High Court · 2009

In response to the above mentioned invitation the appellant in W 3. A No.364/08 in consortium with the appellant in WA No.365/08 submitted a bid. Ap art from that, the appellant in WA No.365/08 also filed a separate bid. The 7th respondent herein, who was the petitioner in WP(C) No.4487/08, also filed its bi d. While the appellant in WA No.364/08 offered to execute the work in question a t Rs.91,60,25,075.01/- the writ petitioner quoted an amount of Rs.107,02,76,569. 37/- whereas the appellant in WA No.365/08 quoted an amount of Rs.100,09,01,448. 15/-.

4. On examination of the tenders filed by the various parties the A SEB invited the appellant in WA No.364/08 for further negotiations as the appell ant was found to be the lowest bidder. Eventually the appellant in WA No.364/08 agreed to reduce the offer marginally and offered to execute the work at a cost of Rs.91,25,60,000/-.

5. It appears that a tri partite agreement was made between the Gov t of Assam, the Assam State Electricity Board (ASEB) and a body known as the Rur al Electrification Corporation Ltd (REC). The approval of the said REC is requir ed for finalization of the tender invited by the ASEB. Therefore, the ASEB sough t the approval of the above mentioned REC to finalise the bid to enter into a co ntract with the appellant in WA No.364/08 for execution of the work of the Packa ge No.4.

6. While the matter was pending consideration before the above ment ioned REC the instant writ petition came to be filed. By an interim order dated 1-2-08 the finalization of the tender process was stayed by this court. With reference to each of the packages for which the bids are in vited various eligibility criteria for participation in the tendering process ar e indicated. Insofar as Package No.4, with which we are concerned the qualificat ions are as follows :- (cid:28)Packages KANCH-4: Supply & installation of 11 kv LT lines & Distribution Transf ormers and service connections to BPL beneficiaries. 1.1(i) The bidder should have executed at least one substation or switch yard of 33 KV class or above during the last seven (7) years as on the date of bid open ing and which must be in satisfactory operation for at least two (2) years as on the date of bid opening. OR (ii) The bidder should have constructed and commissioned transmission lines/ fee ders of aggregate root length of 100 km 11 KV or above voltage class or installe d/erected 11 KV or above voltage class sub-stations (in case of 11/0.4 KV distri bution sub-station at least 20 number substations) during the last seven (7) yea rs and which must be in satisfactory operation for at least two (2) years as on the date of bid opening. OR (iii) The bidder should be a manufacturer who must have designed, manufactured, type tested and supplied in one single year (in any year during last seven years ) at least 20 MVA cumulative distribution transformers of 11/0.4 kV rating or po wer transformers for 11 kV and above voltage class and are in satisfactory opera tion for at least 2 years as on the date of bid opening provided he engages a su b-contractor (the details of which to be submitted along with the bid), who meet s any one of the qualification requirements specified in (i), (ii) or (iii) abov e. In such case the bidder proposing subcontractor(s) shall furnish a Joint Deed of Undertaking (Format enclosed as Appendix) along with the subcontractor(s) gu arantee, quality and timely completion of package and confirming to furnish a pe rformance guarantee to be shared equally amongst subcontractor(s) aggregating to 1% of the package cost. This is in addition to 15% Contract Performance Guarant ee to be submitted by the contractor on award of contract. 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 quali fication requirements set forth in para 1.1 above. (cid:29) We may indicate straightway that the dispute in the present set 7. of appeals revolves around the last clause extracted above. The other conditions extracted above are not relevant for the purpose of the issue on hand.

8. The case of the respondent writ petitioner is that on opening of the technical bids of the various parties, who responded to the tender notifica tion, the writ petitioner came to know that the appellant in WA No.364/08 in con sortium with the appellant in WA No.365/08 submitted one bid and the appellant i n WA No.365/08 independently submitted his own bid. We have already noticed earl ier the amounts quoted by the two appellants referred to above. According to the writ petitioner such a tender process by the above mentioned appellants is tota lly collusive and contrary to the stipulation of the invitation to bid, more spe cifically the clause highlighted earlier in this judgment. According to the writ petitioner the bid of the appellant in WA No.364/08, therefore, should have bee n rejected as a non responsive bid. The writ petitioner also sent a representati on dated 27-8-08 to the Chief General Manager, REC objecting to the consideratio n of the bid of the appellant in WA No.364/08.

9. Ignoring such a complaint of the writ petitioner the ASEB not on ly proceeded to examine the price bid of the appellant in WA No.364/08 but event ually also called the said appellant for negotiation and decided to accept the t ender of the said appellant at a negotiated price, the details of which are alre ady noticed earlier.

10. The objection of the writ petitioner to the process adopted by t he ASEB is that such a process is contrary to the letter and spirit of the stipu lation contained in the invitation to bid documents and more specifically the st ipulation therein which indicates as follows :- (cid:28)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 qual ification requirements set forth in para 1.1 above. (cid:29) According to the petitioner both the letter and spirit of the ab 11. ove mentioned clause is that a bid may be submitted by a joint venture of firms or an individual firm and if an individual firm which in a joint venture with ot her firms (consortium) has responded to the invitation and submitted a bid such an individual firm cannot again submit a bid in its individual capacity. The lea rned Judge accepted the submission of the writ petitioner and allowed the writ p etition with a declaration that the bid submitted by the appellants in WA No.364 /08 and WA No.365/08 are collusive in nature and consequentially directed the AS EB, the appellant in WA No.375/08, to reject the tender of the above mentioned t wo appellants and award the contract in favour of one of the remaining tenderers or by floating new tenders. The relevant portion of the judgment reads as follo ws :- (cid:28)16. For the reasons assigned hereinabove I hold that the writ petition has suff icient merit. Accordingly, it stands allowed. It is declared that the Bids submi tted 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 t o the remaining tenderers after negotiation or by way of floating new tenders. (cid:29) The reasons given by the learned Judge for such a decision is to be found at par a-14 of the judgment and it reads as follows :- (cid:28)14. & 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 c oncept of ’competitive tenders’. Besides this, under Clause 7 of the guidelines issued by the REC the definition of ’fraudulent practice’ includes the acts of m isrepresentation of facts and collusive practices among the bidders. I fail to u nderstand 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 Hous e as an individual and also separately as a technical partner of M/S Lumino Indu stries 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. (cid:29)

12. Hence the present appeal. We have already noticed that the learned Judge by the judgment u 13. nder appeal recorded a finding that the appellants in WA Nos.364/08 and 365/08 r esorted to collusive practice. The learned Judge held that (cid:28)two tenders are subm itted by an individual albeit in the name of two different entities it would cer tainly be against the concept of competitive tenders (cid:29).

14. The learned counsel for the appellant argued that except the ips e dixit the learned Judge has not given any reason for such a conclusion. The le arned counsel further argued that the expression (cid:28)or (cid:29) occurring in the relevant clause of the NIT, (which is already taken note of in this judgment), is only in dicative of the fact that a firm interested in participating in the tender proce ss can do so either individually or in consortium with other firms but the said clause is not intended to make the options mutually exclusive more particularly in view of the stand taken by the Electricity Board (employer) in its affidavit in opposition in the writ petition. The learned counsel argued that either an et ymological analysis of the clause in question or the principles of construction which are employed in interpretation of statutes need not necessarily be the rig ht considerations while interpreting documents forming part of a contract but th e intention of the author of the document should be the determinative factor.

15. On the other hand the learned counsel for the respondents submit ted that the transaction in question is not a transaction of a contract between the private parties. The employer inviting tenders is a public body, a statutory corporation, dealing with public funds and, therefore, the understanding of the electricity board cannot be the sole determining factor as to the meaning of th e clause in issue. The learned counsel submitted, this court in exercise of the jurisdiction under Article 226 of the Constitution would certainly examine wheth er the understanding of the parties to the transaction is consistent with larger public interest. The learned counsel placing reliance on the judgment of the Su preme Court reported in (1993) 3 SCC 499 argued that the activity of the appella nts in WA Nos.364/08 and 365/08 tantamount to formation of a cartel which is no t consistent with the larger public interest and, therefore, the learned Single Judge rightly interfered with the award of the contract by the electricity board , i.e. to the appellant in WA No.375/08.

16. Before going into the rival contentions of the parties we are of the opinion that it would be profitable to examine the meaning of the expressio n (cid:28)collusion (cid:29) and that the acts of the appellants in WA Nos.364/08 and 365/08 ta ntamount to a collusive practice in the context of the present case.