M/s.Phoenix Conveyor Belt India (P) Ltd. v. The Chairman and Managing Director,Tamilnadu Generation of Energyand Distribution Company Limited(TANGEDCO) & Ors.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED 27.04.2012CORAMTHE HONOURABLE MR. JUSTICE M. JAICHANDRENW.P.No.7186 of 2012M/s.Phoenix Conveyor Belt India (P) Ltd.,Rep. by its Deputy Regional Director,Southern Region,Mount Chambers,2nd Floor,No.758, Anna Salai,Chennai 600 002. .. Petitioner vs. 1.The Chairman and Managing Director,Tamilnadu Generation of Energyand Distribution Company Limited(TANGEDCO),Thermal purchase,NPKRR Maligai,144, Anna Salai,Chennai 600 002.2.Forech India Limited,Flat G-1, Hyagreeva,85, Velcherry High Road,Guindy,Chennai 600 032. .. Respondents Writ petition filed under Article 226 of the Constitution ofIndia, praying this Court for the issuance of Writ of Mandamusdirecting the first respondent to confirm the tender bid of thepetitioner dated 30.12.2011 and award the tender for supply of steelcord conveyor Belts for North Chennai Thermal Power Station. https://hcservices.ecourts.gov.in/hcservices/ For Petitioner ... Mr.A.Thiagarajan, SC for Mr.S.Ramesh KumarFor the first Respondent ... Mr.G.VasudevanFor the second Respondent ... Mr.AR.Ramanathan ORDERHeard the learned counsel appearing on behalf of the petitioner,as well as the learned counsel appearing on behalf of therespondents. 2.This writ petition has been filed praying that this Court maybe pleased to issue a writ of Mandamus to direct the firstrespondent, to confirm the tender bid of the petitioner dated,30.12.2011, and to award the tender, for supply of Steel CordConveyor Belts, for North Chennai Thermal Power Station, in favourof the petitioner.3.It had been stated that the petitioner is a leadingmanufacturer of Steel Cord Conveyor Belts in India. The petitionerhad carried out several contracts, in supplying Steel Cord ConveyorBelts, relating to a number of Government projects. 4.It had been further stated that the first respondent hadissued a tender notification for the supply of Steel Cord ConveyorBelts, for North Chennai Thermal Power Station. The tendernotification had contained the usual terms and conditions. InSection II of the tender specifications, certain "BID QUALIFICATIONREQUIREMENTS" had been specified, under clause (ii) of the saidspecifications that 'the bidder should have previous experience forthe order executed for supplying a minimum quantity of 1800 metrelength of Steel Cord Conveyor Belt having minimum 1600mm width andstrength of ST 1150 to TNEB or SEBs or NTPC or PSUs or PowerUtilities or Mines within the last 5 years as on the scheduled dateof opening of technical bid. Out of the quantity supplied at least1000m of the belt should have worked satisfactorily for a minimumperiod of one year as on the scheduled date of opening of technicalbid'. However, the first respondent had placed the supply orders,with the second respondent, even though the second respondent hadnot fulfilled the above specifications. Instead of rejecting thetender submitted by the second respondent, summarily, the firstrespondent had been attempting to confirm the tender, in favour of https://hcservices.ecourts.gov.in/hcservices/ the second respondent, arbitrarily and illegally. In suchcircumstances, the petitioner has preferred the present writpetition, before this Court, under Article 226 of the Constitutionof India.5.In the counter affidavit filed on behalf of the firstrespondent, it had been stated that the writ petition, filed by thepetitioner, is not maintainable, either in law, or on facts. Since,the second respondent had all the necessary qualifications, as perthe "BID QUALIFICATION REQUIREMENTS", and as it had quoted thelowest rate, the tender submitted by the second respondent had beenaccepted and the purchase order had also been issued, on 19.3.2012,even before passing of the interim order, by this Court, in M.P.No.2of 2012, on 20.3.2012.6.It had been further stated that the tender had been floatedfor the procurement of various types of Steel Cord Conveyor Belts,for North Chennai Thermal Power Station. Five offers had beenreceived. One offer had been received from the regular supplier,namely, M/s. Phoenix Yule (P) Limited, Kolkatta. Four other offershad also been made, by new entrants. The Techno-Commercial bids,made by four of the participants, had been opened, on 21.4.2011, andthe price bids had also been opened, on 12.8.2011. Due to certainreasons, a fresh tender had to be floated, instead of the earliertender, after receiving the "BID QUALIFICATION REQUIREMENTS". Theperformance report required was only for one year, instead of thetwo years period mentioned in the previous tender. The new entrantclause had already been removed in the fresh tender, floated for theprocurement of Steel Cord Conveyor Belts. Whileso, three offers hadbeen received, and the Techno Commercial bids received in respectof such offers, had been opened, on 30.12.2011. The price bids hadalso been opened. The bid of the second respondent had beenaccepted, as it had furnished the necessary proof for supplyingnearly 60,000 metres of Steel Cord Conveyor Belts. The secondrespondent was also having a capacity of manufacturing upto 1200mmwidth of Steel Cord Conveyor Belts with a strength of ST2500.Further, the performance of the Steel Cord Conveyor Belts, suppliedby the second respondent to Vishakapatnam Port Trust and GujaratIndustries Power Company limited, had been found to be satisfactory.The second respondent had also exported Steel Cord Conveyor Belts toGermany and Italy, having 2,000 mm width and the strength of ST2000. 7.It had also been stated that the Price offers of both thepetitioner, as well as the second respondent, had been opened, on2.3.2012. Since, the second respondent had quoted the lowest rate,due to which, there was a huge benefit of Rs.1.12 Crores to thefirst respondent Company, the purchase order had been placed with https://hcservices.ecourts.gov.in/hcservices/ the second respondent Company, on 19.3.2012. It has also beenstated that the previous supply made by the petitioner, during theyear, 2003, was found to have certain manufacturing defects i.e.,bonding defects, as per the Anna University Report. In suchcircumstances, the second respondent had been given the purchaseorder to supply the steel cord conveyor Belts. 8.It has also been stated that an efficacious alternativeremedy of an appeal is available to the petitioner, under Section 11(3) of the Tamil Nadu Transparency in Tenders Act, 1998. As such,the writ petition filed by the writ petitioner is devoid of meritsand therefore, it is liable to be dismissed.9.The learned counsel appearing on behalf of the petitioner hadsubmitted that the tender bid made by the second respondent shouldnot have been accepted by the first respondent, as the secondrespondent has not complied with mandatory requirements of clause(ii) of the "BID QUALIFICATION REQUIREMENTS" specified, as per thetender specifications. The first respondent, who is the statutoryauthority is bound to act, as per the provisions of the Tamil NaduTransparency in Tenders Act, 1998, and the Rules framed there under.In fact, the first respondent ought to have accepted the tender bidmade by the petitioner, as it possessed the requiredqualifications.10.The learned counsel appearing for the petitioner had furthersubmitted that the performance certificate, submitted by the secondrespondent, does not refer to the first condition of clause (ii) ofthe "BID QUALIFICATION REQUIREMENTS". As such, the acceptance ofthe tender bid, made by the second respondent, is arbitrary andillegal.11.It had been further stated that no order had been passed bythe first respondent, granting the tender in favour of the secondrespondent, under the provisions of the Tamil Nadu Transparency inTenders Act, 1998, and no reason had been given in the rejection oftender submitted by the petitioner. No intimation had been given tothe petitioner, with regard to the acceptance of the tender of thesecond respondent. 12.It had been further stated that the appeal remedy provided,under Section 11 of the said Act, cannot be applicable to thepresent case, as no order had been passed by the first respondent,under Section 10 of the Act. The purchase order, dated 19.3.2012,said to have been granted in favour of the second respondent, cannot be taken to be the order issued, under Section 10 of the TamilNadu Transparency in Tenders Act, 1998. https://hcservices.ecourts.gov.in/hcservices/

13.It had been further stated that the "BID QUALIFICATIONREQUIREMENTS", prescribe that the attested copies of evidence, forfulfilling the necessary conditions have to be produced, includingthe purchase order and the performance certificate. It would not besufficient for the second respondent, merely to produce the purchaseorder and the performance certificate.14.The learned counsel had further submitted that the terms andconditions of the tender had to be strictly complied with, by thefirst respondent. The learned counsel has also relied on thefollowing decision in support of his submissions, in SIEMENS PUBLICCOMMUNICATION NETWORKS PRIVATE LIMITED AND ANOTHER VS. UNION OFINDIA AND OTHER (2008 (16) SCC 215), wherein, the Supreme Court hasheld that 'it is not possible to rewrite the entries in biddocuments and read into the bid document, certain terms that didnot exist therein'.15.He had also relied on another decision in MONARCHINFRASTRUCTURE (P) LTD., V. COMMISSIONER ULHASNAGAR MUNICIPALCORPORATION AND OTHERS (2000 (5) SCC 287) wherein, the Supreme Courthas held that 'the Government is free to enter into any contractwith the citizens, but the Court may interfere where it actsarbitrarily or contrary to public interest. The Government cannotarbitrarily choose any person it likes for entering into such arelationship or to discriminate between persons similarly placed.It is open to the Government to reject even the highest bid in atender, where such rejection is not arbitrary or unreasonable and ifsuch rejection is in public interest, for valid and good reasons'.16.As such, the action of the first respondent in granting thepurchase order, in favour of the second respondent, is arbitrary andillegal. Hence, the writ petition, filed by the writ petitioner, isarbitrary and illegal.17.Per contra, the learned counsel appearing on behalf of thesecond respondent had submitted that the writ petition filed by thepetitioner is not maintainable, before this Court, under Article 226of the Constitution of India, as an efficacious, alternative remedyis available to the petitioner, under Section 11 of the Tamil NaduTransparency in Tenders Act, 1998. He had further submitted that anorder had been issued in favour of the second respondent, on19.3.2012, pursuant to the acceptance of the tender bid submitted bythe second respondent. 18.It had also been stated that all the relevant documents hadbeen submitted, along with the tender bid, based on which, the firstrespondent had accepted the tender submitted by the secondrespondent and had granted the purchase order in favour of the https://hcservices.ecourts.gov.in/hcservices/ second respondent.19.The learned counsel had further submitted that, since, theissues raised by the petitioner involves disputed questions offact, it would not be appropriate for this Court to decide the same,in the present writ petition. Therefore, the writ petition, filedby the petitioner, is not maintainable. In support of hiscontention he had relied on the decision of the Supreme Court, inSANJANA M. WIG V. HINDUSTAN PETRO CORPORATION LTD. (2005 (5) CTC292). 20.He had also relied on the decision of this Court in UFLEXLIMITED, REPRESENTED BY ITS AUTORISED SIGNAGTORY, MR. R. SUNDARRDOSS V. STATE OF TAMIL NADU, REPRESENTED BY THE SECRETARY TOGOVERNMENT (2011 (4) CTC 225) wherein, paragraph 18 reads asfollows: "Moreover, the terms of the contract are notopen to judicial scrutiny, the same being in the realmof contract. The Courts are always hesitant tointerfere with the administrative policy decision andin rarest of rare occasions, if it is arbitrary,discriminatory, mala fide or actuated by bias, theCourts can interfere or otherwise the Courts cannotstrike down the terms of the tender prescribed by theGovernment because it feels that some other terms inthe tender would have been fair, wiser or logical.The right to choose cannot be considered to be anarbitrary power. Of course, if the said power isexercised for any collateral purpose, the exercise ofthat power will be struck down. In a commercialtransaction, the State can choose its own method toarrive at a decision and it is free to grant anyrelaxation for bona fide reasons, provided the tenderconditions permit such a relaxation. Even when somedefect is found in the decision making process, theCourt has to necessarily exercise its discretionarypowers under Article 226 with great caution and shouldexercise it only in furtherance of public interest andnot merely on the making out of a legal point. TheCourt should always keep the larger public interest inmind in order to decide whether its intervention iscalled for or not. Only when it comes to a conclusionand is satisfied that overwhelming public interestrequires interference, the Court should interfere.Otherwise, the larger public interest will prevailupon the individual's interest. This is the law laiddown by this Court in the cases of Ion ExchangeWaterleau Ltd., and P.Ramadas, cited supra." https://hcservices.ecourts.gov.in/hcservices/

21.In reply, the learned counsel appearing on behalf of thefirst respondent, had submitted that the tender bid of the secondrespondent was the lowest, due to which the first respondent Companyhad benefitted to an extent of Rs.1.12 Crores. Further, the steelcord conveyor Belts, supplied by the petitioner, during the year,2003, was found to have certain manufacturing defects. In view ofthe documents submitted by the second respondent, the TenderEvaluation Committee had approved the bid submitted by the secondrespondent. Based on the said approval, the purchase order had beenissued to the second respondent, on 19.3.2012. It is also submittedthat the petitioner ought to have availed the alternative remedyprovided under Section 11 of the Tamil Nadu Transparency in TendersAct, 1998, and therefore, the present writ petition, filed by thepetitioner, is not maintainable. 22.In view of the submissions made on behalf of the partiesconcerned and on a perusal of the records available, and in view ofthe decisions cited supra, this Court is of the considered view thatthe writ petition, filed by the petitioner, is liable to bedismissed, as it is devoid of merits. 23.The tender bid submitted by the second respondent had beenaccepted, by the first respondent, and the purchase order had alsobeen issued, on 19.03.2012, in favour of the second respondent.While so, the petitioner ought to have filed an appeal, underSection 11 of the Tamil Nadu Transparency in Tenders Act, 1998, ifso advised. Instead of doing so, the petitioner has preferred thepresent writ petition, before this Court, praying that this Courtmay be pleased, to issue a Writ of Mandamus directing the firstrespondent to grant the tender in favour of the petitioner. 24.Further, from the records placed before this Court, it isseen that the second respondent had complied with the requirements,as specified in the "Bid Qualification Requirements". A number ofpurchase orders had been filed before this Court, on behalf of thesecond respondent. They had been submitted by the secondrespondent, along with the tender bid, to show that the Steel CordConveyor Belts with the width of 1600mm had been supplied to variousentities. The minimum required length, as specified in the saidregulations, had also been complied with. While so, it would not bepossible to the petitioner to state that the second respondent hadnot fulfilled the requirements specified in the "Bid QualificationRequirements" of the tender specifications. 25.It is also noted that the Tender Evaluation Committeeconcerned had approved the tender submitted by the second https://hcservices.ecourts.gov.in/hcservices/ respondent, after verification of all the necessary documents, whichwere required to show that the second respondent had fulfilled therequirements specified in the tender specifications. Further, thepetitioner has not been in a position to show that the acceptanceof the tender bid made by the second respondent had been done in amalafide manner. In such circumstances, this Court finds itappropriate to dismiss the writ petition. Hence, the writ petitionstands dismissed. Consequently, connected M.P.No.1 of 2012 isclosed. No costs. Sd/- Asst.Registrar. /true copy/ Sub Asst.Registrar.claToThe Chairman and Managing Director,Tamilnadu Generation of Energyand Distribution Company Limited(TANGEDCO),Thermal purchase,NPKRR Maligai,144, Anna Salai,Chennai 600 002.1 cc to Mr.S. rameshkumar, Advocate, Sr. 286241 cc to M,r.G. Vasudevan, Advocate, sr. 287382 ccs to Mr.AR. Ramanathan, Advocate, sr. 28725, 28939W.P.No.7186 of 2012SGL (CO)kk 8/5