enshrined and engrafted under
Sections 391 and 392 of the Companies Act come into play. It cannot
be said that both the companies should have experience. It cannot be
said that M/s Permanent Prestress Pvt. Ltd. has no stakes. In fact the
stakes have been unified into one and that is also stated in paragraph 23
of the decision in the case of New Horizon (supra).The said paragraph
reads as follows:-
"23. Even if it be assumed that the requirement
regarding experience as set out in the
advertisement dated 22-4-1993 inviting tenders is
a condition about eligibility for consideration of
the tender, though we find no basis for the same,
the said requirement regarding experience cannot
be construed to mean that the said experience
should be of the tenderer in his name only. It is
possible to visualise a situation where a person
having past experience has entered into a
partnership and the tender has been submitted in
the name of the partnership firm which may not
have any past experience in its own name. That
does not mean that the earlier experience of one of
LPA No.509/2011 Page 10 of 13
the partners of the firm cannot be taken into
consideration. Similarly, a company incorporated
under the Companies Act having past experience
may undergo reorganisation as a result of merger
or amalgamation with another company which
may have no such past experience and the tender
is submitted in the name of the reorganised
company. It could not be the purport of the
requirement about experience that the experience
of the company which has merged into the
reorganised company cannot be taken into
consideration because the tender has not been
submitted in its name and has been submitted in
the name of the reorganised company which does
not have experience in its name. Conversely there
may be a split in a company and persons looking
after a particular field of the business of the
company form a new company after leaving it.
The new company, though having persons with
experience in the field, has no experience in its
name while the original company having
experience in its name lacks persons with
experience. The requirement regarding experience
does not mean that the offer of the original
company must be considered because it has
experience in its name though it does not have
experienced persons with it and ignore the offer of
the new company because it does not have
experience in its name though it has persons
having experience in the field. While considering
the requirement regarding experience it has to be
borne in mind that the said requirement is
contained in a document inviting offers for a
commercial transaction. The terms and conditions
of such a document have to be construed from the
standpoint of a prudent businessman. When a
businessman enters into a contract whereunder
some work is to be performed he seeks to assure
himself about the credentials of the person who is
to be entrusted with the performance of the work.
Such credentials are to be examined from a
commercial point of view which means that if the
contract is to be entered with a company he will
look into the background of the company and the
persons who are in control of the same and their
capacity to execute the work. He would go not by
the name of the company but by the persons
behind the company. While keeping in view the
past experience he would also take note of the
present state of affairs and the equipment and
resources at the disposal of the company. The
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same has to be the approach of the authorities
while considering a tender received in response to
the advertisement issued on 22-4-1993. This
would require that first the terms of the offer must
be examined and if they are found satisfactory the
next step would be to consider the credentials of
the tenderer and his ability to perform the work to
be entrusted. For judging the credentials past
experience will have to be considered along with
the present state of equipment and resources
available with the tenderer. Past experience may
not be of much help if the machinery and
equipment is outdated. Conversely lack of
experience may be made good by improved
technology and better equipment. The
advertisement dated 22-4-1993 when read with the
notice for inviting tenders dated 26-4-1993 does
not preclude adoption of this course of action. If
the Tender Evaluation Committee had adopted this
approach and had examined the tender of NHL in
this perspective it would have found that NHL,
being a joint venture, has access to the benefit of
the resources and strength of its parent/owning
companies as well as to the experience in database
management, sales and publishing of its parent
group companies because after reorganisation of
the Company in 1992 60% of the share capital of
NHL is owned by Indian group of companies
namely, TPI, LMI, WML, etc. and Mr Aroon
Purie and 40% of the share capital is owned by
IIPL a wholly-owned subsidiary of Singapore
Telecom which was established in 1967 and is
having long experience in publishing the
Singapore telephone directory with yellow pages
and other directories. Moreover in the tender it
was specifically stated that IIPL will be providing
its unique integrated directory management system
along with the expertise of its managers and that
the managers will be actively involved in the
project both out of Singapore and resident in
India."
17. In view of the aforesaid, we are of the considered opinion that
eligibility criteria as enumerated under Rule 11.1 of the Rules stands
satisfied.
LPA No.509/2011 Page 12 of 13
18. We will be failing in our duty, if we do not take note of the
submission of Mr. Sharma that the learned single Judge should not
have referred to the Competition Act and certain historical statements
made by great protagonists in the field of Economics and Industry with
regard to competition and that has influenced the order. In our
considered opinion, such references in the present case do not vitiate
the order. It is the economic philosophy which has been brought into
the legal philosophy as the single Judge had felt that the petitioner
though claims to be an association of 160 members is scared of
including any other member and possibly wants to shy away to
compete with the fifth respondent. The purpose of reference to this
statement has to be understood in this way and not in the manner Mr.
Sharma has appreciated. Hence, said submission of Mr. Sharma leaves
us totally unimpressed.
19. In view of the aforesaid, we do not perceive any reason to issue
notice on the question of condonation of delay and accordingly the
application for condonation of delay stands rejected and as a natural
corollary, the appeal stands dismissed in limine.
CHIEF JUSTICE
SANJIV KHANNA, J.
MAY 30, 2011 NA LPA No.509/2011 Page 13 of 13