Orissa High Court
International Commerce Ltd. ... vs Secretary, Ministry Of Coal And Others on 5 August, 2014
Author: Biswajit Mohanty
Bench: Pradip Mohanty, Biswajit Mohanty
ORISSA HIGH COURT, CUTTACK
W.P.(C) No.9815 of 2014
An application under Articles 226 and 277 of the Constitution of India.
International Commerce Ltd.
Represented through its Managing
Director ...... petitioner
Versus
Secretary, Ministry of Coal and
others ...... opp. parties
For petitioner : Mr. Ashok Mohanty, Senior Advocate
Prabodh Ch. Nayak and
S.J.Mohanty, Advocates
For opp. parties : M/S. Debasis Mohanty and A. Mishra
( for Caveator)
Mr. S.D.Das, Senior Advocate
(for O.Ps 2 to 4)
M/s. R.K.Rath, Senior Advocate,
Chinmay Choudhyry, U.C.Pradhan,
S.Pattnaik & B.Moharana
(for intervenor-O.P.No.5)
P R E S E N T:
THE HONOURABLE ACTING CHIEF JUSTICE SHRI PRADIP MOHANTY
AND
THE HONOURABLE SHRI JUSTICE BISWAJIT MOHANTY
-----------------------------------------------------------------------------------------
-Date of Judgment: 05.08.2014
------------------------------------------------------------------------------------------
//2//
BISWAJIT MOHANTY, J. This writ petition has been filed by the petitioner-
company with a prayer to quash the rejection order under Annexure-4
issued by opp. party No.4, whereby the petitioner-company was
informed that its technical bid was rejected by the Tender Committee
as it did not comply the requirement of Para No.3 of Sub-Clause 3.2 of
NIT. Further, the petitioner-company has prayed for a direction to the
opp. parties 3 and 4 to accept its tender as valid.
2. The facts of the case are as follows:
On 19.3.2014, vide Annexure-1/Annexure-A/2, e-Tender
Notice was floated by Mahanadi Coalfields Ltd. on-line in the web site
inviting tenders from eligible bidders for extraction of Coal/Coal
measure strata by deploying Surface Miner on hiring basis for
mechanical transfer of the same into Tipping Trucks and for
transportation from Face to different destination for a total quantity of
138,79,680 Cum (230,22,716 Te) at Lingaraj OCP, Lingaraj Area.
The relevant Clauses of e-Tender Notice dated 19.3.2014
are quoted below:
"3. Deposit of EMD:
3.1 Earnest Money can be deposited online on e- Procurement portal of
MCL by following mode:
(a) Online fund transfer from Axis Bank
(b) NEFT from any Scheduled bank
(EMD through NEFT has to be paid strictly as per the challan
generated by the respective bidder on e-procurement portal of MCL.
The EMD payment through NEFT mode should be made well ahead
of time to ensure that the EMD amount is transferred to MCL
account before bid submission)
3.2 Alternatively, bidders can also deposit EMD in the form of
irrevocable Bank Guarantee (BG) from any scheduled Bank in the
format given in the bid document with the following conditions. The
//3//
validity of such BG should be minimum 28 days beyond the validity of
the bid.
1. No Bank Guarantee submitted for EMD shall be accepted for amount
less than Rs.5.00 Lakh (Rupees Five Lakh) only.
2. No extension of Bank Guarantee for a period of less than 3 (Three)
months shall be accepted.
3. Bank Guarantees issued by outstation Banks shall be operative at
their local branch (Sambalpur in case of HQ).
4. Bank Guarantees shall contain complete Postal Address, Telephone
Number, Fax Number and e-mail address of both the outstation bank
issuing the BG as well as its local operating branch.
3.3. In case of offline submission of EMD through BG, the bidder has to
furnish the BG Number, date of issue, expiry date, amount and name
of issuing bank, while submitting the tender on-line. The bidder has
to deposit the original BG against EMD in person or by postal means,
which must be received in the office of the General Manager
(TC/CMC), MCL, HQ on any working day after e-publication of NIT
and up to three working days after the last date of submission of bid.
The Company shall not be responsible for any postal delay in receipt
of EMD. In case the EMD is not received within the aforesaid period,
the bid will be out rightly rejected.
3.4. In case of online payment of EMD, the bid submission can only be
completed when the EMD is received by MCL.
3.5. In case of online payment of EMD, if the payment is made by the
bidder within the last date and time of bid submission but not
received by MCL within the specified period due to any reason then
the bid will not be accepted. However the EMD will be refunded back
to the bidder.
5. Clarification of Bid: The bidder may seek clarification on-line within the
specified period. However, the management will clarify as far as possible
the relevant queries.
7. Eligible Bidders: The invitation for bid is open to all bidders including an
individual, proprietorship firm, partnership firm, company or a Joint
Venture having eligibility to participate as per eligibility criteria stipulated
in clause No.8 of NIT and having Digital Signature Certificate (DSC) issued
from any agency authorized by Controller of Certifying Authority (CCA),
Govt. of India and which can be traced up to the chain of trust to the Root
Certificate of CCA.
Note: Joint Venture: Two or three companies/contractors may participate
in the tender as Joint Venture (JV). Joint Ventures must comply the
following requirements:
(i) The minimum qualification requirements for Joint Ventures: The
qualifying criteria parameters e.g. experience, financial resources etc. of
the individual partners of the J.V. will be added together and the total
criteria should not be less than as spelt out in qualification criteria.
(ii) The formation of Joint Venture or change in the Joint Venture
character/partners after submission of the bid and any change in the
bidding regarding Joint Venture will not be permitted.
(iii) Joint Venture Agreement should legally bind all partners jointly and
severally.
(iv) The pre-qualification of a joint venture does not necessarily pre-qualify
any of its partners individually or as a partner in any other joint venture or
association. In case of dissolution of a joint venture, each one of the
//4//
constituent firms may pre-qualify if they meet all the pre qualification
requirements, subject to written approval of the employer.
(v) The JV Agreement must include the relationship between joint venture
partners in the form of JV Agreement to legally bind all partners jointly
and severally for the proposed agreement which should set out the
principles for the constitution, operation, responsibilities regarding work
and financial arrangements, participation (percentage share in the total)
and liabilities (joint and several) in respect of each and all the firms in the
joint venture. Such JV Agreement must evidence the commitment of the
parties to bid for the facilities applied for (if pre-qualified) and to execute
the contract for the facilities if their bid is successful.
(vi) One of the partners responsible for performing a key component of the
contract shall be designated as Lead Partner. This authorization shall be
evidenced by a Power of Attorney signed by legally authorized signatories of
all the partners.
(vii)The JV Agreement must provide that the Lead Partner shall be
authorized to incur liabilities and receive instructions for and on behalf of
any and all partners of the Joint Venture and the entire execution of the
contract shall be done with active participation of the Lead Partner.
(viii) The contract agreement should be signed jointly by each Joint
Venture Partners.
(ix) An entity can be a partner in only one Joint Venture. Bid submitted by
Joint Ventures including the same entity as partner will be rejected.
(x) The J.V. agreement may specify the share of each individual partner for
the purpose of execution of this contract. This is required only for the sole
purpose of apportioning the value of the contract to that extent to
individual partner for subsequent submission in other bids if he intends to
do so for the purpose of the qualification in that tender.
8. Eligibility Criteria:
A. Work Experience: The intending tenderer must have in its name as a
prime contractor experience of having successfully executed works in any
Government/Semi-Government/Public Sector Undertakings
(Central/State)/Private Firm (only if the Private Firm is a Company registered
under Indian Companies Act 1956) of similar nature valuing 65% of the
"Annualized Value or Estimated Value whichever is less" of the work put to
tender in any year ( a 'year' in this context is a continuous period of 365 days
starting at any date of the year) during last 7 (seven) years ending last day of
month previous to the one in which bid applications are invited.
(in case the bidder is not a prime contractor but a sub-contractor, the bidder's
experience as sub-contractor will be taken into account if the contract in
support of qualification is a sub-contract in compliance with the provision of
such sub-contract in the original contract awarded to prime contractor).
"Annualized Value" of the work shall be calculated as the "Estimated
Cost/Period of completion in days x 365".
The cost of executed works shall be given a weightage to bring them at current
price level by adding 5% for each completed year (total number of days/365)
after the end date of experience till one year before the last day of month
previous to one in which e-Tender has been invited.
The definition of similar work shall be as follows:
Loading of coal or any other minerals into railway wagons/tippers/trucks by
mechanical means and transportation of excavated/stacked/crushed coal or
any other minerals will be considered to be of similar work. In addition to the
above, if any bidder submits the value of experience of Extraction of coal/coal
//5//
measure strata by deploying Surface Miners the same will also be considered
for evaluation. Transportation of consumer goods etc. will not be considered.
In respect of the above eligibility criteria the bidders are required to furnish
the following information on-line:
(i) Start date of the year for which work experience of bidder is to be
considered for eligibility.
(ii) Start date & end date of each qualifying experience (similar work)
(iii) Agreement Number/Work Order Number of each experience
(iv) Work Order issuing authority of each experience
(v) Percentage (%) share of each experience (100%) of share in case of a
Joint Venture)
(vi) Executed Value of work against each experience
Note: In case the bidder is a Joint Venture, the work experience of any or all of
the individual partners of JV may be furnished as the work experience of the
bidder.
B. Working Capital: Evidence of possessing adequate working capital (at
least 20% of the "Annualized Value or Estimated Value whichever is less" of
this work) inclusive of access to lines of credit and availability of other
financial resources to meet the requirement. The bidder should possess the
working capital within three months prior to the date of opening of tender.
In respect of the above eligibility criteria the bidders are required to furnish
the following information on-line:
(i) Amount of available Working Capital inclusive of lines of credit and
availability of other financial resources
(ii) Date on which the bidder possesses the required Working Capital
(iii) Name of the Chartered Accountant (CA)
(iv) Membership Number of the Chartered Accountant (CA) who certifies
the bidder's working capital on a particular date.
(v) Date of Issue of certificate
Note: In case the bidder is a Joint Venture, the above information in respect of
each individual partner of JV may be furnished and the working capital of all
partners will be added by the system to calculate the Working Capital of the
bidder.
C. Fleet Requirement: The bidder is required to give an undertaking in the
form of an Affidavit in the prescribed format to deploy the following matching
equipments/Tippers/Pay-Loaders either owned or hired:
Type of Fleet/Equipment Measure of Unit of Minimum capacity Total Equivalent
Capacity Capacity Required for each capacity required
fleet/equipment to be deployed
daily for
execution of work
Surface Miner Cutting Mm 2000 14422
width Cum/day
Pay loader Power HP 112 1344
Tipper Carrying KG 14000 1120000
capacity
In respect of the above the bidders are required to furnish the following
information online.
"Confirmation in the form of Yes/No for accepting this Clause".
//6//
FOR FURTHER DETAILS, PLEASE SEE TENDER DOCUMENT.
SPECIAL CONDITION:
(a) NATURE OF WORK
The work involves deployment and operation of Surface Miner (s), Pay
Loaders, Tippers and allied machineries like Water Tanker (s), Diesel Bouser (s) etc.,
for mechanical excavation, transfer and transportation of coal and coal measure
strata at this OC Project of MCL. The tenderer should have capacity to start the
work within 45 days of issue of LOA and to build up the required level of
daily/monthly production quantity.
(b) Scope of work
(i) The work involves extraction/breaking of coal/coal measure strata in
slices/layers without resorting to drilling and blasting, then mechanical transfer of
the broken materials into tipping trucks/dumpers and transportation of the same as
directed by the Project Management. The thickness and length of the slices/layers
will be decided by the Management, depending upon the working conditions at site.
However, the broken material should not be greater than (-) 100 mm size.
For the purpose of computing the "output" of Surface Miner, insitumesurement of
coal/coal measure strata will be the only basis as per the practice. For Loading and
Transportation of coal, the "output" will be considered on actual weighment basis.
(ii) The Management however, reserves the right to transfer/shift the quantity to
other projects or re-distribute the same within the project of MCL and it shall be the
responsibility of the contractor to comply with such change/redistribution by
deploying adequate number of equipments.
(c) The tenderers should quote the rates for Extraction, mechanical Transfer and
Transportation of coal separately. Basis of valuation of the offers shall be the
composite value of Extraction, Transfer and Transportation of coal.
(d) Suitable patch size will be provided by MCL.
(e) The contract will be awarded for 962 days subject to the following:
(i) The contract shall be initially awarded for a period of one year and shall
be renewed for second and third year subject to satisfactory performance
in the respective preceding years.
(ii) The L-1 Bidder has to give a declaration in the form of an affidavit that if
he/they do not have a higher capacity machine (i.e. 2200 mm. or more
cutting width) or a new machine of 2100 mm. he/they would purchase at
least one Surface Miner of higher capacity (whose cutting width is more
than 2100 mm) or a new machine of 2100 mm. out of the total
requirement as stipulated in NIT and deploy the same in the awarded
work during the first year of contractual time period.
(f) The NIT will be the part of the Agreement.
(D) Permanent Account Number (PAN): The bidder should possess Permanent
Account Number (PAN) issued by Income Tax department, Govt. of India.
In respect of the above eligibility criteria the bidders are required to furnish the
following information on-line:
(i) Confirmation of possessing the Permanent Account Number (PAN), in the form of
Yes/No.
10. Submission of Bid:
//7//
(a) In order to submit the Bid, the bidders have to get themselves registered
online on the e-Procurement portal (https://mcltenders.gov.in) with valid Digital
Signature Certificate (DSC) issued from any agency authorized by Controller of
Certifying Authority (CCA), Govt. of India and which can be traced up to the chain of
trust to the Root Certificate of CCA. The online Registration of the Bidders on the
portal will be free of cost and one time activity only. The registration should be in
the name of bidder, whereas DSC holder may be either bidder himself or his duly
authorized person.
(b) The bidders have to accept unconditionally the online user portal agreement
which contains the acceptance of all the Terms and Conditions of NIT including
General and Special Terms & Conditions and other conditions, if any, along with on-
line undertaking in support of the authencity of the declarations regarding the facts,
figures, information and documents furnished by the Bidder on-line in order to
become an eligible bidder. No conditional bid shall be accepted.
(c) Letter of Bid: The format of Letter of Bid (as given in the NIT at Annexure-V
will be downloaded by the bidder and will be printed on Bidder's letter head and the
scanned copy of the same will be uploaded during bid submission in cover-I. This
will be the covering letter of the bidder for his submitted bid. The content of the
"Letter of Bid" uploaded by the bidder must be the same as per the format
downloaded from website and it should not contain any other information.
The Letter of bid will be digitally signed by DSC holder submitting bid online and it
does not require any physical signature. However, if the Letter of Bid (LoB) bears the
physical signature in addition to the digital signature of DSC holder, it will be
accepted without questioning the identity of person signing the Letter of Bid.
If there is any change in the contents of Letter of Bid uploaded by bidder as
compared to the format of Letter of Bid uploaded by the department with NIT
document, then the bid will be rejected.
Price Bid: The Price Bid containing the Bill of Quantity will be in Excel format and
will be downloaded by the bidder and he will quote the rates for all items on this
Excel file. Thereafter, the bidder will upload the same Excel file during bid
submission in cover-II. The Price Bid will be in item Rate or Percentage Rate BOQ
format and the bidder will have to quote for all the tendered items and the L-1 will
be decided on overall quoted value. The Price Bids of the tenderers will have no
condition. The Price Bid which is incomplete and not submitted as per instruction
given above will be rejected.
13. After receipt of "EMD" as stated in clause No.3 of NIT, the Technical bid will be
decrypted and opened on-line, on the scheduled date and after the pre-scheduled
time by the Bid Openers with their Digital Signature Certificate (DSC). The bidder
can view bid opening remotely on their personalized dash board under "Bid Opening
(Live)" link. Thereafter, the Technical bid shall be evaluated by the system on-line
based on the information furnished by bidders on-line in accordance with clause
No.8 of NIT (Eligibility Criteria). This on-line evaluation will be validated by MCL.
25. Modification and Withdrawal of Bid:
Modification of the submitted bid shall be allowed on-line only before the
deadline of submission of tender and the bidder may modify and resubmit the bid
on-line as many times as he may wish.
The bidder may withdraw his bid on-line within the end date of bid
submission and his EMD will be refunded. However, if the bidder once withdraws
his bid, he will not be able to resubmit the bid in this tender. For withdrawal of bid
after the end date of bid submission, the bidder will have to make a request in
writing to the Tender inviting Authority. Withdrawal of bid may be allowed till issue
of LOA with the following provision of penal action:
//8//
a. If the request of withdrawal is received before online notification for opening of
price bid, the EMD will be forfeited and bidder will be debarred for 6 months from
participating in tenders in MCL. The Price-bid of remaining bidders will be opened
and the tender process shall go on.
(b) If the request of withdrawal is received after online notification for opening of
price bid, the EMD will be forfeited and the bidder will be debarred for 1 year from
participating in tenders in MCL. The Price-bid of all eligible bidders including this
bidder will be opened and action will follow as under:
(i) If the bidder withdrawing his bid is other than L-1, the tender process
shall go on
(ii) If the bidder withdrawing his bid is L-1, then re-tendering will be done.
(The penal action against clause (a) & (b) above will be enforced from the date
of issue of such order.)
34. Award Criteria:
The Employer will award the Contract to the Bidder whose Bid has been
determined to be substantially responsive to the Bidding documents and who has
offered the lowest evaluated Bid Price, provided that such Bidder has been
determined to be eligible in accordance with the provision of Clause No.7 (eligible
bidders) and Clause No.8 (eligibility criteria)."
Perusal of Clause-3 of e-Tender Notice dated 19.3.2014
makes it clear that tenderers were required to deposit earnest money
online on e-Procurement portal of Mahanadi Coalfields Ltd. for short,
"MCL" either by online fund transfer from Axis Bank or by NEFT from
any scheduled bank. Sub-Clause 3.2 makes it clear that alternatively,
bidders can also deposit EMD in the form of irrevocable Bank
Guarantee from any scheduled bank in the format given in the bid
document with a number of conditions. Such a format is given at
Annexure-III attached to the e-Tender Notice under Annexure-A/2.
One of such conditions is prescribed at Para No.3 of Sub-Clause 3.2,
which makes it clear that bank guarantee issued by outstation banks
shall be operative at their local branch (Sambalpur in case of
Headquarter). Clause-5 as quoted above makes it clear that the bidder
//9//
may seek clarification on-line within the specified period, i.e. from
21.3.2014to 31.3.2014 as provided at clause-2 dealing with time schedule of the tender under Annexure A/2. Clause-7 as indicated above deals with eligible bidders having eligibility to participate as per eligibility criteria stipulated in Clause-8 of NIT. Clause-8 deals with the eligibility criteria in details as quoted above. Clause-10 deals with submission of bid and it makes a reference to the format of letter of bid as given at Annexure-V attached to NIT. A bare reading of Annexure-5 format shows that the tenderer submitting tender papers confirms its "acceptance of all the terms and conditions of the NIT document unconditionally. In other words, this means a tenderer submitting a bid who deposits EMD in the form of irrevocable bank guarantee from any schedule bank is bound to furnish a bank guarantee if issued by outstation banks, so that it would be operative/payable at their own local branch at Sambalpur. Clause-13 of e-Tender Notice under Annexure-A/2 makes it clear that only after receipt of EMD 'as stated in Clause-3 of NIT', the technical bid would be decrypted and opened on-line on the scheduled date. Clause-25 of e-Tender Notice under Annexure-A/2 makes it clear that modification of the submitted bid shall be allowed online only "before" the deadline of submission of tender and the bidder may modify and resubmit the bid on-line as many times as he may wish. Here, as per Annexure-A/2 the last date of submission of bid was 8.4.2014 and last date of receipt //10// of EMD offline through bank guarantee was 11.4.2014. As per Clause- 34 of e-Tender Notice the employer will award the contract to the bidder whose bid has been determined to be substantially responsive to the bidding documents and who has offered the lowest evaluated bid price, provided that such bidder has been determined to be eligible in accordance with the provision of Clause Nos.7 and 8.
In the present case, the petitioner submitted bank guarantee under Annexure-2, which was payable/operative at Kolkata and not at Sambalpur. In such background on 3.5.2014 vide Annexure-B/2, opp. party No.4 wrote a letter to the Branch Manager H.D.F.C. Bank Ltd. at Sambalpur specifically asking him about encashment of bank guarantee at Sambalpur. Under Annexure-C/2, the Branch Manager H.D.F.C. Bank, Sambalpur in his reply made it clear that all claims under the bank guarantee would be payable at Kolkata. It is in such background after receiving the intimation under Annexure-C/2 dated 10.5.2014; the opp. party No.4 issued the impugned rejection order under Annexure-4. Later on, the bank guarantee under Annexure-2 was returned to the petitioner. On 17.5.2014 price bids of rest four bidders were opened. In such background on 19.5.2014, the present writ petition was filed by the petitioner and on 21.5.2014, this Court passed the following interim order:
//11// " ............ In view of the same, we direct the petitioner to furnish the bankers cheque of one crore payable at Sambalpur in favour of opposite party no.3 within three days, whereafter the case of the petitioner shall be considered along with other bidders. This interim order has been passed without prejudice to the rights and liabilities of the parties."
The petitioner also failed to carry out the said order. On 23.5.2014, the petitioner vide Annexure-8 submitted amended bank guarantee which indicated therein that the bank guarantee would be operative at H.D.F.C. Bank at Sambalpur. Further, on the same date, i.e., on 23.5.2014, the petitioner filed a Misc. Case 8976 of 2014 for modification of the interim order dated 21.5.2014 wherein it was prayed that the petitioner-company be allowed to furnish fresh irrevocable bank guarantee in terms of clause 3.2 of NIT having local branch at Sambalpur, which can be encashed at Sambalpur as per NIT". In other words, the petitioner admitted that the bank guarantee submitted under Annexure-2 was not in tune with Sub-Clause 3.2 of NIT. Annexure-8 was received by Mahanadi Coalfields Authorities on 24.5.2014. On 26.5.2014, an affidavit was filed by the petitioner incorporating averments on Annexures-7 and 8.
3. A counter affidavit was filed by opp. parties 2, 3 and 4 taking a stand that as the bid document submitted by the petitioner is not in accordance with law, the bid of the petitioner was rightly rejected. A further affidavit was filed by the petitioner on 10.7.2014 taking a plea that its price bid being the lowest and the requirement of //12// Para-3 of Sub-Clause 3.2 being merely an ancillary condition, this Court may direct the opp. parties to accept it's bid. It also relied on Annexure-10, written by H.D.F.C. to M.C.L. with regard to validation and authentication of Bank Guarantee. It may be noted here that a perusal of letter under Annexure-10 makes it clear that it says nothing about payment at Sambalpur. Rather, three days after issuance of Annexure-10; vide Annexure-C/2, H.D.F.C. Bank in its letter to MCL indicated that the Bank Guarantee would be payable at Kolkata.
4. Heard Mr. Ashok Mohanty, learned Senior Counsel for the petitioner, Mr. S.D.Das, learned Senior Counsel for opp. parties 2 to 4 and Mr. R.K.Rath, learned Senior Counsel representing intervenor-
opp. party No.5. In addition to their oral submission, all the above noted Senior Counsel filed their written notes of argument.
5. Mr. Ashok Mohanty, learned senior counsel for the petitioner submitted that requirement of submitting bank guarantee issued by outstation bank being operative/payable at their local branch at Sambalpur was not an essential tender condition and accordingly he submitted that rejecting the tender paper of the petitioner was arbitrary and unreasonable. In this context, he relied on the decisions reported in the cases of M/s. Poddar Steel Corporation v. M/s. Ganesh Engineering Works and others, AIR 1991 Supreme Court 1579, Sadashiv Morajkar Construction Pvt. Ltd. v. Government of Goa and others), 2005 (2) CTLJ 168 (Bombay) //13// (DB) and Kapsch Metro JV v. Union of India and another, 2007 (2) CTLJ 64 (Delhi) (DB). Secondly, according to him if the petitioner failed to work as per agreement, MCL could en-cash the Bank Guarantee on any branch of H.D.F.C. So, Para-3 of Sub-Clause 3.2 had no legal meaning. He further submitted that as per settled principle of law every terms and conditions of NIT must indicate legal certainty. In this context, he relied on a decision reported in the case of Reliance Energy Ltd. and another v. Maharashtra State Road Development Corporation Ltd. and others, (2007) 8 SCC 1. Thirdly, he contended that as per letter dated 7.5.2014 under Annexure-10 authenticity of Bank Guarantee could have been validated from any branch of H.D.F.C. Bank including the branch at Sambalpur. Without considering this, the MCL authorities illegally rejected the valid tender of the petitioner. Fourthly, he submitted that the petitioner satisfied all the requirements of Clauses 7 and 8 of e-Tender Notice/NIT dated 19.3.2014 dealing with eligible bidders and eligibility criteria. So, authorities have gone wrong in rejecting his tender. In this context, Mr. Mohanty, learned Senior Counsel specifically drew our attention to Clause-34 of e-Tender Notice, which made it clear that the employer would award the contract to the bidder whose bid had been determined to be substantially responsive to the bidding documents and who had offered the lowest evaluated bid price, provided that such bidder had been determined to be eligible in accordance with the //14// provision of Clause No.7 and Clause No.8. Lastly, relying on his further affidavit dated 10.7.2014, he further submitted that though the bid of the petitioner had been rejected, however, a comparison of the rate offered by it and the rest four tenderers would show that there existed a difference about more than Rs. 20 crores between his offer price and that of intervenor/opp. party No.5. In such background Mr. Mohanty submitted that it would have been in public interest if his tender was accepted so that a public sector undertaking like MCL would have saved more than Rs.20 crores.
6. On the other hand, Mr. S.D.Das, learned Senior Counsel appearing for the opp. parties 2 to 4 submitted that tender paper of the petitioner was rightly rejected as it did not furnish bank guarantee, (which was issued by outstation bank) to be operative/payable at the local branch at Sambalpur as required under Para-3 of Sub-Clause 3.2. Thus, the petitioner had not submitted the bank guarantee as per requirement of NIT. According to him, requirement of deposit of EMD in the form of irrevocable bank guarantee being operative/payable at Sambalpur is an essential tender condition. In this context, he relied on Clauses-3, 13 and 14 of the bid document. According to him, this condition was consciously stipulated after MCL failed to en-cash several Bank Guarantees in the past due to non-cooperation by the outstation branches of the Bank, which had issued the Bank Guarantee with possible connivance with //15// bidders. All these resulted in several litigations before different courts. Thus, according to Mr. Das, tender submitted by the petitioner was not substantially responsive. On the nature of EMD being an essential condition, he relied upon a decision reported in the case of Villayati Ram Mittal Private Ltd. v. Union of India and another, (2010) 10 SCC 532. Secondly, he submitted that as per Clause-3 of the e-Tender Notice dated 19.3.2014, there existed three modes of deposit of EMD. If the petitioner was serious/earnest about taking part in the tender process, it could have deposited the earnest money either by online fund transfer from Axis Bank or by NEFT from any scheduled bank or by depositing EMD in the form of irrevocable bank guarantee from any schedule bank making such bank guarantee operative/payable at their local branch at Sambalpur. So, according to Mr. Das, learned senior counsel if the petitioner was earnest, it could have deposited the EMD in either of the three modes prescribed and in case of any doubt, the petitioner could have sought clarification under Clause-5 of the e-Tender Notice dated 19.3.2014 between 21.3.2014 and 31.3.2014, in which case the MCL authorities would have clearly asked the petitioner to act strictly as per the requirement of Para No.3 of Sub-Clause 3.2. Thirdly, with regard to public interest components vis-à-vis difference in the price offered by the petitioner and opp. party No.5, Mr. Das, submitted that on the date of opening of technical bid, i.e., 12.4.2014, the petitioner had not submitted the EMD as required //16// under Clause-3 of the NIT. Further, on 3.5.2014, vide Annexure-B/2, when the MCL authorities wrote to HDFC Bank at Sambalpur to confirm whether encashment proceeds would be entertained on the bank guarantee under Annexure-2 submitted by the petitioner, vide Annexure-C/2, the H.D.F.C. bank replied to MCL that all the claims under this guarantee would be payable at Kolkata. In such background rejection order was issued on 16.5.2014 vide Annexure-4 and Bank Guarantee under Annexure-2 was returned to the petitioner. Thus, there has been no arbitrariness or irrationality in the decision making process. According to Mr. Das, Clause-13 of e-Tender Notice made it clear that "after receipt of the EMD as stated in Clause No.3 of the NIT", the technical bid was supposed to be opened. In this case, since the requirement of Para-3 of Sub-Clause 3.2 of the NIT was not satisfied, there was no question of opening of the technical bid of the petitioner. In such background, he submitted that price offered by the petitioner was rightly not taken into account as his offer was not valid. Thus, it cannot be said that amongst eligible bidders, the price offered by the petitioner was lowest. In such background, the plea of the petitioner for accepting the bid on the ground of saving public money in public interest should be ignored. Fourthly, Mr. S.D.Das submitted that the conduct of the petitioner could be seen from the fact that it also failed to comply with the interim order dated 21.5.2014 passed by this Court in its favour. Further, he submitted //17// that even while submitting the amended bank guarantee under Annexure-8 the petitioner never cared to resubmit the bank guarantee under Annexure-2 which had been returned to it. He also submitted that submission of Annexure-8 was done much after the last date of receipt of EMD. If they would accept Annexure-8, it would amount to extending the last date of submitting EMD in which case the MCL had to go for re-tendering or otherwise prejudice would be caused to other potential tenderers. He further submitted that petitioner only wanted to delay the matter which would go against the public interest. While winding up his submission, Mr. Das drew our attention to the decision of the Hon'ble Supreme Court as reported in the case of Sanjay Kumar Shukla v. M/s. Bharat Petroleum Corporation Ltd. and others, 2014 (1) Supreme 500. According to Mr. Das, the decisions cited by Mr.Mohanty, learned Senior Counsel for the petitioner were distinguishable on facts and the same were not applicable to the present case. On account of present litigation, MCL was not in a position to finalize the tender which involves extraction of coal and supply of coal to NTPC and various power sectors though the price bid of others have been opened. He submitted that MCL was facing heavy pressure to supply the coal to various sectors.
7. Mr. R.K. Rath, learned Senior Counsel appearing for the intervenor-opp. party No.5 submitted that on the date of opening of the technical bid there was no bank guarantee from the side of the //18// petitioner as required under Para-3 of Sub-Clause 3.2 of e-Tender Notice. If the amended bank guarantee as provided under Annexure-8 dated 23.5.2014 would have been accepted, the same would have introduced a change in the rule of the game after game had started. In this context, he submitted emphatically that acceptance of amended bid would have amounted to relaxing the terms and conditions of bid, which would have been discriminatory otherwise. Secondly, according to him a reading of Clauses 13,14, 18 (f) and 25 would show that EMD as stated in Clause 3 of NIT is essential condition, not an ancillary condition. Thirdly, he submitted that since EMD as required under Clause-3 was not submitted by the petitioner it cannot be said that the bid of the petitioner was substantially responsive. Mr. Rath, learned Senior Counsel further submitted that a bidder, who was unable to submit the Bank Guarantee as required by tender call notice only showed that he was not sincere in his offer and somehow wanted to delay the matter. Fourthly, Mr. Rath submitted that vide Annexure-V attached to the tender papers, the petitioner unconditionally accepted all the terms and conditions of NIT. Having done this, when the petitioner did not furnish the EMD as required under Para-3 of Sub-Clause 3.2 of the e-Tender Notice under Annexure-1; its tender papers were rightly rejected. Lastly, he relied on Clause-13 of e-Tender Notice which made it clear that only after receipt of EMD as stated in Clause-3 of the NIT, the technical bid //19// would only be decrypted and bid could be opened. According to him, evaluation of technical bid comes after receipt of EMD as required under Clause 3 of NIT. Only after receipt of EMD as required under Clause-3 of NIT, comes the stage of evaluation of technical bid where the employer has to see whether the same is in accordance with Clause-8 of the NIT. Thus, as per Clause 13 of the e-Tender Notice, a technical bid can be opened only after receipt of EMD as stated in Clause-3 of NIT and not otherwise. In such background Mr. Rath, learned senior counsel submitted that receipt of EMD as stated in Clause-3 of NIT was an essential condition of the bid, not an ancillary condition. Unless the same had been submitted in accordance with the requirement of NIT, technical bid could not be opened. With regard to Clause 34, Mr. Rath, learned senior counsel for the intervenor submitted that the said clause applied to a stage when technical bid was opened for evaluation. But in the present case, there was no question of opening the technical bid of the petitioner as it had not submitted the EMD as stated in Clause-3 of NIT. Therefore, the stage of determination of technical bid of the petitioner being substantially responsive by the employer was yet to come. While winding up his submission, Mr. Rath, learned Senior Counsel cited the following decisions of the Hon'ble Supreme Court reported in the cases of West Bengal Electricity Board v. Patel Engineering Co. Ltd and others (AIR 2001 SC 682), M/s. Monarch Infrastructure (P) Ltd. v.
//20// Commissioner, Ulhasnagar Municipal Corporation and others (AIR 2000 SC 2272), Tafcon Projects (I) (P) Ltd. v. Uniion of India and others, (2004) 13 SCC 788), (Raunaq International Ltd. v. I.V.R. Construction Ltd. and others (1999) 1 SCC 492), New Bihar Biri Leaves Co. and others v. State of Bihar and others (1981 (1) SCC 537 and Sorath Builders v. Shreejikrupa Buildcon Ltd. and another, (2009) 11 SCC 9. According to Mr. Rath the decisions cited by Mr.Mohanty learned Senior Counsel for the petitioner were distinguishable on facts and the same were not applicable to the present case. He further submitted that there was no provision for relaxation in e-Tender Notice.
8. Before analyzing various contentions of the parties, let us remind ourselves about the settled position of law relating to award of contract as laid down in Air India Ltd. v. Cochin International Airport Ltd. and others (2000 (2) SCC 617). This case has been quoted with approval in the case of Sanjay Kumar Shukla (supra).
In the case Air India Ltd. (supra), the relevant portion is quoted below:
"The law relating to award of a contract by the State, its corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this Court in R.D. Shetty v. International Airport Authority, 1979 (3) SCC 488; Fertilizer Corporation Kamgar Union v. Union of India, ; Asstt. Collector, Central Excise v. Dunlop India Ltd, , Tata Cellular v. Union of India, ;. Ramniklal N. Bhutta v. State of Maharashtra, and Raunaq International Ltd. v. I.V.R. Construction Ltd., . The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount are commercial //21// considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the Court can examine the decision making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision making process the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should intervene."
We also need to refer to the decision of Shree Hanuman Cotton Mills and another v. Tata Air Craft Ltd.
(AIR 1970 SC 1986 (1) in order to understand the concept of EMD. This case has been later referred to in Villayati Ram Mittal Private Ltd. (supra). As per the said decision, earnest represents a guarantee that the contract will be fulfilled, or in other words, earnest is given to bind the contract. It is used as a something to put pressure on defaulter, if he failed to carry out his part.
9. In such background let us examine whether the impugned order under Annexure-4 was passed in accordance with law or not.
10. One of the submissions of Mr. Mohanty, learned senior counsel appearing for the petitioner was that in the instant case, requirement of depositing EMD by way of Bank Guarantees //22// payable/operative at Sambalpur was merely an ancillary condition, not an essential condition. Therefore, even if a defective EMD was submitted, on that score the authorities could not reject the technical bid of the petitioner. As per para-3 of Sub-Clause 3.2 of e-Tender Notice, the petitioner was required to furnish a Bank Guarantee which, if issued by outstation banks should have to be operative/payable at Sambalpur. Having accepted this terms/conditions of NIT unconditionally, as per Annexure-V attached to e-Tender Notice, now it lies ill in the mouth of the petitioner to contend that the same should be treated as an ancillary requirement, not as an essential requirement. Mr. Das, learned Senior Counsel for the opp. parties 2 to 4 has pointed out that the above noted clause was inserted in the tender after MCL had failed to en-cash the Bank Guarantee in the past due to non-cooperation by the outstation branches of the bank issuing Bank Guarantee with possible connivance with the bidders. Further, Clause 13 of e-Tender Notice makes it clear that technical bid can only be opened after receipt of the EMD as stated in Clause 3 of NIT. In other words, it means that unless the requirements of Para-3 of Sub-Clause 3.2 of Clause 3 of NIT with regard to EMD are fulfilled, technical bid of the bidders cannot be opened. This also gives a clear indication that requirement of Para-3 under Sub-Clause 3.2 of NIT is an essential condition and not an ancillary condition. Further, if according to the petitioner the //23// requirement of Sub-Clause 3.2 was not an essential requirement, then it should not have filed Misc. Case No.8976 of 2014 praying for permission to furnish Bank Guarantee in terms of above Sub-Clause. Thus, the petitioner is blowing hot and cold at the same time.
Now, coming to the three decisions relied on by Mr. Mohanty on this point, let us examine their applicability to present case.
In the case of M/s. Poddar Steel Corporation (supra), the offer of the appellant was accepted by the authorities after rejecting the offer of respondent No.1 as defective. Respondent No.1 challenged the decision in a writ petition before Allahabad High Court containing that there is no defect in its tender and the tender of the appellant could not have been accepted as necessary condition of payment of Rs.50,000/- as earnest money had not complied with by the appellant. The writ petition was resisted on the ground that respondent No.1 has no loco standi in the matter and that the appellant substantially complied the requirement by sending with its tender with a bankers cheque of Union Bank of India. High Court allowed the writ petition on the ground that the appellant did not satisfy the condition No.6 of tender notice as the earnest money was offered by the bankers cheque of a bank other than State Bank of India as mentioned in the said clause. Accordingly, High Court directed the authorities to consider the other valid tenders. Challenging the judgment of the High Court, //24// the appellant moved the Hon'ble Supreme Court. While allowing the appeal, the Hon'ble Supreme Court has held that as a matter of general proposition, it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified in two categories - those which lay down the essential conditions of eligibility and the other conditions which are merely ancillary or subsidiary. In the first case, the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be opened to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases. In the present case, vide Annexure-V to the e-Tender Notice the petitioner accepted unconditionally all terms and conditions of NIT including the condition that bank guarantee issued by outstation bank shall have to be operative/payable at local branch at Sambalpur. Having accepted that, the petitioner cannot be permitted to wriggle out of the same by supplying the bank guarantee operative at some other places. Secondly, as per Clause-13 unless the EMD as stated in Clause-3 of NIT is received, the technical bid cannot be opened. Thirdly, a perusal of e-Tender Notice dated 19.3.2014 would show that the requirement relating to submission of bank guarantee issued by outstation bank was underlined, which shows that the employer put a //25// special emphasis on such condition being strictly complied. For all these reasons we have no hesitation to hold that the intention of MCL authorities was/is clear that the requirement of submission of bank guarantee issued by outstation bank would be operative/payable at Sambalpur was an essential condition. The facts of M/s. Poddar Steel Corporation (supra) and issues involved therein are clearly different from the present case. In M/s. Poddar Steel Corporation case, there was no dispute regarding encashment/encashability of Banker's cheque. Here much after the last date of receipt of E.M.D., i.e., 11.4.2014 vide Annexure-C/2 dated 10.5.2014, the bank authorities made it clear that the Bank Guarantee was payable only at Kolkata. Since Para-3 of Sub-Clause 3.2 incorporated is an essential condition, the M.C.L. authorities have done no wrong in enforcing the said requirement strictly.
In the case of Sadashiv Morajkar Construction Pvt. Ltd. (supra), the facts are quite different. In that case required EMD was to be paid in the form of a demand draft or deposit at Call Receipt (DCR) of scheduled bank guaranteed by Reserve Bank of India, payable at Mapusa, Goa, however, the petitioner submitted his tender in the prescribed form along with EMD by demand draft payable at Panaji. When the tender submitted by the petitioner was not opened, the petitioner filed a writ petition before Bombay High Court, Panaji Bench. It appears that at the time of hearing, learned Advocate //26// General appearing on behalf of respondent Nos.1 to 3 submitted that the respondent Nos. 1 to 3 would open the tender of the petitioner and in the event the petitioner was awarded the tender, he would be directed to pay the collection charges in respect of demand draft submitted by the petitioner. To such submission of learned Advocate General, learned Senior Counsel appearing for the petitioner agreed and accordingly the matter was disposed of. But here this is not the case as the parties are at contest and want adjudication of the issues involved.
With regard to Kapsch Metro Jv (supra), the said case is also distinguishable on facts. In the above case, tender notice required submission of Bank Guarantee, which should be valid for a period of 180 days from 5.1.2007, which was the original date for opening of the bids. Accordingly, the petitioner had submitted the guarantee. Later on, opening of bid was postponed to 22.1.2007 without any prior intimation to individual bidders. Petitioner however realizing that the Bank Guarantee was required to be from reschedule date, i.e., 22.1.2007 acted promptly by rectifying the same and furnished amended Bank Guarantee. Despite rectification, its bid was rejected. Its writ application was allowed by Delhi High Court as the petitioner acted in a bona fide manner and it was in public interest to allow wider publication. But here, in the present case, facts are different //27// inasmuch as from the very beginning, the petitioner had submitted a defective EMD, which showed its casual approach to entire thing.
With regard to contention of the petitioner that as per Annexure-10, its Bank Guarantee could have been validated from any branch of H.D.F.C. Bank, in this context, it may be noted here that a perusal of Annexure-10, nowhere makes it clear that the Bank Guarantee would be payable at Sambalpur as required under Para-3 of Sub-Clause 3.2 of e-Tender Notice. Rather, three days after, i.e., on 10.5.2014, H.D.F.C. Bank vide letter under Annexure-C/2 wrote back to MCL authorities intimating that the Bank Guarantee was payable only at Kolkata. With regard to non-acceptance of amended Bank Guarantee, we agree with the contention of Mr.S.D.Das, learned Senior Counsel and Mr.R.K.Rath, learned Senior Counsel that such a course is clearly impermissible as it would have been resulted in changing the rules of the game after the game has started and would also have been discriminatory.
With regard to the contention of Shri Mohanty that his offer should have been accepted as it was substantially responsive, it can only be said that whether an offer is substantially responsive or not, can only be determined at the stage of evaluation of bids. But, here is a case where since the EMD was not deposited in the form of irrevocable bank guarantee, operative at Sambalpur as required under Clause-3 of NIT; the question of evaluation of the bid of the petitioner //28// did not arise. Language of Clause 13 of e-Tender Notice also makes it clear that technical bid can only be opened after receipt of EMD in accordance with Clause 3 of NIT. Only after technical bid is opened, stage of evaluation, under Clause 34 comes. Therefore, the petitioner can not take help of Clause 34 of e-Tender Notice, as it deals with the process of evaluation of the bid after receipt of bids as stipulated in Clause-3 of NIT. Therefore, the submission that the bid of the petitioner was substantially responsive cannot be accepted, as on account of submission of defective bank guarantee, the evaluation of his bid was not taken up rightly by the employer. With regard to plea of serving of public interest by accepting the lower price offered by the petitioner, it can only be said that the price table given by the petitioner in further affidavit dated 10.7.2014 is a table, prepared after coming to know about the offer of other bidders after their price bids were opened on 17.5.2014. In fact on 17.5.2014 the tender of the petitioner was not taken into account as despite accepting unconditionally to the requirement of submitting bank guarantee issued by outstation banks to be operative/payable at Sambalpur, the petitioner had not supplied such a bank guarantee. Further, it seems that by way of an abundant caution, the MCL authority vide Annexure-B/2 wrote a letter to the Branch Manager, HDFC Bank Ltd., Sambalpur making a query as to whether the Bank Guarantee could be en-cashed from their branch. To this, as indicated earlier reply was //29// given by the Sambalpur HDFC branch to MCL authority at Annexure- C/2, which shows that all claims under the bank guarantee provided under Annexure-2 will be payable at Kolkata only. To our mind, the plea of public interest can hold water only if the case of the petitioner would have been rejected, despite supplying the bank guarantee payable at Sambalpur and despite having offered lowest price. But, here is a case which clearly shows that on the date of opening of technical bid on 12.4.2014, the petitioner had supplied a defective Bank Guarantee on account of which his technical bid was rightly rejected by the authorities. Here as indicated earlier opening of technical bid was dependant upon supplying of an EMD in the form of bank guarantee as required under Para-3 of Sub-Clause 3.2 of e- Tender Notice. That having not been done, the MCL authority committed no wrong in rejecting the technical bid of the petitioner. Air India Ltd. (supra) case referred earlier makes it clear that price cannot be the sole criterion for awarding the contract. The employer may not accept the offer even though it happens to be the highest or lowest. It is also otherwise settled that adherence to the rules and conditions subject to which bids are invited is equally in public interest. The principle of awarding contract to the lowest tenderer applies when all things are equal. Merely because a bid is lowest, the requirement of rules and conditions cannot be ignored. (see West Bengal Electricity Board (supra).
//30// Another contention of Mr. Mohanty, learned Senior Counsel was that Para-3 of Sub-Clause 3.2 has no legal meaning and the MCL could have realised the Bank Guarantee from any branch of H.D.F.C. Bank. We decline to accept such a contention as the language of Para-3 is clear and in case of any doubt, the petitioner could have asked for clarification under Clause-5 of e-Tender Notice within the prescribed period. Further, after participating in the tender proceeds, the petitioner cannot say that Para-3 of Sub-Clause 3.2 has no legal meaning and the same is vague. Also after unconditionally accepting the terms and conditions, the petitioner cannot raise plea of vagueness of para-3. Reliance Energy Ltd. and another (supra) has no application here as facts are different. There, the State had not specified the accounting norms for calculating "net cash profit", one of the requirements of tender. So, Hon'ble Supreme Court held that terms must be clear not vague. Here, Para-3 of Sub-Clause 3.2 of e- Tender Notice was clear and not at all vague, which can be understood even by a lay man. Further, the conduct of the petitioner can be seen from the fact that despite interim order dated 21.5.2014 granted by this Court in its favour, it could not comply the same. It was not disputed at the bar that the tender covering extraction of coal was meant for supply to NTPC and other various power sectors and that MCL was under heavy pressure to supply coal to different power sectors so that there would be no power shortage in the country. Despite the //31// urgency, the MCL authorities did not reject the tender paper of the petitioner outright and to show their bona fide, they wrote a letter to the local HDFC Bank and after receiving communication from the local HDFC Bank that the claims relating to the bank guarantee supplied by the petitioner under Annexure-2 were payable at Kolkata, the MCL authorities rejected the tender paper of the petitioner under Annexure-4. Further, supply of amended tender paper on 23.5.2014 vide Annexure-8 cannot be of any help to the petitioner as the same was supplied much after last date of receipt of EMD and much after the filing of the present writ petition. Thus, for all these reasons we are satisfied that there has been no arbitrariness, mala fide, unreasonableness and irrationality in the decision making process in rejecting the bid of the petitioner.
11. In the above background, keeping in mind the modern trend, which points to judicial restraint in administrative action and the fact that the decision making process has not been vitiated because of any illegality, arbitrariness and mala fide, we find the writ petition is without any merit and accordingly the same stands dismissed.
..............................
Biswajit Mohanty,J.
Pradip Mohanty, ACJ. I agree ....................................
Pradip Mohanty, ACJ.
High Court of Orissa, Cuttack Dated 5th day of August, 2014/bns