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2010 DIGILAW 1742 (BOM)

Siemens Ltd. v. Mumbai Railway Vikas Corporation Ltd.

2010-12-07

ANOOP V.MOHTA, D.Y.CHANDRACHUD

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JUDGMENT: Dr. D. Y. Chandrachud, J. Leave to amend in terms of the draft amendment tendered is granted. Amendment be carried out during the course of the day. 2. MUT-PII is a project aided by the World Bank and is being implemented by the First Respondent. The First Respondent floated a tender for the supply of 72 trains, each of 12 coaches. The bids are to be opened this morning. The First Petitioner has not been permitted to bid in view of a settlement that was entered into by the First Petitioner with the World Bank under which the First Petitioner agreed to voluntarily desist from bidding for any World Bank aided project, across the world, for a period of two years and to make a financial commitment of US Dollars 100 million over fifteen years to support anticorruption work. This followed, what the World Bank described as the Petitioner’s, “acknowledged past misconduct in its global business and a World Bank investigation into corruption in a project in Russia involving a Siemens subsidiary”. The decision of the World Bank was communicated to the Union Ministry of Finance which, in turn, informed the First Respondent of the debarment by a letter dated 24 August 2009. 3. The position as it exists is that the First Petitioner is debarred from bidding for the project in question. Tenders have been invited under the MUT-PII project of the First Respondent, which is entirely aided and financed by the World Bank. The First Respondent is, therefore, obligated not to entertain a bid of a bidder who is precluded from bidding until 31 December 2010. These facts are adverted to in a World Bank letter dated 31 July 2009 to the Joint Secretary in the Department of Economic Affairs, Union Ministry of Finance of the Government of India. 4. The Petitioners seek to challenge a communication of the First Respondent dated 3 June 2010 stating that under the guidelines issued by the Union Ministry of Finance and the World Bank, the bid documents for this bid could not be issued to the First Petitioner. The First Respondent had sought a clarification from the World Bank by a letter dated 11 November 2010. The World Bank informed the First Respondent by its letter dated 15 November 2010 that it had nothing further to add. The First Respondent had sought a clarification from the World Bank by a letter dated 11 November 2010. The World Bank informed the First Respondent by its letter dated 15 November 2010 that it had nothing further to add. On 18 November 2010 the World Bank responded to a representation by the Petitioner and found no reason to make an exception from the voluntary restraint imposed under the settlement agreement. The World Bank, in its letter to the Petitioner furnished the following reasons for not making an exception: “While we recognize the potential benefits that may accrue to the borrower and the project if Siemens were allowed to bid, in our view, it has not been established that the loss of those potential benefits would constitute `disproportionate harm’ to the borrower, as required by the settlement agreement. We would note, among other things, that there are a number of other potential bidders that have expressed interest in the tender, so that the borrower has not been deprived of a competitive process, nor is there any indication from the borrower itself that Siemens’ absence from the bidding would have a material adverse effect on project implementation. Indeed, our borrower has not communicated any concern to us in connection with this tender or Siemens’ participation, which we would view as a sine qua non for any exception. We are also conscious of the precedent that an exception would create for future bidding as the voluntary restraint period draws to a close.” The World Bank stated that the question as to whether the deadline for the bid should be extended is a matter for the borrower to decide. The First Respondent has declined to extend the deadline for the submission of bids. 5. Counsel for the Petitioners has adverted to the averments made in paragraph 19 of the Petition and submitted that there is an element of public interest involved in extending the time for the submission of bids. The First Respondent has declined to extend the deadline for the submission of bids. 5. Counsel for the Petitioners has adverted to the averments made in paragraph 19 of the Petition and submitted that there is an element of public interest involved in extending the time for the submission of bids. Among the factors to which a reference has been made is that (i) the Petitioner has successfully completed three years of project experience, in integrating over the Chassis, IGBT traction EMU units on trains; (ii) the Petitioner already has two dedicated units at Kalwa and Nashik which no other competitor possesses for manufacturing the equipment/trains for which tenders have been invited; (iii) other bidders would either have to set up a new facility or to incur import costs; (iv) the bid submitted by the Petitioner in an earlier tender was substantially lower, envisaging a saving of nearly Rs.120 crores and (v) the petitioner is in a position to supply the final product within twelve to fourteen months. 6. The only relief that has been sought in these proceedings, at the hearing, is that this Court should direct the First Respondent to extend the dead line for the submission of bids to a date beyond 31 December 2010, in order to facilitate the Petitioner to submit a bid. The jurisdiction under Article 226 of the Constitution of India is invoked on the ground that having regard to the experience and the past performance of the Petitioner it is in the public interest to extend the deadline for submission of bids. That is the only relief which Learned Senior Counsel pressed at the hearing. 7. We have already noted the circumstance that the MUTP-II project under which bids have been invited is entirely funded by the World Bank. The Petitioner is under a voluntary agreement of restraint not to bid for any project financed by the World Bank globally until 31 December 2010. The World Bank, while evaluating a representation submitted by the Petitioner noted that it was unable to come to a conclusion that the First Respondent would suffer disproportionate harm by excluding the Petitioner from the bidding process. That was on the basis of several other potential bidders having expressed interest in the tender and that the First Respondent would not be deprived of a competitive process. That was on the basis of several other potential bidders having expressed interest in the tender and that the First Respondent would not be deprived of a competitive process. The World Bank was of the view that the exclusion of the Petitioner would not have a material adverse effect on the implementation of the project. These are of course observations of the World Bank and by no means conclude the Court on the question as to whether it is in the public interest to grant relief in terms prayed for extending the deadline for submission of bids. The views of the World Bank do not bind the Court, particularly when it is exercising its jurisdiction under Article 226 of the Constitution of India. 8. During the course of the hearing, counsel on behalf of the First Respondent, on a query by the Court, stated that four bidders have submitted their bids by the dead line which expired at 11 am this morning. These bidders are (i) M/s.Alstom, Transport SA, France in joint venture with BHEL, (ii) Sumitomo Corporation of Japan in joint venture with Mitsubishi, (iii) M/s.Zhuzhou CSR Times Electric Co.Ltd., China and (iv) Bombardier, Germany. We have allowed the statement which has been placed by the counsel for the First Respondent to be taken on record. These facts would indicate that a competitive process of bidding has not suffered as a result of the exclusion of the Petitioner. Whether, as a matter of fact, the bids that have been received by the First Respondent meet the technical criteria and if so, whether they are commercially viable is a matter which is to be evaluated in the public interest by the First Respondent. The relief that is sought in these proceedings is fairly exceptional because a bidder who is admittedly not entitled to bid until 31 December 2010 seeks a direction from the Court compelling the bid inviting authority to extend the deadline for the submission of bids. Ordinarily the Court would not exercise the jurisdiction under Article 226 to grant relief of this nature. On the basis of material on the record, we are of the view that no case has been made out for an order of the Court for the extension of time to submit bids. Several bidders, including among them, those with a global presence are involved in the bidding process. On the basis of material on the record, we are of the view that no case has been made out for an order of the Court for the extension of time to submit bids. Several bidders, including among them, those with a global presence are involved in the bidding process. There is no justification for the Court to direct the extension of the time prescribed for submitting bids, if only to enable a party which is not qualified to bid at this time to bid at a future date. Besides any such direction will only delay the implementation of a public project. The Petitioner has not questioned, in the submissions at the hearing, the ground for its debarment under what is described as a settlement on voluntary restraint. 9. For these reasons, we decline to entertain the petition. The Petition is dismissed. There shall be no order as to costs.