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2003 DIGILAW 220 (ORI)

EMCO LIMITED v. GRID CORPORATION OF ORISSA LIMITED

2003-03-11

M.PAPANNA, R.K.PATRA

body2003
R. K. PATRA, ACJ. ( 1 ) BY this application under Articles 226 and 227 of the Constitution of India, the petitioners seek quashing of the decision dated 21-9-2002 at Annexure-6/2 of the Board of Directors of Grid Corporation of Orissa Limited rejecting its bid and accepting opposite party No. 3's bid. ( 2 ) PETITIONER No. 1 is a limited company. Petitioner No. 2 is one of its shareholders. (for the sake of convenience they are hereinafter referred to as 'petitioner' ). ( 3 ) THE case of the petitioner is that it has been manufacturing, selling and supplying transformers for the last more than 35 years. The Grid Corporation of Orissa Limited (hereinafter referred to as 'the GRIDCO') invited sealed bids at Annexure-1 for supply and installation of Transformers Package E and F for EHV sub-stations. In response to the said invitation, the petitioner filed tender for package No. E relating to supply of 4 numbers of 220/132/33 KV, 100 MVA Auto Transformers. In addition to the general and specific requirements laid down in the invitation of bids, the Project Management Unit of GRIDCO issued Amendment No. 1 on 13-5-2002 at Annexure-2 comprising seven items out of which one of the items (Item No. 3) stipulated as follows :"the Core shall be rigidly clamped by belting to ensure adequate mechanical strength. . . . . . . . . . . . . Bolted type core construction shall not be acceptable. . . . . . . . . . . . . The supplier shall have in-house CORE cutting facilities, for better control of quality and to avoid possibility of mixing prime core materials from second Grade core materials. " (Emphasis supplied)the amendments made in the letter dated 13-5-2002 were issued without approval of the Task Force and Director (Engineering)/cmd. The condition requiring the bidders to have in-house core cutting facilities has no relevancy with the object sought to be achieved namely for controlling the quality of the transformers or preventing mixing of prime core materials with second grade core materials. The petitioner accordingly requested in letter dated 18-5-2002 at Annexure-3 to the GRIDCO to withdraw the said amendment on the ground inter alia that manipulation like mixing of primary and secondary core material cannot be totally ruled out or obviated even if the manufacturer possess an in-house core cutting facility. The petitioner accordingly requested in letter dated 18-5-2002 at Annexure-3 to the GRIDCO to withdraw the said amendment on the ground inter alia that manipulation like mixing of primary and secondary core material cannot be totally ruled out or obviated even if the manufacturer possess an in-house core cutting facility. On 24-5-2002 the bids were opened and the landed cost inclusive of capitalisation rate quoted by the petitioner, opposite party No. 3 and four other companies is as follows :"1) EMCO Ltd. (petitioner): Rs. 12,91,67,442. 002) DELHI : Rs. 14,03,68,640. 003) ABB Ltd. (opp. party No. 3): Rs. 14,25,36,800. 004) ALSTOM : Rs. 14,97,32,760. 005) CGL : Rs. 15,35,96,960. 006) XIAN ELEC. P. R. CHINA : Rs. 19,41,61,087. 00"while the petitioner ranked L1, BHEL, ABB, ALOSTOM, CGL and XIAN ELEC. P. R. CHINA ranked respectively as L2, L4, L5, and L6. As the petitioner ranked L1, it was expecting that its bid would be accepted, but was surprised to learn that it has been rejected and the bid offered by opposite party No. 3 has been accepted. According to the petitioner, the amendment to the bid documents has no legal basis and since opposite party No. 3 does not possess any in-house core cutting facility, the bid offered by the petitioner could not have been rejected on the plea that it does not possess in-house core cutting facility. ( 4 ) THE GRIDCO and its Board of Directors (opposite parties 1 and 2) have filed counter-affidavit denying the allegations of the petitioner. They assert that the tenders have been finalised "in a most reasonable and transparent manner" considering all aspects of the bidders for Package-E and the contract has rightly been awarded to opposite party No. 3. Letter of intent has already been issued on 31-10-2002 and thereafter the contract has been signed on 29-11-2002. The opposite party No. 3 is now in a very advance stage of execution of the contract work. The opposite parties 1 and 2 further state that although seven bidders purchased the bid documents, only six participated in the tender by submitting their respective bids. The tender was opened on 24-5-2002, although as per the tender notice dated 30-3-2002 at Annexure-1 it was fixed to 16-5-2002. A pre-bid conference was held on 10-5-2002 instead of 30-4-2002 as originally indicated in the tender notice. The tender was opened on 24-5-2002, although as per the tender notice dated 30-3-2002 at Annexure-1 it was fixed to 16-5-2002. A pre-bid conference was held on 10-5-2002 instead of 30-4-2002 as originally indicated in the tender notice. All the purchasers of the bid documents were intimated to attend the said conference. After various discussions and analysis made in the said pre-bid conference and taking into consideration the GRIDCO's requirement as per its past experience it was felt necessary to bring out certain amendments to the bidding documents. Accordingly, amendments as per Annexure-2 were intimated to all the parties concerned. The petitioner appreciated the said amendments which is evident from its reply at Annexure-3. While appreciating the amendments, the petitioner requested for withdrawal of the same. The petitioner, thereafter without any murmur or raising any further dispute over the same, submitted its tender on 24-5-2002. The opposite party No. 3 also submitted its tender on that day. After opening of the tenders on the same day (24-5-2002), the price quoted by different bidders was as hereunder :"1) BHEL : Rs. 9,16,01,600/-2) Alsthom : Rs. 9,96,60,760/-3) Xian : US $ 2,075,690 Plus: Rs. 95,00,617 (US $ 1: Rs. 49. 30)4) CGL : Rs. 10,91,50,000/-5) ABB (opp. party No. 3): Rs. 8,86,68,000/-6) EMCO (petitioner): Rs. 8,47,58,722/-The difference of price quoted by opposite party No. 3 and the petitioner was Rs. 39. 09 lakhs, but for award of the contract the total bid price was to be considered and after making arithmetical calculation, the difference was Rs. 18,35,624/- (petitioner Rs. 8,47 crores and opposite party No. 3 Rs. . 65 corers ). According to the GRIDCO, the difference is only Rs. 18. 35 lakhs and not Rs. 1. 34 crores. The comparative statement is at Annexure-B/1. As pre Clause 7 of Instructions to Bidders (I. T. B.) documents under the heading of "amendment of Bidding Documents", the employer at any time prior to the deadline of submission of bids may for any reason at its own initiative or in response to a clarification requested by the prospective bidder amend the bidding documents. The Senior G. M. (P. M. U.), GRIDCO being the Team Leader and authorised to act as the Nodal Officer consequent upon the discussion and various analysis made in the pre-bid conference thought it proper to bring out certain amendments to the specifications of the bid documents. The Senior G. M. (P. M. U.), GRIDCO being the Team Leader and authorised to act as the Nodal Officer consequent upon the discussion and various analysis made in the pre-bid conference thought it proper to bring out certain amendments to the specifications of the bid documents. It was also done taking into account the past experience and requirement of the GRIDCO with the objective to see that the materials supplied would be viable. The petitioner accepted the same and participated in the tender. The amendment to the documents was issued on 13-5-2002 to all prospective bidders duly approved by the concerned Team Leader i. e. Merz Mc'lellan and PMU Team Loader and also approved by the C. M. D. , GRIDCO. The amendment was also approved by the World Bank and GRIDCO Task force. The petitioner could not prove that it had supplied and commissioned blot-less core type transformers nor does have any in-house core cutting facility which is a technical and commercial deviation to the bid documents and as such, its bid was found non-responsive both technically and commercially. In para 16 of the counter, it has been averred that opposite party No. 3 has got in-house core cutting facilities and supplied and commissioned bolt-less core type transformers which are in successful operation for the last two years. ( 5 ) OPPOSITE party No. 3 besides reiterating what has been stated by GRIDCO, in its counter asserts that it does possess in-house core cutting facility and it has already signed the contract with GRIDCO on 29-11-2002 Annexure-A/3 for Rs. 8,66,94,000/ -. ( 6 ) THE present dispute relates and is confined to Package-E to which there were 6 (six) tenderers. Their bids were first evaluated in Project Management Unit (in short 'p. M. U. ' ). It recommended to the Task Force Committee to approve the bid of opposite party No. 3 (the bid price is Rs. 8,65,94,000/- ). The Task Force Committee in its meeting held on 2-8-2002 at Annexure-6 rejected the bid of one Xian Electric Import and Export of China on the ground that it is not a manufacturer of transformers. The bid of the petitioner was considered to be "non-responsive". The said Committee examined the evaluation report and found the offer of opposite party No. 3 to be technically and commercially responsive. The bid of the petitioner was considered to be "non-responsive". The said Committee examined the evaluation report and found the offer of opposite party No. 3 to be technically and commercially responsive. Its offer was the lowest of all the bidders and the Committee accordingly recommended to the Board of Directors for accepting its tender. A memorandum was prepared at Annexure-6/1 which was placed before the Board of Directors of GRIDCO on 21-9-2002. The Board perused the memorandum and on due consideration accepted the bid offered by opposite party No. 3 at Annexure-6/2. ( 7 ) IT may be stated that the petitioner's bid was held to be "non-responsive" because (i) the documents submitted by it did not indicate that it had supplied and commissioned blot-less core type transformers and (ii) it does not possess in-house core cutting facilities. Clause 22. 5 of I. T. B. (Instructions to Bidders) lays down that if a bid is not substantially responsive, it will be rejected by the Employer. The Employer's determination of a bid's responsiveness is to be based on the contents of the bid itself without recourse to extrinsic evidence. The aforesaid two qualifying requirements were added to the bid documents by way of amendment prior to submission of bids by the concerned bidders. ( 8 ) SHRI I. Mohanty, learned counsel for the petitioner, contended that the tender process lost its value when new qualifications were introduced by way of amendment for the purpose of evaluating the bids. He rhetorically submitted that it is just like changing the rules of the game after the players entered into the field. In support of this submission, he placed reliance on the judgment of the Supreme Court in M/s. Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar Municipal Corporation, AIR 2000 SC 2272 . ( 9 ) SHRI Mohanty's submission is that in the above case of Monarch Infrastructure the State Government amended the clause prior to submission of the bids which procedure was held to be impermissible. Counsel for the contesting opposite parties submitted that in that case the Government relaxed a particular clause after submission of the bids which was held to be unfair and arbitrary. Shri Mohanty has made us available a copy of the judgment of the Bombay High Court out of which the appeal before the Supreme Court arose. Counsel for the contesting opposite parties submitted that in that case the Government relaxed a particular clause after submission of the bids which was held to be unfair and arbitrary. Shri Mohanty has made us available a copy of the judgment of the Bombay High Court out of which the appeal before the Supreme Court arose. We have carefully perused the judgments of the Bombay High Court and the Supreme Court (supra) and we have found that in that case the amendment by way of deletion was made after tenders were submitted. In fact, as we find, the date fixed for submission of tenders was 23-3-2000 and thereafter, i. e. on 24-3-2000 a particular clause (Clause 6-a) was deleted. In the penultimate sentence of paragraph-8 of the judgment, the Bombay High Court has observed as follows :"the deletion, if needs emphasis, took place after offers were received on 23-3-2000. "from the above, it is evident that in the case of Monarch Infrastructure, the impugned condition was deleted/relaxed after submission of tenders and not prior to it. ( 10 ) LET us now proceed to consider the validity of the qualifications introduced to the bid documents by way of amendment. ( 11 ) THE Supreme Court in Messrs. G. J. Fernandez v. State of Karnataka, AIR 1990 SC 958 observed as follows :"thirdly, the conditions and stipulations in a tender notice like this have two types of consequences. The first is that the party issuing the tender has the right to punctiliously and rigidly enforce them. Thus if a party does not strictly comply with the requirements of paras III, V and VI or the NIT, it is open to the KPC to decline to consider the party for the contract and if a part comes to Court saying that the KPC should be stopped from doing so, the Court will decline relief. The second consequence, indicated by this Court in earlier decisions, is not that the KPC cannot deviate from these guidelines at all in any situation but that any deviation, if made, should not result in arbitrariness or discrimination. It comes in for application where the non-conformity with, or relaxation from, the prescribed standards results in some substantial prejudice or injustice to any of the parties involved or to public interest in general. It comes in for application where the non-conformity with, or relaxation from, the prescribed standards results in some substantial prejudice or injustice to any of the parties involved or to public interest in general. For example, in this very case, the KPC made some changes in the time frame originally prescribed. These changes affected all intending applicants alike and were not objectionable. In the same way, changes or relaxations in other directions would be unobjectionable unless the benefit of those changes or relaxations were extended to some but denied to others. "from the above, it is clear that fresh qualifications can be added to the eligibility conditions introduced before submission of tenders. Admittedly, number of qualifications were introduced by way of amendment and Shri Mohanty fairly did not object to all the amendments except the two amendments on account of which the petitioner's bid was found to be "non-responsive". In the tender call notice (Annexure-1), it was inter alia, stipulated as follows :" (1) Interested eligible bidders may obtain further information and inspect the bidding documents at the office of Director of Engineering, GRIDCO, Clause-3 of Annexure-1 ). (2) The pre-bid conference will be held at office of GRIDCO on 30-4-2002 (which was not held on that day, but held on 10-5-2002) to clarify to prospective bidders the exact scope of the work, the basic date available and other issues raised in accordance with Clause 6 of ITB. " one of the bidding documents, i. e. Section II of "instruction to bidders" (Annexure-C/1) provides as follows : "6. 4 The bidder's designated representative is invited to attend a pre-bid meeting. The purpose of the meeting will be to clarify issues and to answer questions on any matter that may be raised at this stage. . . . . . . . . . . Any modifications of the bidding documents listed in ITB sub-clause 5. 1 which may become necessary as a result of the pre-bid meeting shall be made by the Employer exclusively through the issue of an Addendum pursuant to ITB Clause 7 and not through the minutes of the pre-bid meeting. 7. Amendment of bidding documents. 7. 1 At any time prior to the deadline for submission of bids, the Employer may, for any reason, whether at its own initiative, or in response to a clarification requested by a prospective bidder amend the bidding documents. 7. 7. Amendment of bidding documents. 7. 1 At any time prior to the deadline for submission of bids, the Employer may, for any reason, whether at its own initiative, or in response to a clarification requested by a prospective bidder amend the bidding documents. 7. 2 The amendment will be notified in writing or by cable to all prospective bidders that have received the bidding documents and will be binding on them. Bidders are required to immediately acknowledge receipt of any such amendment, and it will be assumed that the information contained therein will have been taken into account by the Bidder in its bid. (Emphasis supplied ). ( 12 ) ON careful perusal of the above clauses, we have no hesitation to hold that the GRIDCO reserved its right to make necessary amendments to its bidding documents by giving liberty to the bidders to discuss the proposed amendments in the pre-bid meeting. There is no dispute that all the purchasers of the bidding documents including the petitioner were informed to attend the pre-bid conference held on 10-5-2002. In the said, conference, the proposed amendments were discussed and the amendments were issued to all concerned including the petitioner on 13-5-2002 (Annexure-2 ). In letter dated 18-5-2002 (Annexure-3) the petitioner took exception to the new clause which required bidders to have their own in-house core cutting facilities. In the said letter, it requested the GRIDCO to withdraw the said clause. The said request, however, was not accepted by the GRIDCO. The petitioner thereafter without any murmur submitted its tender on 24-5-2002. ( 13 ) HAVING participated in the bid, it cannot turn around to contend that the decision-making process was erroneous because of introduction of a new qualification by way of amendments prior to submission of bids. We reiterate that in this case the amendments to the bid documents were brought in prior to submission of bids which is permissible for the reasons stated above. ( 14 ) SHRI Mohanty's next submission is that the requirements that the bidder must have his own in-house core cutting facility has no relevancy with the object sought to be achieved. According to him, even without having an in-house core cutting facility the quality of the transformers can be controlled and mixing of prime core material with second grade core materials can be prevented. According to him, even without having an in-house core cutting facility the quality of the transformers can be controlled and mixing of prime core material with second grade core materials can be prevented. ( 15 ) THE stand of the GRIDCO is that the qualification requiring supply of bolt-less core type transformers with the availability of in-house core cutting facility is to avoid mixing of prime core and second grade core and the core cutting facility is a part of manufacturing facility at the first stage of the manufacturing process. According to the GRIDCO, the above two requirements were insisted by taking into the consideration the past experience and requirement with an object to see that the materials so supplied would be viable. We may state that the primary object of the GRIDCO is to procure best quality materials. For this, what should be the best criterion is a matter which is exclusively within the domain of the "employer". A writ Court cannot substitute or add any new standard. ( 16 ) BY referring to the last sentence of paragraph-7 of the counter-affidavit of the GRIDCO which reads that "gridco believes that ABB does have in-house core cutting facility", Shri Mohanty contended that ABB (opposite party No. 3) does not possess core cutting facility and, therefore, its bid ought not to have been accepted. The opposite party No. 3 in para-7 of its counter-affidavit categorically asserts that it does possess in-house core cutting facility. Besides the assertion made by opposite party No. 3, the GRIDCO in paragraph 16 of its counter-affidavit also avers that it (opposite party No. 3) has got in-house core cutting facility. In view of what has been stated above, we have no hesitation to hold that opposite party No. 3 does possess in-house core cutting facility. ( 17 ) SHRI Mohanty also contended that because of the rejection of the petitioner's tender and acceptance of opposite party No. 3's tender it would cause a net loss of Rs. 1. 34 crores to GRIDCO which is not in public interest. In support of this he relied on the bid evaluation report at Annexure-B/1. Counsel for the opposite parties refuted the above contention. According to them the difference would be only Rs. 18. 35 lakhs and not Rs. 1. 34 crore. 1. 34 crores to GRIDCO which is not in public interest. In support of this he relied on the bid evaluation report at Annexure-B/1. Counsel for the opposite parties refuted the above contention. According to them the difference would be only Rs. 18. 35 lakhs and not Rs. 1. 34 crore. From the bid evaluation report (Annexure-B/1) it would appear that the bid price of the petitioner is Rs. 8,47,58,376. 00 whereas opposite party No. 3's is Rs. 8,65,94,000 and thus the difference comes to only Rs. 18,35,624. 00. The petitioner instead of taking into account the total bid price has based the differential loss compensation (petitioner's Rs. 23,30,720. 00 and opposite party No. 3's Rs. 11,800,800. 00) to make up the alleged difference of price. There is no dispute that the award for supply of transformer Package-E, the contract price is Rs. 8,65,94,000. 00. This being the factual position, the petitioner is not justified in bringing out the difference of prices or apprehended differential loss compensation to show that it would cause loss amounting to Rs. 1. 34 crores to the exchequer. ( 18 ) FOR all the reasons mentioned above, we have no hesitation to hold that the decision of the GRIDCO in accepting the bid of opposite party No. 3 cannot be faulted with. ( 19 ) THERE is thus no merit in this writ application which is accordingly dismissed. ( 20 ) M. PAPANNA, J. :- I agree. Application dismissed.