Bombay High Court
Welspun Projects Limited vs Mira Bhayander Municipal on 11 June, 2012
Author: A. M. Khanwilkar
Bench: A.M. Khanwilkar, S. S. Shinde
Jvs. wp6584.11
IN THE HIGH COURT OF JUDICATURE AT BOMBAY.
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 6584 OF 2011
1. Welspun Projects Limited
a company duly registered under the
provisions of the Companies Act,1956
with its registered office at 707, sterling
centre, R.C.Dutt Road, Alkapuri, Baroda
- 390005, Gujarat India and its
concerned office at 4th floor,Welspun
House, Karnalaig Mills Compound,
Senapati Bapat Marg, Lower Parel,
Mumbai 400 013.
2. SPML INFRA Limited
a company duly registered under the
provisions of the Companies Act 1956
with its registered office at F-27/2 Okhla
Industrial area,phase II New Delhi 110020
and its concerned office at 206,
Marthanda Bldg, Above Canara Bank, Dr.
Annie Besant Road, Worli, Mumbai-18.
3. VA TECH WABAG LIMITED
a company duly registered under the
provisions of the Companies Act 1956
with its registered office at 11 Marez Gate
Road, Alwar Peth, Chennai 600018.
:- Petitioners
VERSUS
1. MIRA BHAYANDER MUNICIPAL
CORPORATION, Mira Bhayander, Thane
Maharashtra.
2. RAMKY INFRASTRUCTURE
LIMITED a company duly registered
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under the provisions of the Companies
Act 1956 with its registered office at
Ramky House, Gulmohar Avenue,
Rajbhavan Road, Samajguda, Hyderabad
500082. Andhra Pradesh.
3. KONARK INFRASTRUCTURE
LIMITED, a company duly registered
under the provisions of the Companies
Act 1956 with its registered office at 111-
112, Anil Complex, New Link Road,
Ulhasnagar - 421 002. Maharashtra
:- Respondents
Mr. Viraj Tulzapurkar, Senior Advocate, i/b. M/s. Wadia Ghandy & Co.
for Petitioners.
Mr. R. S. Apte, Senior Advocate, with Mr. N. R. Bubna for Respondent
No. 1.
Mr. A.A.Kumbhakoni, with Mr.Sathyam Acharya for Respondent No. 3.
CORAM: A. M. KHANWILKAR &
S.S. SHINDE, JJ.
Reserved on :- 4th May, 2012
Pronounced on :- 11th June, 2012
JUDGMENT :- (Per A. M. Khanwilkar, J.)
1) Rule. Rule returnable forthwith. Counsel for the respective Respondents waive notice. By consent, taken up for final hearing forthwith.
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2) By this Writ Petition under Article 226 of the Constitution of
India, it is prayed that the decision of the Standing Committee of Respondent No. 1 Corporation and the letter of intent, issued in favour of R. K. Consortium be quashed and set aside, including, in particular the decision of the Standing committee of the Respondent No. 1 Corporation disqualifying/rejecting the Petitioners' bid or financial proposal. The Petitioners have thus, prayed for quashing and setting aside the declaration of R K Consortium as the preferred bidder, whether by way of a letter of intent or otherwise and the decision to award the contract to Respondent Nos.2 and 3 / R K Consortium. The Petitioners have further prayed for direction against Respondent No.1 to consider the Petitioners' bid or financial proposal, carry out the financial evaluation and allocate points/marks in accordance with the RFP and to take a decision on the basis that the Petitioners' bid or financial proposal is eligible and qualifies for consideration. In the alternative, the Petitioners pray that writ of mandamus be issued directing Respondent No. 1 to re-conduct the entire bid process by issuing necessary clarifications to the RFP, for giving fresh bids and reevaluating the same in accordance with the revised RFP.
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3) Briefly stated, each of the Petitioner is a Public Limited
Company. The Petitioners have formed a Consortium in the name of WELSPUN-SPML-WABAG Consortium vide a joint venture agreement dated 21st April, 2011 with a view to bid for and execute the subject project. The Petitioner No. 1 is the leading member of the said Consortium. The Respondent Nos. 2 and 3 are also Public Limited Companies registered under the provisions of the Companies Act, 1956. The Respondent Nos. 2 and 3 have formed Consortium in the name of R. K. Consortium. The said Consortium was one of the bidder and has been declared as preferred bidder for the project of the Respondent No. 1 Corporation.
4) The Respondent No. 1, with a view to meet the growing demand of water in the Corporation Region, decided to develop and augment the source of water supply and internal water distribution by means of Design, Build, Finance, Operate and Transfer (DBFOT) project, on a public private partnership basis. Respondent No. 1 issued the Request for Proposal Documents (RFP) on 28 th February, 2011 inviting the proposals/bids from various bidders. The Petitioners obtained copy of the said RFP and expressed their interest in the said project by submitting a Bank Guarantee to the extent of `13.50 crores Page 4 of 67 ::: Downloaded on - 09/06/2013 18:39:08 ::: Jvs. wp6584.11 on 19th April, 2011, as bid security. The Petitioners then submitted the technical proposal and financial proposal on 21 st April, 2011 as per the requirements of the RFP documents. The Petitioners assert that even though their bid qualified the technical qualifications, yet they were left out from consideration, at the stage of financial evaluation. According to the Petitioners, once their bid had qualified the technical proposals, the Respondent No. 1 could not have left out the Petitioners from consideration for evaluation of financial qualifications, but was obliged to consider the financial proposals of the Petitioners, as per the RFP in accordance with clauses 27.2.e, 27.2.f, 27.3, 27.4 and 27.5. As per clause 27.2.e of the RFP, the scheme for allocation for marks with respect to financial proposal have been specified. The Respondent No. 1, for selecting the preferred bidder, was obliged to compute and allot marks as per clause 27.2.e and the bidder with the lowest equity IRR was to be rated highest in terms of clause 27.3 of the RFP.
Further, as per clause 27.4 of the RFP, the bidder with the lowest operation and maintenance and management cost per KL was to be rated highest. Similarly, as per clause 27.5, the bidder quoting the lowest revenue grant, shall be rated highest.
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5) The bid given by Respondent No. 1 was evaluated and
the Petitioners' bid was completely left out from consideration at the financial evaluation stage. That was on account of the decision taken by the Standing Committee of Respondent No. 1, in its meeting dated 25th May, 2011. The reasons, in support of the said decision, as can be discerned from the minutes of the said meeting, is as follows:
"....... However, during the meeting of contractor with the consultant in the financial statement of M/s. Welspun Infrastructure Ltd. As the capital fund of Rs. 1150 crore funds was asked from the Municipal Corporation in the beginning year as their inclination is towards usual (EPC) contract system and as stated in the tender the bidder was asked for 84 months instead of 34 years when it was 30 years for completing commissioning and transferring the scheme/project.
Similarly, M/s. Welspun Infrastructure Ltd. In the meeting held with the Advisor/consultant had shown the demand of water supply in the financial structure and had shown the capacity of supplying water 60% less. As the said capacity is being contrary to the Standards of Government of India and the target mentioned in the tender by the Mira Bhayander Municipal Corporation and as the overall financial calculation is not as per the rules and financial criteria of the tender, the same was not considered. The advisor and the Committee in their report had suggested that for the said reason and for the financial evaluation the tender of M/s. Welspun Infrastructure Ltd. Should be declared as not eligible....."
6) Principally, this decision of the standing committee of Respondent No. 1 is the subject matter of challenge in this Petition Page 6 of 67 ::: Downloaded on - 09/06/2013 18:39:08 ::: Jvs. wp6584.11 and upon quashing and setting aside the same, consequential reliefs have been prayed by the Petitioners, referred to earlier.
7) The Petition has been resisted by the Respondent No. 1 by filing affidavit of Suresh Dashrath Wakode, the Executive Engineer of Respondent No. 1 dated 14 th November, 2011. In the reply affidavit, it is stated that the Petitioners have erroneously assumed that their financial bid was not considered. It is asserted that the Petitioners' financial bid was duly considered and was found totally unacceptable, by the Corporation. It is then stated that the Petition involves disputed questions of fact, which cannot be decided in Writ Jurisdiction. It is then stated that, considering the growing demand of water, the Corporation decided to develop and augment the source of water supply and internal water distribution, by means of DBFOT project on Public Private Partnership basis, as the capital expenditure projected was about `1200 crores and the Corporation was not in a position to allocate that amount due to shortage of funds. Thus, the financial capital expenditure was to be made by the private bidder, who had to complete the project in preparatory period. The preparatory period of the project was to start and the bidder was supposed to maintain the project for next 30 years and collect the water charges. Since the amount, to be collected from the citizens, by the contractor, would be Page 7 of 67 ::: Downloaded on - 09/06/2013 18:39:08 ::: Jvs. wp6584.11 inadequate in return of the capital expenditure of the bidder, the bidder was permitted to submit accounts viability amount, to be reimbursed by the Corporation.
8) As regards the procedure, the affidavit asserts that as per clause 27.2, after the technical proposals submitted by the various bidders were to be evaluated by a Bid Evaluation Committee (BEC) constituted by Respondent No. 1, those bidders, who would secure 75 or more marks for the evaluation of their technical proposals, were to be considered as qualified bidders and the financial proposals of only such technically qualified bidders were to be considered for evaluation/award of the project. The affidavit states that the financial proposals submitted by the qualified bidders were to be evaluated in accordance with clauses 27.2.e, 27.2.f, 27.3, 27.4 and 27.5. After referring to the said procedure, the affidavit asserts that the technical bids, submitted by the bidders through E-Tendering, in connection with the RFP in question, were opened by Respondent Corporation for scrutiny, on 21st April, 2011, in the presence of the authorised representatives of the bidders. The technical evaluation and scrutiny of those bids was completed on 26 th April, 2011 in accordance with the prescribed criteria in the RFP. During the technical evaluation, three bidders were found acceptable, including the Petitioners' herein. The Page 8 of 67 ::: Downloaded on - 09/06/2013 18:39:08 ::: Jvs. wp6584.11 affidavit asserts that the Respondent Corporation opened the financial bids of three short listed bidders, i.e. of the Petitioners, Ramky-Konark and NCC on 26th April, 2011 in the presence of representatives of the bidders. Thereafter, clarifications were sought from the bidders, including the Petitioners, in respect of doubts arising about financial modeling and underlying assumptions of the bid.
9) The affidavit then adverts to the doubts arising out of the financial modeling and underlying assumptions of the Petitioners' bid.
The first reason is that the Petitioners, instead of seeking viability gap funding every year for project of 30 years, had sought entire capital cost of project for initial years. This defeats the very purpose of inviting the project on BOT basis and as the Corporation did not have amount of `1150 crores. If the Corporation had sufficient funds, it would have carried out the project on EPC basis and would have opted for management contract on much lower price. Thus, the Petitioners' bid was found totally unacceptable. Further, the Petitioners had put internal rate of return at zero percent. The Petitioners had no record of Philanthropy. It is stated that the Petitioners had done that with a view to get advantage in marks to be alloted as per clause 27.3. It was also not clear as to how much Page 9 of 67 ::: Downloaded on - 09/06/2013 18:39:08 ::: Jvs. wp6584.11 amount the Petitioners were to invest and from where said huge amount of ` 1150 crores would be raised at zero percent. It is stated that the bid of the Petitioners was therefore considered as mischievous and unacceptable. The third factor stated in the reply affidavit is that the Petitioners have quoted operation and maintenance cost at the rate of ` 30 per KL but, failed to give composition thereof. It is then stated that the Petitioners had clarified pursuant to query of Respondent Corporation that the said rate composed of cost pertaining to raw water charges, electricity charges, chemical costs, maintenance costs, water management and distribution cost, administration overheads, salaries, other miscellaneous expenses plus amount calculated to recover their capital back from the project. The Petitioners, however, did not give any percentage and/or weightage of said costs. The Petitioners further did not give figures to justify the rate of ` 30 per KL. The Petitioners claimed that with variation in water supplied, the total revenues and costs calculated in the financial Model shall vary which was not reflected in the financial model supplied in the bid. It therefore appeared that rate quoted by Petitioners was designed to give them advantage in marks to be alloted as per clause 27.4, but were liable to change at wish of Petitioners. The affidavit then asserts that the Corporation found that the financial bid of the Page 10 of 67 ::: Downloaded on - 09/06/2013 18:39:08 ::: Jvs. wp6584.11 Petitioners left huge scope for ambiguity. The Corporation further found that it was not possible to pay the Petitioners in the initial years itself and it would defeat the very rights of floating project on DBFOT basis. For that reason, the bid of the Petitioners could not be accepted. The affidavit asserts that the Committee was of the opinion that the Petitioners' bid was not a bonafide bid and was desperate bid designed to get advantage of shortcomings in the evaluation procedure and that the said bid will defeat the entire bidding process of floating contract on DBFOT basis. Therefore, the Corporation rightly decided not to accept the Petitioners' financial bid as the same was found to be inherently flawed and mischievous and for that reason, the comparative chart, to compare the same with other two bidders, was rightly not prepared. In substance, the stand of the Respondent No. 1 is that the Petitioners were not completely kept out of financial qualification evaluation but, their bid was duly considered and found to be unviable and flawed.
10) The affidavit then adverts to the importance of the Water Supply Scheme undertaken by the Respondent Corporation. It is intended to provide water to its citizens in desired quantity and quality with minimum losses. However, the Petitioners, while explaining the Page 11 of 67 ::: Downloaded on - 09/06/2013 18:39:08 ::: Jvs. wp6584.11 model to the Corporation, contended that over all ratio of volume of water supply have been considered 60% throughout the concession period. That means in the first year of concession period after commissioning of the scheme of 200 MLD only 125 MLD of water will be supplied by Petitioners against water demand of 186 MLD and in final year of concession, Petitioners would be supplying 180 MLD water against installed capacity of 310 MLD water. Thus, the Petitioners were not able to meet the requirement of water. Further, the Petitioners, in their financial bid sought preparatory period of 84 months, whereas, Respondent Nos. 2 and 3 sought 36 months.
Therefore, if the Petitioners' bid were to be accepted, it would result in depriving citizens for a period of 4 more years for supply of water. It is stated that the bid submitted by the two other bidders was therefore found to be more beneficial to the Corporation and thus, declared Respondent No. 3 to be the preferred bidder, after following due process. It is asserted that the entire process was transparent and fair and was in complete format with the procedure indicated in the RFB and law.
11) The Petitioners filed rejoinder affidavit and refuted the claim of the Respondent No. 1. While reiterating its stand that once the Page 12 of 67 ::: Downloaded on - 09/06/2013 18:39:08 ::: Jvs. wp6584.11 Petitioners had cleared the technical evaluation, the Committee was obliged to assign appropriate marks for each of the factor to be considered at the stage of financial evaluation and on the basis of comparative marks so given, the preferred bidder has to be chosen.
But, by no standards, the Committee could completely disregard the Petitioners' financial bid and more so, on the grounds noted in the impugned Resolution. According to the Petitioners, the Respondent No. 1 cannot give additional reasons for justifying the decision of the Committee, other than the ones mentioned in the Resolution of the Standing Committee. The Respondent No. 1 can succeed or fail only on the basis of the said reasons alone. According to the Petitioners, on fair reading of the Resolution of the Committee, only three reasons have been noted for declaring the Petitioners as ineligible. The first is that the Petitioners had asked for upfront amount of `1150 crores in the initial years, which was not consistent with the DBFOT contract.
Secondly, the preparatory period mentioned by the Petitioners is of 84 months instead of 36 months. Thirdly, the capacity of supplying water 60% less is contrary to the standards of the Government of India and the requirement mentioned in the tender. No other reason can be reckoned for examining the controversy or to uphold the impugned decision of the Committee.
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12) As regards the above said three factors, the rejoinder
affidavit reiterates the petitioners' stand. It is also submitted that if there was any doubt with regard to any of the above factors, the Petitioners should have been given opportunity to renegotiate their bid, as was done in the case of R. K. Consortium, by the Corporation. It is stated that the Respondent No. 1 has admitted that there were shortcomings in the evaluation procedure. It is stated that the committee rejected the bid of the Petitioners at the threshold with a view to avoid awarding marks to the Petitioners' bid for financial proposal, in accordance with the RFP. That was discriminatory and arbitrary conduct of the Committee. The Petitioners have denied that the initial expenditure was to be made by the preferred bidder, who had to complete the project in the preparatory period or that the preparatory period was to start when the bidder was to maintain the project for the next 30 years and collect the water charges. The Petitioners have relied upon clauses 15, 4(c)(i) and 17 of the Concession Agreement. With regard to the reason of upfront payment in the initial years, the Petitioners assert that the RFP, particularly the format of the financial proposal does not specify that the revenue grant/support is to be claimed on annual basis or on upfront basis or that, if the revenue grant is sought on the upfront basis, the bid would Page 14 of 67 ::: Downloaded on - 09/06/2013 18:39:08 ::: Jvs. wp6584.11 be disqualified/rejected. Therefore, it was open to the bidders to bid in whatever manner they deemed fit. The RFP format, therefore, was vague and subjective and disregarding the Petitioners' bid on that count was arbitrary and discriminatory. Further, the Petitioners should have been given opportunity to negotiate and modify their financial proposal, as was done in the case of R. K. Consortium. Although, the reasons stated in the reply affidavit that the Petitioners have quoted a zero percent IRR to derive an advantage in getting marks to be alloted as per the clause 27.3 of the RFP, that reason is not specifically stated in the impugned Resolution of the Standing Committee of Respondent No. 1. The Petitioners assert that the RFP does not, at any place, require that the bids with zero percent IRR would be disqualified/rejected. The Respondent No. 1 was not concerned with the Petitioners' business policy and that could, in any case, be no ground to reject the Petitioners' bid. The Petitioners assert that they have disclosed the amount to be invested. The source of funding have been clearly provided in the financial model submitted by the Petitioners. From that financial model, interest rate considered is at 12%. The Petitioners were also placing reliance on letter of comfort dated 20th April, 2011 from lender (IDBI Bank), which was to provide for funding of ` 1100 crores. The Petitioners assert that they had merely Page 15 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 quoted the Equity IRR at zero percent. According to the Petitioners, their bid or financial proposal was more viable and the Petitioners ought to secure full 45 marks alloted for IRR, as per clause 27.2.e of the RFP; and in that case, the Petitioners would emerge as preferred bidder. Only for that reason, the Committee avoided allotting marks to the Petitioners by disqualifying and declaring them ineligible. Further, the Petitioners had already clarified the doubts and queries raised by the Respondent No. 1. After that clarification, the Petitioners did not receive any further query instead later on came to know that the Petitioners' bid has been totally disregarded on the ground that the Petitioners were found to be ineligible at the stage of financial evaluation.
13) Respondent No. 3 filed reply-affidavit sworn by Amar Ramchand Jethani, C.E.O, dated 5th January, 2012. It is stated that the petition has become infructuous, as the Committee has already found Ramky-Konark Consortium as preferred bidder for awarding the contract vide Resolution dated 25th May, 2011. It is then stated that the petition suffers from delay and laches. For, petition has been filed on 26th July, 2011 to challenge the decision of the Committee of respondent No. 1 dated 25th May, 2011. It is then stated that the Page 16 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 petitioners had full knowledge about the rejection of tender as far back as on 25th May, 2011. It is then stated that the petition is not bona fide and/or abuse of process of law. Respondent No. 3 has then adverted to the relevant facts and asserted that the process followed by respondent No. 1 was free, fair, transparent and reasonable. The petitioners' financial proposal was evaluated, and that too, by expert bodies, and found to be not conducive for the project, for which reason, it was rejected. Respondent No. 3 has refuted the allegations made by the petitioners in the writ petition and the rejoinder-affidavit. It is submitted that the opinion of the Committee on the evaluation of bids cannot be made subject-matter of judicial review. Respondent No. 3 has asserted that the petition is devoid of merits and ought to be dismissed.
14) The petitioners have filed rejoinder-affidavit to the reply filed by respondent No. 3. Amongst others, it is submitted that respondent No. 3 has sought to rely upon confidential and privileged report of some consultant and advisory team of respondent No. 1, which respondent No. 1 itself has neither referred to nor relied upon.
It is stated that the fact that respondent No. 3 has access to the confidential reports and records of respondent No. 1 demonstrates the Page 17 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 close nexus between the officials of respondent No. 1 and respondent No. 3. The petitioners have denied that the writ petition has become infructuous as alleged. The petitioners have also denied that they had full knowledge about the rejection of their bid as far back as on 25 th May, 2011. It is asserted that, until the filing of reply-affidavit of respondent No. 1 on November 14, 2011, respondent No.1 had never communicated to the petitioners about rejection of the petitioners' bid or awarding of the contract to R.K. Consortium. The petitioners, however, came across a newspaper report on 28 th May, 2011 in the Loksatta newspaper, which report suggested that the project has been granted by the Corporation to R.K. Consortium. The petitioners, therefore, made enquiries with the Corporation and upon enquiries on 9th June, 2011, the petitioners through their advocate addressed notice to respondent No. 1 and called upon respondent No. 1 to re-consider its bid, carry out the financial evaluation and allocate points / marks in terms of RFP or, in the alternative, issue necessary clarifications to the RFP and call for fresh bids. The petitioners' advocates then addressed another notice dated 12th July, 2011 to respondent No. 1. Since no reply was received, an application under the Right to Information Act was also made for furnishing the copy of the order / notes of the Standing Committee containing the impugned decision specifying that Page 18 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 the petitioners' financial proposal has been disqualified. In substance, it is stated that the petitioners explored all possible avenues before filing of the writ petition without further loss of time. Accordingly, the petitioners have refuted the allegation that their petition suffers from delay and laches. On merits, the petitioners have reiterated the stand taken in the writ petition and the rejoinder-affidavit filed in response to the reply-affidavit of respondent No. 1.
15) The writ petition was extensively heard on 23 rd February, 2012, as can be discerned from the order of that date. The Court passed a speaking order noting the arguments of both the sides. In the context of the argument of the petitioners that a strange procedure for evaluating the financial bid of the petitioners not formulated in the tender document, and which procedure was not consistent with the stipulation in clause 27.2(e), etc., the Court called upon the Corporation to articulate on affidavit its response to the Court that the procedure adopted by the Corporation is sustainable in law, though the procedure stipulated in clauses 27.2(e), 27.3., 27.4 and 27.5 has not been followed. This is noted in paragraph 6 of the said order.
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16) Pursuant to the liberty to file further affidavit, respondent
No. 1 has filed additional affidavit sworn on 13 th March, 2012 by Suresh Dashrath Wakode, Executive Engineer of respondent No. 1.
In this additional affidavit, while referring to clauses 26 and 26.2 of RFP, respondent No. 1 has asserted that it is clear that before detailed evaluation by allotment of marks, it is necessary to consider and determine that the bid is substantially responsive to the requirements of the RFP document, after the bidder provides clarification and/or substantiation required by Corporation to determine responsiveness.
The additional affidavit then refers to the benchmark prescribed by the Ministry of Urban Development Department, Government of India, in respect of water supply schemes. It provides that the per capita water supply should not be less than 135 litres per day. The petitioners, in their financial proposal, however, made estimates taking demand at 100 litres per capita per day. Thus, the bid was not responsive to the stated requirements.
17) It is then stated that the Corporation had asked queries vide letter dated 4th May, 2011 to determine responsiveness of petitioners' bid to the requirements on tender document. Vide query No. 3, the petitioners were called upon to give detailed break-up of Page 20 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 operation and maintenance base cost for per k.l. of water supplied from source to consumer, including bulk water management cost, distribution management cost and raw water and technical cost and to form basis for Operational Support Grant as per Business Plan. The petitioners failed to give any break-up and/or particulars in that behalf.
The petitioners merely stated that Operational Support Grant is a Bid Variable, Thus, the basis for quoting is a function of all the variables affecting the project, including but not limited to the recovery of capital cost, the demand and the operation and maintenance costs and servicing the debt holders of the Company and returns of the equity invested. According to respondent No. 1, this response was found to be vague answer, as no details and break-up as required were furnished. It is sated that the petitioners treated the demand as a parameter of cost, but the said demand considered for calculation was much below requirements of tender document. Therefore, the result was bound to be lower and could not be compared with others who have made calculations on the basis of required demand.
18) The additional affidavit further states that clause 14 of tender document deals with financial proposal. It is noted that the financial plan comprises of viable financing plan for the duration of the Page 21 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 project as well as bidder's proposal for recovering the investment made towards construction of the project. As per clause 27.2d, the financial proposal comprising Business Plan and other detailed information in respective formats is to be evaluated by Bid Evaluation Committee. The stage of allotment of marks will come only after the proposal and business plan is considered and found viable as well as responsive to tender requirements. It is asserted that Format 25 prescribed by tender document makes it clear that Corporation was not bound to accept the lowest or any bid it received. Evaluation of business plan cannot be a mechanical exercise which can be completed by allotment of marks. It is asserted that only after business plan and other detailed information is found viable, selection can be made by allotment of marks.
19) It is then stated that, as per clause 33.1 of tender document, the Corporation reserves the right to accept or reject any bid, and to annul the bid process and reject all bids, at any time prior to award of contract, without thereby incurring any liability to the affected bidder or bidders or any obligation to inform the affected bidder or bidders of the grounds for Corporation's action. It is asserted that the Corporation has acted fairly and reasonably while not selecting the petitioners' bid for detailed evaluation by allotment of marks.
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20) The petitioners have filed rejoinder to the aforesaid
additional reply-affidavit filed by respondent No. 1. The petitioners have refuted the claim of respondent No. 1, and assert that reliance placed on clause 26.2 is completely misplaced and untenable. The determination contemplated in the said clause is to be carried out prior to evaluation of the technical proposal of the bidders; and that the petitioners were already held as qualified bidders for opening of the financial bids. The financial bids of all bidders, including of the petitioners, were also opened on that understanding. As regards the benchmark prescribed by the Ministry of Urban Development Department, Government of India, the petitioners assert that the service level benchmarks are merely a mechanism for measuring and monitoring the service provider's performance and are mere performance indicators and ought not to be treated as binding under law nor are to be adhered to as statutory requirement. Further, these purported benchmarks have nowhere been referred and/or relied by respondent No. 1 in the RFP or otherwise, but respondent No. 1 has raised the same. It is stated that the said factor cannot be determinative to test the petitioners to be responsive or otherwise. In any event, even if the petitioners have assumed a minimum of 100 lpcd, it should not be assumed that the petitioners intend to supply less Page 23 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 than what is required under applicable laws from time to time. The petitioners further assert that the benchmark for efficiency in collection of water charges is 90%. The bid originally submitted by R-K Consortium allocated a collection efficiency of 45%, as opposed to the stipulated 90% service level benchmark. The R-K Consortium, during re-negotiation, raised the benchmark to 90%. If similar opportunity was given to the petitioners, they would have given suitable offer. But, it was completely wrong to totally disregard the petitioners' bid on the assumption that they were ineligible on this count. The petitioners have also dealt with the other contentions relating to clauses 27.2d and 14 of the RFP of respondent No. 1 as incorrect and devoid of merits. According to the petitioners, on harmonious interpretation of the said clauses, marks are required to be allocated to the petitioners who were amongst the three competing bidders after the individual bids were opened on 26th April, 2011. That has not been done by the Committee, which is the manifest error committed by it in the decision-
making process.
21) We have heard the counsel for both sides. The counsel for the petitioners, while relying on the impugned Resolution of the Committee of respondent No.1, submits that the same refers to only Page 24 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 three aspects to treat the petitioners as ineligible. He submits that the respondents cannot be allowed to rely on any other reason stated for the first time on affidavit before this Court. He submits that only three reasons have weighed with the Committee of respondent No. 1.
Firstly, that the bid of the petitioners was for upfront payment in the initial years itself. Secondly, the preparatory period mentioned by the petitioners is not consistent with the tender specification. Thirdly, the water supply ratio specified by the petitioners is also not consistent with the tender requirement. The learned counsel, relying on the statement in the tender document and the bid specification, contends that the Committee of respondent No. 1 misdirected itself in treating the petitioners as ineligible. As a matter of fact, the eligibility of the petitioners has already been considered at the stage of technical evaluation. Only three bidders were found qualified in that behalf.
After evaluation of the technical qualifications, the Committee, as per the tender clauses, was obliged to allocate comparative marks in respect of different heads to the qualified bidders and on the basis of the marks obtained by the said bidders, the preferred bidder must be selected. Going by the scheme of the clauses in the tender document, it was not open to the Committee to totally disregard the bid of the petitioners without allocating any marks for the concerned head as Page 25 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 required under clause 27.2.d. In substance, it was argued that the Committee has committed manifest error in interpretation and correct application of the relevant clauses of RFP; and that is a germane ground for interfering in exercise of Writ Jurisdiction, especially when the offer given by the petitioners was more favourable and there was substantial difference in the offer given by the stated preferred bidder.
The learned counsel has demonstrated that each of the reason noted in the impugned Resolution of the Standing Committee, which is the basis for disregarding the bid of the petitioners, is untenable. He submits that the argument of respondent No. 1 that the petitioners' bid was found to be non-responsive is without any merits. In support of this argument, he has placed reliance on the decision of the Apex Court in the case of W.B. State Electricity Board v. Patel Engineering Co. Ltd., (2001) 2 SCC 451 (paragraphs 24 and 25) and Sorath Builders vs. Shreejikrupa Buildcon Limited & anr., (2009) 11 SCC 9 (paragraphs 22 and 26).
22) The counsel for respondent No.1-Corporation, however, submits that the project was a special project of its own kind - design, build, finance, operate and transfer - as the Corporation did not have sufficient funds to finance the same, which involved expenditure of Page 26 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 around `1300 crores. He submits that the petitioners' bid was disregarded, being ineligible, having found that the petitioners wanted recovery of the entire project costs upfront at the initial stage itself.
The Corporation was within its right to reject and disregard such bid.
During arguments, he has emphasised that the petitioners had provided for zero percent IRR. That itself was indicative of a freak and absurd offer given by the petitioners. The opinion of the Advisory Committee was that the offer given by the petitioners was not financially viable on that count. He submits that even this reason has been noticed in the impugned decision, if read in its proper perspective. He relied on other circumstances referred to in the reply-
affidavit and additional affidavit of respondent No. 1, but in all fairness accepts that those reasons cannot be culled out from the impugned Resolution of the Committee. He, however, submits that, besides the three reasons referred to by the petitioners, the Corporation was justified in asserting that the bid founded on zero percent IRR is also a valid reason and has been reckoned in the impugned Resolution of the Committee. He submits that, with regard to the doubts raised by the Corporation, the petitioners gave vague reply, which was also considered by the Expert Committees, and, on the basis of their recommendations, the Standing Committee took final decision of Page 27 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 treating the petitioners as ineligible. He has relied on the decision of the Apex Court in the case of Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517 (paragraph 33), in support of his submission that the Corporation was within its rights to reject the bid given by the petitioners. He submits that, even with regard to the preparatory period specified in the bid, the same was not consistent with the conditions / requirements given in RFP. He submits that even the requirement regarding water supply percentage was a good ground for treating the bid given by the petitioners as non-responsive.
23) The counsel for respondent No. 3 has supported the impugned decision of the Standing Committee. He submits that the said decision has been taken after the evaluation done by the Project Consultant Committee, Evaluation Committee, MMRDA and IIT. All experts were unanimous that the bid given by the petitioners was non-responsive. The petitioners were given opportunity to reply and explain the queries posed by the Corporation. The petitioners, however, gave vague replies. From the financial statements given by the petitioners, it was obvious that the petitioners would be taking loan and had assumed interest on such loan at the rate of 12% per annum.
Even then they have provided for zero percent IRR. It is, thus,
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contended that the bid given by the petitioners was non-bankable and non-responsive bid. He submits that, considering the nature of project, the question of upfront payment at the initial stage of the project claimed by the Petitioners itself was a non-responsive bid. Further, the petitioners have maintained their stand even in the writ petition that they were expecting upfront payment at the initial stage of the project itself. Even with regard to the reason noticed by the Committee of respondent No. 1 of non-responsive bid on account of excessive preparatory period, the counsel invited our attention to the averments in the writ petition. He submits that the period referred to in the bid given by the petitioners is not consistent with the conditions in RFP document. He submits that even the offer given by the petitioners is not consistent with the general conditions in respect of water supply efficiency level. Thus, it would be a non-responsive bid and rightly discarded by the Corporation. He submits that the petitioners have not furnished any business plans and have not produced the same even before the Court. He has relied on the decision of the Apex Court in the case of Raunaq International Ltd. vs. IVR Construction, (1999) 1 S.C.C. 492 (paragraphs 10 to 17), and pressed for dismissal of the petition.
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24) We shall first answer the preliminary objection raised by
the respondents. The first objection is that the petition involves
disputed question of facts. We are not inclined to accept this
submission. Inasmuch as, the challenge in this petition is to the decision-making process. Further, it is founded on facts which are indisputable or not disputed. The factual basis on which the petitioners have assailed the decision of the Standing Committee of Respondent no.1 Corporation is not disputed in the reply affidavit. In that, the issue raised by the petitioners, inter alia, is that, the petitioners have been completely kept out from consideration at the stage of financial evaluation of the bid without following the norm and procedure specified in the tender document regarding allocation of marks for different specified heads. That fact is not in dispute. The Respondents, in particular respondent no.1 Municipal Corporation, instead, has asserted that the Committee, for the reasons recorded in the impugned decision, was satisfied that the petitioners were ineligible. Whether, in the fact situation of the present case, that approach was permissible or otherwise is, therefore, a question of law.
By no stretch of imagination it can be said to be a disputed question of fact. If the petitioners succeed in their argument that this approach of the Committee was impermissible, inevitably, the decision of the Page 30 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 Committee will have to be set aside - because of jurisdictional error committed by the Evaluating Committee and the Standing Committee.
In our opinion, therefore, the argument regarding petition raises disputed question of fact is devoid of merits.
25) The next question raised by the Petitioners is that the petition suffers from delay and laches. There is no doubt that the petition has been filed on 26th July 2011 to challenge the decision of the Committee of Respondent no.1 dated 25 th May 2011. The Respondents have asserted that the Petitioners had complete knowledge about the rejection of their tender document soon after 25 th May 2011, and yet the Petitioners did not file the Writ Petition in right earnest. This assertion has been refuted by the Petitioners by filing rejoinder-affidavit. It is denied by the Petitioners that they had knowledge about rejection of their tender. The Petitioners have asserted that the Respondent no.1, at no point of time informed the Petitioners about the impugned decision. However, the Petitioners, for the first time, came to know about the decision of the Respondent No. 1 to give contract to Respondent Consortium, after the newspaper report appeared on 28th May, 2011. Soon thereafter, the Petitioners made inquiries and also sent two successive legal notices, i.e., 9 th Page 31 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 June, 2011 and 12th July 2011. As no reply was received from the Corporation, the Petitioners then rushed to this Court on 26 th July 2011. Nothing is brought on record by the Respondents, in particular Respondent no.1 Municipal Corporation, to contradict the stand taken by the Petitioners that the impugned decision including of exclusion of Petitioners' bid from consideration at financial evaluation stage being ineligible, was never communicated to the Petitioners directly or otherwise. In that case, it is not possible to assume that the Petitioners had knowledge about the impugned resolution/decision dated 25th May 2011. We would, instead, accept the stand of the Petitioners that the Petitioners became aware about the said decision only through the newspaper report which appeared on 28th May 2011.
The Petitioners then made enquiries and also sent legal notices to the Respondent no.1 Corporation. As no corrective steps were taken nor any reply was received by the Petitioners, the Petitioners decided to approach this Court on 26th July 2011. Thus, it is not a case of intentional inaction in filing of Writ Petition in earlier point of time. We are, therefore, not impressed with the preliminary objection that the petition suffers from delay and laches.
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26) The next ground urged by the Respondents is that the
petition has become infructuous. Even this contention does not
commend to us. The Petitioners have asked for more than one relief.
If the Court was to accept the grounds urged by the Petitioners for quashing and setting aside of the impugned decision of Respondent no.1 being arbitrary, discriminatory and likely to cause substantial loss to the public exchequer, it is open to the Court to grant the reliefs as prayed by the Petitioners as it is, or to mould the same as may be warranted in the fact situation of the present case.
27) Now turning to the merits of the case, the first question is whether the Respondents, in particular Respondent no.1 Corporation, can be permitted to urge grounds which are not explicitly mentioned in the impugned resolution of the Standing Committee. We have no hesitation in taking the view that by now, it is well established position that the reasons recorded in the decision alone can be reckoned for justifying the decision of the authority. It cannot be supplemented with additional reasons. Accordingly, the Respondents, in particular Respondent No.1, can support the decision of its Committee only on the basis of the reasons explicitly recorded in the impugned decision.
In paragraph no.4 above, we have extracted the relevant portion of the Page 33 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 minutes of the meeting, which is the basis to discard the Petitioners' bid at the financial evaluation stage. Accordingly, we would confine our discussion to the reasons so recorded by the Committee.
28) We shall now examine the said minutes. On a bare perusal of the extracted portion of the said minutes, it is seen that the first reason noted is that the Petitioners have asked for capital fund of ` 1150 crores from the Municipal Corporation in the beginning year.
That means, the inclination of Petitioners was towards usual (EPC) contract system and not DBFOT with private public participation. The second reason noted is that the Petitioners have asked for 84 months instead of 36 months for preparatory period which is not consistent with the tender condition. The third reason noted is that the Petitioners in the meeting held with the advisor or the consultant had shown the demand of water supply 60% less. This water supply capacity was contrary to the standards of Government of India and the target mentioned in the tender by the Corporation. These three points are clearly spelt out from the impugned decision. The Respondent Corporation, however, relies on the latter part of the extracted portion of the minutes to assert that the Petitioners were considered ineligible because their bid provides for zero percent IRR. Such offer Page 34 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 presupposes that it is a freak and unviable offer. This argument is made on the basis of the observation in the minutes, which refers to the fact that the overall financial calculation is not as per the rules and financial criteria of the tender. According to the Corporation, this observation takes within its fold the reason now canvassed before the Court that the bid submitted by the Petitioners providing for zero percent IRR was freak and unviable offer. We, however, agree with the Petitioners that the Respondents cannot be permitted to urge new ground - founded on zero percent IRR offer of the Petitioners. For, the stated observation in the said minutes, is, obviously, in the context of the first reason recorded in the minutes about the Petitioners claim of upfront payment of capital fund of ` 1150 crores by the Corporation at the initial years of the contract itself. We say so because, the said observation is found in a sentence which is linked to the reasons expressly noticed in the earlier part of the minutes. The original minutes in vernacular reads thus:
ßlnj {kerk gh Hkkjrh; ljdkjP;k ekukadukis{kk o fejk&HkkbZanj egkuxjikfydsus fuosnsr ueqn dsysY;k mnnh"Vkis{kk foijhr vlY;kus ,dw.k vkfFkZd vkdMseksM gh fufonsrhy fu;e o vkfFkZd fud"kkr cl.kkjh ulY;kus fopkjkr ?ksryh ukgh-Þ Page 35 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 The translation thereof would be as follows :
"As the said capacity is being contrary to the Standards of Government of India and the target mentioned in the tender by the Mira Bhayander Municipal Corporation and as the overall financial calculation is not as per the rules and financial criteria of the tender, the same was not considered."
Accordingly, the Respondents cannot be permitted to take advantage of this observation, which, however, as noted earlier, is, linked to the reasons explicitly mentioned about the financial issue i.e., claim of upfront payment at the initial years of the contract itself.
29) A Priori, the additional reason pressed into service by the Respondent no.1 Corporation to justify the impugned decision of its Committee on the basis of Petitioners 0% IRR offer, cannot be taken into account; and the controversy will have to be decided essentially on the basis of the three reasons unambiguously noted in the impugned decision. Whether those reasons are germane and tangible to declare the petitioners ineligible will have to be considered.
30) Before we examine the challenge in respect of the three reasons referred to above, we may first deal with the decision of the Apex Court in Raunaq International Ltd. v. I.V.R. Construction Ltd. & Ors., (1999) 1 SCC 492, on which, reliance is placed by the counsel Page 36 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 for respondent No. 3. Emphasis was placed on paragraphs 9 to 16 thereof, which read thus:-
"9. The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount importance are commercial considerations. These would be:
(1) the price at which the other side is willing to do the work; (2) whether the goods or services offered are of the requisite specifications;
(3) whether the person tendering has the ability to deliver the goods or services as per specifications. When large works contracts involving engagement of substantial manpower or requiring specific skills are to be offered, the financial ability of the tenderer to fulfil the requirements of the job is also important;
(4) the ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality;
(5) past experience of the tenderer, and whether he has successfully completed similar work earlier; (6) time which will be taken to deliver the goods or services; and often (7) the ability of the tenderer to take follow up action, rectify defects or to give post contract services.
Even when the State or a public body enters into a commercial transaction, considerations which would prevail in its decision to award the contract to a given party would be the same. However, because the State or a public body or an agency of the State enters into such a contract, there could be, in a given case, an element of public law or public interest involved even in such a commercial transaction.
10. What are these elements of public interest ? (1) Public money would be expended for the purposes of the contract; (2) The goods or services which are being commissioned could be for a public purpose, such as, construction of roads, public buildings, power plants or other public utilities. (3) The public would be directly interested in the timely fulfilment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. Poor quality of work or goods can lead to tremendous public hardship and substantial financial outlay either in Page 37 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 correcting mistakes or in rectifying defects or even at times in re-doing the entire work - thus involving larger outlays or public money and delaying the availability of services, facilities or goods. e.g. A delay in commissioning a power project, as in the present case, could lead to power shortages, retardation of industrial development, hardship to the general public and substantial cost escalation.
11. When a writ petition is filed in the High court challenging the award of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the court Would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the court is satisfied that there is a substantial amount of public interest, or the transaction is entered into mala fide. the court should not intervene under Article 226 in disputes between two rival tenderers.
12. When a petition is filed as a public interest litigation challenging the award of a contract by the State or any public body to a particular tenderer, the court must satisfy itself that party which has brought the litigation is litigating bona fide for public good. The public interest litigation should not be merely a cloak for attaining private ends of a third party or of the party bringing the petition. The court can examine the previous record of public service rendered by the organisation bringing public interest litigation. Even when a public interest litigation is entertained the court must be careful to weigh conflicting public interests before intervening. Intervention by the court may ultimately result in delay in the execution of the project The obvious: consequence of such delay is price escalation. If any re-tendering is prescribed, cost of the project can escalate substantially. What is more important, ultimately the public would have to pay a much higher price in the form of delay in the commissioning of the project and the consequent delay in the contemplated public service becoming available to the Page 38 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 public. If it is a power project which is thus delayed, the public may lose substantially because of shortage in electric supply and the consequent obstruction in industrial development. If the project is for the construction of a road, or an irrigation canal, the delay in transportation facility becoming available or the delay in water supply for agriculture being available, can be a substantial set back to the country's economic development. Where the decision has been taken bona fide and a choice has been exercised on legitimate considerations and not arbitrarily, there is no reason why the court should entertain a petition under Article 226.
13. Hence before entertaining a writ petition and passing any interim orders in such petitions, the court must carefully weigh conflicting public interests. Only when it comes to a conclusion that there is an overwhelming public interest in entertaining the petition, the court should intervene.
14. Where there is an allegation of mala fides or an allegation that the contract has been entered into for collateral purposes, and the court is satisfied on the material before it, that the allegation needs further examination, the court would be entitled to entertain the petition. But even here, the court must weigh the consequences in balance before granting interim orders.
15. Where the decision-making process has been structured and the tender conditions set out the requirements, the court is entitled to examine whether these requirements have been considered. However, if any relaxation is granted for bona fide reasons, the tender conditions permit such relaxation and the decisions is arrived at for legitimate reasons after a fair consideration of all offers, the court should hesitate to intervene.
16. It is also necessary to remember that price may not always be the sole criterion for awarding a contract. Often when an evaluation committee of experts is appointed to evaluate offers, the expert committee's special knowledge plays a decisive role in deciding which is the best offer. Price offered is only one of the criteria. The past record of the tenderers, the quality of the goods or services which are offered, assessing such quality on the basis of the past performance of the tenderer, its market reputation and so on, all play an important role in deciding to whom the contract should be awarded. At times, a higher price for a much better Page 39 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 quality of work, can be legitimately paid in order to secure proper performance of the contract and good quality of work-
which is as much in public interest as a low price. The court should not substitute its own decision for the decision of an expert evaluation committee."
(emphasis supplied)
31) The Apex Court has adverted to the seven considerations, which are of paramount importance for a commercial transaction. In paragraph 11, the Court has dealt with the factors to be kept in mind by the Court while entertaining the challenge to the award of contract by a public authority or the State. The Court must be satisfied that there is some element of public interest involved in entertaining such a petition.
There can be no difficulty in accepting this settled proposition, but, in the present case, the challenge is about the arbitrary and discriminatory approach of the Committee in excluding the petitioners from consideration even after having qualified at the technical evaluation stage. That was impermissible in law; and contrary to the tender conditions. As a matter of fact, the observations in paragraphs 11 and 12 of the reported decision are in the context of a petition filed as a public interest litigation. In the present case, it is the competing bidder who has filed the present petition complaining about the arbitrary and discriminatory approach of the Committee. The challenge is not merely on the basis that he has offered relatively lower rates.
The grievance, however, is about total exclusion of the petitioners from Page 40 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 consideration at the financial evaluation stage in the teeth of the legal position that, once the bidder qualifies the technical evaluation stage, his bid cannot be disregarded but has to be considered along with the other offers on merits as per the procedure specified in RFP. As a result of complete exclusion of the petitioners from consideration at the financial evaluation stage in arbitrary and discriminatory manner, only one bidder remained in the field with no option but to award contract to that bidder, i.e., respondent Nos. 2 and 3 / R.K. Consortium. In other words, the challenge in the present petition is to the decision-making process adopted by the Committee of respondent No. 1.
32) The petitioners have justly relied on the decision of the Apex Court in W.B. State Electricity Board v. Patel Engineering Co. ltd. & Ors., (2001) 2 SCC 451. In paragraph 24 of the said decision, the Apex Court observed that where bidders should fulfil pre-
qualification alone are invited to bid then, adherence to the instructions cannot be given a go-by by branding it as a pedantic approach.
Otherwise, it will encourage and provide scope for discrimination, arbitrariness and favouritism which are totally opposed to the rule of law and our constitutional values. The Court noted that the very purpose of issuing rules / instructions is to ensure their enforcement Page 41 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 lest the rule of law should be a casualty. Further, relaxation or waiver of a rule or condition, unless so provided under the ITB, by the State or its agencies in favour of one bidder would create justifiable doubts in the minds of other bidders, would impair the rule of transparency and fairness and provide room for manipulation to suit the whims of the State agencies in picking and choosing a bidder for awarding contracts as in the case of a distributing bounty or charity. That approach must be eschewed.
33) Suffice it to observe that the challenge in the present writ petition is a formidable challenge, and, if accepted, the petition ought to succeed. The counsel for the petitioners had also relied on the decision of the Apex Court in Sorath Builders v. Shreejikrupa Buildcon Ltd. & Anr., (2009) 11 SCC 9. In paragraph 22 of the said decision, the Apex Court has adverted to the exposition in Raunaq International (supra) that where rational non-discriminatory norms have been laid down for granting of tenders, a departure from such norms can only be made on valid principles. This decision also refers to the exposition of Patel Engineering (supra).
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34) Keeping in mind the legal principle expounded in the
abovestated decisions - with regard to the first argument of the
petitioners that, once the petitioners had qualified the technical evaluation stage, the only option was to process their bid by allocation of marks for the relevant heads as required to be done at the financial evaluation stage. At the financial evaluation stage, the norm and procedure prescribed in the RFP does not permit the Committee to completely exclude the bider from consideration. That would not be a case of want of eligibility, but one of preferring one bidder against the other bidders because of relatively better offer given by him. This argument will have to be answered, keeping in mind the terms specified in RFP, in particular clauses 26 and 27. The same read thus:-
26 Examination of 26.1 The Bid Evaluation Committee (BEC), Bids and constituted by MBMC shall evaluate Determination 26.2 Bids.
of Prior to the detailed evaluation of bids, responsiveness the Bid Evaluation Committee will determine whether each Bid (a) meets the eligibility criteria as stipulated in RFP; (b) has been properly signed; (c) is accompanied by the required Bid Security; (d) is substantially responsive to the requirements of the bid document; and (e) provides any clarification and/or substantiation that MBMC may require to determine responsiveness.Page 43 of 67 ::: Downloaded on - 09/06/2013 18:39:09 :::
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27. Evaluation and 27.1 Bid Evaluation Committee will evaluate comparison of and compare only the Bids determined bids to be eligible in accordance with clause 2 27.2 Technical proposal and other details in the respective formats furnished by the bidder will be evaluated by the BEC in the light of stipulations in the RFP.
a. The committee will evaluate the bids from the point of view of Managerial Resources, Technical and Financial Capability.
b. Presentation:
Bidders will be required to demonstrate through presentation the salient ig features of their proposal in the office of MBMC. The venue date and time of such presentation will be intimated to the bidders later.
The maximum points to be allotted to the Technical Proposal will be:i) Technical Capability 10 ii) Relevant experience 10 iii) Liaison Acumen 5
iv) Methodology and Work Plan 20
v) Safety, Reliability and Project Management 5
vi) Implementation of integrated Information System to address customer services, asset register, monitoring of non-revenue water levels 10 vii) Financial Capability 20 viii) Key Personnel 10
ix) Communication and public awareness programme 10 Total 100 Those Bidders securing 75% or more will be held as qualified Bidders.
c. Financial bids received in accordance with clause 19.3 from qualified bidders Page 44 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 will be opened in the presence of bidders those who choose to remain present.
d. The Financial Proposal comprising Business Plan and other detailed information in respective format will be evaluated by the Bid Evaluation Committee.
e. The Bidder quoting the maximum weighted score shall be ranked as a preferred Bidder:
i) Preparation of corporate business plan 5
ii) Internal rate of return of igEquity
iii) Methods for improving user charges collection efficiency 45 5
iv) Operation & Maintenance and management remuneration Base cost*per KL 25
v) Financial structuring of the project 5
vi) Revenue grant required from mbmc 15 Total 100 For quoting base cost of O & M Bidder may consider I. Indexation of 5% every two years for calculation II. Electricity charges may be considered as Rs.5.5/Unit.
III. Raw Water charges may be considered as Rs. 0.45/1000 liters Financial bids shall remain valid for the period of 360 days after the opening for bid submission.Page 45 of 67 ::: Downloaded on - 09/06/2013 18:39:09 :::
Jvs. wp6584.11 f. The Financial Proposal comprising Business Plan and other detailed information in respective formats will be evaluated by the Bid Evaluation committee.
27.3 Bidder with least Equity IRR shall be rated highest.
27.4 Bidder quoting lowest O & M, management cost per KL shall be rated highest.
ig Bidder quoting lowest revenue grant shall be rated highest.
27.5 A bidder who scores maximum point will be selected as "Preferred Bidder" Conditional Financial offers will be rejected.
27.6 If the Bidders want to quote any special conditions and / or deviations from the stipulations made in the Bid documents the same should form part of the technical Proposal indicating clearly the technical / financial implications of the said conditions in form 7A. The Evaluation Committee may, without any obligation, consider the same while evaluating the bids for selection of qualified Bidders. Any Bidder quoting any special condition and/or deviations from the Bid documents shall as a condition to the Evaluation Committee considering such special condition or deviation shall be required to submit a conforming proposal in accordance with the Bid documents."Page 46 of 67 ::: Downloaded on - 09/06/2013 18:39:09 :::
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35) On a bare perusal of clause 26, it envisages that the Bid Evaluation Committee (BEC) constituted by the Corporation is expected to evaluate bids received before the prescribed date. Clause 26.2 makes it amply clear that the BEC is expected to inter alia determine as to whether the respective bid makes the eligibility criteria as stipulated in RFP including whether the bid is substantially responsive to the requirements of the bid document and provides any clarification and/or substantiation that the Corporation may require to determine responsiveness. Once this exercise is undertaken by the BEC and it considers the given bid as qualifying in all respects and determination of responsiveness, the next stage is of evaluation and comparison of such bids as per clause 27. During this inquiry, the BEC in the first place evaluates and compares all the bids determined to be eligible in the earlier stage of inquiry (under clause 26.2). The technical proposal and other details in the respective formats furnished by the bidder is evaluated by the BEC in the light of stipulations in the RFP. The Committee is expected to evaluate the bids from the point of view of managerial resources, technical and financial capability. The bidders are given opportunity to demonstrate through presentation the salient features of their proposal, at the specified time and place. After that, points are assigned to the technical proposal given by the Page 47 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 respective bidder which is the basis for comparison of the bids. The total points to be allocated are 100 for nine different heads referred to in clause 27.2.b. The bidder who secures 75% or more is then held qualified bidder. After that the financial proposals received in accordance with clause 19.3 from qualified bidders are opened in the presence of these bidders. The financial proposal given by the respective bidder comprising business plan and other detailed information in the respective format is then evaluated by the BEC and weighted score is assigned for each of the six heads referred to in clause 27.2.e.
36) In the present case, we are not concerned with the other stages. For, in this case the question is: once the petitioners were treated as qualified by the BEC upon examination and determination of responsiveness as per clause 26.2, was it open to the Committee or for that matter the Corporation, to completely disregard the bid without following the procedure specified in clause 27 of the RFP? The answer is an emphatic "No". Inasmuch as once the bid passes the muster of Clause 26 and is found to be eligible as per Clause 26.2, then the committee is expected to evaluate and compare the managerial resources, technical and financial capability of the proposal Page 48 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 of the respective eligible bidders in the manner specified in Clause 27.2, in particular, and not otherwise.
37) It is common ground that in this case the BEC did not follow the procedure specified in clause 27.2.b, of allocating points to the technical proposal for nine different heads of the concerned bidder or for that matter the maximum weighted score as per clause 27.2.e for six different heads to the financial proposal of the Petitioners' bid.
Without following the prescribed procedure, the petitioners' proposal has been completely kept out from consideration, essentially on the three points adverted to earlier. Those three reasons, even if relevant, cannot legitimise the failure of the Committee to allocate weighted score for six different heads qua the financial proposal of the eligible bidders. It is common ground that the petitioners' financial bid along with that of two other bidders was opened on 26 th April, 2010. It is nobody's case that the financial proposal of the Petitioners was wrongly opened. That presupposes that the Petitioners' bid had passed the scrutiny regarding the determination of responsiveness as per clause 26.2. Inasmuch as, the financial bids are opened as per clause 27.2.c only after the evaluation of the bid by the Committee and being found that the concerned bidder has secured 75% or more Page 49 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 points in respect of the technical proposal. In absence thereof, the question of opening the financial bid of the bidder does not arise.
38) As per clause 27.2.c, once the financial proposal is opened, the BEC has no other option but to assign weighted score in respect of six different heads specified in Clause 27.2.e, pertaining to financial offer such as preparation of corporate business plan; internal rate of return of equity; methods for improving user charges collection efficiency; operation and maintainance and management remuneration Base cost per KL; financial structuring of the project; and lastly revenue grant required from MBMC.
39) We may assume that the question regarding the upfront funds demanded at the initial years by the petitioners may be covered in clause 27.2.e.vi. Similarly, the issue regarding excessive preparatory period or deficit water supply may be covered within clauses 27.2.e.iv, which deals with operation and maintenance. Even so, considering the procedure explicitly specified in the RFP document, it was not open to the BEC to completely disregard the bid given by the petitioners. The BEC was under bounden duty to allocate weighted score with regard to the matters relevant to be considered at Page 50 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 the stage of evaluation of financial proposal. Non-compliance of the presecibed procedure has vitiated the decision of the BEC and for the same reason of Standing Committee of the Corporation, which is based on the recommendation of BEC. It will be useful to advert to the exposition of the Apex Court in the case of Patel Engineering (supra) wherein the Apex Court observed that where bidders who fulfill pre-
qualification alone are invited to bid, then adherence to instructions cannot be given a go-by by branding it as a pedantic approach.
Otherwise, it will encourage and provide scope for discrimination, arbitrariness and favourtism which are totally opposed to the rule of law and our constitutional values. The Court noted that the very purpose of issuing rules/instructions is to ensure their enforcement lest the Rule of Law should be a casualty.
40) A priori, the only course open for us is to set aside the impugned resolution of the Standing Committee as also all the steps taken on the basis of the said resolution. Instead, the parties will have to be relegated before the BEC with direction to BEC to evaluate the financial proposal given by the eligible bidders by adopting procedure prescribed under Clause 27.2.e, de novo. While doing so, the BEC may have to assign suitable weighted score for the specified heads Page 51 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 qua the petitioners' proposal. It is open to the Committee to give opportunity to the bidders to clarify the doubts on any matter, if any;
and then assign suitable weighted score. Suffice it to observe that the bid of the Petitioners cannot be completely kept out from consideration after it has cleared the stages including of Techincal Proposal, specified under clauses 26.2 and 27.2.b. It is not open to the committee to go back to the earlier stages regarding determination of eligibility of the bidders - even if it had failed to allot points to the Technical Proposals of the concerned bidder to determine eligibility, as per clause 26.2.b. Indeed, it is open to the Corporation to scrap the entire tender process and issue fresh tender on same or modified conditions by removing the doubts or shortcomings in the present tender document. As a matter of fact, the Respondent No. 1 has admitted in the reply affidavit that the Petitioners have made provision with intent to take undue advantage of the drawbacks in the RFP documents. That itself is good reason to scrap the entire process and issue fresh tender with just, clear, unambiguous and proper conditions.
But that is the prerogative of the Corporation.
41) Here, we may place on record that the tender process had commenced with the issuance of public notice in February, 2011 and Page 52 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 the bids were submitted on the assumption that the offer was valid only for a limited duration. That period (360 days after opening for bid submission), has already expired long back. We, therefore, called upon Respondent Nos.2 and 3/R.K. Consortium to clarify as to whether upon rejection of this petition and allotment of contract to them, they would still abide by the bid given by them or otherwise. The Counsel for the said respondents, on instructions, stated that since the said respondents have not withdrawn their offer inspite of lapse of time of about one year, there is no question of the said respondents resiling from the offer given by them. This clarification was sought because, if the said respondents were to withdraw from their offer because of lapse of time, the Corporation may be left with no option but to issue fresh public notice inviting tenders from the interested persons as there is no other eligible bidder as of now, and that would obviate answering the controversy in this Petition. As aforesaid, the Corporation as well as Respondent Nos. 2 and 3/R.K. Consortium have urged that they intend to take the impugned tender process to its logical end, we were left with no option but to decide the matter.
42) Considering the above, we would now turn to the argument of the Petitioners with the first reason noted in the impugned Page 53 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 Resolution of the Standing Committee of the Corporation. We have already adverted to the pleadings of the parties as well as the arguments canvassed before us in the context of the criterion reckoned by the Corporation in the impugned resolution. According to the petitioners, the respondents have not been able to show from the tender documents that the same explicitly provide that the bid must be for deferred payment or funding of the project by the Corporation for 30 years. Since nothing in this behalf has been explicitly mentioned in the tender document, the petitioners could give their own offer as may be deemed fit. We are agree with this contention. At any rate, the tender could not have been rejected or completely disregarded from consideration merely because of the pattern of funding by corporation expected by the petitioners. Further, we are in agreement with the grievance made by the Petitioners that if there was any doubt, the committee ought to have sought clarification from the Petitioners including to demonstrate that the offer given by them was beneficial to the Corporation and also allowed them (Petitioners) to negotiate.
Suffice it to observe that, from the RFP document, it is not as if deferred payment or funding of the project by the corporation for 30 years was an inexcusable, non-condonable or non-negotiable condition. As aforesaid, it was open to BEC to allocate suitable Page 54 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 weighted score in the context of head (vi) of Clause 27.2.e pertaining to revenue grant required from MBMC. The Petitioners are relying on the documents in the form of financial proposal in format 22 and 25 read with Clause 14.2 of the Instructions to Bidders, to justify the bid given by them. Thus, the Petitioners' bid could not have been completely kept out from consideration or rejected at this stage of financial evaluation, on the stated reason.
43) That takes us to the second reason quoted in the impugned resolution. In that, the preparatory period asked by the petitioners was for 83 months instead of 36 months. According to the petitioners, this issue cannot be reckoned at the stage of evaluation of financial proposal of the bidders. We accept this submission. That matter could have been considered at the stage of examination and determination of the responsiveness of the bid as per clause 26.2, if it was considered as one of the eligibility criteria stipulated in RFP. But, at the stage of evaluation of the financial proposal, the EBC could only allocate weighted score towards the head - Operation and maintenance, as per Clause 27.2.e.iv. In the present case, admittedly, the financial Page 55 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 proposal of the bidders were already opened. That pre-supposes that the stage of evaluation of the technical proposal as per clause 27.2.b is already over and that the technical proposal submitted by the petitioners was treated as qualified bid. As already held above, the next stage is to allocate weighted score to the financial bid/proposal submitted by the eligible bidders comprising business plan and other detailed information in respective format, as per clause 27.2.e. We may assume that the factor under consideration could be allocated weighted score under the head operation and maintenance, as per clause 27.2.e.iv. However, the financial proposal cannot be completely kept out from consideration merely because the preparatory period is in excess of the period specified in RFP document.
44) As a matter of fact, the petitioners, in the first place, contend that, the preparatory period specified by them in the format is in consonance with the period mentioned in clause 2.1.3 of the instructions (at page 35 of the paper book) to bidders in RFP document. However, that is a matter which has to be evaluated and examined by the EBC in the first place. Suffice it Page 56 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 to observe that from the tender document, it does appear that the period of concession has been clearly stated as 30 years extendable to 5 years (including preparatory period of 5 years from the date of signing agreement). The format 7B (at page 242 of the paper book) of the bid submitted by the Petitioners, regarding exceptions and deviations, it refers to Clause 4 of the RFP Vol. III concerning the preparatory period. The petitioners have stated that they have assumed a preparatory period of full 5 years for the purpose of quoting the Revenue Support required from MBMC. Further, in case the actual preparatory period is shorter than the assumed period of five years, necessary adjustments shall be made by the petitioners such that they are favourable to MBMC.
45) The respondents are relying on paragraphs 4 and 5 of clause 2.1.3 of the instructions to bidders (at page 35 of the paper book) in RFP document which reads thus:
"2.1.3. Operation and Maintenance ...
...
The details of Operations and Maintenance requirement of the Project are given in Schedule I of Draft Concession Page 57 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 Agreement. The Project shall be commissioned for commercial operation within 3 years i.e. 36 months from the date of signing Concession Agreement and will continue to be operated, maintained and managed till end of concession period.
The COD for project shall be 36 months from the Agreement Date."
46) The respondents have also relied on clause 15 (at pages 159/160 of the paper book) of the concession agreement which mentions the preparatory period applications. No doubt, the concession agreement is also a part of the RFP. As aforesaid, the period of concession specified in RFP is 30 years extendable to 5 years (including preparatory period of 5 years from the date of signing agreement). The clauses from the instructions to bidders in the RFP relied by the respondents refer to the commissioning of the project for commercial operation which is within three years i.e., 36 months from the date of signing concession agreement. The petitioners have assumed preparatory period of full 5 years on the basis of the period of concession referred to in clause 1 under heading "introduction"
contained in the RFP (at page 29 of the paper book) which unambiguously provides for preparatory period of 5 years from Page 58 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 the date of signing agreement. In that case, no fault can be found with the petitioners for having assumed the preparatory period of full 5 years. There can be no debate that the preparatory period will have to be understood from the stipulation under heading "period of concession" contained in the table in the opening part of the RFP (at page 29 of the paper book) under heading "introduction". Besides, in the concession agreement, which is part of the RFP document, clause 4 thereof (at page 146 of the paper book), it deals with the preparatory period and concession period. Sub Clause (a) provides that the period between the date of execution of the concession agreement and appointed date is referred to as the preparatory period. Sub-
clause (b) provides that the concession period shall commence on the appointed date and continue for a period of 30 (thirty years), except where terminated or extended in accordance with the provisions of the agreement (concession period). The preparatory period, therefore, is different from the concession period. The preparatory period is between the date of execution of the agreement and the appointed date. On the appointed date, the concession period would commence and continue for a Page 59 of 67 ::: Downloaded on - 09/06/2013 18:39:09 ::: Jvs. wp6584.11 period of 30 years. Such being the stipulations in the RFP document coupled with the remark of the petitioners in format 7B regarding proposed deviation with regard to the clause 4 of RFP regarding preparatory period, we fail to understand as to how that can be the basis to completely disregard the bid given by the petitioners. At best, it was open to the BEC to assign suitable weighted score to the petitioners with regard to the proposed deviation regarding preparatory period, if any. In any case, the issue could have been negotiated with the petitioners as was done with respondent Nos.2 and 3 R.K. Consortium by the Corporation. During the negotiations, all aspects could have been considered and on the basis of response and explanation given by the petitioners, the Committee could have evaluated the financial proposal by allocating suitable weighted score. Once again, that is a matter which will have to be left to the discretion of the BEC.
47) As in the case of the first reason, even with regard to the second reason pertaining to the excessive preparatory period referred to in the impugned resolution, we would leave all other Page 60 of 67 ::: Downloaded on - 09/06/2013 18:39:10 ::: Jvs. wp6584.11 questions open to be considered by the BEC and/or the Standing Committee, as the case may be. We express no final opinion in that behalf.
48) The third reason noted in the impugned resolution is about the deficiency of water supply ratio. According to the Corporation, the demand of water supply in the financial structure and the capacity of the water supply shown by the petitioners 60% less was not compliant with the tender condition. The respondents are relying on service level benchmark prescribed by the Ministry of Urban Development Department, Government of India in respect of the water supply schemes which provides that per capita water supply should not be less than 135 litres per capita per day. The petitioners in the financial proposal, however, have made estimates taking demand at 100 litres per capita per day. According to the petitioners, the water supply ratio was not an eligibility condition. Further, none of the bidders were in a position to meet the said criteria now stated in the affidavit. It is an utopian benchmark which is unachievable. Admittedly, even respondent Nos.2 and 3 R.K. Consortium had not offered to achieve the said target. The said respondents, however, modified their offer during negotations. Notably, the petitioners were never invited for Page 61 of 67 ::: Downloaded on - 09/06/2013 18:39:10 ::: Jvs. wp6584.11 negotiations and if they were to be so invited, even they could have assured of achieving the target given by the Respondents Consortium.
In any case, it was not open to completely disregard the bid given by the petitioners as it was not an eligibility criteria at all.
49) We find force in the argument of the petitioners that in the RFP document, there is nothing to indicate that the water supply level has been made the eligibility criteria. Further, the fact that the petitioners have not made provision for the benchmark of 90% specified by the Central Government, would not make their bid non-
responsive. In any case, the BEC having proceeded until the stage of opening of financial bids pre-supposes that the petitioners had fulfilled the requisite conditions and in particular, the eligibility criteria. The water level criteria ought to have been reckoned at the stage of technical proposal itself, as per clause 27.2.b; and for that the committee should have allocated comparative points to the concerned bidder regarding their technical proposal. In any case, the petitioners ought to have been invited for negotiation, as was done in the case of Respondent Nos.2 and 3 - to given them opportunity to offer better water supply ratio. As a matter of fact, for the same reason, even the bid of Respondent Nos. 2 and 3 ought to have been discarded as in Page 62 of 67 ::: Downloaded on - 09/06/2013 18:39:10 ::: Jvs. wp6584.11 the case of the petitioners. Indeed, the said Respondents have given modified offer bid of providing higher water supply ratio only at the stage of negotiation. But, the said Respondent Nos.2 and 3 have not given any "guarantee" to achieve the prescribed water supply ratio.
Moreover, no query was made to the petitioners regarding water supply ratio. Taking an overall view of the matter, therefore, we are in agreement with the argument of the petitioners that the said reason to completely disregard the bid given by the petitioners is a manifest error committed by the Committee bordering on arbitrariness and discrimination.
50) We have already held that the additional reason given in the reply affidavit by the Corporation about freak and absurd offer of the Petitioners because of zero percent IRR, cannot be considered as that is not part of the reasons recorded in the impugned resolution.
Even then, we would test the efficacy of the said reason. In the first place, the impugned resolution makes no reference to the zero percent IRR as the ground for completely discarding the petitioners' bid.
Assuming that the Respondent Corporation is justified in relying on the general observation that the overall financial calculation is not as per the rules and financial criteria of the tender as justification for this Page 63 of 67 ::: Downloaded on - 09/06/2013 18:39:10 ::: Jvs. wp6584.11 reason, the question is whether that could be made the basis for completely disregarding the bid given by the petitioners. We would assume that the petitioners have restated their stand in this regard even in the writ petition but have elaborated their stand in the rejoinder affidavit. The petitioners have denied that they have quoted zero percent IRR to derive advantage in the marks to be allotted as per clause 27.3 of the RFP. They have asserted that the RFP does not indicate that the bidders with zero percent return would be disqualified/rejected. The petitioners further contend that the corporation is not concerned with the investment policy of the petitioners. It is then clarified in the rejoinder affidavit that the petitioners have merely provided for equity IRR at zero percent.
It is the case of the petitioners that since the Committee found it inconvenient to give full 45 marks towards the head internal rate of return of equity which would result in petitioners emerging as the preferred bidder, the petitioners were declared ineligible.
51) We are in agreement with the submission of the petitioners that the RFP document does not even remotely indicate that the bidder quoting zero percent IRR of equity would Page 64 of 67 ::: Downloaded on - 09/06/2013 18:39:10 ::: Jvs. wp6584.11 be treated as ineligible. In the first place, if that were to be the eligibility criteria, it ought to have been determined at the initial stage of examination of bids and determination of responsiveness under clause 26.2. In the present case, as found earlier, even the stage of evaluation of technical proposal under clause 27.2.b is over and the financial proposals given by the bidders were opened, as per clause 27.2.c. After opening of the financial bid, the committee was obliged to allocate weighted score for the concerned heads mentioned in clause 27.2.e. After seeking necessary clarification from the bidders, the BEC could assign suitable weighted score for the head Internal Rate of Return equity under clause 27.2.e.ii. However, the offer cannot be kept completely out from consideration - much less treated as disqualification or ineligibility of the bidder, which is the purport of the reason recorded in the impugned resolution. This does not mean that the petitioners should necessarily secure full 45 weighted score because of having quoted zero percent IRR.
That exercise has to be undertaken by the BEC on the basis of its subjective satisfaction. We leave all questions in that behalf open to be considered as and when occasion arises. Suffice it to Page 65 of 67 ::: Downloaded on - 09/06/2013 18:39:10 ::: Jvs. wp6584.11 observe that the reason weighed with the Committee of treating the bid submitted by the petitioners as ineligible on the ground that it provides for zero percent IRR cannot be sustained and is bordering on discrimination and arbitrariness. Instead, the BEC was obliged to follow the procedure of allotting appropriate weighted score to the petitioners against the head Internal Rate of Return equity as per clause 27.2.e.ii r/w 27.3 and evaluate the financial proposal of the eligible bidders before declaring one of the eligible bidders as the preferred bidder.
52) Considering the above, we are inclined to allow this writ petition by quashing and setting aside the opinion of the Bid Evaluation Committee and, in particular, of the Standing Committee impugned in this petition to disqualify/reject the petitioners' bid or financial proposal and also all steps taken by the Corporation on the basis of the declaration that R.K. Consortium is the preferred bidder in respect of the subject contract. Having set aside the impugned decision of the Standing Committee and the consequential steps taken by the Corporation, we are inclined to direct Respondent No.1 Corporation and/or its Page 66 of 67 ::: Downloaded on - 09/06/2013 18:39:10 ::: Jvs. wp6584.11 Committee to consider the petitioners' bid or financial proposal, carry out the financial evaluation and allocate points/marks in accordance with the RFP document and then take decision on the basis of the marks secured by the competing bidders before declaring one of them as the preferred bidder.
53) Needless to observe that it is open to Respondent No.1 Corporation to drop the subject tender process and instead invite fresh tenders with regard to the subject contract for developing the source of water supply and augmentation of water distribution network in its area of operation, by issuing public notice on such terms and conditions, as may be advised.
54) Rule made absolute on the above terms with no order as to costs.
55) Petition is disposed of accordingly.
(S. S. Shinde, J.) A. M. Khanwilkar, J.)
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