Rajasthan High Court - Jaipur
M/S Real Mazon India Ltd & Ors vs State Of Raj And Ors on 2 November, 2017
Author: Ajay Rastogi
Bench: Ajay Rastogi
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT
JAIPUR
D.B. Special Appeal Writ No. 1325 / 2017
1. M/s. Real Mazon India Ltd. (accompanying Incorporated Under
the Companies Act 1956), Having its office/factory at Khasra No.
666/1, Trilokpur Road, Village Ogli, Kala Amb, Sirmour-173030,
Himachal Pradesh through its Authorised Signatory Shri Ramjilal
Soni.
2. M/s. Mazon B.V. ( a Company Duly Created Organized Under
the Laws of Netherland ), and having its registered office at Oude
Rederweg 10 6422 PE Heerlen Netherland, through its authorized
representative Shri Ramjilal Soni.
3. Shri Ramjilal Soni, Authorised Signatory, Real Mazon Rajasthan
Pvt. Ltd. and M/s. Mazon B.V., S/o Shri Hari Shankar Soni, Aged
About 55 Years, R/o 52, Shriji Nagar, Durgapura, Jaipur,
Rajasthan.
----Appellants
Versus
1. State of Rajasthan, Through Chief Secretary, Govt. of
Rajasthan, Secretariat, Jaipur, Rajasthan -302005
2. The Transport Secretary-cum-commissioner, Transport
Department, Government of Rajasthan, Parivahan Bhawan,
Sahkar Marg, Jaipur, Rajasthan-302005
3. M/s Celex Technologies Pvt. Ltd. Through Director/Authorised
Signaroty, Regd. Office Haute Street Building 86A, Topsia Road,
Unit 702, Kolkata: 700046 West Bengal (India)
----Respondents
_____________________________________________________
For Appellant(s) : Mr.Aman Preet Singh, Advocate with
Mr.Sandeep Pathak, Adv.
For Respondent(s) : Mr.Rajendra Prasad, AAG assisted by
Mr.Ashish Sharma, Adv., Mr.Madhav Mitra,
Adv. & Mr.Arun Singh Shekhawat, Adv.
_____________________________________________________
HON'BLE MR. JUSTICE AJAY RASTOGI
HON'BLE MR. JUSTICE DEEPAK MAHESHWARI
Judgment
Judgment reserved on : 14/10/2017
Date of Pronouncement : 02/11/2017
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BY THE COURT :(Per Hon'ble Mr. Justice Deepak Maheshwari)
This intra court appeal has been preferred to assail the judgment dt. 05.09.2017 passed by the Ld. Single Judge in the S.B. Civil Writ Petition No. 14142/2017. The said writ petition sought to quash the order dt.18.08.2017 passed by the respondent No.2 whereby the bid for creating infrastructure for supplying and affixing the "High Security Registration Plate"
(hereinafter referred to as 'the HSRP') in the State of Rajasthan submitted by the present appellant, was rejected during technical evaluation by the committee on the ground of technical disqualification.
With the consent of the parties, the matter was finally heard and during the course of arguments, opportunity was afforded to submit their written submissions. However, the same were filed by the appellants and respondent No.3 only.
The narrow yet important issue to be decided in this appeal is whether cl.1.5.3.2 under the conditions of "Notice Inviting Tender" (hereinafter referred to as 'the NIT') dt.30.05.2017 read with corrigendum dt.30.06.2017 is in addition to the requirement envisaged in cl.1.5.3.1 or it is in reference to cl.1.5.3 (financial capabilities). Secondly, whether interpretation of the terms & conditions of the NIT as observed by the ld.Single Judge in the impugned judgment dt.05.09.2017 is tenable in law.
For the sake of brevity, before adverting to the facts of the case, it has come on record that the appellant herein earlier implemented the HSRP Project in the State of Rajasthan from 2012-2017 and concerning the first issue, our attention was drawn (3 of 14) [SAW-1325/2017] to the text of the NIT dt.30.05.2017. Cl.1.1.5 of the NIT stipulates that "Bidder' shall mean an individual or a registered firm or a company or a corporation or a joint venture or a consortium, each having a valid Type Approval Certificate in its own name or in the name of an entity forming part of joint-venture/consortium, and in possession of such qualifications both technical and financial, as laid down in this bid document". Further definitions of "Bidder" is given u/cl.1.1.5 and "consortium" & "Joint Venture" u/cl.1.1.6 & 1.1.16 respectively, which state as following:
"1.1.5 "Bidder" shall mean an individual or registered firm or Company or a Corporation or a Joint Venture or a Consortium, each having a valid Type Approval Certificate in its own name or in the name of an entity forming part of Joint Venture/Consortium, and in possession of such qualifications both technical and financial as are laid down in this bid document.
1.1.6 "Consortium' shall mean the association of a minimum of two and a maximum of four entities and of which one entity is the lead member duly nominated by all other members of that consortium. The lead member shall commit to hold a minimum equity stake of 40 percent in the consortium. Rest of the members may possess remaining equity share, but not less than 15 percent individually and such member shall not be a part of any other bidding entity for the purpose of this bid. Such consortium should possess Type Approval Certificate in its own name or in the name of one of the entities forming the consortium.
1.1.16 "Joint Venture', duly incorporated under provisions of the Companies Act, 1956, shall mean the combination of a minimum of two and a maximum of four entities, one entity is the lead member, duly nominated by all other members of that joint-venture. The Lead Member shall commit to hold a minimum equity stake of 40 percent in the Joint Venture. Rest of the members, if any, may possess remaining equity share, but not less than 15 percent individually, one member of such joint-venture must hold a Type (4 of 14) [SAW-1325/2017] Approval Certificate and such member shall not be a part of any other bidding entity for the purpose of this bid. Each entity either individually or one of its constituent partners/members should hold a valid type approval certificate, as the case may be."
The assessment of an application for bid, whether by a Joint Venture or a Consortium including bidders referred u/cl.1.1.5 is based upon the financial capability which has been stipulated u/cl.1.1.12 to mean "financial worthiness of bidders as per the terms of the Tender Document". Pertinently, the eligibility criteria under the head of financial capability relevant for the purpose is defined in cl.1.5.3 of the NIT which is reproduced herein below:
"1.5.3. Financial Capabilities:
i. The bidder must have a minimum net worth, equivalent to Rs. 25 crores (certificate from the chartered accountant to be attached with the bid).
ii. The bidder must have a minimum annual turnover of Rs. 25 crores in any two of the immediately preceding three years. Certificate along with the balance sheets for any two of the three preceding financial years, 2014-15, 2015-
16 and 2016-17, confirming the above will have to be provided, duly attested by a chartered accountant in support of fulfilment of this condition. Income tax returns/PAN for the above- mentioned financial years must also be attached, verified by the chartered accountant.
iii. The bidder must attach a solvency certificate of minimum Rs. 25 crores from scheduled banks, to prove his financial soundness to execute and invest in this project.
1.5.3.1 For the purpose of above evaluation, if the
bidder is a joint-venture, the financial
capabilities of its constituent entities shall be considered in the ratio of their shareholding in the JV.
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[SAW-1325/2017]
1.5.3.2 In case the bidder is a consortium, it shall
comply with the following additional
requirements as the case may be:
a. The member of a consortium shall form an
appropriate SPV registered under the Indian companies act, 1956, after issuance of LOI before signing of agreement, to execute the project, if awarded to the consortium.
b. The joint bidding agreement should include a brief description of the roles and responsibilities of individual members, particularly with reference to financial, technical and O&M obligation.
c. Members of the consortium shall nominate one member as the lead member (the "lead member"), who shall have an equity shareholding of at least 40% (40 percent) of the paid-up and subscribed equity of the SPV and 15% equity share for the rest of the members individually. The nomination(s) shall be supported by a power of attorney signed by all the other members of the consortium.
d. The application should contain all the information as required in this bid for each member of the consortium.
e. An individual bidder cannot at the same time be member of a consortium. Further, a member of a particular bidder consortium cannot be member of any other bidder consortium for this bid."
However, the original text of the NIT was amended by the corrigendum dt. 30.06.2017 which amended cl.1.5.3 of the NIT in the following manner:
"1.5.3 i. The bidder must have a minimum net worth, equivalent to Rs. 10 crores (certificate from the chartered accountant to be attached with the bid) .
ii. The bidder must have a minimum annual turnover of Rs. 20 crores in any two of the (6 of 14) [SAW-1325/2017] immediately preceding three years. Certificate along with the balance sheets for any two of the three preceding financial years, 2014-15, 2015- 16 and 2016-17, confirming the above will have to be provided, duly attested by a chartered accountant in support of fulfillment of this condition. Income tax returns/PAN for the above- mentioned financial years must also be attached, verified by the chartered accountant. iii. The bidder must attach a solvency certificate of minimum Rs. 10 crores from scheduled banks, to prove his financial soundness to execute and invest in this project."
In this context, the appellants contended that there was no ambiguity in the terms & conditions of the NIT. For each of the constituent entities of a Joint Venture, financial capabilities was required to have been in the ratio of their shareholding in the Joint Venture but it was not the requirement for the constituents of Consortium and to support counsel further contended that Consortium and Joint Venture have been separately defined u/cl.1.1.6 & 1.1.16 respectively in the NIT which indicates that the State Government has treated them distinctly but the ld.Single Judge under the impugned judgment has effectively obliterated such distinction for the purpose of evaluating their financial capabilities which according to the counsel is an attempt to re- write the terms of the NIT which was not permissible in law.
Counsel for the appellants further submitted that cl.1.5.3 of the document deals with the financial capabilities of the bidders in reference to cl.1.1.5 which includes various kind of bidders including Joint Venture & Consortium apart from an individual or registered firm or Company or a Corporation, holding a valid Type Approval Certificate.
(7 of 14) [SAW-1325/2017] Counsel submits that cl.1.5.3.1 cannot be attracted to a Consortium for the reason that a Joint Venture as per cl.1.1.16 ought to have incorporated entity whereas a Consortium as per the cl.1.1.6 is not required to be incorporated entity at the pre- bidding stage and a Consortium has to form appropriate Special Purpose Vehicle (hereinafter referred to as 'the SPV') which is required to be incorporated under the Companies Act, 2013 at the post-bidding stage after issuance of LOI and signing of the agreement provided the Consortium bidder is successful and if two interpretations are possible, counsel submits that interpretation subserving the public interest should be adopted besides applying the doctrine of contra proferentem and further submitted that the financial bid of the appellant is of Rs.126.91 as against the bid submitted by the respondent No.3 of Rs.149.62.
Per contra, counsel for the respondents jointly submit that cl.1.5.3.1 of the NIT applies to both the entities i.e. Joint Venture & Consortium, additional conditions to be complied with by the Consortium referred to u/cl.1.5.3.2 and since the appellant had participated in the process as Consortium fails to fulfill the financial capabilities of its constituent entities in the ratio of their share holding in the Consortium, the tender was rightly rejected by the authorities vide communication dt.18.08.2017 and the harmonious interpretation of cl.1.5.3 if conjointly read with cl.1.5.3.1 and 1.5.3.2 apart from other conditions it reaches to only one conclusion that a Consortium has to comply with the financial capabilities of its constituent entities in the ratio of their share holding.
(8 of 14) [SAW-1325/2017] Counsel for the respondents further submitted that no error has been committed in the decision making process and confirmed by the ld.Single Judge under its order impugned needs no further indulgence of this court.
Counsel for the respondents Mr.Rajendra Prasad, Additional Advocate General further submits that the difference between the definitions of 'Consortium' and 'Joint Venture' is to accommodate those Joint Venture which has a track record of implementing the projects but their financial and technical capabilities are met through their constituent and what is being submitted by the appellants' counsel even if taken on its face value would lead to the consequences contrary to the intention of the NIT as it would allow constituent of Consortium who does not possess or hold the required financial capabilities to bid in the project by roping in larger entities holding insignificant share in the Consortium/SPV and placed reliance on judgment of the Apex Court in Maninder Singh Bitta Vs. Vijay Kumar Chibber reported in (2016) 14 SCC 72 wherein it has been held that the State Governments is supposed to ensure selection and authorization only of those TAC manufacturers who have been financially and technically competent to manufacture and supply the required number of HSRP in the State. Thus, if two reasonable interpretations are possible for a provision of the NIT and only one of them complies with the law, such an interpretation ordinarily has to be preferred.
Counsel for the State further submitted that the expression "Consortium" and "Joint Venture" have been used identically in the text of the NIT and therefore, cl.1.5.3.1 and 1.5.3.2 cannot be (9 of 14) [SAW-1325/2017] said to be mutually exclusive of each other and the financial capability is to be determined by reading the provisions harmoniously and also submitted that there is no sufficient material provided by the appellants to establish that the State Government has favoured the respondent No.3 in awarding the contract.
We have heard counsel for the parties and with their assistance perused the material available on record.
The indisputed facts which emerge from the record and relevant for the present purpose are that initially there were three bidders in the bidding process but since one was eliminated at the initial stage, for all practical purposes, two bidders had effectively participated in the bidding process in which the appellants had participated as consortium with two constituent members M/s.Real Mazon India Ltd. and M/s.Mazon B.V. The shareholding of both the members of consortium are 85% (M/s.Real Mazon India Ltd.) and 15% (M/s.Mazon B.V.) which is in consonance with the cl.1.1.16 read with cl. 1.5.3.2(c) of the NIT. The consortium, if taken collectively, fulfills the requirement of net worth i.e. Rs.10 Crores, annual turnover i.e. Rs.20 Crores and solvency i.e. Rs.10 Crores in terms of the cl.1.5.3.
For the sake of brevity, the question emerges for consideration is "Whether cl.1.5.3.2 of the NIT dt.30.05.2017 read with corrigendum dt.30.06.2017 is in addition to the requirement given in cl.1.5.3.1 or is it in reference to cl.1.5.3 (financial capabilities)".
Therefore the technical evaluation was only of two bidders who had participated in the bidding process in reference to the NIT (10 of 14) [SAW-1325/2017] dt.30.05.2017 and after judgment of the ld.Single Judge impugned dt.05.09.2017, LOI was issued by the Additional Transport Commissioner (Tax) dt.07.09.2017 in favour of M/s.Celex Technologies Pvt. Ltd. which was placed for perusal before the court on 08.09.2017 and on the oral request made by the appellants' counsel, we permitted to implead M/s.Celex Technologies Pvt. Ltd. as party respondent and notices were issued to the added respondent who has been duly represented by their counsel in the course of appeal and also filed their written objections.
At the outset, it may be noticed that it is settled by judicial precedents laid down by the Apex Court that it is a well recognized principle of construction of terms of the bid document or a contract has to be read as a whole to ascertain true meaning of its several clauses and the words of each clause should be interpreted so as to bring them into harmony with other clauses & if that interpretation does no violence to the meaning of which they are naturally susceptible and the true construction of terms of the bid document always depend on the import of the words used and not upon what the parties choose to say afterwards.
The nature and purpose of the bid document is important guide in ascertaining rights of the parties. It is also well settled law that a contract or the clauses of the document which have been acted upon should be construed strictly without adding or deleting anything from the terms thereof. At the same time, where the words are unequivocal, there is no scope for importing any rule of interpretation and ordinarily there should be no departure from the literal rule of interpretation.
(11 of 14) [SAW-1325/2017] If we apply these settled principles of law in the instant facts of the case and what emerges from the bid document for our consideration appears to be that under the Rajasthan Transport Department HSRP Tender Document, with which we are presently concerned, the bidder is defined u/cl.1.1.5 which includes an individual or registered firm or Company or a Corporation or a Joint Venture or a Consortium, each having a valid Type Approval Certificate in its own name or in the name of an entity forming part of Joint Venture/Consortium and to be in possession of such qualifications both technical and financial, as laid down in the bid document.
At the same time, 'Consortium' is separately defined u/cl.1.1.6 and 'Joint Venture' u/cl.1.1.16 being separate and in their own entities, as a bidder referred to u/cl.1.1.5 and each bidder has to establish their financial worthiness as referred to u/cl.1.1.12 of the tender document, Joint Venture and Consortium being two separate entities as bidders apart from others, referred to u/cl.1.1.5, each has to establish their financial worthiness as referred to u/cl.1.5.3 for the purposes of evaluation of its financial capabilities as a bidder and such bidder who is a Joint Venture has to comply additionally cl.1.5.3.1 for the financial capabilities of its constituent entities having being in the ratio of their share holding in the JV and a Consortium with its constituents has to comply with requirements referred to in cl.1.5.3.2 in addition to the financial capabilities like other bidders, as referred u/cl.1.5.3 and being two separate entities Joint Venture & Consortium, each has to comply with their separate additional conditions/financial (12 of 14) [SAW-1325/2017] capabilities of its constituent entities, as referred to u/cl.1.5.3.1 & 1.5.3.2 respectively.
A conjoint reading of cl.1.5.3 read with cl.1.5.3.1 & 1.5.3.2 leaves no manner of doubt and room for interpretation for the reason that each of the bidder has to comply with the financial capabilities as envisaged u/cl.1.5.3 and a JV has to additionally comply cl.1.5.3.1 and a Consortium has to additionally comply cl.1.5.3.2 and to be more specific financial capabilities as envisaged respectively u/cl.1.5.3.1 & 1.5.3.2 are to be complied with by JV & Consortium in addition to the financial capabilities as required for the bidders u/cl.1.5.3 of the bid document.
For the sake of submission cl.1.5.3.1, as referred to by the ld.Single Judge and supported by the State counsel, if has to be complied with by a Consortium, it may result into a situation where Joint Venture and Consortium are being treated on the same pedestal whereas both are distinct & separate entities according to the terms of NIT and both are Bidders in their own separate entity, as referred to u/cl.1.1.5 and the respondents have committed an error in making cl.1.5.3.1 applicable on a Consortium for evaluating its financial capabilities, in addition to as referred u/cl.1.5.3.2 of the bid document and in our considered view, it was an apparent error which the authorities have committed in rejecting the bid of the appellants (Consortium) under its order impugned dt.18.08.2017 from participating in the tender process.
In our considered view, the interpretation has to be harmonious and to be referred to in the context in which it has (13 of 14) [SAW-1325/2017] been indicated in the tender document and the words used u/cl.1.5.3.1 which open with the phrase "for the purpose of above evaluation' and the word 'if' which has been given more emphasis by the ld.Single Judge are only in reference to two individual bidders who have to comply with their separate additional conditions while their financial capabilities are being evaluated by the authorities in terms of the cl.1.5.3 and the bidder who is a Consortium was not supposed to comply with the requirement of cl.1.5.3.1 which in our considered view is exclusively applicable for a bidder who is a Joint Venture and not to any other entity of a bidder including Consortium and this in our considered view is an apparent misinterpretation of the clause referred to and we are unable to subscribe the view expressed by the ld.Single Judge under its impugned judgment in making the conditions referred to u/cl.1.5.3.1 applicable in the case of a Consortium and any other interpretation of the bidding document, referred to by us will indeed rule out an apparent basic distinction of two separate entities as a bidder referred to u/cl.1.1.5 and that appears to be the reason with which under the definition clause of the bidding document 'Consortium' and 'Joint Venture' being two separate entities has been defined u/cl.1.1.6 & 1.1.16 and both the bidders have to fulfill their additional financial worthiness as a bidder in fulfillment of the financial capabilities respectively being referred u/cl.1.5.3.1 & 1.5.3.2 read with cl.1.5.3 of the bidding document and any other interpretation to the contrary may tantamounts to re-writing the terms of bid document which may not be permissible under the law.
(14 of 14) [SAW-1325/2017] The submission made in reference to R.68 of the Rajasthan Transparency in Public Procurement Rules, 2013 or the CVC guidelines, the ld.Single Judge at the stage observed that it was premature because the decision on the selection of single bidder was pending at that time when the judgment was pronounced by the ld.Single Judge but as we have set aside the order of rejection dt.18.08.2017 and in the further process there being two bidders, R.68 of the Rules, 2013 may not have any application at this stage and it is always open for the State authorities to consider while reaching to the finality of the present tender process and it is expected that the mandate of the Rajasthan Transparency in Public Procurement Act, 2012 and the Rules, 2013 framed thereunder may be fulfilled in its true spirit.
Consequently, the instant appeal succeeds and is hereby allowed. The impugned rejection order dt.18.08.2017 and so also order of the ld.Single Judge dt.05.09.2017 are hereby quashed and set aside. The Government is at liberty to complete the tender process keeping in view the conditions of the bid document within a period of four weeks and take further action in accordance with law. No costs.
(DEEPAK MAHESHWARI),J. (AJAY RASTOGI),J.
Solanki DS, PS