Madras High Court
M/S.Sap Industries vs Tamil Nadu Electricity Board on 30 July, 2010
Author: R.Sudhakar
Bench: R.Sudhakar
IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated 30.7.2010 CORAM THE HONOURABLE MR.JUSTICE R.SUDHAKAR Writ Petition Nos.4423, 4437, 4440 and 4441 of 2010 and M.P.No.1 of 2010 in all Writ Petitions M/s.SAP Industries, represented by Harirajan, Plot No.51, Industrial Estate, Thirumudivakkam, Chennai-600 044. ... Petitioner in W.P.No.4423 of 2010 M/s.Ascott Electricals Pvt. Ltd., No.2, Murahari Street, West Jones Road, Sarathy Nagar, Saidapet, Chennai-600 015. ... Petitioner in W.P.No.4437 of 2010 M/s. Associated Transformers P. Ltd., represented by R.Venkateshwaran, C.E.O. & Authorised Signatory, F.2 Springfield Apartments, No.6 Twelfth Cross Street, Indra Nagar, Adyar, Chennai-20. ... Petitioner in W.P.No.4440 of 2010 M/s.Dhanya Electric Company, represented by Managing Partner, K.V.Pradeep, 15 Susmith Aparts, Kandappan Colony, Gill Nagar, Choolaimedu, Chennai-600 094. ... Petitioner in W.P.No.4441 of 2010 -Vs.- 1.Tamil Nadu Electricity Board, represented by its Chairman, 10th Floor, NPKRR Maaligai, 144, Anna Salai, Chennai-600 002. 2.The Chief Engineer/Material Management, Tamil Nadu Electricity Board, 4th Floor, NPKRR Maaligai, 144, Anna Salai, Chennai-600 002. 3.Kerala Electricals & Allied Engineering Co. Ltd., Cochin, Kerala. ... Respondents in all W.Ps. Writ Petition No.4423 of 2010 is filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorarified Mandamus, calling for the records of the proceedings of the second respondent in Lr.No.SE/MM.11/EED/A2/M16/09-10D 216/2010 dated 8.2.2010 and Lr.No.SEE/MM.11/EED/A2/M16/9-10/D.225/2010 dated 11.1.2010 signed on 11.2.2010 and quash the same and consequently direct the respondents 1 and 2 to place orders with the petitioner for supply of 500 KVA/11 KV/433.V Distribution Transformers as per the Tender Specification No.M.16/2009-10 dated 12.8.2009. Writ Petition No.4437 of 2010 is filed under Article 226 of the Constitution of India praying to issue a Writ of Mandamus, directing the respondents 1 and 2 to treat the petitioner as L1 and conduct negotiations with the petitioner and to place orders on the basis of the so negotiated price in respect of tender specification M.16/2009/10 for supply of 500 KVA/11 KV/433.V Distribution Transformers. Writ Petition No.4440 of 2010 is filed under Article 226 of the Constitution of India praying to issue a Writ of Mandamus, directing the respondents to place orders with the petitioner to supply 500 KVA/11 KV/433.V Distribution Transformers as per Tender Specification M.16/2009-10 dated 12.8.2009. Writ Petition No.4441 of 2010 is filed under Article 226 of the Constitution of India praying to issue a Writ of Mandamus, directing the respondents 1 and 2 to place orders with the petitioner to supply 500 KVA/11 KV/433.V Distribution Transformers as per Tender Specification M.16/2009-10 dated 12.8.2009. For petitioner in W.P.No.4423 of 2010 : Mr.R.Muthukumarasamy, Senior Counsel for Mr.K.Venkatasubbaraju For petitioner in W.P.Nos.4440 and 4441 of 2010 : Mr.Venkatachalapathy, Senior Counsel for Mr.K.Venkatasubbaraju For petitioner in W.P.No.4437 of 2010 : Mr.G.Jermiah, For respondents 1 and 2 in all W.Ps. : Mr.P.S.Raman, Advocate General assisted by Mr.A.Selvendran For 3rd respondent in all W.Ps. : Mr.M.K.Kannan ----- COMMON ORDER
Writ Petition No.4423 of 2010 is filed praying to issue a Writ of Certiorarified Mandamus, calling for the records of the proceedings of the second respondent in Lr.No.SE/MM.11/EED/A2/M16/09-10D 216/2010 dated 8.2.2010 and Lr.No.SEE/MM.11/EED/A2/M16/9-10/D.225/2010 dated 11.1.2010 signed on 11.2.2010 and quash the same and consequently direct the respondents 1 and 2 to place orders with the petitioner for supply of 500 KVA/11 KV/433.V Distribution Transformers as per the Tender Specification No.M.16/2009-10 dated 12.8.2009.
2. Writ Petition No.4437 of 2010 is filed to issue a Writ of Mandamus, directing the respondents 1 and 2 to treat the petitioner as L1 and conduct negotiations with the petitioner and to place orders on the basis of the so negotiated price in respect of tender specification M.16/2009/10 for supply of 500 KVA/11 KV/433.V Distribution Transformers.
3. Writ Petition No.4440 of 2010 is filed to issue a Writ of Mandamus, directing the respondents to place orders with the petitioner to supply 500 KVA/11 KV/433.V Distribution Transformers as per Tender Specification M.16/2009-10 dated 12.8.2009.
4. Writ Petition No.4441 of 2010 is filed under Article 226 of the Constitution of India praying to issue a Writ of Mandamus, directing the respondents 1 and 2 to place orders with the petitioner to supply 500 KVA/11 KV/433.V Distribution Transformers as per Tender Specification M.16/2009-10 dated 12.8.2009.
5. The factual plea in all the writ petitions, nature of communications between the petitioners and the respondents 1 and 2 Department are identical in all aspects except minor variations which are trivial and are not relevant. The relief sought for in all the 4 Writ Petitions are almost one and the same and arise out of the same cause of action and hence, all the 4 Writ Petitions are taken up together and disposed off by this common order.
6. W.P.No.4423 of 2010: The brief facts of the case are as follows: Petitioner firm is carrying on manufacturing of Transformers for over 10 years and regular supplier of transformers to the respondents 1 and 2 Electricity Board for many years by participating in tenders. The respondents 1 and 2 Electricity Board invited tenders by specification No.M16 for supply of 468 numbers 500KVA/11KV/433V Distribution Transformers. In response to the said tender notification 32 tenderers submitted their bids including the petitioner. Of this 5 are new entrants, 4 are outside State bidders, 2 are large industries and 21 are local S.S.I. units. Technical bids were opened on 12.8.2009 and price bids were opened on 19.12.2009. Petitioner made a representation on 5.1.2010 requesting the second respondent to implement price preference policy provided under the Tender Transparency Act/Rules and the clarifications issued by the State Government, stating that local S.S.I. units are eligible for price preference upto 15%. In other words whenever local S.S.I. units quote a price within a 15% range of the price quoted by the other State SSI units/large industries, they shall be treated as evaluated L1 and local S.S.I. units shall be called for negotiation of prices and separate evaluation shall be made for new entrants and for regular suppliers since there are two different Bid Qualification Requirements (BQRs). On 7.1.2010, the second respondent sent a letter asking the petitioner whether it is agreeable to supply 500KVA/11VK/433V Distribution Transformers at a variable all inclusive price excluding VAT/CST of Rs.3,19,766.80 each by matching of lowest negotiated price. On 11.1.2010, petitioner sent a letter stating that the petitioner is not in a position to comply as per Department's letter dated 7.1.2010 and pleaded for considering their claim as local SSI Unit. However, on 8.2.2010, the second respondent sent the impugned letter which reads as follows:-
"Please refer to your letter cited.
In this regard it is submitted that only one set of BQR conditions are stipulated in the tender documents with exception to new entrants from the experience criteria. Two BQR conditions are not specified in the tender documents and further two evaluation cannot be done in the same tender as per tender regulation.
In the clarification received from the Principal Secretary to Government, Micro, Small & Medium Enterprises (F) Department vide letter No.561/F/2009-3 dated 5.5.09 it has been clearly stated that 15% price preference should be calculated on the basis of lowest quoted rate if it is quoted by a large or medium industry/SSI of another State. In this case the Local Non SSI unit (New Entrant) himself has quoted the lowest rate and became the L1 tenderer.
Hence the price preference of 15 percent has not been loaded in order to know as to whether any local SSI comes within the price range of Rs.115 (Rs.100+15%).
As per your request for separate evaluation for new and regular supplier and giving 15% price preference does not arise as per the above clarification.
Please note that this letter does not carry with it any assurance that an order will be placed on you."
On 11.2.2010 the second respondent sent another letter dated 11.1.2010 to confirm whether the petitioner is agreeable to supply the distribution transformers against the specification at a variable all inclusive price excluding VAT/CST of Rs.3,40,734.22 each and sought for a reply by 15.2.2010. Petitioner sent reply insisting that price preference should be given to it on the basis of the provisions of the Act/Rules and the clarification letter issued by the State Government dated 5.5.2009. Second respondent once again sent a letter on 17.2.2010 requesting the petitioner to confirm the supply at Rs.3,40,734.22 by 19.2.2010 and failing to comply, it will be construed that the petitioner is not interested in matching with above price and further action as per tender procedure will be taken. On 19.2.2010, petitioner sent a reply as follows:-
"We are in receipt of your letter 5th cited and thanking you for the same. As per the Tender Transparency Act, our rates are evaluated L1, as per Bid Qualification Requirements, prescribed in the Tender Specification. Being evaluated L1, we should be invited for the Price Negotiation. On contrary, your goodself has negotiated with other state firm (who is not evaluated L1), violating the Tender Transparency Act. So, we humbly request you to kindly please be invited us for negotiation."
The Department did not evince any interest in petitioners offer and was repeatedly calling upon the local SSI Units to match the price of the SSI Unit of the other State. Petitioners felt that the respondents 1 and 2 Electricity Board are taking steps to place orders with the third respondent for supply of transformers contrary to the Act and Rules. According to the petitioners, the third respondent unit is an unit outside the State of Tamilnadu. If the respondents 1 and 2 Electricity Board strictly observes the provisions of the Tamil Nadu Transparency in Tenders Act, 1998/Tamil Nadu Transparency in Tenders Rule, 2000 (hereinafter called as the Act and the Rules) and understands the spirit of the clarification letter dated 5.5.2009 issued by the State Government, there cannot be any negotiation with the third respondent. The respondents 1 and 2 Electricity Board by preferring outside State S.S.I. unit like the third respondent is acting against the provisions of the Act/Rules and clarification letter issued by the Government. The respondents 1 and 2 Electricity Board should have accepted the tender of the petitioner once it is within 15% of the price range when compared with the price quoted by the third respondent, SSI unit of the other State, by treating the petitioner as L1 as petitioners is a domestic S.S.I. unit. It is contended that the approach of the respondents 1 and 2 Electricity Board directing the petitioner to match the rates of SSI of other State and to split the procurement between the petitioners and the third respondent is misconceived and unacceptable and against the spirit of the Act/Rules and Policy of State Government to give price preference to domestic SSI Units. On this premise, the writ petitions have been filed challenging the letters issued by the second respondent Board stating that the Department is acting arbitrarily and contrary to the Act and the Rules.
7. Though the facts pleaded in the three other writ petitions vary to some extent, the nature of the case and the relief sought for in all the four writ petitions are one and the same, and hence the facts of other cases are not set out once again.
8. Respondents 1 and 2 Electricity Board filed separate counter-affidavits in all the four writ petitions. The common contentions raised in the counter-affidavits in all the four writ petitions are as follows:- There is an appeal provision provided under Section 11 of the Tamil Nadu Transparency in Tenders Act, 1998 (hereinafter referred to as "the Act") and as such the writ petitions would not lie as there is an alternate remedy by way of an appeal. As per Rule 31(1) of the Tamil Nadu Transparency in Tender Rules, 2000 (hereinafter referred to as "the Rules"), negotiation has to be conducted strictly with reference to the price offered by the lowest evaluated tenderer and not as claimed by the petitioner. The respondents 1 and 2 Electricity Board has acted in terms of the Act and the Rules and also the clarificatory orders issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises (F) Department in Lr.No.561/F/2009-3 dated 5.5.2009. The 15% price preference shall be applicable only in the event of the L1 tenderer is a large/medium/SSI of another State. In other words, if the L-1 is a domestic tenderer then the question of applicability of 15% price preference does not arise. In the instant case, M/s.Wilson Power and Distribution Technologies Private Limited being L-1 and domestic tenderer, the petitioner is not entitled to seek price preference. The third respondent comes under regular category and as such the averments of the petitioner relating to new entrant have no nexus to the relief sought for. The writ petitions are based on presumptions and assumptions without there being any cause of action on the date of filing the writ petitions. As a matter of fact, the 21 domestic tenderers under regular category have quoted Rs.3,92,295.84 (excluding VAT) and Rs.4,07,951.67 (including VAT) and not as stated in the affidavit filed by the petitioner. In the price bids of the eligible 30 firms opened on 19.12.2009 the rates quoted by the tenderers and the evaluated rates are as follows:-
Sl.No. Name of the firm Qty offered All-inclusive Price including VAT/CST Evaluated Price Evalu-ated Rank-ing Local/ Outsider Regular/New 1 M/s.Wilson Power and Distribution Technologies Pvt Ltd., Chennai 10 333080.32 320308.00 L1 Local Non SSI New Entrant 2 M/s.Kerala Electrical & Allied Engineering Co. Ltd., Cochin, 468 347555.50 347555.50 L2 Outsider Regular 3 M/s.Vinai Electric Company, Chennai 5 407028.55 391411.68 L3 Local SSI New Entrant 4 M/s.S.L.Electricals, Chennai 5 407028.55 391411.68 L3 Local SSI New Entrant 5 M/s.Indus Power Equipments, Vellore 5 407028.55 391411.68 L3 Local SSI New Entrant 6 M/s.Auro Tech Transformers, Cuddalore 5 407028.55 391411.68 L3 Local SSI New Entrant 7 M/s.Current Electricals Limited, Chennai 468 407951.67 392295.84 L4 Local SSI Regular 8 M/s.Senthil Engineering Co., Chennai 468 407951.67 392295.84 L4 Local SSI Regular 9 M/s.Venkateswara Electrical Industries (P) Ltd., Chennai 468 407951.67 392295.84 L4 Local SSI Regular 10 M/s.Hindusthan Heavy Electricals, Coimbatore 468 407951.67 392295.84 L4 Local SSI Regular 11 M/s.Electromech Industries, Coimbatore 468 407951.67 392295.84 L4 Local SSI Regular 12 M/s.Sri Ramakrishnan Transformers, Villupuram 468 407951.67 392295.84 L4 Local SSI Regular 13 M/s.Tamil Nadu Transformers, Ranipet 468 407951.67 392295.84 L4 Local SSI Regular 14 M/s.Sarayu Engineering, Dindigul 468 407951.67 392295.84 L4 Local SSI Regular 15 M/s.SAP Industries, Chennai 468 407951.67 392295.84 L4 Local SSI Regular 16 M/s.Supreme Power Equipment Pvt. Ltd., Chennai 468 407951.67 392295.84 L4 Local SSI Regular 17 M/s.Blue Star Exports, Tiruvallur 468 407951.67 392295.84 L4 Local SSI Regular 18 M/s.Danya Electric Company, Chennai 468 407951.67 392295.84 L4 Local SSI Regular 19 M/s.Associated Transformers(P) Ltd., Dindigul 468 407951.67 392295.84 L4 Local SSI Regular 20 M/s.Veltech Transformers Pvt. Ltd., Chennai 468 407951.67 392295.84 L4 Local SSI Regular 21 M/s.Bala Industries, Chennai 468 407951.67 392295.84 L4 Local SSI Regular 22 Sri Vinayaga Star Electricals, Chennai 468 407951.67 392295.84 L4 Local SSI Regular 23 M/s.Hindusthan Transformers, Chennai 468 407951.67 392295.84 L4 Local SSI Regular 24 M/s.Sun Tech Transformers, Ranipet 468 407951.67 392295.84 L4 Local SSI Regular 25 M/s.Ascott Electricals Ltd., Chennai 468 407951.67 392295.84 L4 Local SSI Regular 26 M/s.IPL Products, Chennai 468 407951.67 392295.84 L4 Local SSI Regular 27 M/s.Sri Thirumala Fabricators, Chennai 468 407951.67 392295.84 L4 Local SSI Regular 28 M/s.Raychem RPG Ltd., Chennai 100 430510.00 430510.00 L5 Outsider New Entrant 29 M/s.Indo Tech Transformers Ltd., Chennai 468 463539.86 445788.33 L6 Local SSI Regular 30 M/s.Southern Power Equipment Co. Pvt. Ltd., Bangalore 468 474020.40 474020.40 L7 Outsider Regular Some Transformer companies have represented to the respondents Electricity Board and contended that the Board has specified two sets of BQR, one for regular supplier and another for new entrants and requested for separate evaluation and 15% price preference shall be given to them and they shall be invited for price negotiation and orders to be placed on them. As there is no restriction in the Act and the Rules, such requests were not entertained (the proper word should be prescription and not restriction). As a matter of fact, incorporation of new entrant clause was to encourage new players and for competition so as to secure competitive price and such concessions to new entrants is in force from the year 2003. Paras 11.0, 12.0, 14.0, 15.0, 17.0 and 18.0 of the counter-affidavits which is relevant read as follows:-
"11.0. I respectfully submit that in the Govt. letter dt.5.5.09, the Govt. has issued the clarification as extracted below:-
I am directed to invite your attention to the letters cited and despite that in your letter first cited you have stated that the following issues have been highlighted as impediments in the implementation of the Purchase preference Policy of the Government by TNEB.
i) The MSEs in Tamil Nadu form a cartel to increase their prices.
ii) The purchasing Department has to pay 15 percent higher price in all their purchase resulting in a considerable loss.
iii) Quality products offered by MSEs from other states could not be purchased because of the price preference available to the Tamil Nadu MSEs.
2. In this connection, I am directed to state that
i) Upto 15% price preference for evaluation should be allowed to SSIs of Tamil Nadu, who have quoted in the same tender application.
ii) 15% price preference should be calculated on the basis of the lowest quoted rate if it is quoted by a large or a medium industry/SSI of another state.
iii) The lowest bids by the SSI unit from Tamil Nadu within the 15% price preference for awarding the tender, as illustrated below:
Determination of the lowest evaluated price involving domestic SSI units and large and medium industries/Micro and Small enterprises of other states.
L1 L2 L3 L4 Large and Medium Industries/Micro and Small Enterprises of other states Micro and Small Enterprises of Tamil Nadu Micro and Small Enterprises of Tamil Nadu Micro and Small Enterprises of Tamil Nadu Rs.100 Rs.108 Rs.112 Rs.115 Range of price preference is upto Rs.115, i.e. Rs.100 + 15% of Rs.100.
The Micro and Small Enterprises L2, L3 and L4 are eligible to be considered.
Tender is to be awarded to L2 at Rs.108 as it is the lowest evaluated price.
3. You are requested to follow the above procedure for determining the lowest evaluated price of Micro, Small and Medium Enterprises of Tamil Nadu."
"12.0. I respectfully submit that, in the said clarification received from the Principal Secretary to Government, Micro, Small & Medium Enterprises (F) Department vide letter No.561/F/2009-3 dated 5.5.09 it has been clearly stated that 15% price preference should be calculated on the basis of lowest quoted rate if it is quoted by a large or medium industry/SSI of another State. In other words, if the L1 is a domestic tenderer, then the question of applying 15% price preference to domestic SSIs does not arise at all."
"14.0. I respectfully submit that from the above it may be seen that Price Preference of 15% has to be calculated only on the basis of the price offered by lowest evaluated tenderer as per rule 31(1) of the Tamil Nadu Transparency in Tender Rules 2000 and not as claimed by the petitioner. In the present case, the lowest tenderer M/s.Wilson Power and Distribution Technologies Pvt. Ltd., Chennai is a domestic tenderer and hence the price preference of 15 percent is not applicable to the case of the petitioner."
"15.0. I respectfully submit that in the meanwhile it was negotiated with M/s Wilson Power and Distribution Technologies Pvt. Ltd., on 31.12.09 and it has reduced the ex-works price from Rs.2,95,000/- to Rs.2,94,500/-. The All Inclusive price of L1 tenderer after negotiation is Rs.3,32,517.47 (including VAT). The all inclusive price including VAT is Rs.3,19,766.80."
"17.0. I respectfully submit that since the L1 tenderer has quoted for 10 Nos. and in order to cover the balance quantity, Negotiation was conducted with the Evaluated L2 tenderer M/s.Kerala Electrical & Allied Engineering Co. Ltd., Kochi (third respondent) on 10.2.2010. They have reduced their Ex-works price from Rs.3,10,100/- to Rs.3,10,000/-. Negotiated all inclusive price including CST works out to Rs.3,47,445.10. All inclusive price excluding CST works out to Rs.3,40,734.22. All the remaining 23 regular tenderers were requested to match with the negotiated L2 price Rs.3,40,734.22 (all inclusive price exclusive of CST). M/s.Southern Power Equipment Co. Pvt. Ltd., Bangalore and M/s.Indo Tech Transformer Ltd., Chennai vide their letter dt.15.2.10 have regretted to match with the L2 price. The other 21 firms (including the petitioner) who were requested to match with L2 price have given their letter dt.15.2.2010 stating that they are eligible for price preference upto 15% and they shall be treated as Evaluated L1 and they shall be invited for price negotiation. They have also stated that TNEB has specified two sets of BQR, one for regular supplier and another one for new entrants and requested two separate evaluation which request would be impermissible under the provisions of the Act and the Rules made thereunder. The petitioner was once again requested vide Letter dt.17.2.2010 to confirm their willingness to match the L2 price. However they have again requested to call them for price negotiation vide letter dt.19.2.2010. The action of the petitioner shows that they are not interested in matching the L2 price."
"18.0. I respectfully submit that only one set of BQR conditions are stipulated in the tender documents with small concessions to new entrants from the experience criteria. Two BQR conditions are not specified in the tender documents and further two evaluation cannot be done in the same tender as per tender regulation."
The price difference between the petitioner and the third respondent is huge. The writ petitions are premature in nature without there being a cause of action. The writ petitions are based on false and frivolous grounds and are abuse of process of the Court. Petitioners want unjustly enrich themselves. Therefore, all the writ petitions must be dismissed.
9. We shall now consider the tender which is the bone of contention. As per the Specification No.M.16, the Bid Qualification Requirements reads as follows:-
"SECTION-II (Specn.No.M.16) BID QUALIFICATION REQUIREMENTS (BQR) THE BIDDERS shall become eligible to bid on satisfying the following "BID QUALIFICATION REQUIREMENTS" and on production of the required documentary evidences along with the tender.
I) "The Bidders shall be actual manufacturer of Distribution Transformers.
II) They should have supplied satisfactorily a minimum of 5 Nos. 500 KVA/11 KV/433V Distribution Transformers with same voltage rating or higher KVA/higher KV capacity during any one of the previous three years period (2006-2007, 2007-2008, 2008-09) to State Electricity Boards/Power Utilities. The details of Purchase orders executed during the above three years period shall be furnished. This should be attached inside Envelope A cover. Tenders with non-submission of these details will be summarily rejected".
III) "The Annual Turn over of the Bidders shall be more than Rs.1 Crore (Rupees One Crore only) during any one of the previous three years period (2006-2007, 2007-2008 & 2008-09). The Bidder shall enclose necessary proof of evidence therefor".
IV) The copy of the Type Test Certificates along with certified drawings in respect of Impulse voltage withstand Test and Dynamic Short Circuit Withstand Test for the tendered capacity transformer as per the technical parameters stipulated in the specification conducted at Government Institute/Undertaking dated not earlier than 5 years as on the date of tender opening should be enclosed along with the tender inside Envelope-A. The new entrants who are the manufacturers of Distribution Transformers with no previous experience of supply of tendered capacity transformer to Power utilities/State Electricity Boards are permitted to participate in the tender provided they satisfy Clause I, Clause III and Clause IV of BQR and satisfy technical/Commercial terms stipulated in the specification.
In the case of New Entrants who are manufacturers of Distribution Transformers, the Tamil Nadu Electricity Board reserves the right to place order upto 10% of the tender quantity provided the firm is Evaluated L1 tenderer. In the case of more than one new entrant have become evaluated L1, Board has right to place orders upto 10% of the tendered quantity on each new entrant, provided they satisfy commercial, technical and BQR conditions except previous experience of supply.
NOTE: A firm who have got purchase order in earlier tender under New Entrant Category is eligible to be considered under regular category in subsequent tenders provided they have satisfied satisfactory period of service if any specified in the tender documents for the ordered item even though the quantity supplied is lesser than the quantity stipulated in tender document. The firm as above is not eligible to be considered as new entrant again in the subsequent tender for the items in the absence of non-completion of the satisfactory period of performance of the earlier supplies as New Entrant."
10. As per the Specification No.M.16, the Evaluation and Comparison of the Tender offers reads as follows:-
"7.0. EVALUATION AND COMPARISON OF THE TENDER OFFERS:
7.1. The tenders will be evaluated strictly as per the Tamil Nadu Transparency in Tenders Act, 1998 and the Tamil Nadu Transparency in Tender Rules, 2000.
7.2. The tender offers received will be examined to determine whether they are in complete shape, all required Datas have been furnished, properly signed and generally in order and conforms to all the terms and conditions of the Specification without any deviation.
7.3. For the purpose of evaluation of tender offers, the following factors will be taken into account for arriving the evaluated price:
(a) the quoted price will be corrected for arithmetical errors.
(b) In case of discrepancy between the price quoted in words and figures, lower of the two shall be considered.
(c) Where the Tenderers are both from the state of Tamilnadu as well as from outside the state of Tamilnadu, the TNGST quoted by the Tenderers situated in the state of Tamilnadu will be excluded and CST quoted by the Tenderers outside the state of Tamilnadu will be included for the evaluation of the offer received to determine the L1 Tenderer.
(d) If all the bidders are from other States, the evaluated price will include Ex-works price, Excise Duty, freight & insurance and Sales tax.
(e) If all the bidders are from Tamil Nadu, the evaluated price will include Ex-works price, Excise Duty, freight & insurance and Sales tax.
(f) The amount of Sales Tax & Surcharge and percentage of Sales Tax & Surcharge shall be indicated in the offer.
(g) Price preference: The evaluation and comparison shall include Fifteen Percent Price Preference for Domestic Small Scale Industrial Units and Ten Percent Price Preference for the Public Sector Undertakings of Government of Tamil Nadu in respect of products and quantities manufactured by them.
The price preference will be given on the evaluated price."
11. Section 10(1), (2) and (3) of the Tamil Nadu Transparency in Tenders Act, 1998 reads as follows:-
10. (1) The Tender Accepting Authority shall cause an objective evaluation of the tenders taking into consideration the schedule of rates as mentioned in the tender document and the prevailing market rate for procurement and comparison of the tenders in accordance with the procedure and criteria specified in the tender document.
(2) After evaluation and comparison of tenders as specified in sub-section (1), the Tender Accepting Authority shall accept the lowest tender ascertained on the basis of objective and quantifiable factors specified in the tender document and giving relative weights among them.
(3) Notwithstanding anything contained in sub-section (2), if the Tender Accepting Authority decides that the price of the lowest tender is higher with reference to the prevailing market rate or the schedule of rates, he may negotiate for a reduction of price with that tenderer."
As per Section 10(1) of the Act, the authority should make an objective evaluation based on schedule rates specified in tender documents and the prevailing market rate in accordance with the procedure and criteria specified in the tender document and that is reflected in para 7.0 of the Specification. It includes price preference. After determining the evaluated price based on objective and quantifiable factors specified in the tender document, the lowest tender will be ascertained and accepted.
12. Rule 29 of the Tamil Nadu Transparency in Tenders Rules, 2000 provides for the method to determine the lowest evaluated price and it reads as follows:-
"29. Determination of the lowest evaluated price.-
(1) Out of the tenders found to be substantially responsive after the initial examination the tenderers who has bid the lowest evaluated price in accordance with the evaluation criteria or the tenderers scoring the highest on the evaluation criteria specified as the case may be shall be determined.
(2) In determining the lowest evaluated price, the following factors shall be considered, namely:-
(a) the quoted price shall be corrected for arithmetical errors;
(b) in cases of discrepancy between the prices quoted in words and in figures, lower of the two shall be considered;
(c) adjustments to the price quoted shall be made for deviations in the commercial conditions such as the delivery schedules and minor variations in the payment terms which are quantifiable but deemed to be non-material in the context of the particular tender;
(d) "the evaluation shall include all central duties such as customs duty and central excise duty and sales tax as a part of the price, as detailed below:-
(i) in evaluation of the price of an imported item, the price has to be determined inclusive of the customs duty;
(ii) in evaluation of the price of articles which are subject to excise duty, the price has to be determined inclusive of such excise duty;
(iii) in a tender where all the tenderers are from within the State of Tamil Nadu, or where all the tenderers are from outside the State of Tamil Nadu, the sales tax shall be included for the evaluation of the price; and
(iv) In a tender where the tenderers are both from the State of Tamil Nadu as well as from outside the State of Tamil Nadu, the sales tax under the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of (1959) shall be excluded for the evaluation of the price".
(e) in the case of purchase of equipment, the operation and maintenance and spare part costs for appropriate periods as may be specified in bid documents may be quantified, where practicable and considered.
(f) the evaluation and comparison shall include fifteen percent price preference for domestic small scale industrial units and ten percent price preference for the Public Sector Undertakings of the Government in respect of products and quantities manufactured by them.
(3) In order to secure the best possible procurement price, negotiations with tenderer determined as per clauses (1) and (2) above are permissible subject to provisions in section 10 of the Act.
(emphasis supplied) It will be pertinent to note that para 7.0 of the Tender Specification is in line with Rule 29(f).
13. In this backdrop and considering the provision of Section 10 and Rule 29, the letters which are challenged needs to be analysed and considered for deciding the lis between the parties. In order to understand the same they are set out hereunder.
(i) The letter dated 7.1.2010, issued by the Chief Engineer, Materials Management, Tamil Nadu Electricity Board in Lr.No.SE/MM-II/EED/A2/M.16/09-10/D.38/2010, which is the first offer, reads as follows:-
"Sub: Specification No.M.16/2009-10 for supply of 500 KVA/11KV/433 Distribution Transformer Matching of Lowest Negotiated price Reg.
Ref: 1. Your Offer against Specification M.16/2009-10.
***** Please refer to your letter cited.
Please confirm whether you are agreeable to supply 500 KVA/11KV/433V Distribution Transformers against the above Specification at a variable All Inclusive Price excluding VAT/CST of Rs.3,19,766.80 each.
Your reply to the above points may be addressed to the Chief Engineer/Materials Management and sent on or before 11.1.10.
Please note that this letter does not carry with it any assurance that an order will be placed on you."
(ii) The letter dated 8.2.2010, issued by the Chief Engineer, Materials Management, Tamil Nadu Electricity Board in Lr.No.SE/MM-II/EED/A2/M.16/09-10/D.216/2010, which denies the benefits, reads as follows:-
"Sub: Tender - M.16/2009-10 Procurement 500KVA/11KV/433 Distribution Transformers Representations received Reg.
Ref: 1.M/s.IPL Products, Chennai letter dated 5.1.10.
2.M/s.SAP Industries, Chennai letter dated 5.1.10.
3.M/s.Senthil Engineering Company, Chennai letter dated 6.1.10.
4.M/s.Venkateswara Electrical Industries Private Ltd.,Chennai letter dated 6.1.10.
5.M/s.Current Electricals Limited,Chennai letter dated 6.1.10.
***** "Please refer to your letter cited.
In this regard it is submitted that only one set of BQR conditions are stipulated in the tender documents with exception to new entrants from the experience criteria. Two BQR conditions are not specified in the tender documents and further two evaluation cannot be done in the same tender as per tender regulation.
In the clarification received from the Principal Secretary to Government, Micro, Small & Medium Enterprises (F) Department vide letter No.561/F/2009-3 dated 5.5.09 it has been clearly stated that 15% price preference should be calculated on the basis of lowest quoted rate if it is quoted by a large or medium industry/SSI of another State. In this case the Local Non SSI unit (New Entrant) himself has quoted the lowest rate and became the L1 tenderer.
Hence the price preference of 15 percent has not been loaded in order to know as to whether any local SSI comes within the price range of Rs.115 (Rs.100+15%).
As per your request for separate evaluation for new and regular supplier and giving 15% price preference does not arise as per the above clarification.
Please note that this letter does not carry with it any assurance that an order will be placed on you."
(iii) The letter issued by the Chief Engineer, Materials Management, Tamil Nadu Electricity Board in Lr.No.SE/MM-II/EED/A2/M.16/09-10/D.225/2010 dated 11.1.2010 signed on 11.2.2010, where a new criteria is introduced, reads as follows:-
"Sub: Specification No.M.16/2009-10 for supply of 500 KVA/11KV/433V Distribution Transformer Matching of L2 Negotiated price Reg.
Ref: 1.Your Offer against Specification M.16/2009-10 ***** "Please refer to your letter cited.
Please confirm whether you are agreeable to supply 500 KVA/11 KV/433V Distribution Transformers against the above Specification at a variable All Inclusive Price excluding VAT/CST of Rs.3,40,734.22 each.
Your reply to the above points may be addressed to the Chief Engineer/Materials Management and sent on or before 15.2.2010.
Please note that this letter does not carry with it any assurance that an order will be placed on you."
(iv) The letter issued by the Chief Engineer, Materials Management, Tamil Nadu Electricity Board in Lr.No.SE/MM-II/EED/A2/M.16/09-10/D.260/2010 dated 17.2.2010 reiterating the letter dated 11.1.2010 reads as follows:-
"Sub: Specification No.M.16/2009-10 for supply of 500 KVA/11KV/433V Distribution Transformer Matching of L2 Negotiated price Reg.
Ref: 1.Your Offer against Specification M.16/2009-10.
2.Lr.No.SE/MM-II/EED/A2/M.16/ 09-10/D.225/2010 dt.11.2.2010.
3.Your letter dt.15.2.2010.
***** In this office letter cited under reference (2), it has been requested to confirm whether you are agreeable to supply 500 KVA/11 KV/433V Distribution Transformers against the above Specification at a variable All Inclusive Price excluding VAT/CST of Rs.3,40,734.22 each. But in your reply the matching of the above rate has not been concurred. Hence you are again requested to inform your concurrence or otherwise to match with the above price.
Your reply letter may be addressed to the Chief Engineer/Materials Management and set on or before 19.2.2010. Otherwise it will be construed that you are not interested in matching with the above price and further action as per Tender Procedure will be taken.
Please note that his letter does not carry with it any assurance that an order will be placed on you."
14. Mr.R.Muthukumarasamy, learned senior counsel appearing for the petitioner in W.P.No.4423 of 2010; Mr.Venkatachalapathy, learned senior counsel appearing for the petitioners in W.P.Nos.4440 and 4441 of 2010 and Mr.G.Jermiah, learned counsel appearing for the petitioner in W.P.No.4437 of 2010 contended that the local SSI units are eligible to be considered as L1 and entitled to 15% price preference. They contended that the respondents 1 and 2 Department is not entitled to take the price quoted by the new entrant as L1. In any event if the price quoted by SSI of other State is taken, then 15% price preference should be given to the petitioners. The letters that are challenged are misconceived and contrary to the provisions of the Act/Rules and the clarification given by the Government in its letter dated 5.5.2009.
15. Mr.P.S.Raman, learned Advocate General appearing for the respondents 1 and 2 Electricity Board in all the writ petitions contended that the writ petitions are premature, the petitioners are unable to match the lowest evaluated price quoted by the new entrant and hence not entitled to be considered as L1 with the 15% price preference in terms of Rule 29(f) and the Government's Clarification issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009. He reiterated the stand taken by the Department in its counter-affidavit and justified the Department's letter calling upon the petitioners to match the price quoted by the SSI Unit of the other State.
16. Mr.M.K.Kannan, learned counsel appearing for the third respondent in all the writ petitions after notice took time to get instructions and thereafter in the subsequent hearing the learned counsel stated that he is adopting the arguments of the learned Advocate General.
17. W.P.No.4423 of 2010:-
(i) For the supply of 500 KVA/11/KV/433V Distribution Transformers, new entrant SSI Units, large/medium scale industries/SSI Units of other States compete with one another for grant of tender. Based on the specification and tender notification several tenders were submitted. M/s.Wilson Power and Distribution Technologies Private Limited, a new entrant of Tamil Nadu has quoted the price of Rs.3,19,766.80 per transformer excluding VAT/CST. M/s.Kerala Electricals and Allied Engineering Co. Ltd., the third respondent who falls under the category of SSI unit of other State has quoted the price of Rs.3,40,734.22 per transformer excluding VAT/CST. The petitioners and other local SSI have quoted higher price which is in the range of Rs.3,90,000/- per transformer approximately.
(ii) Having received the technical bid in respect of supply of 468 numbers of 500 KVA/11KV/433V Distribution Transformers, the Department initially communicated the letter No.SE/MM-II/EED/A2/M.16/09-10/D.38/2010 dated 7.1.2010 calling upon the petitioner local SSI Units to confirm whether they are agreeable to supply the 500KVA/11MV/433V Distribution Transformers matching the price of Rs.3,19,766.80 excluding VAT and CST quoted by the new entrant SSI said to be the L1. To this, the petitioner on 11.1.2010 clearly replied that they are not in a position to match the price of Rs.3,19,766.80.
(iii) Thereafter, based on representation received from some individual domestic SSI Units, the letter No.SE/MM-II/EED/A2/M.16/09-10/D.216 dated 8.2.2010 came to be issued and it has already been extracted earlier. In this letter, the second respondent while referring to the clarification received from the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department letter No.561/F/2009-3 dated 5.5.2009 stated that the clarification will not apply to the petitioner as local non SSI unit, a new entrant, has quoted the lowest rate and becomes L1 tenderer. Therefore, the price preference of 15% cannot be given to the petitioner. The request for separate evaluation was also rejected.
(iv) Thereafter, by a letter No.SE/MM-II/EED/A2/M.16/09-10/D.225 dated 11.1.2010 signed on 11.2.2010 (i.e.) one month after preparing the letter, the second respondent called upon the petitioner to confirm whether they are agreeable to supply 500 KVA/11 KV/433VG Distribution Transformers at a price of Rs.3,40,734.22 each excluding VAT/CST. In the said letter it is clearly stated that this price is to match the L2 negotiated price. Petitioner by letter dated 15.2.2010 submitted their grievance stating that if the third respondent SSI Unit of other State negotiate price is taken as evaluated price, then the petitioner is entitled to 15% price preference in terms of the clarification issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009. To this, the second respondent once again sent a reply in Lr.No.SE/MM-II/EED/A2/M.16/09-10/D.260/2010 dated 17.2.2010 reiterating their request as per letter dated 11.1.2010 calling upon the petitioner to confirm whether they are agreeable to supply 500 KVA/11 KV/433V Distribution Transformers at a price of Rs.3,40,734.22 each excluding VAT/CST (i.e.) L2 negotiated price, which is the price quoted by the SSI Unit of other State, viz., the third respondent herein.
(v) Realizing that the Department is proceeding erroneously in the issue and taking different stands at different times, the present writ petition has been filed challenging the letters dated 8.2.2010 and 11.1.2010 signed on 11.2.2010 and to treat the petitioners and other similarly placed SSI Units as L1 and place the order.
(vi) At the outset, it may be pointed out that there is a discrepancy in the stand taken by the Department in the two letters the one dated 7.1.2010 and the other dated 11.1.2010 but signed on 11.2.2010. In the letter dated 7.1.2010, the petitioners are called upon to confirm whether they are agreeable to supply 500 KVA/11 KV/433V Distribution Transformers at the price of Rs.3,19,766.80 each price stating that it is the L1 price. This is the price quoted by the new entrant SSI domestic.
Thereafter, the Department has shifted its stand and has called upon the petitioners to match L2 negotiated price (i.e.) the price quoted by the SSI Unit of other States. This prevaricating stand of the Department has caused the confusion leading to the filing of the writ petition.
(vii) Before we can understand and analyse the two letters, it has to be borne in mind that the tender bid qualification as per the Tender Specification No.M.16 is for supply of 500 KVA Distribution Transformers. Section-II pertains the Bid Qualification Requirements. Section-II makes a quantity restriction insofar as the new entrant as against other suppliers who already have number of years of experience in supply of transformers. According to Section-II of Bid Qualification Requirement, a regular supplier should have satisfactorily supplied a minimum of 5 numbers 500 KVA/11 KV/433V Distribution Transformers with same voltage rating or higher KVA/higher KV capacity during any one of the previous three years period (2006-2007, 2007-2008 and 2008-2009). They should have an annual turn over limit of Rs.1,00,00,000/- in any one of the three years as above. Whereas in the case of new entrants who are manufactures of the Distribution Transformers, the quantity is specifically restricted to 10% of the total quantity with a further rider that the firm should be evaluated L1 tenderer. Therefore, the new entrants necessarily should be L1 tenderer to get into the 10% quota.
(viii) Based on the price quoted by the new entrant stating that he is the L1, the petitioners were called upon to match the price for supply and the plea of the petitioners for 15% price preference were rejected by letter dated 8.2.2010 stating that the local non SSI new entrant has quoted the lowest rate and is the L1 tenderer and therefore, the price preference in terms of the letter issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009 will not be applicable. Having stated so, the Department has by its letter dated 11.1.2010 signed on 11.2.2010 changed its stand and stated that the petitioners should match the L2 negotiated price (i.e.) Rs.3,40,734.22 each excluding VAT/CST which is the price quoted by the third respondent SSI Unit of State of Kerala. Therefore, there is a contradiction between the letter dated 7.1.2010, letter dated 8.2.2010 and the subsequent offer in letter dated 11.1.2010 signed on 11.2.2010.
(ix) The fact that the Department is not insisting upon the new entrants quoted price is evident by letter dated 17.2.2010 where again the petitioners have been called upon to match the L2 negotiated price. In view of the subsequent stand taken by the Department, it is clear that they have given a go-by letter dated 8.2.2010 and therefore, there is no basis for the Department to non suit the petitioners on the basis of the letter dated 8.2.2010 stating that they are not entitled to the benefit of the clarification issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009. The counter-affidavit accepts the binding nature of the letter issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009. If the Department has subsequently taken the stand to call upon the petitioners to confirm and state whether they are agreeable to supply the Distribution Transformers matching the L2 negotiated price, then the question that would arise is if L2 negotiated price is the price quoted by an SSI unit of other State then what is the effect of the clarification issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009 and what benefits will flow to the petitioners in terms of Rule 29(f) of the Rules.
(x) The issue therefore, has to be read on the basis of the said clarification issued by the Government. The clarification issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009 which has already been extracted above, clearly states that 15% price should be calculated on the basis of the lowest quoted rate, if it is quoted by larger and medium industry/SSI of another State. The method for determination has also been specified in the said clarification letter issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009. There is no ambiguity or confusion.
(xi) Once the price quoted by new entrant is not taken into consideration for fixing the evaluated price as is evident from the letter dated 11.1.2010 signed on 11.2.2010 and the subsequent letter dated 17.2.2919, then the SSI Unit of other State necessarily will have to be taken as L1 and the petitioners will be entitled to the benefit of the 15% price preference and each one of the SSI units who fall within the price range (i.e.) L2, L3, L4 as the case may be subject to the overall limit of 15% are eligible for confirmation of the tender. This will in consonance with the Government's clarification letter. The denial of the benefits to the petitioners stating that the price quoted by the new entrant is L1 has not been accepted by the petitioners and the price quoted L2 has also not been accepted by the petitioners only establish the confusion in the mind of the Department as there is no proper evaluation in terms of the Act and the Rules and that issue will be clarified shortly.
(xii) Even as per paragraph 7.0 of the Tender Specification No.M.16, an emphasize is laid on the provisions of the Act and the Rules. Para 7.3(g) of the Tender Specification No.M.16 provides for evaluation and comparison of the price by giving 15% price preference to Domestic Small Scale Industrial Units and it further provides that price preference will be given on the evaluated price. In the tender, there is no exclusion insofar as regular suppliers are concerned based on the price quoted by new entrant even though as per Bid Qualification Requirement new entrant has to be L1. If the price quoted by new entrant is the only criteria then para 7.3(g) and Rule 29(f) becomes redundant and unworkable. It will defeat the object of the Act and the Rules.
(xiii) Rule 29(2) of Tamil Nadu Transparency in Tenders Rules, 2000 states the method of determining the lowest evaluated price. Rule 29(2)(f) states that evaluation and comparison shall include 15% price preference for domestic small scale industrial units. It is emphatic and definite. The provisions of Section 10 of the Act provide for negotiation only on certain contingencies and the Department in this case instead of evaluating the price has been protracting the issue by negotiating the price when the petitioners have clearly expressed that they are unable to match the price and that the benefit of Rule 29(f) and Government's Clarification dated 5.5.2009 should be extended without any further confusion.
(xiv) Section 10(1), (2) and (3) of the Tamil Nadu Transparency in Tenders Act, 1998 Act speaks about the objective evaluation of the tenders by taking into consideration the schedule of rates, prevailing market rate and by comparison of the tenders in accordance with the procedure and criteria specified in the tender document. Clause (2) of Section 10 provides for accepting the lowest tender after evaluation and comparison of tenders. Clause (3) of Section 10 of the Act provides for further negotiation for reduction of price with the tenderers.
(xv) A conjoint reading of Section 10 of the Tamil Nadu Transparency in Tenders Act, 1998 and the Rule 29 of the Tamil Nadu Transparency in Tenders Rule, 2000 as above, it is clear that the authority has to first evaluate and compare the price on various variables and thereafter determine the lowest evaluated price. Insofar as the Domestic SSI units are concerned at the time of evaluation, as per Rule 29(f), 15% price preference shall be given and that is specifically provided in the Rules. In the present case, in the letter dated 7.1.2010, the second respondent has stated that the new entrant quoted price is the lowest negotiated price. Thereafter, in the letters dated 11.1.2010 and 17.2.2010 the same Department states that the price quoted by the third respondent SSI unit of other State is the L2 and it is the negotiated price. Nowhere it has been stated which of the price is the evaluated price in terms of Rule 29 of the Tamil Nadu Transparency in Tenders Rule, 2000 read with Section 10 of the Tamil Nadu Transparency in Tenders Act, 1998. Therefore, the authority is still in the stage of negotiation and that could be seen by the repeated letters of the second respondent, viz., letter dated 11.1.2010 signed on 11.2.2010 and letter dated 17.2.2010 whereby they have called upon the petitioners to confirm whether they are agreeable to supply 50 KVA Distribution Transformers at a price of Rs.3,40,734.22 each excluding VAT/CST stating that it is the L2 negotiated price. The tenor of the letters states that the petitioners have not concurred with the rate and therefore, they should once again inform whether they are agreeable and are willing to match the above said price. It is, therefore, clear that there is no evaluation and comparison as per the Act and the Rules even as on 17.2.2010. The tender specification clearly states that the due date for opening price bid was fixed as 19.12.2009. The second respondent has been continually corresponding for nearly three months. The second respondent is unable to conclude which of the price is the lowest evaluated price to grant the tender. Therefore, the letter dated 11.1.2010 signed on 11.2.2010 and the letter dated 17.2.2010 are in the nature of offer. The Department is unable to conclude the evaluation process.
(xvi) In accordance with Section 10 and the provisions of the Act and the Rule 29 and other Rules as applicable, the second respondent has to evaluate the lowest price. Rule 29(f) further provides for 15% price preference to domestic small scale industries and the manner and method in which the price preference should be given has been specified in the clarification issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009. This process has not been done in the present case. The second respondent on one hand is relying upon the price quoted by the new entrant and denies the benefit of the Rule 29(f) and the clarification issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009 in its proceedings dated 8.2.2010. The letter dated 8.2.2010 is in conflict to the above Rules and the Government's Clarification issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009, which is binding on the second respondent. Further, in view of the subsequent letters dated 11.1.2010 signed on 11.2.2010 and 17.2.2010 wherein the L2 negotiated price is taken, the letter dated 8.2.2010 becomes irrelevant. Therefore, there is no hesitation for this Court to come to the conclusion that the letter dated 8.2.2010 is bad and has to be set aside as irrelevant in view of the subsequent events as set out above.
(xvii) Insofar as the letter dated 11.1.2010 signed on 11.2.2010, which has been emphasized once again in letter dated 17.2.2010, it is clear that the price quoted by the SSI Unit of other States has been taken as negotiated price and it is stated as L2 and the petitioners are called upon to supply on the said price. As has already been observed by this Court, the letter issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009, will be binding on the Department if the price taken is that of an SSI unit of other State.
(xviii) Assuming for a moment that the price quoted by the SSI Unit of other State is the price which is to be taken for consideration, necessarily the petitioners should be given the benefit of Rule 29(f) read with the Government's clarification issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009. For denying the benefit to the petitioners, the Department on one hand relies upon the price quoted by the new entrant, and in the same breath the Department relies upon the price quoted by the SSI Unit of other State, but refuses to extend the benefit that has to flow from Rule 29(f) and the Government clarification in letter dated 5.5.2009. This is a contradiction in terms. Therefore, the two letters impugned in the writ petition cannot form the basis of finalizing the tender. The Department has to therefore, necessarily follow the provision of Section 10 of the Tamil Nadu Transparency in Tenders Act, 1998 and Rule 29 of the Tamil Nadu Transparency in Tenders Rule, 2000 and first evaluate the lowest price on comparison of the tenderers and thereafter give the price preference in terms of Rule 29(f) of the Rule and the Government's clarification issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009 if the price of SSI Unit of other State is taken as the lowest evaluated price which is the case on hand.
(xix) The second respondent cannot adopt two yardsticks in the process of awarding the tender. Since the entire process of granting the tender is based on indecisiveness and vagueness, this Court has to step in to correct the error in decision making process. Irrelevant factors, like negotiated price, are stated in the impugned letters and that leads to confusion. The Department is adopting two variables to deny the benefit to the petitioners which cannot be justified. Hence, this Court has no hesitation to hold that both the letters impugned in the writ petition No.4423 of 2010 are liable to set aside and are set aside.
(xx) The second respondent, therefore, has to finalise the tender by following the provisions of Section 10 of the Tamil Nadu Transparency in Tender Act, 1998 and the Rule 29 of the Tamil Nadu Transparency in Tender Rules, 2000 keeping in mind the Government's clarification issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009 as applicable.
18. W.P.Nos.4440 and 4441 of 2010:- Insofar as the relief sought for in the Writ Petition Nos.4440 and 4441 of 2010 (i.e.) to grant mandamus to direct the respondents 1 and 2 to place orders with the petitioners for supply of Distribution of Transformers is concerned, except to direct the second respondent to reconsider the matter in the light of what has been observed by this Court in W.P.No.4423 of 2010 no further direction or mandamus is required to be passed.
19. W.P.No.4437 of 2010:- So far as Writ Petition No.4437 of 2010 is concerned, since the matter is in the stage of negotiation, the Court is not inclined to state as to who is L1. No further direction can be issued to place orders without proper determination. It is not for the Court to go into the arena to determine which is the lowest evaluated price as it is the domain of the authority to decide the claims of various tenderers in accordance with the Act and Rules. No mandamus as prayed for can be granted in this case except to direct the authority to consider the case of the petitioner as decided in W.P.No.4423 of 2010.
20. The plea of the respondents 1 and 2 Board in all the writ petitions that there is an effective alternative remedy by way of appeal is provided under Section 11 of the Tamil Nadu Transparency in Tenders Act, 1998 and therefore, the writ petitions are not maintainable, is misconceived and untenable in the present case as the letters which are challenged in the writ petitions are not final orders passed by the competent authority so as to file an appeal to the higher forum. The vacillation mind of the Electricity Board in deciding as to who is the L1 and the consequent letter by the Electricity Board calling upon the petitioners to match two different price (i.e.) one price quoted by the new entrant and the another by SSI unit of the other State would clearly establish that the authority is unable to make a final decision in the matter and therefore, there is a stalemate for a considerable period. The clarification of the Government's letter No.561/F/2009-3 dated 5.5.2009 is rejected on an erroneous plea. If the price quoted by the new entrant is taken, the question of Government's clarification in letter No.561/F/2009-3 dated 5.5.2009 will not arise. In the event of SSI of outside State being considered for price evaluation, then the Government's clarification will come into effect. In such a confused situation, the petitioners are justified in approaching the Court to direct the authority to finalize the tender on their quoted price based on the clarification issued by the Government in letter No.561/F/2009-3 dated 5.5.2009. Since the action of the respondents Board is arbitrary, vague and indecisive, the petitioners are justified in approaching this Court under Article 226 of Constitution of India. This Court is not deciding the issue relating to grant of tender to one or other person. It does not interfere with the decision making, but tests the decision making process on the touch stone of arbitrariness. The writ petitions are entertained so as to direct the authority to decide the matter in accordance with law, namely, the Tamil Nadu Transparency in Tenders Act, and Rules coupled with the Government's clarification in letter No.561/F/2009-3 dated 5.5.2009 issued by the Tamil Nadu Government. In this view of the matter, the writ petitions under Article 226 of Constitution of India are maintainable.
21. W.P.No.4423 of 2010:- In the result, this Writ Petition is partly allowed as follows:-
(i) The impugned letters, viz., Lr.No.SE/MM.11/EED/A2/M16/09-10D 216/2010 dated 8.2.2010 and Lr.No.SEE/MM.11/EED/A2/M16/9-10/D.225/2010 dated 11.1.2010 signed on 11.2.2010 are set aside.
(ii) In respect of the tenders submitted by the petitioner and others, the second respondent is directed to reconsider the same by following the provisions of Section 10 of the Tamil Nadu Transparency in Tender Act, 1998 and the Rule 29 of the Tamil Nadu Transparency in Tender Rules, 2000 keeping in mind the Government's clarification issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009 as applicable.
(iii) There will be no order as to costs.
(iv) Consequently, the interim injunction granted in M.P.No.1 of 2010 is vacated and the miscellaneous petition is closed.
22. W.P.Nos.4437, 4440 and 4441 of 2010:- The second respondent is directed to reconsider the petitioners' case by following the provisions of Section 10 of the Tamil Nadu Transparency in Tender Act, 1998 and the Rule 29 of the Tamil Nadu Transparency in Tender Rules, 2000 keeping in mind the Government's clarification issued by the Principal Secretary to Government, Micro, Small and Medium Enterprises(F) Department in Lr.No.561/2009-3 dated 5.5.2009 as applicable. The writ petitions are disposed off accordingly. There will be no order as to costs. Consequently, the interim injunction granted in M.P.No.1 of 2010 in all the three writ petitions is vacated and the miscellaneous petitions are closed.
Index: Yes 30.7.2010
Internet:Yes
ts
To
1.The Chairman,
Tamil Nadu Electricity Board,
10th Floor, NPKRR Maaligai,
144, Anna Salai,
Chennai-600 002.
2.The Chief Engineer/Material Management,
Tamil Nadu Electricity Board,
4th Floor, NPKRR Maaligai,
144, Anna Salai,
Chennai-600 002.
R.SUDHAKAR,J.
ts.
Common Order in
W.P.Nos.4423, 4437, 4440
and 4441 of 2010
Date 30.7.2010