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2012 DIGILAW 4631 (MAD)

OSD HRC Pipeline Engineers Pvt Ltd. Rep by its Assistant General Manager, Chennai v. Hindustan Petroleum Corporation Limited, Rep by its Chief Manager Procurement (P&P), Mumbai

2012-11-08

N.PAUL VASANTHAKUMAR

body2012
Judgment :- 1. This writ petition is filed seeing to quash the notification inviting tenders issued by the first respondent in the News Paper Times of India, Chennai Edition, dated 22.8.2012 and direct the first respondent to confirm the contract pursuant to the earlier tender issued by the first respondent on 26.3.2011 on successful completion of technical and price bid respectively. 2. Mr.K.M.Vijayan, learned Senior Counsel appearing for the petitioner during the course of the arguments submitted that even though such a prayer is made in the writ petition, petitioner is not interested in challenging the tender notification dated 22.8.2012 and the petitioner is restricting the challenge only with regard to forfeiture of EMD. The said submission made by the learned Senior Counsel for the petitioner is recorded. 3. The brief facts necessary for disposal of this writ petition are as follows: (a) Petitioner Company is incorporated in the year 2010 as Joint Venture between OSD Private Limited, Australia, and Hydro Carbon Projects Engineers Limited, Chennai. The main scope of the company is to pursue design and project management contracts in the petroleum pipeline and pipeline sector in India. According to the petitioner, it is performing various contracts to public sector companies viz., IOCL, Gujarat State Petronet Limited (GSPL), Gas Authority of India Limited (GAIL), etc. (b) In the month of March, 2011, first respondent floated E-Tender for Engineering Procurement and Construction Management Work (hereinafter referred to as EPCM) for Rewari-Kanpur pipeline project. The said pipeline will transport various petroleum products from Rewari at Haryana to Kanpur at U.P. The tender process are of two parts; one is technical part and another is price part. (c) According to the petitioner, eight bidders along with petitioner participated in the tender. The technical bid was opened and according to the petitioner only two out of eight bidders were finally qualified in the technical bid. Petitioner is one among the two. In June, 2012, first respondent decided to open the price bid and when it was opened it was found that the petitioner was the lowest bidder. (d) It is stated in the affidavit, instead of confirming the bid, the first respondent decided to carry out workability assessment to ascertain once again as to whether the petitioner is technically eligible for the award of contract and according to the petitioner, the said step was taken only to favour the other bidder. (d) It is stated in the affidavit, instead of confirming the bid, the first respondent decided to carry out workability assessment to ascertain once again as to whether the petitioner is technically eligible for the award of contract and according to the petitioner, the said step was taken only to favour the other bidder. (e) On 13.7.2012 the first respondent sent an E-Mail raising five points stating that number of man-hours/man-days considered for the job as furnished in the bid submitted by the petitioner is grossly inadequate and also the bank guarantee from the parent company. The petitioner contended that once technical bid evaluation was completed and price bid was opened, the same issue cannot be raised again. Petitioner has pointed out that the second lowest bidder has submitted the bid for not more than 5% higher than the petitioner's estimation. (f) Petitioner was given time till 22.8.2012 for confirming the said issues raised, failing which, it was informed that the first respondent shall be constrained to draw the conclusion that the petitioner's offer stands withdrawn. (g) The petitioner having not sent confirmation within the stipulated time of 22.8.2012, a fresh tender notification was issued inviting tenders. The said tender notification dated 22.8.2012 is challenged in this writ petition as stated supra and the said prayer is given up and now the petitioner is challenging the forfeiture of EMD alone on the ground that the petitioner has not withdrawn from the bid and the first respondent has only fixed outer time limit to confirm the workability for the amount quoted and stated that if the confirmation is not received by 22.8.2012, the offer stands withdrawn. It is the contention of the petitioner that the first respondent having unilaterally withdrawn the tender, forfeiture of EMD given by the petitioner by way of bank guarantee, is an unjust enrichment and the same is liable to be set aside. 4. The first respondent has filed counter affidavit contending that if the petitioner is having any grievance it can approach the Grievance Redressal Mechanism of the respondent, namely the Director (Marketing) of the respondent Corporation for adjudication of the dispute through arbitration. As per Clause 27.4k of the Tender, the parties agreed that the Courts situated in Mumbai alone has exclusive jurisdiction and no cause of action has arisen to agitate the issue before this Court by the petitioner. As per Clause 27.4k of the Tender, the parties agreed that the Courts situated in Mumbai alone has exclusive jurisdiction and no cause of action has arisen to agitate the issue before this Court by the petitioner. It is further stated in the counter affidavit in paragraph 10 that the price bid submitted by the petitioner is the lowest and the approving authority for the tender found the rates quoted by the petitioner to be significantly low compared to the cost estimated by HPCL. HPCL's purchase policy empowers the review of tender offers regarding their workability of the rates to ascertain whether the party has properly quoted with reference to the scope and the Negotiating Team may require the bidder to produce detailed price analysis for any or all items to demonstrate the internal consistency of the prices, and if the workability assessment is not found satisfactory, the tender will be rejected and EMD if any, will be forfeited. According to the first respondent, as per the above policy, the assessment team met the petitioner's representatives in HPCL office at New Delhi on 26.6.2012 and again on 28.6.2012. During the said meetings various details for assessment of workability of rates was sought for from the petitioner. The details of the man-month required for the job submitted, were inconsistent. The views of the workability assessment was reviewed by the purchase authority of HPCL and it was decided to seek confirmation and clarification on the issues pertaining to details of man-month vis-a-vis the rates quoted for the job from the main constituent member of the petitioner company and sought confirmation on five points by E-Mail dated 13.7.2012. Reminder E-mails were sent on 16.7.2012, 17.7.2012, 26.7.2012, 30.7.2012 and 2.8.2012. On 2.8.2012 the OSD Pipelines, Australia, the main constituent member has responded without giving any specific confirmation on the details sought. Again on 3.8.2012 a statement was sent by OSD Pipeline, Australia stating as follows: "We have collectively within the company offer 1000 man years of pipeline expertise and we will bring that technical support behind OSD-HRC for your Project, but the financial risk in delivering the project will remain with OSD-HRC (Petitioner)." The said contradicting commitment necessitated to raise a further confirmation through E-Mail dated 13.8.2012 stating that the confirmation must be received by 22.8.2012, failing which the first respondent will draw a conclusion that the offer stands withdrawn. As no response was received by 22.8.2012, the first respondent decided to invoke the bank guarantee as the bid was deemed to be withdrawn. The said decision was taken as the main constituent member communicated its opinion on 13.8.2012 in not providing financial support, as initially agreed. The Bank guarantee was invoked by letter dated 30.8.2012 and the second respondent was requested to pay under the bank guarantee provided on 2.6.2012 by the petitioner. As the petitioner is not interested in proceeding with the tender, it is presumed to be withdrawn and as per the tender conditions EMD of Rs.30,66,670/- is to be forfeited. The floating of the fresh tender by notification dated 22.8.2012 is justified in the counter affidavit stating that the process of placement of EPMC contract has already been delayed and without any further loss of time, fresh tender was called for. 5. A reply affidavit was filed by the petitioner contending that there is no concluded contract to raise arbitration, and invoking of bank guarantee by forfeiture of EMD will arise only when there is breach of concluded contract. There is no term of agreement, signed between both the parties, either stipulating a time or forfeiture of contract for invocation of bank guarantee to encash the EMD. 6. Mr.K.M.Vijayan, learned Senior Counsel appearing for the petitioner submitted that on 26.3.2011 notification inviting tenders was issued and eight bidders submitted technical and price bids. On evaluation of technical bids, only two were found eligible i.e, petitioner and another bidder. In June, 2012 price bid was opened and the petitioner was found as the lowest tenderer, but still no confirmation order was issued by the first respondent. Learned Senior Counsel further submitted that the petitioner has not withdrawn the offer and the first respondent, without confirming the bid in favour of the petitioner, offered to withdraw the tender and therefore no forfeiture of EMD can be ordered. Learned counsel also cited the judgment of this Court reported in 2002 (3) LW 271 (K.N.Keerthi Rao v. The General Manager, Southern Railways and Another) in support of his contentions. 7. Mr.G.Masilamani, learned Senior Counsel appearing for first respondent objected the submission made by the learned Senior Counsel for the petitioner regarding restriction of challenge only with regard to forfeiture of EMD by giving up the original prayer in the writ petition. 7. Mr.G.Masilamani, learned Senior Counsel appearing for first respondent objected the submission made by the learned Senior Counsel for the petitioner regarding restriction of challenge only with regard to forfeiture of EMD by giving up the original prayer in the writ petition. The learned Senior Counsel relied on Clause 27.4k of the Tender conditions and submitted that if the petitioner has any grievance it can only move the Courts at Mumbai and this Court has no territorial jurisdiction to consider the plea raised by the petitioner, even for challenging the forfeiture of EMD, as no cause of action has arisen at Chennai to invoke the jurisdiction of this Court. The learned Senior Counsel further submitted that E-Tender was called for and the petitioner is having its office at Chennai and submitted tender to the first respondent Company situated at Mumbai. The learned counsel further submitted that the tender having been called for throughout the country, the tenderers, who participated in the tender from various parts of the country, cannot be allowed to raise dispute everywhere, except Mumbai. Therefore, a preliminary objection was raised regarding the maintainability of the writ petition before this Court. The learned Senior Counsel also made submissions on merits, without prejudice to his objection regarding maintainability, particularly relying on the judgment of the Supreme Court reported in (2003) 7 SCC 410 (National Highways Authority of India v. Ganga Enterprises) for the proposition that even before entering into contract, for non-performance of the contract of some act, forfeiture of EMD can be ordered. 8. As the maintainability issue having been raised as preliminary issue, this Court is inclined to consider the said issue before dealing with the merits of the contention raised in the writ petition. 9. The Tender notification dated 26.3.2011 was issued by the first respondent at Mumbai and bids were to be submitted through online only. Petitioner submitted the tender, both technical bid and price bid and EMD was taken by way of bank guarantee from second respondent. The bank guarantee was furnished in lieu of cash towards EMD in favour of the first respondent. Petitioner submitted the tender, both technical bid and price bid and EMD was taken by way of bank guarantee from second respondent. The bank guarantee was furnished in lieu of cash towards EMD in favour of the first respondent. Technical bid was opened at Mumbai; price bid was opened at Mumbai; works are to be carried out at Rewari in Haryana to Kanpur in U.P; the prime member of the bid is OSD, Australia; new tender was also not invited at Chennai; and the forfeiture of bank guarantee was also ordered on 30.8.2012 at Mumbai. Hence the cause of action inviting tender, submission of tender, opening of technical bid, opening of price bid and forfeiture of EMD, all have taken place at Mumbai and not at Chennai. 10. Similar issue was considered by the Honourable Supreme Court in the decision reported in (2007) 11 SCC 335 (Alchemist Ltd. v. State Bank of Sikkim). In the said case, not entertaining the writ petition by the Punjab & Haryana High Court was upheld by the Supreme Court as the respondent in the said writ petition viz., State Bank of India, Sikkim, was having its head office at Gangtok. Several proposals were received from various entities throughout the country and the bank informed the appellant company, who was at Chandigarh that its proposal was accepted in principle, subject to consideration and approval of the Government of Sikkim. The appellant Company received a communication at Chandigarh, not approving the proposal and sought to withdraw the proposal. The said action was challenged before the Punjab & Haryana High Court in the writ petition and the same was dismissed on the ground that the Punjab & Haryana High Court did not have territorial jurisdiction to entertain the writ petition as no cause of action has arisen within the territorial jurisdiction of that Court. The said order was challenged before the Supreme Court contending that the appellant Company has its registered and Corporate Office at Chandigarh; it carries on business at Chandigarh;, the acceptance of offer of the appellant Company was communicated at Chandigarh; the part-performance of the contract viz., 4.50 crores had been deposited by the Company in a fixed deposit at Chandigarh; and the revocation order was received at Chandigarh office, among other things. The respondent State Bank of India, Sikkim resisted the case by contending that the respondent's Corporate Office is at Gangtok, Sikkim; offers were called for from various parties at Gangtok; the offers were scrutinised and decision to accept the offer was taken at Gangtok; the decision not to approve the proposal was taken at Gangtok; the resolution to withdraw the letter of acceptance was passed at Gangtok; and a communication was despatched to the appellant Company at Chandigarh at Gangtok. The Supreme Court considered the provision contained in Article 226(1)(a) of the Constitution of India and answered the said issue in paragraphs 19 to 24 which read thus, "19. The question for our consideration is as to whether the assertion of the appellant is well founded that a part of cause of action can be said to have arisen within the territorial jurisdiction of the High Court of Punjab and Haryana. Whereas, the appellant Company submits that a part of cause of action had arisen within the territorial jurisdiction of that Court, the respondents contend otherwise. 20. It may be stated that the expression “cause of action” has neither been defined in the Constitution nor in the Code of Civil Procedure, 1908. It may, however, be described as a bundle of essential facts necessary for the plaintiff to prove before he can succeed. Failure to prove such facts would give the defendant a right to judgment in his favour. Cause of action thus gives occasion for and forms the foundation of the suit. 21. The classic definition of the expression “cause of action” is found in Cooke v. Gill ((1873) 8 CP 107 : 42 LJCP 98) wherein Lord Brett observed: ‘Cause of action’ means every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court.” 22. For every action, there has to be a cause of action. If there is no cause of action, the plaint or petition has to be dismissed. 23. For every action, there has to be a cause of action. If there is no cause of action, the plaint or petition has to be dismissed. 23. Mr Soli J. Sorabjee, Senior Advocate appearing for the appellant Company placed strong reliance on A.B.C. Laminart (P) Ltd. v. A.P. Agencies ( (1989) 2 SCC 163 : AIR 1989 SC 1239 ) and submitted that the High Court had committed an error of law and of jurisdiction in holding that no part of cause of action could be said to have arisen within the territorial jurisdiction of the High Court of Punjab and Haryana. He particularly referred to the following observations: (SCC p. 170, para 12) “12. A cause of action means every fact, which if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action can possibly accrue. It is not limited to the actual infringement of the right sued on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Everything which if not proved would give the defendant a right to immediate judgment must be part of the cause of action. But it has no relation whatever to the defence which may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff.” 24. In our opinion, the High Court was wholly justified in upholding the preliminary objection raised by the respondents and in dismissing the petition on the ground of want of territorial jurisdiction." In paragraphs 37 to 39, the Supreme Court further held as follows: "37. In our opinion, the High Court was wholly justified in upholding the preliminary objection raised by the respondents and in dismissing the petition on the ground of want of territorial jurisdiction." In paragraphs 37 to 39, the Supreme Court further held as follows: "37. From the aforesaid discussion and keeping in view the ratio laid down in a catena of decisions by this Court, it is clear that for the purpose of deciding whether facts averred by the appellant-petitioner would or would not constitute a part of cause of action, one has to consider whether such fact constitutes a material, essential, or integral part of the cause of action. It is no doubt true that even if a small fraction of the cause of action arises within the jurisdiction of the court, the court would have territorial jurisdiction to entertain the suit/petition. Nevertheless it must be a “part of cause of action”, nothing less than that. 38. In the present case, the facts which have been pleaded by the appellant Company, in our judgment, cannot be said to be essential, integral or material facts so as to constitute a part of “cause of action” within the meaning of Article 226(2) of the Constitution. The High Court, in our opinion, therefore, was not wrong in dismissing the petition. 39. For the foregoing reasons, we see no infirmity in the order passed by the High Court dismissing the petition on the ground of want of territorial jurisdiction. The appeal, therefore, deserves to be dismissed and is accordingly dismissed. In the facts and circumstances of the case, however, we leave the parties to bear their own costs." (Emphasis Supplied) In the said judgment it is held that whether the facts averred would or would not constitute cause of action, one has to consider whether such fact constitute a material, essential or integral part of the cause of action. 11. In this case, the petitioner submitted its tender application through E-Mail from Chennai and merely because the EMD was submitted by bank guarantee through the second respondent, who is at Chennai, petitioner is not justified in contending that part of the cause of action has arisen within the territorial jurisdiction of this Court. The bank guarantee was furnished towards EMD in lieu of remitting the cash at Mumbai. The bank guarantee was furnished towards EMD in lieu of remitting the cash at Mumbai. The mere fact that the petitioner is carrying on its business at Chennai and the reply to the correspondence was received at Chennai, cannot constitute a material, essential and integral part of cause of action. In the decision reported in (2004) 9 SCC 786 (National Textile Corporation Ltd. v. Haribox Swalram) similar question was considered and in paragraph 12.1 the Hon'ble Supreme Court held thus, "12.1 ....... the mere fact that the writ petitioner carries on business at Calcutta or that the reply to the correspondence made by it was received at Calcutta is not an integral part of the cause of action and, therefore, the Calcutta High Court had no jurisdiction to entertain the writ petition and the view to the contrary taken by the Division Bench cannot be sustained." 12. Therefore, the preliminary objection raised by the learned Senior Counsel for the first respondent regarding the maintainability of the writ petition before this Court on the ground of lack of territorial jurisdiction is well founded and the said preliminary issue is decided against the petitioner. Consequently the writ petition is liable to be dismissed as not maintainable due to want of territorial jurisdiction. 13. As this Court is of the view that the writ petition is liable to be dismissed on the ground of maintainability, merits of the contentions raised by the learned Senior Counsels appearing for the petitioner as well as first respondent are not dealt with in any manner, in this order. 14. In fine, the writ petition is dismissed for want of territorial jurisdiction. If the petitioner is having any right to agitate, it is for the petitioner to work out its remedy before the Courts at Mumbai. No costs. Connected miscellaneous petitions are also dismissed.