Madras High Court
Larsen & Toubro Ltd. vs Neyveli Lignite Corporation Ltd. And ... on 21 December, 1998
Equivalent citations: AIR 1999 MADRAS 306
Author: V.S. Sirpurkar
Bench: V.S. Sirpurkar
ORDER V.S. Sirpurkar, J.
1. Heard finally at the notice of motion stage with the consent of the parties.
2. This petition is filed by a company, claiming to enjoy high reputation in the field of engineering and public works throughout the World for challenging its exclusion from the tender floated by the respondents. The said tender was floated for conducting the work divided in five items. The petitioner complains that the petitioner-company has been excluded from the work titled as "SI. No. 1 (Bucket Wheel Excavatory)". The tender was for the supply of Bucket Wheel Excavators for the mines run by the respondents. The tender notice puts a conditions that a bidder, who has designed, manufactured/supplied, erected, successfully tested and commissioned at least four Bucket Wheel Excavators of equal or higher theoretical capacity (3400 M3/hr.Loose) capable of working in hard, abrasive, sand stone and also in clay similar to strata as in Neyveil and are in successful operation of at least 5 years alone shall be eligible to participate. The tender notice further suggests that a bidder, who has a valid collaboration agreement with Collaborators or a Consortium of firms singly or jointly, could also take part. However, such bidder would have to furnish an undertaking jointly executed by him and his Collaborators to guarantee the standards of performance of the equipment as detailed in the tender specifications. It seems that in pursuance of this Tender Notice dated 20-2-1998, the petitioner-company offered its bid for this work as well as for other works also. However, the present petition is limited to the above mentioned work alone. It is the case of the petitioner that the petitioner purchased tender documents and as per the qualifying requirements, which were set out at pages 26, 27 and 28 in Section C of the tender document, submitted the offers along with all the documents required to accompany such offers. The petitioner claims to be in collaboration with an Austrian Company, namely Tamrock Voest Alphine Bergetchinik. The petitioner further claims that the petitioner-company was invited for seeking certain clarifications about the exact capacity of the bucket wheel exacavators, which the petitioners collaborators had already supplied to certain other parties. All these clarifications were also provided by the petitioner by their fax dated 22-5-1998. It is the petitioner's that the parties were then short-listed at the instance of the respondents and the petitioner was one of the short-listed parties and as such called for discussion at Neyveli which held on 1-7-1998 and 2-7-1998. This discussion was in respect of only three items, though the petitioner had offered their bid for four items. The petitioner suggests that even in this discussion, no doubt was expressed about the qualifying requirements of the petitioner in respect of at least three tenders in respect of which the petitioner was invited for discussion and the discussion proceeded in normal course. The petitioner pleads that there were discussions about the prices and the petitioner's representatives were informed that there will be a further and final discussions when the tenderers submit revised price covers with break-up details, consequent upon the discussed adjustments suggested and agreed to in the meeting. The petitioner claims that subsequently its Collaborator company received a communication dated 2-11-1998 suggesting therein that the two-member team of the respondent would like to visit a mine in China where the equipment manufactured by the petitioner/collaborator was in operation and that the petitioner's collaborator responded positively by their message dated 2-11-1998 assuring its full co-operation for such a visit. Since the Chinese Authorities refused the permission for such a visit, it could not fructify and, therefore, this was duly conveyed by the Collaborator Tamrock to the respondents by their communication dated 3-11-1998. It is then claimed by the petitioner that the respondents by their communication dated 7-11 -1998 insisted that such clearance for the visit should be obtained within the next four days, failing which cognizance of the representations received would be taken and decisions would be made on the merits of the case. It is claimed by the petitioner that Tamrock by their communication dated 10-11-1998 expressed their helplessness for getting such a clearance for a visit to China. Subsequently, by communication dated 12-11-1998, the respondents requested Tamrock to furnish the copy of the extract of relevant portions of the agreements between Tamrock and the Chinese mining company. The petitioner's further case is that Tamrock vide : its communication dated 13-11-1998 expressed its inability to supply the copy of the agreement as they were bound to keep it as confidential. However, along with their communication, Tamrock sent the necessary documents and drawings representing the actual equipments operational in the Chinese mines and by a subsequent communication dated 16-11-1998 also disclosed to the respondents the relevant clause in their contract with the Chinese mine along with the relevant drawings certified the same to be identical to the drawings attached to the said contract. The petitioner claims that in the meantime, the petitioner had come to know that certain false propaganda was being made against the petitioner and, therefore, by their communication dated 27-11-1998 the petitioner informed the Chairman as also the Secretary, Ministry of Coal, Government of India, about the same. On this backdrop, the petitioner received a communication dated 30-11-1998 whereby the respondent has invited the petitioner for a final round of discussion to be held only in respect of the other two items of the tenders, but not in respect of item covering bucket wheel excavators. It is this communication and the pursuant action of excluding the petitioner from consideration for the supply of bucket wheel excavators which is in challenge in the present petition.
3. Notice of motion was sent and in reply thereto the respondents have filed a detailed counter as also number of documents suggesting that the impugned decision is a bona fide decision taken in public interest and also in keeping with the rules on general principles for grant of tenders. The respondents also suggest that in excluding the petitioner-company from consideration, the respondents have not acted secretively and there is a complete transparency about its transactions. It has also supported its action on the ground that though initially the petitioner was found to be qualified for this work of bucket wheel excavators, the subsequent enquiries disclosed that the information given by the petitioner in support of its claim was not factually correct nor did the petitioner complete the essential tender conditions for pre-qualification and it is this latter revelation that led to the petitioner being excluded from being considered for the work of bucket wheel excavators supply.
4. The respondents have also put on record the Minutes of the Tender Committee as also the resolutions of the Board of Directors approving the minutes and approving the actions taken as suggested by the Tender Committee.
5. Mrs. Malini Ganesh, learned counsel appearing on behalf of the petitioner, firstly contended that having cleared the petitioner-company as holding it to be qualified, the subsequent exclusion is not permissible as per the tender conditions and also the general principles governing the subject of tender. Her further argument is that this exclusion is actuated with malice inasmuch as the said exclusion is at the behest of the competitors of the petitioner in whose influence the respondents have allowed themselves to play. As a necessary corollary of this argument, the learned counsel suggests that the malice becomes all the more prominent as the authorities have not even given any opportunity to the petitioner to explain the so called irregularities and the defects in the offer. The learned counsel suggests that even technically speaking, the inferences drawn by the respondents were unsustainable and incorrect and, therefore, there was justification whatsoever in nipping in bud the petitioner's participation.
6. The learned Senior Counsel appearing on behalf of the respondents Mr. U.N.R. Rao, countered these arguments by suggesting that the respondents were wholly justified in probing into the claims made by the petitioner and there was nothing in the tender conditions or general principles offenders which would come in their way of excluding the petitioner, though the petitioner was initially found to be qualified. He suggests that if the petitioners being cleared and held as qualified was itself based on some mis-statement of facts at the instance of the petitioner, then merely because a complaint was made against them by a competitor would be of no avail. Mr. Rao, learned Senior Counsel, countered the argument of the petitioner by further suggesting that there was no question of any malice being there in either entertaining the complaint or in probing further into the claims made by the petitioner. The learned Senior Counsel goes on to suggest that there was a complete transparency in the concerned transactions of the respondents and even on the technical aspect, the petitioner's claim was found to be unsustainable.
7. On the backdrop of these rival contentions, it will be worthwhile to consider the conditions of tender. The notice of tender contains specific requirements of the respondents under the head "main qualifying requirements". The relevant clauses are as under :--
"For SI. No. 1 (Bucket Wheel Excavator)
(i) Bidder who has designed, manufactured/ supplied, erected, successfully tested & commissioned at least Four Bucket Wheel Excavators of equal or higher theoretical capacity (3400M3/hr. Loose) capable of working in hard, abrasive, sand stone and also in clay similar to strata as in Neyveli and are in successful operation of at least 5 years, alone shall be eligible to participate.
(ii) A bidder who does not meet the above qualifying requirement can also participate if he can furnish satisfactory evidence that he has a valid collaboration agreement with Collaborator(s) or a Consortium of firms singly or jointly, fully meets the qualifying requirement stipulated as in (i) above, provided the bidder shall furnish an undertaking jointly executed by him & his collaborator(s) to guarantee the standards of performance of the equipment as detailed in the tender specification. Alternatively, where manufacturers do not have facility to quote directly, astate owned/sponsored undertaking/State authorised export corporation on behalf of manufacturer(s) who otherwise single or jointly meet the above requirements can also submit the bids."
Clause No. (ii) very specifically suggests that a bidder, who by himself does not meet the qualifying requirement in order to participate, has to furnish satisfactory evidence about the collaboration agreement and has to further show that he, along with the Collaborators, fully meets the qualifying requirements stipulated in Clause No. (i). Under this clause, therefore, in order to qualify to participate, the bidder has to not only stake his claims but has to furnish evidence in support thereof and has to further convince the tendering authority that he fully meets the qualifying requirements. The qualifying requirement for this work is firstly the bidder should have designed, manufactured/supplied, erected and successfully tested and commissioned atleast Four Bucket Wheel Excavators of equal or higher theoretical capacity (3400 M3/hr. Loose). The second condition is that such excavators should be capable of working in hard, abrasive, sand stone and also in clay similar to strata as in Neyveli. The third condition is that such excavators of the stated capacity should have been in successful operation of 5 years. With the tender documents, the qualifying requirements for the bidders were brought out in more details. Clause 1-1-6 of the tender conditions suggests that it shall be one of the conditions for being qualified that the bidder has handled similar projects of similar magnitude successfully. Clause 1 suggests that the bidder has done the work as stated in that clause which is identical with the clause stated in the tender notice alone shall be eligible to participate. Clause 2, 4 suggests that the bidder should also produce documentary evidence on the following aspects:-- "(a) The name of the customer/open cast mine to whom their equipments have been supplied; (b) Place of installation; (c) Date of supply; (d) Date of commissioning and present status of the equipment; and (e) Capacity of the installation and type of materials carried." Clause 2.5 suggests that any special design features developed by the bidder or his foreign collaborator(s) and accepted by the open cast mine may be indicated.
8. Now these conditions would clearly suggest that the lender authority had not only invited the information from the bidders regarding their claim, but had also required them to give supporting evidence for the same so that the tender authority is convincing of the capability of the bidder to successfully execute the contract.
9. The learned Senior Counsel appearing on behalf of the respondents suggested and that is reiterated in the counter affidavit filed on behalf of the respondents also that the petitioner's claim of qualification was cleared on the basis of data supplied by the petitioner initially. The learned Senior Counsel was at pains to point out that though data supplied by the petitioner along with its claim did initially meet the requirements in the tender notice, the subsequent probe into that data belied the claims of the petitioner. The learned Senior Counsel pointed out that though the petitioner had claimed of having supplied the excavators of the similar capacity to the firms in Austria and China, the subsequent information sent by the petitioner in pursuance of the queries made suggested in no uncertain terms that the materials supplied by the petitioner to the firms in Austria and China were not of the capacity as claimed by the petitioner and their capacity was much lesser, thereby in fact, the petitioner could not successfully prove that it had designed, manufactured, supplied, erected successfully tested and commissioned four bucket wheel excavators which were successfully in operation of 5 years and if that was so, even if the petitioner was initially cleared on the basis of its representations, the respondents were within their rights to exclude the petitioners from consideration at least on the basis of subsequent information sought by the respondents and supplied by the petitioner. The learned Senior Counsel very strongly refuted the claim of the petitioner that merely because the proposed visit to China could not come off, the petitioner was excluded. The argument by the petitioner in this behalf was that it was deliberately a short period of four days provided to arrange for the visit to China and to get the necessary clearances and it was merely a subterfuge to keep the petitioner away from the competing parties. The learned counsel was at pains to point out that it was essential for the respondents to request for such a visit, as the personal inspection would have been of an immense benefit to decide as to whether firstly the excavators supplied to a mine in China were of the similar or better capacity and further whether those excavators were successfully working for 5 years which two conditions were sine qua non for pre-qualification. The learned counsel also pointed out that since the visit to China did not materialise, the petitioner was requested to supply the necessary drawings, documents and technical data to prove their claim and this data supplied by the petitioner was at variance with the data supplied earlier. A comparative table was filed by the respondents whereby it was pointed out that the details supplied in support of the claim of the petitioner were at variance of the details supplied after the queries were made. It is reported by the respondents in the Counter that in respect of bucket capacity, the petitioner had claimed it to be 640 litres initially, while the same becomes 650 litres when on subsequent probe as also the petitioner had claimed the number of discharges per minute between 70/90 but it remained at 70 only in the subsequently supplied details. It is reiterated in the affidavit that theoretical capacity in cubic metres per hour given at the readings were 2680/3460 at the time initially, while it became 4006 cubic metres per hour subsequently. The learned counsel points out that similar such discrepancies were found in respect of the bucket wheel excavators supplied to Austria also. It is reiterated in the affidavit that the calculations made by the respondents on the basis of the data supplied were based on the basis of the maximum claim. For example, since the petitioner had given the number of discharges between 70/90, the calculations were made at the rate of 90 and that alone could bring the petitioner in the qualifying category. While if the calculations have been made at the rate of 70, then the petitioner could not have been brought in the qualifying category. It is also reiterated in the affidavit that though it was specifically stated in the tender document that the theoretical capacity should be 3400 M3 without ring volume, the petitioner had included the ring volume while calculating the capacity which became apparent only on the subsequent probe. According to the learned counsel, therefore, the subsequent probe falsified the claim of the petitioner and only one irrefutable inference was possible that the petitioner was not qualified to compete for this item of bucket wheel excavator. It will be seen that the respondents' requirements were loud and clear. The requirements as reflected from the tender notice and the tender documents unmistakably point out that the tenderers were required to satisfy the respondents in respect of their capacity and if the claims of the petitioner were re-checked and it was found that the petitioner had not in fact supplied the equipment of the equal or better capacity as claimed, then it cannot be said that the respondents were not justified in excluding the petitioner. The respondents have successfully explained as to under what circumstances the petitioner came to be held qualified in the first blush. In paragraph 14 of the Counter-Affidavit, the respondents have asserted as follows :--
"On the other hand, the documents furnished consistently revealed that the Theoretical capacity had been calculated based only on the bucket capacity excluding any part of the ring volume. This was as it should be, since by International practice for purposes of reckoning Qualifying Requirement, the Theoretical Capacity is reckoned in terms of the 100% fill bucket capacity and no percentage of the ring volume is included for the purpose. The ring volume varied from design to design and it is taken into account only for the purposes of arriving at the effective output at the time of operation. Even then, there is no universal standard as to what percentage of the ring volume is to be included for the purpose of arriving at the effective output. Thus, with reference to VABE 550, it was found that with the stated bucket capacity of 640L and at a discharge of 70 per minute, the Theoretical Capacity came to 2688 and at a discharge rate of 90 per minute, it came to 3456. This tallied with the figures of 2680 and 3460 given by the petitioner in the documents annexed by them to the Bid and which had been duly certified by none other than the Vice President of the petitioner.
Similarly, with respect to VABE 700 with a bucket capacity of 700 L and the respective discharge rates of 70 per minute and 84 per minute, the Theoretical capacity as given by the petitioner tallied with the actual calculation. In both these two cases as in the other five cases, the calculations amply revealed that the Theoretical capacity is a direct function of the bucket capacity, excluding ahy portion of the ring volume. It is an admitted fact that the bucket capacity does not in any case include any portion of the ring volume.
Thus, based on the data furnished by the petitioner it was found that the 4 BWEs mentioned in their bid documents fulfilled the requirement of Theoretical Capacity of 3400 cu.m. per hour (loose), even though in two cases it was met at the higher of the two stated discharge per minute. Since there was nothing before the Tender Committee at that stage to doubt the correctness or authenticity of the documents furnished by the petitioner, the committee found that the petitioner satisfied the Qualifying Requirement and since in other aspects the petitioner's bid satisfied the other conditions, the petitioner's bid was taken up for further processing.
The counter further goes on to suggest in paragraph 18 as follows :--
"On a scrutiny of the entire material received till then with respect to the Qualifying Requirement, the following features came to light:--
(a) As per the authenticated documents annexed to the bid, the BWE Type VABE 550 has a bucket capacity 640 L and two rates of discharges viz., 70 per minute and 90 per minute. But as per the documents annexed to the fax of TVAB of 13-11-98, the bucket capacity of VABE 550 was variedly stated as 669 L in one document and as "approximately 650L" in another document.
(b) While the documents annexed to the bid clearly revealed a higher discharge capability of 90 per minute in one case (VABE 550) and of 84 per minute in another case (VABE 700), in all the subsequent clarifications/ documents received from the petitioner or from TVAB, the discharge was limited to one rate viz., 70 per minute and there was no mention of a higher rate Contrary to the mathematical calculations as revealed in the documents annexed to the bid by the petitioner, in the subsequent clarifications of 13, 16, 17 and 18 Nov. 98, the petitioner started making a claim that the Theoretical Capacity ought to be calculated by including the ring volume. Even while doing so, the petitioner had at one place claimed that 100% ring volume should be included while even the extracts annexed from text books by the petitioner did not support such a preposition;
(c) Apart from the inconsistencies and the contrary nature of the data furnished by the petitioner at different points of time with respect to VABE 550, it became explicitly clear that the documents annexed to the bid by the petitioner, though authenticated by the Vice President of the Company, were neither complete nor correct even according to their subsequent clarifications. The position was the same with respect to VABE 700 as well."
In paragraph 24 of the counter also the respondents assert that the petitioner was initially considered to be qualified for the purposes of meeting the Qualifying Requirement solely on the data furnished by them in their offer and there was no question of expressing any doubt at that stage. It is asserted that since the petitioner had declared the number of discharges per minute as "70/90" and "70/84" with respect to VABE 500 and VABE 700 respectively, the Theoretical Capacity when computed, by taking into account the higher rate of discharges, satisfied the Qualifying Requirements and, therefore, the petitioner was short-listed for technical discussions. It is asserted by the respondents thereafter that since the petitioner could not arrange for a visit to China for inspecting the machinery, they were asked to give additional relevant data which when ultimately given proved to be inconsistent with their initial claims of the petitioner.
10. Now it will be clear from these assurances coupled with the conditions which were accompaniment of the tender form that the respondents were well justified in getting themselves convinced about the correctness of the claim made by the parties initially. If the subsequent events bring to the fore something contrary to the petitioner's claim thereby questioning the petitioner's capacity, the respondents would be fully within their rights to exclude the petitioner.
11. Mrs. Malini Ganesh, learned counsel appearing for the petitioner, very studiously tried to urge that all these were done without giving an opportunity to the petitioner. The learned counsel avers that if the respondents after examining the documents supplied by the petitioners, felt that there were discrepancies in respect of the claims made by the petitioner initially and those made subsequently then the petitioner could have been invited for further discussions and the petitioner in that case would have explained its position and cleared all the doubts raised by the respondents and that has not been done deliberately. Now it cannot be said that the respondents have acted in this case unreasonably or were more keen to exclude the petitioners than to consider the claims of the petitioner objectively. It is no doubt true that the respondents were intimated about the discrepancies in the claim of the petitioner by the competitor of the petitioner on 11-8-1998 though such a complaint was made by the competitor-company on 24-7-1998 also. It is apparent that after this, the Tender Committee meeting was held wherein the representations made by the competitor-company were considered and as a result, the respondents requested the petitioner to arrange for a visit to China to inspect the machinery installed in the mines there. It is clear that such visit could not materialise and, therefore, the petitioner was asked to furnish the details regarding the capacity, model and the design features of the machinery. It is apparent that thereafter between 13-11-1998 and 27-11-1998 the petitioner supplied the information which information was again considered by the tender Committee in Meeting No. 7 on 27-11-1998 wherein it recommended the exclusion of the petitioner. This exclusion was approved by the Board only on 28-11-1998 and before it was informed to the petitioner on 1-12-1998, the present petition came to be filed. It does not, therefore, suggest even distantly that the respondents were in hurry to exclude the petitioner maliciously. It will have, therefore, to be held that firstly the respondents had every right to test the correctness of the claims made by the tendering parties as a pre-qualification essentially depended upon their satisfaction regarding the capacity of the tenderer and further the respondents had good reasons and scope to change their decision to pre-qualify the petitioner. The argument that the petitioner should have been heard again before considering the petitioner's exclusion has to be rejected on the backdrop of the facts that the respondents had all the necessary technical data supplied by the petitioner before them which data was supplied from 13-11-1998 to 27-11-1998. Again the correspondence which are on record does go to show that fair opportunity was given to the petitioner to substantiate its claims made initially. It cannot be, therefore, said that the respondents acted unreasonably, capriciously or maliciously in excluding the petitioner from consideration though the petitioner was initially declared as a qualified tenderer.
12. As regards malice, the learned counsel for the petitioner very strenuously contended that after all the competitor of the petitioner had made a complaint and, therefore, such complaint should not have been entertained by the respondents who had displayed their malice in not only entertaining the complaint but also acting thereon. Merely because a competitor gave a complaint by itself would be no reason to read the malice so long as the respondents show to the Court that they had acted in a bona fide manner and in good faith. It is apparent that even after receiving the complaint, the petitioner was not scraped of in a day. A full opportunity seems to have been given to the petitioner firstly in demanding the inspection of the machineries allegedly similarly supplied by the petitioner to a mine in China and secondly by demanding the technical details about that machineries and examining those technical details and claims made by the petitioner. It cannot be then forgotten that this was not a decision of a singular person but the pros and cons of this action were deliberated and actively considered by the Tender Committee which consisted of the experts. This is apart from the fact that the action of the Tender Committee ultimately came to be approved by the Board of Directors. To read a malice merely because the complaint by a competitor was considered would be over stretching the principle of malice. It is, therefore, held that there was no malice on the part of the respondents in any of the steps taken by the respondents culminating in exclusion of the petitioner. On the other hand, the actions by the respondents appear to be transparent and necessary in the public interest. After all, the magnitude of the contract and the fact that the respondent is a public undertaking involved in a sensitive power generation activity are the factors which cannot be ignored while considering whether the respondents were within their rights to probe further into the offer by the petitioner, even if they did so on the basis of the complaint of the competitor. Under the circumstances, it may be concluded that the petition has no merits and deserves to be dismissed. It is accordingly dismissed without any orders as to costs. W.M.P. No. 29160 of 1998 is closed.