Bangalore District Court
Boving Fouress Limited vs Chevron Hydel Pvt. Limited on 11 January, 2016
IN THE COURT OF THE III ADDL.CITY CIVIL & SESSIONS
JUDGE, BENGALURU CITY (C.C.H.No.25).
Dated: This the 11th day of January 2016
Present: Sri.Ron Vasudev, B.Com. LL.B, (Spl),
III Addl.City Civil & Sessions Judge,
Bengaluru.
O.S.No:6145/2002
Plaintiff BOVING FOURESS LIMITED, a company
incorporated under the Companies Act,
1956, having its registered office at Plot
No.2, Phase-II, Peenya Industrial Area,
Bangalore-560058, represented by
Sri.H.L.Suresh, its Assistant Manager,
Marketing.
(By Sri. LSM, Advocate)
Vs
Defendants 1. CHEVRON HYDEL PVT. LIMITED, a
company incorporated under the
Companies Act, 1956, having its
office at 285, RPS Sheikh Sarai-I
New Delhi-110017, represented
herein by its Director Mr.N.Kanwar.
2. THE STATE BANK OF INDIA,
Industrial Finance Branch, 61,
Residency Road, Bangalore-560 025
represented herein by its Manager
Defendant-2 (DELETED)
(D1 by Sri.MBC, Advocate)
Date of Institution 5.9.2002
Nature of suit Declaration & recovery of
2 O.S.No:6145/2002
money
Date of commencement of 28.8.2009
evidence
Date on which the judgment was 11.1.2016
pronounced.
Total Duration: Years Month Days
13 4 6
(RON VASUDEV),
III Addl.City Civil & Sessions Judge,
Bengaluru.
`
JUDGMENT
This is a suit for declaration and for recovery of money.
2. The summary of the plaint averments is that; the plaintiff is engaged in the business of designing, supplying, erecting and commissioning of mini hydel projects throughout the country, that the defendant no.1 through its letter dt.10.3.2002 forwarded an invitation for bids for designing, manufacturing, assembling and erecting of turbines at Jiwa Hydel Project, Jiwa Nallah, Himachal Pradesh. In accordance with the said letter, the plaintiff obtained bid application and submitted required particulars for the tender. As per Clause-13 of the bid, the bidder was expected to provide a bank guarantee as a bid security in the prescribed form, in the name of defendant no.1, accordingly the plaintiff furnished a conditional bank guarantee for a sum of Rs.5 lakhs through the defendant no.2-banker. The bid document had provided that plaintiff shall abide by the bid for a period of 120 3 O.S.No:6145/2002 days from the date fixed for submission of the bids and it was informed that bid will be accepted till 3 p.m. on 15.4.2002 and bids will be opened on the very same day. As per the said calendar of events, the bids were opened on 15.4.2002 and since the bid offered by the plaintiff was the lowest, through the letter dt.11.5.2002 the defendant no.1 forwarded its comments and sought some information/clarifications from the plaintiff. Pursuant to it the plaintiff replied that letter on 4.6.2002 by furnishing all required information/clarifications. Thereafter also there were exchange of communications and some correspondences also took place. When the defendant no.1 requested for techno commercial discussion, the plaintiff intimated that it will attend the meeting in the last week of June 2002. Thereafter also some correspondences were made between the plaintiff and the defendant no.1, but no consensus was reached on some issues. The defendant no.1 raised several queries in its letter dt.27.7.2002 and requested the plaintiff to have fresh look in the matter and clarify its stand unequivocally by 31.7.2002 as to whether or not the plaintiff is interested in the work. The plaintiff replied the said letter also on the same day stating that its key personnel are out of country and they would be returning only in the first week of August 2002 and it would give comprehensive reply at the earliest on their return. Then the defendant no.1 through its letter dt.31.7.2002 stated that it would be waiting till 4th August 2002. Thereafter on 7.8.2002 the plaintiff replied all the points raised by the defendant no.1 and categorically stated 4 O.S.No:6145/2002 that there were number of points needing clarification prior to the settling of firm understanding between them and requested that points raised therein be confirmed in totality. Apart from that the plaintiff stated that if needed it will depute it's personnel to Delhi for mutual convenience and for technical discussion. When that was going on; negotiations and clarifications were progressing; when no contract had come into existence between the plaintiff and the defendant no.1 in the matter and also when the defendant no.1 having not awarded the contract to the plaintiff, through its fax dt.10.8.2002 (Saturday) at about 7.28 p.m, when the office of the plaintiff was closed, sent a message requesting the plaintiff to depute it's representative for a meeting at Delhi on 12.8.2002. Since the next day was non-working day (Sunday), immediately on the next working day i.e., on 12.8.2002 the plaintiff sent it's reply through fax stating that it is not possible to attend the meeting and it's Assistant Manager (Marketing) will be scheduling to Delhi in next few days. When the matter stood thus the defendant no.1 illegally, fraudulently and with an intention to enrich itself unlawfully wrote to the defendant no.2 on 12.8.2002 invoking the bank guarantee much against the guidelines contained in the bid document. That the intention of the defendant no.1 in not awarding the contract to the plaintiff within the time stipulated, calling the plaintiff for discussion on 12.8.2002 at Delhi and invoking of the bank guarantee on the same day manifestly show its mischievous, fraudulent and ulterior motives. Similarly the defendant no.2 though being aware that 5 O.S.No:6145/2002 bank guarantee furnished was conditional one, against the factual position and the request of the plaintiff not to honour the claim of the defendant no.1, enforced the bank guarantee and invoked the counter guarantee given by this plaintiff and paid Rs.5 lakhs to the defendant no.1. Therefore both are jointly or severally liable to repay the above sum. That the cause of action for the suit arose on 12.8.2002 and also when the bank guarantee was invoked by the defendant no.2 on 19.8.2002. Wherefore the plaintiff prays for declaration to declare that invocation of the bank guarantee by the defendant no.1 was illegal and not in accordance with the terms of the bank guarantee; that the invocation of the counter guarantee by the second defendant against the plaintiff was illegal; that the payment of Rs.5 lakhs by the defendant no.2 to the defendant no.1 pursuant to the invocation of the guarantee is illegal and contrary to the terms of the guarantee; to direct the defendants jointly and severally to pay a sum of Rs.5 lakhs together with future interest at the rate of 18% p.a. till payment and for such other reliefs including awarding of costs.
3. The defendant no.1 appeared and filed detailed written statement the concise content of it is as under;
that the defendant no.1 resides in Delhi, tenders for the project were prepared, invited, opened and processed at Delhi, the tender documents were prepared by the defendant-company and approved by the Indian Renewable Energy Development 6 O.S.No:6145/2002 Agency (IREDA), Government of India and the World Bank, the offices of which are located at Delhi and this dispute having arose on account of invocation of bank guarantee by the defendant no.1, which was done at Delhi and the project is located at Himachala Pradesh, the Implementation Agreement and the Power Purchase Agreement were signed by defendant no.1 with Himachala Pradesh Government and Himachala Pradesh state Electricity Board, Shimla at Himachala Pradesh etc., apparently show that no part of the transaction took place within the territorial jurisdiction of Bangalore City, therefore this court has no territorial jurisdiction to try this suit and it is hit by Sec.20 of Civil Procedure Code. The very fact that the plaintiff has approached this court shows its intention of arm twisting techniques, which it has done throughout the period of validity of the bid period. The non-committal attitude, dilatory tactics, pressurizing the defendant no.1 for additional monetary benefits and non-furnishing of essential details and others made it impossible for the defendant no.1 to finalize and award contract leaving no other option to invoke the bank guarantee. It is denied that said guarantee was a conditional one and defendant no.2 was not required to invoke the counter guarantee. All the while with its persistent non-committal attitude and its unprofessional conduct, the plaintiff made that bid did not reach the stage of finality and refused to comply the provisions of the bid document and furnish the critical technical details as per the requirement of bid and thereby prevented this defendant no.1 from accepting or 7 O.S.No:6145/2002 rejecting the bid. The entire period of validity of bid was utilized for only dilatory tactics in order to avoid the enforcement of bank guarantee. That the bid submitted by the plaintiff was found to be incomplete in many aspects and it failed to furnish all the required details, the technical specifications and conditions as required in the bid document. The main deficiencies, which were found out in the bid offered by it, did not confirm to the tender specifications. When the said discrepancies were highlighted in detail by the defendant no.1 and it sought clarifications from the plaintiff, without providing the required information, which was mandatory on the part of the plaintiff before it could enter into contract with defendant no.1, thereby delayed the commissioning of the project. It is denied that through its letter dt.4.6.2002 the plaintiff gave all the requisite information/clarifications as required by the defendant no.1. The said response of the plaintiff reflected its unprofessional attitude and the information provided by it was vague, incomplete and was not inconformity with the bid provisions. The correspondences between the plaintiff and the defendant no.1 reveal that it was almost one sided and against the efforts of the defendant no.1 to get the requisite information and clarifications from the plaintiff were ended in futile. There was hardly any response from the plaintiff. That as per the bid document there was no provision for deviation and the said fact was brought to the notice of plaintiff again and again, despite receiving such letters and reminders there was no reply of whatsoever from the plaintiff. When the defendant no.1 set a 8 O.S.No:6145/2002 time frame within which the clarifications have to be supplied by the plaintiff, it went on seeking time on one or the other reason. Especially in the letter dt.31.7.2002 the defendant no.1 clarified and wanted to know whether the plaintiff is really interested in the E & M works or not; it was also stated that if no reply is received it would be presumed that the plaintiff is not interested in the said work and the defendant no.1 would exercise its right and enforce the guarantee and inform the other agencies viz; IREDA and Ministry of Non Conventional Energy Sources, New Delhi and HIMURJA, the nodal agency under the Government of Himachal Pradesh. That a day before the due date the defendant no.1 made another attempt to remind the plaintiff vide it's letter dt.30.7.2002 about the impending expiry of time set by them. Inspite of it and the telephonic communications, the plaintiff failed to respond positively. On the expiry of the period i.e., on 31.7.2002 a fax was received from the plaintiff seeking extension of time for four days and it was conceded by defendant no.1, even at the risk of delay in finalization of the contract and commissioning of the project, despite that the plaintiff did not adhere to the extended dead line perhaps may be fully aware that after expiry of the period it can go scott free and avoid the enforcing of the bank guarantee. That is why through its letter dt.7.8.2002 the plaintiff raised new grounds for encashing the bid disclosing its feigning interest in the project which left no-doubt in the mind of defendant no.1 that entire attempt of the defendant no.1 was to delay and make sure that the period of bid 9 O.S.No:6145/2002 validity should be crossed over and it can retract from it's commitment. As per the tender document in case the period of validity of bid is not mutually extended, the bidder may refuse the request for extension without forfeiting its security. It is too obvious to note that the plaintiff's intention of tiding over the period of bid validity was only to secure his guarantee amount. It is pertinent to add here that it is a customary practice to seek affirmation from E & M contract prior to finalization and placing of order with no change in price or in the substance of the bid, as the same was provided in the ITB Clause-21.1 of the tender document and the cost of withdrawal would be nil as stated in Attachment 6A. Instead of adhering to the said specific reaffirmation and reconfirmations, the plaintiff went on claiming additional costs. That an affirmative determination is a pre- requisite for awarding of contract to the bidder as per ITB Clause-28.3 of tender document. The plea of the plaintiff that it was interested in fulfilling the terms of contract without giving its affirmation to do so is a clear indicator of it's misconduct and fraudulent intention. It's plea that matter was still being negotiated, clarifications sought and furnished, discussions were being held etc., show its mind frame. The further submission of the plaintiff that, it came to know about the reminders only on the date of expiry of the period of bid validity is yet again an intention of its misconduct. At one stage plaintiff acknowledges the receipt of information on 12.8.2002 but by another stage it submits that it had no time to reply immediately. Therefore left 10 O.S.No:6145/2002 with no option the defendant no.1 forced to encash the bank guarantee as it was convinced that plaintiff was only having game play of delaying the finalization of the contract. The defendant no.1 did not exercise the option of encashment of bank guarantee till it was fully convinced about the malafide actions of plaintiff. Wherefore the defendant no.1 submits that there is no cause of action for the suit and the alleged one is false and invented, accordingly it has prayed to dismiss the suit and in turn has prayed to award costs and damages for forcing it to re-invite the fresh bids for execution of E & M works of the project.
4. The defendant no.2 also appeared through its counsel and filed separate written statement questioning the very filing of the suit against it and contended that as the bank guarantee was unconditional, at the invoking of the guarantee by the defendant no.1, it invoked the counter guarantee issued to the plaintiff and paid that amount of Rs.5 lakhs to the defendant no.1. It further contended that it is not aware of the dispute between the plaintiff and the defendant no.1 nor it acted in haste. It submits that it was duty bound to honour the commitment made by it and it has discharged it as required under law. It further averred that in the event the defendant no.1 has committed any fraud or misrepresentation, it is a matter between the plaintiff and the defendant nao.1 to settle their dispute and this defendant no.2 is nothing to do with it, accordingly it prayed to dismiss the suit against it.
11 O.S.No:6145/20025. Based on the said pleadings my predecessors in office have framed the following issues and additional issues:
ISSUES
1. Whether the plaintiff proves that the invocation of the bank guarantee by the 1st defendant was illegal and contrary to the terms of bank guarantee?
2. Whether the plaintiff proves that the invocation of counter guarantee by the 2nd defendant against them was illegal?
3. Whether the plaintiff proves that 2nd defendant has illegally paid Rs.5,00,000/- to the 1st defendant contrary to the terms of the guarantee?
4. Whether the plaintiff proves that the defendants are liable to pay a sum of Rs.5,00,000/- to them with interest at 18% p.a.?
5. Is the plaintiff entitled to the reliefs sought for in the suit?
6. What order or Decree?12 O.S.No:6145/2002
Additional issues
1. Whether defendant no.1 proves that this court has no territorial jurisdiction to try the suit as contended in the written statement?
2. Whether defendant no.1 is entitled for any damages from the plaintiff as contended?
6. In order to prove its case plaintiff examined it's Manager (Commercial) as PW1 and got marked Ex.P1 to P15. On the other hand the defendant no.1 examined it's Managing Director as DW1 and got exhibited Ex.D1 to D31. After examining PW1 and before his cross-examination was commenced plaintiff filed I.A.No.10 u/s 151 of CPC to dismiss its claim as against defendant no.2 and after hearing the defendant no.2 and plaintiff, my predecessor in office allowed the same on 31.8.2010, as a result the suit to the extent of defendant no.2 was dismissed and it was deleted from the cause title, consequently suit claims stand confined between plaintiff and the defendant no.1 only. Heard the arguments of Sri.RS Advocate for the plaintiff and Sri.MBC Advocate for defendant no.1. Perused the written arguments filed by the defendant no.1 as well as the decisions relied by it.
7. My findings on the above issues and additional issues are as under:
13 O.S.No:6145/2002Issue No.1 - In the negative Issue No.2 - Does not survive for consideration Issue No.3 - Does not survive for consideration Issue No.4 - In the negative Issue No.5 - In the negative Addl. Issue No.1 - In the negative Addl. Issue No.2 - In the negative Issue No.6 -As per final order, for the following:
REASONS Issue No.2 & 3:
8. For the sake of convenience and in order to have an effective finding on rest of the issues, I have taken these two issues in preference to others.
9. As I mentioned supra with the filing of I.A.No.10 on 22.7.2010 to dismiss the claims against the defendant no.2 and allowing of it on 31.8.2010 resulted in the dismissal of suit against the defendant no.2, so it was deleted from the cause title. Consequently plaintiff's plaint prayer Para-23(b)(c), which were directed against the defendant no.2, stood automatically dismissed. The plaintiff having dropped its claim against the defendant no.2 obviously cannot seek any relief against it nor it needs to prove these issues 2 and 3, which are pertaining to the alleged irregularities that were committed by defendant no.2, wherefore these two issues no-longer survive for consideration, accordingly they are answered.
14 O.S.No:6145/2002Issue No.1 and 4:
10. These two issues being core and co-related, to avoid possible overlapping of discussion, I have taken them simultaneously.
11. On perusing the pleadings and rival allegations of the parties the whole dispute can be stated in few lines. According to the plaintiff when the negotiations were going on between it and the defendant no.1 towards finalization of the contract for establishment and maintenance of project at Jiwa, Jiwa Nallah, Himachal Pradesh, without affording opportunity to clarify the things, unilaterally the defendant no.1 invoked the bank guarantee thereby compelling the defendant no.2 to invoke the counter guarantee, leading to the illegal enrichment of defendant no.1 much against the terms of the bid document. On the other hand the defendant no.1 contends that it made all efforts to get information and clarification from the plaintiff towards execution of contract pursuant to the plaintiff's bid, but because of non committal attitude of the plaintiff it's efforts went in vain and in the process it lost precious time leading to delay in commissioning of the project and it was compelled to go for one more round of bid. It is the specific allegation of the defendant no.1 that though the bid of plaintiff was the lowest it was incomplete and when clarifications were sought, deviating from the terms of the bid the plaintiff went on seeking for additional 15 O.S.No:6145/2002 costs, which was impermissible and it was manifest from the conduct of the plaintiff that it had no serious intention to proceed with the project, so after providing enough opportunity to the plaintiff it was constrained to invoke the bank guarantee. Thus in addition to dismissing of the suit it has also sought for damages and costs for unnecessarily defending this suit. This defence is in addition to the preliminary objection with regard to the territorial jurisdiction of this court. In this background I have gone through the entire material made available by the parties.
12. Admittedly the correspondence regarding the project between the plaintiff and the defendant no.1 begun with offering of its bid by the plaintiff to establish the mini hydel project at Himachal Pradesh. It is undisputed that the defendant no.1 had invited bids from the local and international agencies i.e. it was an international bid and this plaintiff also sent it's bid and it was accepted as it was the lowest one. Though both sides harped much in support of their respective contentions, the whole case depends on bidding document produced at Ex.P15 and offer document submitted by the plaintiff which is marked as Ex.D2. If the offer document viz; Ex.D2 met the requirements of the bidding document, certainly it is for the defendant no.1 to show that it invoked the bank guarantee in terms of the bidding document, otherwise the very foundation of the suit would get shaken. Therefore I have concentrated more on these two crucial documents to find out whether the plaintiff is able to discharge its initial burden. If it discharges its burden then only onus shifts to 16 O.S.No:6145/2002 the defendant no.1 and court can call upon it to prove its defence.
13. According to me bidding document is a crucial document to decide the fate of this dispute. It is a very comprehensive document containing nine sections guiding the intending bidders of India and International, as to how they have to bid; what all documents they have to produce; the technical specifications they have to furnish; the forms in which the guarantee is to be offered and especially the SECTION-II, which contains the instructions to the bidders (ITB). Every Clause of the ITB has got its own prominence because they act as a torch bearer to the bidders so that there should not be any ambiguity between the bidder and the employer (defendant no.1). As per ITB Clause 5.2 the bidder is expected to examine all the instructions, forms, terms, specifications and other information in the bidding document and failure to furnish all the information required by the bidding document or submission of bid not substantially responsive to the bidding document in every respect will be at the Bidder's risk and may result in rejection of its bid.
As per ITB Clause-6.4 the pre-bid meeting was arranged by the employer/defendant no.1 inviting the bidders to get clarify the issues and to answer the quarries on any matter that may be raised at that stage, and the bidders were requested to submit their questions in writing to reach the employer not later than one week before the meeting. It was also clarified that it may not 17 O.S.No:6145/2002 be practicable at the meeting itself to answer the questions received at belated stage, but those questions and responses will be transmitted as indicated thereafter. It also conveyed that bidders have to attend the pre-bidding meeting which was scheduled as per the bid data sheet. In that background if the bid data sheet of SECTION-III (Page No.24) is gone through, one can see that in accordance with ITB Clause 6.4 the pre-bid meeting was fixed on 25.2.2002 at 11 a.m. with the details of venue. With certain intention I am referring to the said relevant clause and bid data sheet. If the plaintiff was really a serious professional engaged in the hydel project, it was expected to attend the pre bid meeting without fail to sort out any kind of doubt that might have cropped up in its mind. The Ex.D3 i.e. letter written by the plaintiff on 18.2.2002 shows that in response to the fax dt.9.2.2002 of defendant no.1 inviting to participate in the tender, the plaintiff requested for tender document by enclosing DD for Rs.5,500/-. Immediately on the very next day i.e. on 19.2.2002 as per Ex.D4 the defendant no.1 sent copy of the tender document/ Ex.P15, it shows that even before the date of pre-bid meeting, the plaintiff had enough information about its date, time and venue. Despite that as could be seen from Ex.D6, which is minutes of the pre-bid meeting held on 25.2.2002, except M/s Jyoti Limited of Vadodara, no other company participated in it. The attendance sheet enclosed with Ex.D6 shows that only Mr.T.K.Modak, General Manager and Mr.B.Singh, Electrical Engineer of M/s Jyoti Limited attended that meeting and 18 O.S.No:6145/2002 sought clarifications for there queries. Even then defendant no.1 did not keep quite on other hand through its letter dt.26.2.2002 produced at Ex.D5 it sent the minutes of the pre bid meeting to all the six intending bidders with queries of Jyoti Limited and clarifications it issued to them. These documents would show that the defendant no.1 being a responsible company having shouldered mini hydel project under the supervision of World Bank, took all precautions in keeping informed the intending bidders. That being the case without attending the pre-bid meeting and even without looking at the schedule of requirements i.e. SECTION-VI(A) of bidding document the plaintiff sent its offer document without adhering to the norms and requirements of bidding document. The Page No.101 of the bidding document clearly specifies the description of the goods and quantity, inspite of it the offer document (Ex.D2) did not furnish all the particulars that were expected from a prudent and efficient bidder resulting multiplication the work of defendant no.1. Having examined the said offer document which was the lowest and accepting the bid for Rs.1,98,00,000/-, the defendant no.1 found many shortcomings as it had no occasion to verify the offer document first and then accept the bid, therefore through its letter dt.11.5.2002 produced at Ex.P2 wrote elaborately to the plaintiff. As per the said letter of defendant no.1 it noticed that instead of two power transformers the plaintiff had offered one; similarly instead of two circuit breakers, dewatering and drainage systems, only one sets were offered; no details were provided in 19 O.S.No:6145/2002 respect of another interconnection bay; transformer breaker panels were not of the specific requirement; the generator, auxiliary transformer, turbine elements, power outlets, exhaust fans, governor, scada system, spares price, erection and sm tools price, drawings were not furnished or information furnished on those parts were not up to the mark. Besides that there were defects in respect of guaranteed technical particulars (GTP) and many of the offer document were left blank. The technical particulars in respect of some items were incomplete. Therefore the defendant no.1 was compelled to write a detailed letter as per Ex.P2 requesting the plaintiff to ensure that no bunching/generalization should be done while furnishing the additional information. This attitude of the plaintiff reflected its lack of professionalism even after claiming itself as champion in the field and enclosing its customers certificates that it had established several hydel projects as per Attachment No.3 to the offer document. The said attachment reveals that it has already established hydel projects at Gokak-I (1 x 500 kW), Gokak-II and III (2 x 500 kW), Gokak-IV (1 x 1000 kW), Lachung (2x100 kW) so on and so forth.
14. It may be noted that in reply to Ex.P2 the plaintiff wrote letter on 4.6.2002 as per Ex.P3 furnishing the alleged required information. Unfortunately even at this juncture also it did not furnish the information completely. The scope and supply of equipments enclosed with Ex.P3 show that in respect of turbine performance calculation it was stated that one more 20 O.S.No:6145/2002 power transformer and circuit breaker will be provided at an additional cost. This claim of the plaintiff was outside the scope of bidding document. Instead of sending the complete offer document in accordance with the set norms and prescribed forms of the bidding document it was incorrect on the part of the plaintiff to quote lowest bid with incomplete and under requirement equipments and after accepting of its bid as it was the lowest one, to raise voice for additional claim. The attachment VI and VIA of the bidding document had categorically stated that no deviations in the matter of price would be allowed and it was not permissible. In addition to above in respect of generator plaintiff had stated that it will furnish characteristic curves, short circuit behavior, harmonic load suppression particulars etc after it places the order with its generator supplier. Again with respect to auxiliary transformers it stated that the detailed calculations will be furnished later. Regarding the drawings, guaranteed technical particulars it reiterated that it will furnish the information after obtaining reports from the engineers or from the valve manufacturers. Regarding power and auxiliary transformer it stated that if two bays are required the same will be furnished at the additional price. Similar was the case in respect of power and control cables etc. Thus making it practically difficult for the defendant no.1 to decide on the technical feasibility the plaintiff's offer.
21 O.S.No:6145/200215. When the bids were invited from the local as well as international bidders and project was taken up under the supervision of World Bank, the time factor plays an important role. If really the plaintiff was competent enough to handle the whole project in the light of the bidding document, which it had received much earlier to sending of its offer document on 15.4.2002 (Ex.D2), it should have adhered to all the norms and requirements and ought to have sent its offer document by furnishing all the requisite information. If one goes through Ex.P3 certainly it is not the case of plaintiff that the information that was sought by the defendant no.1 under Ex.P2 was in deviation to the bidding document or in excess what was contained in it. So it goes without saying that the very offer document of the plaintiff was of a poor quality necessitating to make too many correspondences between the employer (defendant no.1) and the bidder (plaintiff).
16. Be that at it may, when the defendant no.1 through its letter dt.17.6.2002 (Ex.D9) clarified that no deviation is permissible from the specifications in the tender documents which envisage unit system and prior furnishing of GTP's Single diagram etc., and expressed its intention to hold discussion in Delhi in the last week of June 2002 and requested the plaintiff to confirm the suitable date by fax, through its letter dt.18.6.2002 (Ex.P4/Ex.D10) the plaintiff communicated that they are ready to attend techno-commercial discussion on the subject project in the last week of June 2002 and it would intimate the convenient date 22 O.S.No:6145/2002 shortly. But there is no document to show that in accordance with the said letter, it intimated the date and time to have techno- commercial discussion with defendant no.1. Therefore on 8.7.2002 the defendant no.1 himself wrote one more letter (Ex.D11/D27) once again requesting the plaintiff to forward immediately all the outstanding GTP's for perusal and single line diagram in line with the unitized system so as to reach it by 12.7.2002 positively. Then again on 17.7.2002 the defendant no.1 wrote one more letter (Ex.D13) requesting the plaintiff to furnish information in unitized system so as to take decision in the matter at an earliest. It also enclosed Annexure-1 and 2 for ready reference of the plaintiff. The another letter dt.22.7.2002 (Ex.D14) written by the defendant no.1 reveals that it did not receive proper response from the plaintiff, therefore it stated that it is still awaiting the reply on all outstanding GTP's and single line diagram. It also sought to know whether the terms and conditions of the tender document except those indicated in the deviation statement are acceptable to the plaintiff or not. When there was no response from the plaintiff even after several correspondences made by the defendant no.1 in writing insisting the particulars which were required to finalize the contract, without loosing its hope it wrote one more letter on 27.7.2002 (Ex.P5) again explaining in detail and also expressing its dissatisfaction regarding non-responsive attitude of the plaintiff and disclosed its mind that it is creating a doubt about the commitment of plaintiff and the intention of plaintiff in 23 O.S.No:6145/2002 deliberately trying to retract. The said letter itself is a self- explanatory and was like a caution to the plaintiff. Through that letter the defendant no.1 once again requested the plaintiff to have a fresh look on the whole issue and clarify its stand unequivocally by 31.7.2002. It also stated that it has lost valuable time in the process and that episode was really unfortunate leaving a bad taste in the mouth. Then again through its letter dt.30.7.2002 (Ex.D16) the defendant no.1 invited the attention of the plaintiff to its letter dt.27.7.2002 and further requested to ensure that reply of the plaintiff reaches by scheduled date. After so correspondences from the defendant no.1 the plaintiff wrote letter on 31.7.2002 as per Ex.P6 as usual seeking lame excuse that with regard to the clarifications on the subject bid its key personnel are out of country and they will be returning to India in the first week of August 2002 and in the meanwhile it will be pursuing the technical deviations mentioned in their bid vis-a-vis tender specifications and comprehensive reply will be sent at the earliest. The said letter was immediately replied by the defendant no.1 on the same day as per Ex.P7/Ex.D18 and conveyed the message that it will wait up to 4th August 2002 for final reply and there will be no further extension of time thereafter. Then came the letter of plaintiff dt.2.8.2002 (Ex.D28) again seeking extension of time that too four days "after" 5.8.2002 to comply the request of the defendant no.1. Then on 7.8.2002 as per Ex.P8, the plaintiff gave reply/clarification to the defendant no.1 without conceding its mistakes. Going against the contents of the 24 O.S.No:6145/2002 bidding document it claimed that it is entitled to take major and minor deviations from the tender specifications and accordingly it has done some deviations and it continued to persist that in a power plant it is impossible to bid everything exactly as per the scope and specification as detailed by the customer in the tender and similarly it is impossible to list out each and every deviation in the deviation list by referring to Clause-22.3 of ITB. However the said ITB Clause at Page no.18 of the bidding document merely provided that an employer may waive any minor informality, nonconformity or irregularity in a bid that does not constitute a material deviation, whether or not identified by the Bidder in Attachment 6 to its bid, and that does not prejudice or affect the relative ranking of any Bidder as a result of the technical and commercial evaluation, pursuant to ITB Clauses 24 and 25. Here it can be seen that without demonstrating the technical or commercial evaluation of its equipments, the plaintiff went on seeking time. Supplying of one power transformer, one circuit breaker, one dewatering and drainage systems against the required quantity of two, and without furnishing the designs and unitized specifications as insisted by the defendant no.1, the plaintiff sought to defend itself. In Ex.P8 it went on defending itself that they will be offering only one transformer, but yet it has not received confirmation from the defendant no.1. It manifested the intention of the plaintiff to retract from the bid by killing time somehow without adhering to the bid offered by it. The plaintiff having caused unwanted delay in furnishing the 25 O.S.No:6145/2002 information/clarification and technical feasibilities of its equipments in Ex.P8 at Para-3, as if everything was result of the inaction on the part of defendant no.1, alleged that any delay in this milestone will result in a time overrun to it which cannot be afforded with such tight pricing. But at the end of that letter still expressed its so-called willingness to depute its personnel to Delhi at mutual convenience for a technical discussion to sort out the unanswered points. This shows that plaintiff was sure that even as on 7.8.2002 it did not answer many points nor it had sent any technical person to clarify the doubts that were raised by defendant no.1 much earlier. The said letter was promptly replied by defendant no.1 on 9.8.2002 and it continued to convey that any minor informality or nonconformity it does not in any way, vary or affect the scope, quality, performance or change in price of bid is acceptable to it and again it requested to send the plaintiff's confirmation by 10.8.2002 and depute its personnel for meeting in New Delhi to take a final view on 12.8.2002. Then on the following day i.e. 10.8.2002 as per Ex.P9 plaintiff itself conceded that it had mentioned major deviations in Attachment No.6 of its offer and it requested to confirm defendant's acceptance of those deviations. On the very same day the defendant no.1 also communicated to the plaintiff that it can depute its representative for the meeting to be held in the office of Mr.S.K.Sharma, New Delhi at 2.30 hours on 12.8.2002 to take final decision in the matter (Ex.D22). Thus the defendant no.1 on more than one occasion had clarified that it is going to take final 26 O.S.No:6145/2002 decision on 12.8.2002. In spite of such repeated final warning through its letter dt.12.8.2002 (Ex.D24/Ex.P10) the plaintiff expressed its inability to attend the meeting on 12.8.2002 as it received the fax message only on 12th and as usual sought time for few more days. Since through that reply the defendant no.1 had realized that there is no meaning in pursuing the plaintiff further and as per the ITB Clauses, 120 days after the bid was very close i.e. bid validity period was to expire by 13.8.2002 and reading the mind of the plaintiff to tide over that expiry date to get away with its guarantee amount, through its letter dt.12.8.2002 (Ex.D25) wrote to the defendant no.2 and invoked the guarantee and by writing one more detailed letter dt.14.8.2002 as per Ex.D31 enforced the guarantee and received the amount of Rs.5 lakhs from defendant no.2.
17. The saga of the events show that almost there was a kind of one way traffic from defendant no.1 to plaintiff. Having made the bid the plaintiff caused unnecessary delay in finalizing of the contract and finally retracted from its commitment without discharging its duty and without sticking to its own words of deputing a technical person for techno-commercial discussions. Surprisingly even when the trial commenced the plaintiff acted in the same manner by examining the PW1, who has no knowledge of this bid transaction. As admitted by the said witness it is the Marketing Executives by name Suresh Kumar, Shankaraiah and Prasad of their company are more acquainted with the details of this bid transactions. Even then this PW1 was examined who was 27 O.S.No:6145/2002 of no use to the plaintiff. Para-27 of the cross-examination of PW1 shows that he was not aware where the agreement was held even he was not aware where hydel project was to be commissioned and as engineers of his company are looking after the details of the tender he is not acquainted with its particulars. Then as elicited in Para-28 of his cross-exam though he stated that he is having documents to show that their company attended pre-bidding meeting no such document was produced by him. In Para-29 he conceded that their tender (offer document) was deviating on many counts and because of which defendant no.1 wrote letter as per Ex.P2. He also admitted that turbine and transformer are two different equipments and they offered only one unit each against two units specified in the bid document. He replied that without verifying all the records he cannot say whether they communicated to the defendant no.1 about running of the power house with one transformer. At Para-33 he further conceded that though he himself wrote Ex.P4 on 18.6.2002 he did not meet the defendant no.1 in the last week of June 2002. Thereafter looking to his tendency of answering the questions only after going through the marked documents and taking too much time for the same by standing in the witness box, recording his said demeanor, my predecessor deferred his cross-exam. In the further cross-examination dt.17.6.2013 it was elicited that offer validity was 120 days ending on 13.8.2002 and their company did not visit the defendant no.1 on 15.4.2002 to clarify the queries. He expressed his ignorance about the contents of 28 O.S.No:6145/2002 Ex.P5 even on that day. When the bid document clearly stated that all the queries/clarifications have to be furnished through letters he went to the extent of replying that over phone they clarified the things. In the further cross-examination dt.3.9.2013 he stated that H.L.Suresh is the GPA holder of the plaintiff company, but that witness was not examined for the reasons best known to the plaintiff. Therefore I have no hesitation to say that PW1 is a worthless witness to the plaintiff, instead of helping it he destroyed its case further.
18. During the argument referring to ITB Clause-13.6 Sri.RS, Advocate vehemently argued that bid security was not an unconditional one, therefore unless the conditions enumerated in the said clause were proved, the defendant ano.1 could not have enforced the guarantee. In this regard I have gone through the relevant ITB clause as well as Ex.D30. I do not find any material changes in them. As rightly pointed out by Sri.MBC, Advocate the plaintiff being a successful bidder and acceptance of his bid having been communicated to him, during the bid validity period without furnishing the required information and clarifications went on pulling the days and demonstrating that it was not in a condition to issue the performance guarantee in accordance with the bidding document, therefore having no other option the defendant no.1 was compelled to invoke that guarantee. Therefore I am fully convinced that there was no illegality on the part of the defendant no.1 in invoking the bank guarantee. The very fact that having made attack on the defendant no.2 and 29 O.S.No:6145/2002 seeking relief against him also and later withdrawing the claim against him by this plaintiff shows that it itself was not clear in approaching this court. There is no iota of material to show that there was any lapse on the part of the defendant no.1 in invoking the guarantee. In the commercial transactions like this if delay is occasioned, certainly it would affect the reputation of the institutions which undertake such projects in addition to costs overrun and loss to the Nation in the form of wealth formation.
19. In contrast to the evidence of PW1 the evidence of DW1 shows that in thread bare he explained the irregularities, non-committal attitude of plaintiff but his brief cross-examination shows that plaintiff was not serious in challenging his said evidence. The only grouse of the plaintiff is that on 10.8.2002 fax was sent to it when it had closed its office asking it to attend the meeting on 12.8.2002 and since the intervening day was a Sunday (11.8.2002), sending of fax after office hours did not come to its notice on 10.8.2002, therefore on 12.8.2002 it requested to extend time but it was not heeded. No-doubt even assuming that the said fax message reached the plaintiff after it's office hours on 10.8.2002, earlier correspondences were more than enough to show that 12.8.2002 was the dead line for its commitment to complete the furnishing of replies. Hence viewed from any angel I do not find any substance in the plaintiff's case. In the decision reported at AIR 2015 SC 2452 (National Thermal Power Corporation Ltd., V M/s Ashok Kumar Singh and others), relied by Sri.MBC, Advocate, Hon'ble Court held that when the 30 O.S.No:6145/2002 bidders submits their bid along with the earnest money, if they failed to adhere to the special conditions of contract, the employer can forfeit the earnest money. In that case Hon'ble Court had an occasion to consider the distinction between a "tender" and "tender notice". Then considering the circumstances under which the earnest money could have been forfeited by the NTPC, taking bit broader view, Hon'ble court held that the plain reading of condition no.2 enabled the NTPC to forfeit the earnest money. Here also the ITB Clause-13.6 enabled the circumstances under which the defendant no.1 could have forfeited the bid security and its plain meaning suggests that if the successful bidder fails to sign the contract in accordance with ITB Clasue- No.32 or to furnish the required performance security in accordance with ITB Clause No.33, as mentioned above, it could have enforced the bid security. Therefore I do not find any lapse on the part of the defendant no.1 in enforcing the guarantee. So it is not laible to refund Rs.5 lakhs with interest as claimed. For the foregoing reasons I answer these two issues in the negative.
Additional issue no.1:
20. The defendant no.1 took preliminary objection regarding territorial jurisdiction of the court on the reason that plaintiff is having registered office at Hosakote Taluk, which is part of Bangalore Rural District and defendant no.1 is the resident of Delhi, project was located at Himachala Pradesh and bidding document and offer document having been received and 31 O.S.No:6145/2002 submitted at Delhi, there was no scope for this court to try the matter. In support of said submission and arguing that no part of cause of action arose the jurisdiction of this court Sri.MBC, Advocate invited my attention to the decision reported at ILR 2013 KAR 94 (M/s Malaprabha Co-operative Spinning Mills Ltd., Belgaum District v M/s Buildmet Pvt. Ltd.,). I have gone through the said judgment. In that case contact was already concluded to construct in the factory premises at Savadatti, but in the instant case no such contract was came in to existence and since invocation of the bank guarantee of SBI Bangalore and the letters of the plaintiff, which shows that it is having registered office at Plot No.2, Phase-2, Peenya Industrial Area, Bangalore, show that the plaintiff is having its transactions in Bangalore also moreover it corresponded through its registered office, Bangalore. So holding that part of cause of action arose within the jurisdiction of this court, I reject the preliminary objection on territorial jurisdiction of the court. Accordingly, I answer this issue in the negative.
Issue No.5 and Additional issue no.2:
21. Since these two issues deal with granting of reliefs to the plaintiff and defendant no.1, I have taken them simultaneously.
22. By answering issue no.1 and 4 against the plaintiff I have already made clear that it is not entitled for any relief. Now coming to the question of awarding damages to defendant no.1, 32 O.S.No:6145/2002 when it has not paid any court fee, court cannot simply award damages, more precisely when no evidence is adduced on it. At the most for unnecessarily compelling the defendant no.1 to defend this suit for all these years that too for its own mistake, the plaintiff is liable to pay the compensatory costs. In this regard I may refer to the decision reported at AIR 2012 SC 2010 (G)(A.Shanmugam v. Ariya Kshatriay Rajakula Vamsathu Madalaya Nandhavana Paripalanai Sangam, Represented by its President) wherein Hon'ble Court held that if knowingly vexatious suits are brought by the parties or if vexatious defence is set up, courts have to impose realistic costs. Hence in view of the ratio laid down in that case and on overall evaluation of the case in hand, as rightly contended by the defendant no.1 unnecessarily it was compelled to defend this vexatious suit and incur expenses for the same. Therefore plaintiff is not only liable to pay costs of the suit even the realistic costs. The duration of this litigation prompts me to quantify the compensatory costs at Rs.10,000/-. With this observation I answer both issues in the negative.
Issue No.6 :
23. In the light of the above finding, I proceed to make the following:
ORDER Suit is dismissed with costs and compensatory costs of Rs.10,000/- payable by the plaintiff to the defendant no.1.33 O.S.No:6145/2002
Draw decree accordingly.
(Dictated to the Judgment Writer, transcription computerized, then corrected and pronounced by me in open court, this the 11th day of January 2016) (RON VASUDEV), III Addl. City Civil & Sessions Judge, Bengaluru.
ANNEXURE List of witness examined for the plaintiff side:
PW1 Ravi Parkash List of documents exhibited for the plaintiff side:
Ex.P1 General Power of Attorney dt.30.11.07 Ex.P2 Letter dt.11.5.02 Ex.P3 Letter dt.4.6.02 Ex.P4 Letter dt.18.6.02 Ex.P5 Letter dt.27.7.02 Ex.P6 Letter dt.31.7.02 Ex.P7 Letter dt.31.7.02 Ex.P8 Letter dt.7.8.02 Ex.P9 Letter dt.10.8.02 Ex.P10 Letter dt.12.8.02 Ex.P11 Letter dt.19.8.02 Ex.P12 Debit advice Ex.P13 Bank statement Ex.P14 Minute extract Ex.P15 Bidding documents
List of witness examined for the defendant/s side:
DW1 Neeraj Kanwar 34 O.S.No:6145/2002 List of documents exhibited for the defendant/s side:
Ex.D1 Authority letter
Ex.D2 Offer documents 196 sheets
Ex.D3 Letter
Ex.D4 Tender documents
Ex.D5 Letter dt.26.2.2002
Ex.D6 Annexures
Ex.D7 Letter
Ex.D8 Reply letter
Ex.D9 Letter
Ex.D10 Plaintiff letter
Ex.D11 Reply letter
Ex.D12 Board meeting minutes
Ex.D13 Letter
Ex.D14 Reply
Ex.D15 Postal acknowledgement
Ex.D16 Reminder
Ex.D17 Receipt
Ex.D18 to 21 Postal receipts
Ex.D22 Reminder
Ex.D23 Postal acknowledgement
Ex.D24 Reply
Ex.D25 Letter to SBM
Ex.D26 Reply
Ex.D27 Letter
Ex.D28 Debt letter
Ex.D29 General entries
Ex.D30 Letter
Ex.D31 Postal receipt
(RON VASUDEV),
III Addl. City Civil & Sessions Judge,
Bengaluru.
35 O.S.No:6145/2002
Judgement pronounced in open court
vide separate order
ORDER
Suit is dismissed with costs and
compensatory costs of Rs.10,000/-
payable by the plaintiff to the
defendant no.1.
Draw decree accordingly.
III Addl. City Civil & Sessions Judge,
Bengaluru.