Calcutta High Court (Appellete Side)
M/S. Dnb Transport & Anr vs The Coal India Limited & Ors on 5 April, 2019
Author: Debangsu Basak
Bench: Debangsu Basak
z 1
74. 05.04.
Sd3 2019 W.P. 6706 (W) of 2019
M/s. DNB Transport & Anr.
Versus
The Coal India Limited & Ors.
Mr. Srijib Chakraborty
Mr. Sunny Nandy
...for the petitioners.
Mr. Bhaskar Prasad Banerjee
...for the respondent nos. 3, 4 & 5
Mr. Probal Kr. Mukherjee Mr. Suhrid Sur ...for the respondent no.7 The petitioners assail e-Tender dated February 9. 2019 undertaken by the Eastern Coalfields.
Learned advocate appearing for the petitioners submits that, the terms and conditions of the e-Tender requires a reverse auction to be undertaken. According to him, the eligible contractors are allowed to participate in the tender process by quoting their rates. The rates are first looked at without considering whether the bidders are technically qualified or not. The reverse bidding starts from the lowest bid received. After such a reverse bidding takes place, the lowest bidder is awarded the contract after verifying the technical qualification. He submits that, as the technical qualifications of the bidders are not checked by the authorities before the commencement of the reverse bidding process, a lot of unscrupulous bidders are entering into cartels amongst themselves to drive out bona fide participants. Under the process a cartel is formed where such cartel files an abnormally low bid by a person who is not technically qualified to bid. One member of the cartel also bids a suitably low rate. Under the tender process, when the bids are open, the technical qualifications are not checked. The reverse bidding starts z 2 from the abnormally low rate quoted. Bona fide bidders are ousted from the bid process as there are none to match the abnormal low rate. The tender is then given to the next highest tenderer who is a member of the cartel.
In the present case, learned advocate appearing for the petitioners submits that, the two bidders entered into an unholy nexus, allowed one of such bidder to quote an abnormally low rate so that no bidder is in a position to or participate in the reverse bidding process. Thereby, the other bidder is allowed to take the contract. He draws the attention of the Court to the various terms and conditions of the tender process which allows that, in the event of default of L-1 tenderer to have the requisite qualifications, the contract will be awarded to the L-2 bidder. In this process, he submits that, the private respondents was 6 and 7 obtained a contract under another tender process. In the present case also, there is a bid of -39% by the respondent No. 6 who has no qualification to participate in the tender. The next lowest bid is that of the respondent No. 7. In this process, the only financial implication of the respondent No. 7 is only a sum of Rs.3,00,000/- which is the earnest money deposit. Under the tender conditions the earnest money deposit may be forfeited. So far as the lowest bidder is concerned, the lowest bidder is not technically qualified to participate in the bid process. This is known to the respondent Nos. 6 and 7. Therefore, the lowest bidder cannot be given contract. In such process, the bona fide tenderers are being prevented from participating in the tender.
Learned advocate appearing for the ECL authorities z 3 submits on instructions that, the lowest tenderer participating in the tender process does not have the requisite qualification to participate in the tender process.
Learned senior advocate appearing for the private respondent no.7 submits that, the petitioners have no locus to challenge the tender process. The petitioners are not within the zone of consideration as he is the fifth lowest tenderer. No right of the petitioners stands affected. Moreover, the terms and conditions of the tender process requires the ECL authorities to award the contract to the next highest bidder who is the respondent no.7 herein. Therefore, there is no impediment in the ECL in granting the tender in favour of the respondent no.7.
As noted above, the e-Tender initiated by ECL dated February 9, 2019 is under challenge. The tender is for transportation of sand. It invites bids from registered contractors of ECL having Digital Signature Certificate issued from any agency authorized by Controller of Certifying Authority, Government of India. The eligibility of the bidder is prescribed in Clause 8 which is as follows :-
"Eligible Bidders: The invitation for bid is open to all registered bidders of ECL under SOR including an individual, proprietorship firm, partnership firm, company having eligibility to participate as per the eligibility criteria stipulated below and having Digital Signature Certificate (DSC) issued from any agency authorized by Controller of Certifying Authority (CCA), Govt. of India and which can be traced up to the chain of trust to the Root Certificate of z 4 CCA."
A bidder participating in the tender process is required to submit its bid. The bid is on a reverse auction basis. Instructions to bidder at Clause 11 of the tender conditions specifies as to how the reverse auction would take place. The terms and conditions of the bidders for evaluation system and evaluated by the bidder in Clause 14 of the terms and conditions which stipulates the evaluation by evaluator. Clause 14 Sub-Clause 'E' and 'F' thereof are as follows:
"14. Evaluation by Evaluator:
E. In case the L-1 bidder fails to submit requisite documents online as per Discount Bid or if any of the information/declaration furnished by L-1 bidder online is found to be wrong by Tender Committee during evaluation of scanned documents uploaded by bidder, which changes the eligibility status of the bidder, then his bid shall be rejected and EMD of L-1 bidder will be forfeited.
F. In case the L-1 bidder is rejected due to noncompliance of confirmatory documents then the L-2 bidder will become L-1 bidder and confirmatory documents of this bidder shall be evaluated by TC and the process shall be followed as mentioned in clause no.A to F above."
In the present case, a member of bidders participated in the tender process. The estimated rate of z 5 the tender is Rs.2,4568030/-. One bidder quoted the same rate as that of the estimated rate. The private respondent no.7 quoted a rate which is -7.70% than the estimated rate. The respondent no.6 quoted a rate of - 39% of the estimated rate. Under the terms and conditions of the e-Tender process. The reverse auction is to commence from the rate quoted by the respondent no.6 which is -39%. There being no bidder willing to make any bid which is less than the rate quoted by the respondent no.6, the respondent no.6 is to be considered as the L-1 bidder in the tender process. The respondent no.1 was considered to be the L-1 bidder. However, on scrutiny of the documents submitted by the respondent no.6, it was found that, the respondent no.6 was not technically qualified to participate in the tender process. The next step under the terms and conditions of the tender process is to grant the contract in favour of the next highest bidder who is the respondent no.7.
Attention of the Court is drawn to another tender process in which the respondent nos. 6 and 7 participated and where the respondent no.6 and 7 adopted the same procedure as that of the subject tender process with the respondent no.6 quoting a price less than -39% of the estimated rate and the respondent no.7 quoting a rate which is less than -9.9% of the estimated rate thereby preventing the reverse auction to take place. In the present case also the respondent nos.6 and 7 successfully stalled the reverse auction process. Respondent nos. 6 and 7 prevented the bona fide tenderers in participating in the reverse tender process. The penalty of forfeiture of z 6 the earnest money deposited as stipulated in the terms and conditions of the e-Tender process is inconsequential relation to the actual benefits that the dishonest tenderers entering into such cartel stands to gain in tender process. The dramatis personae and the modus operandi involved in the two tender processes are of such stunning similarities to wish them away as coincidences.
In the facts of the present case, therefore, it would be imprudent to allow ECL to continue with the tender process as the same stands vitiated. It will be prudent for the authorities to revisit the terms and conditions of the tender process to ensure that, bona fide bidders technically qualified to participate in the tender process are afforded a level playing field. It is not for the writ Court to rewrite the terms and conditions of the tender process. However, ECL should take into account to its experience in the impugned tender process as also in the other tender process.
This order will not prevent ECL authorities from taking appropriate steps against the respondent Nos. 6 and 7.
W.P. No.6706(W) 2019 is disposed of.
No order as to costs.
Urgent certified Website copy of this order, if applied, be supplied to the parties, upon compliance of all requisite formalities.
(Debangsu Basak, J.) z 7