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2008 DIGILAW 792 (GAU)

Diamond Power Infrastructure Ltd. v. Assam State Electricity Board

2008-11-14

B.D.AGARWAL

body2008
JUDGMENT B.D. Agarwal, J. 1. In this writ petition, precisely, I am called upon to answer the question-whether two Bids, one in the individual capacity and the other one as joint venture firm, can be termed as 'tenders in collusion' and non-responsive. 2. Heard Sri P.K. Goswami, learned senior counsel for the writ Petitioner as well as Sri N. Dutta, learned senior counsel and Sri G.N. Sahenwalla, learned senior counsel for the Respondent Nos. 5 and 6 respectively. Respondent Nos. 1, 2, 3, 4, 7 and 8 (hereinafter referred to as "ASEB") were represented by Sri B.D. Das, learned standing counsel. 3. The facts necessary for deciding this writ petition are as follows: The Aseb Published Invitation TO BID (INV) on 31.5.2008 under Memo No. ASEB/CGM/(RE)/RGGVY/KANCH/2008 inviting Domestic Competitive Bids for execution of electrification works in the rural areas of Karbi Anglong district of Assam under "Rajiv Gandhi Grameen Vidyuitikaran Yojana, conceived by Rural Electrification Corporation of India. The works were divided under five packages. The present controversy relates to "Package KANCH-4 which relates to supply, construction of 11 KV lines, LT lines and installation of Distribution Transformers and providing service connection to BPL beneficiaries. Tenders were received till 17.7.2008 and the commercial bids were opened on 3.9.2008. Before the opening of price bids, the Petitioner-firm lodged a formal protest on 27.8.2008 for considering the tenders of R-5 and R-6 on the ground that those two tenders, for all intent and purposes, were submitted by the same individual, which is not permitted. Despite this protest, the Petitioner-firm was informed vide letter dated 1.9.2008 that price bids will be opened on 3.9.2008, impliedly rejecting the objection. Even after the opening of commercial bids the Petitioner-firm reiterated that bids submitted by R-5 and R-6 were contrary to Clause 33.3 of the special conditions of contract and basic principles of tendering and, as such, their bids should be rejected. 4. The R-6 stood the lowest Bidder quoting 92.6 crores (approximately) whereas R-5, the writ Petitioner and M/s Jyoti Structures Ltd. stood second, third and fourth quoting 100, 107 and 394 crores (approx) respectively. Thereafter, the ASEB invited R-6 M/s Lumino Industries Pvt. Ltd for further negotiation and after negotiation, the said firm marginally reduced the offer to Rs.91,25,60,000/-. 4. The R-6 stood the lowest Bidder quoting 92.6 crores (approximately) whereas R-5, the writ Petitioner and M/s Jyoti Structures Ltd. stood second, third and fourth quoting 100, 107 and 394 crores (approx) respectively. Thereafter, the ASEB invited R-6 M/s Lumino Industries Pvt. Ltd for further negotiation and after negotiation, the said firm marginally reduced the offer to Rs.91,25,60,000/-. As per the tripartite agreement between the Government of Assam, REC and ASEB the finally accepted Bid was forwarded to REC for approval, which is still awaited. In the meanwhile, the writ petition was filed and vide order dated 1.10.2008 though the authority was allowed to complete the tender process final allotment was withheld, subject to leave of the Court. In this way, the tender has not yet been settled with either party. 5. The writ Petitioner is basically seeking a writ in the nature of certiorari to set aside the tenders/Bids submitted by R-5 and R-6. Sri P.K. Goswami, learned senior counsel for the Petitioner submitted that under Clause 1.1 of the 'Qualification of the Bidders' (Annexure-2) bids may be submitted by any person either in the name of his/her individual firms or joint venture firms, with certain conditions applicable to joint venture firms, but not more than one tender. The learned senior counsel also referred to Clause 33.3 of the Special Conditions of the Contract which authorizes the authority to determine substantial responsiveness of each bidder. On the basis of this bidding conditions it was contended that neither R-5 and R-6 ought to have been permitted to submit two tenders in collusion nor their bids could have been considered as responsive and competitive inasmuch as the bids of the private Respondents cannot come within the doctrine of 'sealed tendering process'. In other words, it was the submission of learned Counsel that tenders of R-5 and R-6 are nothing short of manipulation to frustrate the very object of confidential bidding for getting competitive and best rates by the authority. To buttress his contention that submission of two tenders by R-5 and R-6 in collusion is an act of fraud and corrupt practice the learned senior counsel for the Petitioner also referred to the guidelines issued by the REC for implementing various projects under RGGVY scheme. Clause 7 of the guidelines relates to fraud and corruption. To buttress his contention that submission of two tenders by R-5 and R-6 in collusion is an act of fraud and corrupt practice the learned senior counsel for the Petitioner also referred to the guidelines issued by the REC for implementing various projects under RGGVY scheme. Clause 7 of the guidelines relates to fraud and corruption. On these premises, it was contended that the tenders submitted by R-5 and R-6 are liable to be rejected out-rightly. 6. To fortify his submissions the learned Counsel for the Petitioner also referred to Clause 1.1 of the 'Qualification of the Bidders' which restricts submission of one Bid only either in individual capacity or as a joint venture firm. Sri Goswami, learned senior counsel for the Petitioner firm repeatedly emphasized the word 'or' used therein. The learned Counsel submitted that the use of the word 'or' cannot be read as 'and' as so to widen the scope of submission of multiple tenders. In support of this submission, the learned Counsel cited a number of authorities both from England Courts and Indian Courts. Prominent authorities relied upon are The Mersey Dock sand Harbour v. Henderson Brothers1888 AC 595, Green v. Premier Glynrhonwy Slate Corporation Ltd. reported in (1928) 1 KB 561 at 568 and R. v. Oakes reported in (1959) 2 All ER 1992, from England Courts and the judgments rendered by the Hon'ble Supreme Court of India reported in R.S. Nair v. A.R. Antulay (1984) 2 SCC 183 and the judgment of Punjab and Haryana High Court reported in Goodyear India Ltd. v. Panchayat Samiti AIR 1969 P & H 379. 7. Rebutting the submissions of the Petitioner's counsel, Sri Dutta and Sri Sahewalla, learned Counsels for R-5 and R-6 respectively advanced their arguments in tandem. Practically both of them adopted and supplemented the arguments of each other. According to Sri Dutta, learned senior counsel for R-5, this Court is not required to find out the intention of the authority for using the word 'or' in 'Qualification of the Bidders'. According to the learned Counsel such an exercise is normally done to ascertain the intention of the Legislature to interpret a particular provision in the statute and not in the contract jurisprudence, which are decided in the plain language of the stipulations of tenders/contract agreements. According to the learned Counsel such an exercise is normally done to ascertain the intention of the Legislature to interpret a particular provision in the statute and not in the contract jurisprudence, which are decided in the plain language of the stipulations of tenders/contract agreements. The learned Counsel went further to submit that even if the word 'or' is not read as 'and' it will not prohibit an individual to submit two tenders in different capacities. The learned Counsel also cautioned the Court that if the stipulations are twisted under the garb of finding out the intention of the authority, it would amount to re-writing the tender stipulations, which is beyond the domain of judicial intervention. 8. Adopting the submission of Sri Dutta, learned Counsel for R-5, Sri Sahewalla appearing for the lowest Bidder i.e. R-6 submitted that M/s Lumino Industries Ltd. has a different entity being a joint venture firm and as such its bid cannot be termed as a 'bid in collusion'. In other words, it was the submission of Sri Sahewalla that both R-5 and R-6 have submitted their respective bids as different entities and there is no illegality in doing so in absence of any express bar under tender conditions. According to the learned senior counsel, the only bar in the matter of submission of tenders can be found in Clause 4 of the guidelines issued by the REC. Learned Counsel for R-5 and R-6 also relied upon the judgment of TATA Cellular v. Union of India reported in (1994) 6 SCC 651 , wherein the Hon'ble Supreme Court has held that terms of tender are not open to judicial scrutiny because the invitation to tender is in the realm of contract. It was also submitted that only motive for filing of this writ petition is to oust the competitive bidders to gain immunity from competition which should not be permitted. 9. In addition to the above submissions, learned Counsel for the private Respondents also submitted that the writ petition has been filed belatedly inasmuch as the technical bids were opened in presence of the Petitioner on 17.7.2008 and the writ petition was filed only on 30.9.2008. It was also contended that a person seeking relief in Court must also approach the Court with clean breast. It was also contended that a person seeking relief in Court must also approach the Court with clean breast. However, in the present case although the Petitioner was not the lowest Bidder, the said fact was suppressed in the writ petition. In my considered opinion, neither there was gross delay in filing the writ petition nor the non-disclosure of the amount of bids in the writ petition can be considered as a deliberate suppression of fact. Be that as it may, these objections do not go to the root of the issue and as such I am not persuaded to dwell upon these issues at length. 10. Sri Das, learned Counsel for ASEB defended the action taken by the authority by submitting that the tender submitted by R-6 has been recommended for approval since it is a different entity from R-5 and also on the ground that its Bid was found to be lowest. He also submitted that in absence of any express stipulation that the same individual cannot submit any additional tender in the name of joint venture firm had persuaded the authority not to disqualify the tenders submitted by R-5 and R-6. 11. As noted earlier, the crux of the writ petition lies in the interpretation of certain pre-conditions for submitting tenders and guidelines for processing the same. Hence, it would be apposite to reproduce those conditions, which have already been referred and adumbrated in this judgment while narrating the submissions of both the parties. Qualification of the Bidder.-(IV) Package KANCH-4: (i)... (ii)... (iii)...Bids may be submitted by individual firms or joint venture of firms (having one partner as lead partner) wherein each or any one of the partners meets the qualification requirement set forth in para 1.1. above. Special conditions of the contract: Clause No. 33.3.-Prior to the detailed evaluation, Assam State Electricity Board will determine the substantial responsiveness of each bid to the Bidding Document. For purpose of this clause, a substantially responsive bid is one, which conform to all the terms and conditions of the Bidding Document without material deviations. above. Special conditions of the contract: Clause No. 33.3.-Prior to the detailed evaluation, Assam State Electricity Board will determine the substantial responsiveness of each bid to the Bidding Document. For purpose of this clause, a substantially responsive bid is one, which conform to all the terms and conditions of the Bidding Document without material deviations. A material deviation is one which limits in any substantial way, inconsistent with the bidding documents, the Owner's rights or the bidder's obligation under the contract or whose rectification would affect unfairly the competitive position of other bidders presenting substantially responsive bids and which affects in any way the prices, quality, quantity or delivery period of the equipment or which limits in any way the responsibilities or liabilities of the Bidder of any right of the Assam State Electricity Board as required in these specifications and documents. Assam State Electricity Board's determination of a bid's responsiveness shall be based on the contents of the bid itself without recourse to extrinsic evidence. Guidelines for Procurement of Goods and Services for Implementation of Rural Electrification Project.--(I) Purpose xxx xxx xxx (II) xxx xxx xxx (III) xxx xxx xxx (IV) Eligibility.- To foster competition, all firms and individuals are permitted to offer goods, works and services for REC-financed projects. Conditions for participation shall be limited to those that are essential to ensure the firm's capability to fulfill the contract in question. Borrower including its assignee(s) may carry out due diligence on the technical and financial qualifications of bidders to be assured of their capabilities in relation to the specific contract. A firm which has engaged by the borrower including its assignee(s) to provide consultancy services for the preparation or implementation of a project, and any of its affiliates, shall be disqualified from subsequently providing goods, works or services resulting from or directly related to the firm's consultancy services for such preparation or implementation. (V) xxx xxx xxx (VI) xxx xxx xxx (VII) Fraud and Corruption. It should be kept in mind that all actions towards award of contracts and its implementation on the ground have to be fair, consistent, transparent and based on highest standard of ethics. Similarly, bidders/suppliers/contractors associated in the procurement and works, are expected to observe the highest standard of ethics during procurement and execution of contracts. It should be kept in mind that all actions towards award of contracts and its implementation on the ground have to be fair, consistent, transparent and based on highest standard of ethics. Similarly, bidders/suppliers/contractors associated in the procurement and works, are expected to observe the highest standard of ethics during procurement and execution of contracts. In pursuance to above (a) xxx (b) xxx (c)(i) "Corrupt practice" means offering, giving, receiving, or soliciting anything of value to influence the action of a public official(s) in the procurement process or in the contract execution, and (ii) "Fraudulent practice" means a misrepresentation of facts in order to influence a procurement process or the execution of a contract and includes collusive practices among bidders (prior to or after bid submission) designated to establish bid prices at artificial, non-competitive levels. 12. I have already mentioned earlier that according to Sri Dutta, learned Counsel for R-5, the Court should not venture to re-write the terms and conditions of the tender. In other words, it was their submission that Clause 1.1 of the 'Qualifications of the Bidder' should be read without any interpolation. Even otherwise, the gist of the authorities cited on behalf of the learned Counsel for the Petitioner is that if the words of the statute or tenders or contract agreements are themselves precise and unambiguous and the words are reasonably deducible in their natural and ordinary sense the Courts should be reluctant and slow in reading the word 'OR' AS 'and' or vice-versa. I am also of the view that if Clause 1.1 of the Package KANCH-4 is read with the use of the word 'and' it would not give express liberty to the individuals to submit multiple tenders in the name of different entities. For this purpose, the authority must have used the words 'and/or individually and jointly' in the qualification document. During the argument, Sri Das, learned Counsel for the ASEB candidly admitted that it is the standing practice that if any individual submits more than one tender, then such tenders are out rightly rejected. In fact, the private Respondents did not dispute this statement. Their only defence is that while R-5 has submitted the tender in his individual capacity, the tender of R-6 is in the name of a different entity and as such both the tenders cannot be described as 'tenders in collusion'. 13. In fact, the private Respondents did not dispute this statement. Their only defence is that while R-5 has submitted the tender in his individual capacity, the tender of R-6 is in the name of a different entity and as such both the tenders cannot be described as 'tenders in collusion'. 13. Admittedly, M/s Everest Engineering House (R-5) is a technical partner in the joint venture agreement of R-6. At the same time, the said R-5 has also submitted a tender in his individual capacity. Had M/s Everest Engineering House not participated in the tender process a defence could have been taken that the role of R-5 was limited to give technical assistance to M/s Lumino Industries. However, since R-5 itself has submitted a separate tender, it is difficult to take a view that there was no consultation in between R-5 and R-6 and instead it can be safely inferred that two tenders were submitted to support each other and make the tender process technically satisfied in numbers. 14. Clause 33.3 of the Special Conditions of the Contract authorizes the ASEB to determine that the Bids are substantially responsive and competitive. In my considered opinion, if two tenders are submitted by an individual, albeit in the name of two different entities it would certainly be against the concept of 'competitive tenders'. Besides this, under Clause 7 of the guidelines issued by the REC the definition of 'fraudulent practice' includes the acts of misrepresentation of facts and collusive practices among the bidders. I fail to understand as to how the ASEB overlooked this important guideline of the owner of the project despite the fact of submission of two bids by the same person being brought to their notice by the writ Petitioner by way of filing protest letters. In my considered opinion, the ASEB ought to have given serious thought on the implication and motive for submitting the tender by M/s. Everest Engineering House as an individual and also separably as a technical partner of M/s Lumino Industries Ltd. However, the ASEB has superficially overruled the objections of the Petitioner, which had sufficient force under established and accepted principle of single tender permissibility. I find no difficulty to hold that it is a clear case of collusion in between R-5 and R-6, which is against the basic concept of settling Government largess on competitive bidding free from collusion. 15. I find no difficulty to hold that it is a clear case of collusion in between R-5 and R-6, which is against the basic concept of settling Government largess on competitive bidding free from collusion. 15. The submission of Sri Sahewalla that under Clause 4 of the guidelines issued by REC that only the firm which has been engaged by the borrower are prohibited from filing tenders has no force. In my considered opinion, this provision relates to the consultancy firms which are engaged by the owner of the project. This clause does not in any way dilute the single bidding practice nor can it be interpreted so as to permit submission of more than one Bid in different capacities apparently in collusion with each other. 1 am also of the view that the word 'or' used in the Qualification of the Bidder signifies entitlement of individuals and joint venture firms to participate in the bid and it does not extend to authorize individuals to submit multiple tenders in the garb of tenders by separate entities. 16. For the reasons assigned hereinabove I hold that the writ petition has Sufficient merit. Accordingly, it stands allowed. It is declared that the Bids submitted by M/s Everest Engineering House and M/s Lumino Industries Ltd., R-5 and R-6 respectively are tenders in collusion and cannot be considered as competitive. Hence, the Respondent-ASEB is directed to reject their tenders/Bids in respect to package KANCH-4 and proceed further either by way of awarding the contract to the remaining tenderness after negotiation or by way of floating new tenders. In the facts and circumstances of the case, I refrain from awarding any cost in favour of the writ Petitioner.