Bharathi Data Service Pvt.Ltd.,No.53/1, Patel RoadPerambur, Chennai 600 011 v. Director of Collegiate EducationDirector of Public Information ComplexChennai 600 0062

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:03.09.2009CORAM;THE HONOURABLE MR.JUSTICE P.JYOTHIMANIW.P.No.18022 of 2009and M.P.No.1 of 2009Bharathi Data Service Pvt.Ltd.,No.53/1, Patel RoadPerambur, Chennai 600 011represented by its DirectorMr.P.Maduraiveeran ..Petitioner Vs.1.Director of Collegiate EducationDirector of Public Information ComplexChennai 600 0062.SecretaryTamilnadu B.Ed.Admission 2008Lady Willington Institute of Advanced Studiesin Education CampusTriplicaneChennai 600 0053.Broadline Computer SystemsNo.7, II FloorKhader Nawaz Khan RoadNungambakkam, Chennai 600 034 ..RespondentsWrit Petition is filed under Article 226 of the Constitution ofIndia praying for issuance of a writ of Mandamus directing therespondents to follow the Tamilnadu Transparency in Tenders Act,1998 and Rules strictly in Tender Notice dated 7.8.2009 also andforbearing the respondents 1 and 2 from issuing tender confirmationorder to the ineligible person like 3rd respondent as he has violatedtender terms and conditions and also direct the respondents toaccept the petitioner's tender application dated 28.8.2009 and issueconfirmation order to the petitioner as he has been complied all theterms and conditions as per the Tamilnadu Transparency in TendersAct and Rules. https://hcservices.ecourts.gov.in/hcservices/ for petitioner : Mr.P.Jayaraman Senior Counsel for Mr.G.Elanchezhiyanfor respondents : Mr.G.SankaranSpecial Govt.Pleader ORDER Heard Mr.P.Jayaraman, learned senior counsel appearing forMr.G.Elanchezhiyan, learned counsel for the petitioner andMr.G.Sankaran, learned Special Government Pleader who has takennotice and made his submissions based on instructions by producingrecords.2.The writ petitioner is one of the applicants appliedpursuant to the public notice issued by the first respondent,Director of Collegiate Education, for execution of Single WindowSystem (SWS) of counselling work at Lady Willington Institute ofAdvanced Studies in Education Campus, Chennai-5. The thirdrespondent has also applied in accordance with the saidnotification. As per the terms and conditions set out by the secondrespondent based on which the application has been made by thepetitioner as well as third respondent, participants should complywith the following conditions:(1)The company should possess ISO certificate.(2)The tender company should be in existence for aminimum period of 10 years (Incorporationcertificate should be enclosed).(3)The company should have prior experience inexecuting similar type of Single WindowCounselling work for a minimum of twoorganizations.(4)The annual turnover of the company shall be morethan Rs.3 crores in the preceding 3 years[Auditor's Report].(5)Proof for submission of latest income taxreturns.(6)Stage wise [1 to 7] cost price to be quoted perapplication.(7)Stage 1 to Stage 5 must be completed by 06.09.09.(8)Counselling to be conducted.and the sealed tenders were received upto to 28.8.2009 to be openedon the said date. As per the conditions each participant shouldenclose in two separate covers, one about the technical capability https://hcservices.ecourts.gov.in/hcservices/ and another about the price bid. It is the complaint of thepetitioner that even in the previous year the petitioner has appliedin accordance with the earlier notification apart from the thirdrespondent and when certain illegalities were anticipated, thepetitioner has moved this Court. Since by that time the tenderprocess has been completed and the third respondent was alreadyawarded the tender there was no interim order and the thirdrespondent accordingly has been awarded the tender and has carriedout the work as per the notification. This year the apprehension ofthe petitioner is that the third respondent has no qualificationsince the third respondent has applied in a single cover in respectof the technical bid as well as price bid which is against the termsand conditions of the notification and also the terms and conditionsunder the Tamil Nadu Transparency in Tenders Act, 1998 (hereinafterreferred to as `the Act') and therefore, the tender applied by thethird respondent ought to have been rejected by the secondrespondent. Further it is the case of the petitioner that tenderswere opened in the presence of the petitioner including the thirdrespondent and it was found that the third respondent has made boththe technical bid as well as the price bid in one cover when thetenders were opened. It is the case of the petitioner that thepetitioner has applied in two covers as per the terms and conditionsunder the Act and anticipating that the second respondent is likelyto confirm the contract to the third respondent as in the last yearthe present writ petition is filed for a direction against therespondents 1 and 2 to act as per the Act and strictly as per thetender notification dated 7.8.2009 and to forbear the respondents 1and 2 from issuing the tender confirmation in favour of the thirdrespondent. 3.Mr.P.Jayarayam, learned senior counsel for the petitionerhas taken me to various provisions of the Act and submitted thatevery one of the provisions of the Act should be read as formingpart of the terms and conditions and if that is taken into accountthe third respondent has certainly failed to comply with therequirements as per law and therefore, the third respondent'sapplication should have been rejected. It is also his contentionthat the third respondent has been black listed earlier and as perthe terms and conditions a black listed applicant is disentitled toparticipate in the tender.4.On the other hand, Mr.G.Sankaran, learned SpecialGovernment Pleader on producing the papers relating to theparticipants in the tender process submitted that apart from thepetitioner – Bharathi Data Service Pvt.Ltd., and the thirdrespondent – Broadline Computer Systems, No.7, II floor, KhaderNawaz Khan Road, Nungambakkam, Chennai600 034, two more concernshave also applied, namely, (i)SVN IMAGING PVT.LTD., Mo.3, State BankStaff Colony, Alwarthiru Nagar, Valasaravakkam, Chennai 600 008 and https://hcservices.ecourts.gov.in/hcservices/ (ii)T.R.S.FORMS & SERVICES, No.23, Chakrapani Street, West Mambalam,Chennai 33. He has also filed a comparative statement in respect ofthe said four participants in respect of the work including theamount quoted by them.5.On comparison of the applications and other documentsfiled on behalf of the petitioner it is seen that the petitioner whois stated to have been carrying on business is admitted to have beenincorporated under the Companies Act in 2007-2008. However, it isthe case of the petitioner that the petitioner has got sufficientexperience in the SWS work as a proprietory concern. There are alsorecords to show that the petitioner has been registered under theQuality Management System-ISO 9001:2000. However the fact remainsthat as per the terms and conditions enumerated above the petitionerhas not completed the minimum requirement of 10 years as a Companywith proof of Certificate of Incorporation. The contention of thelearned senior counsel for the petitioner is that the IncorporationCertificate is only for the purpose of participation of thepetitioner to come within the eligibility criteria and it hasnothing to do with the 10 years experience has no meaning since theterms and conditions as enumerated above are clear and categoricthat the participant should be a Company with 10 years of experienceas an Incorporated Company. That apart, the fourth condition alsospeaks about the actual turn over of the participant as the Companywith Auditor's Report. In such circumstances, on the factual matrixof the case in relation to the petitioner there is no difficulty toconclude that the petitioner is not qualified even though thepetitioner has applied in two covers as per the requirements underthe Act.6.In respect of the third respondent also it is seen onrecord that the third respondent was also incorporated as a companyvery recently, even though in the last year the third respondent wasawarded the said work. In the admitted situation in respect of thethird respondent there is no difficulty to conclude that the thirdrespondent has not complied with the requirements as per the termsand conditions of the notification as well as the requirements ofthe Act. Admittedly, the third respondent has not applied in twoseparate covers regarding the technical bid and the price bid andthe very purpose of having two covers system is for fairness andtransparency in awarding the contracts in public matters.7.The Tamil Nadu Transparency in Tenders Rules, 2000 framedin accordance with the terms of the Act under Rule 2(e)defines the"two-cover system" which is extracted as under:(e)"two-cover system" means a procedure underwhich the tenderers are required to simultaneouslysubmit two separate sealed covers, one containing the https://hcservices.ecourts.gov.in/hcservices/ Earnest Money Deposit and the details of theircapability to undertake the tender which will be openedfirst and the second cover containing the pricequotation which will be opened only if the tenderer isfound qualified to execute the tender"The said "two cover system" which forms part of the tender documentis defined under Section 2(i) of the Act and the same is extractedas under:"(i)'Tender Document' means a set of paperscontaining schedule of works, rates, requirement ofgoods or services, technical specifications, procedureand criteria as may be prescribed for evaluation andcomparison of tenders and such other particulars as maybe prescribed.[Provided that such criteria for evaluation andcomparison of tenders shall also provide for a pricepreference,-(a)not exceeding fifteen per cent for the domesticsmall scale industrial units;(b)not exceeding ten per cent for the Public SectorUndertakings of the Government in respect of productsand quantities manufactured by them]Section 10 of the Act which explains about the evaluation andacceptance of tender prescribes certain procedures especially thoseexplained under sections 10(1), 10(4) and 10(7) which are asfollows:10.Evaluation and acceptance of tender.-(1)The TenderAccepting Authority shall cause an objective evaluation ofthe tenders taking into consideration the schedule ofrates as mentioned in the tender document and theprevailing market rate for procurement and comparison ofthe tenders in accordance with the procedure and criteriaspecified in the tender document.(4)If at any time before the acceptance of tender, theTender Accepting Authority receives information that atenderer who has submitted tender has been banned by anyprocuring entity, he shall not accept the tender of thattenderer even if it may be the lowest tender.(7)The Tender Accepting Authority shall intimate theinformation regarding the name and address of the tendererwhose tender has been accepted along with the reasons for https://hcservices.ecourts.gov.in/hcservices/ rejection of other tenders to the appropriate TenderBulletin Officers."which enable the authority to decide in choosing the participant oncomparison of tenders. The said provisions also state that in casewhere a person has been banned as a procuring entity suchapplication should be rejected. The rules further contemplate theprocedure to be followed for opening the tender documents, themanner in which all commercial conditions are to be decided and alsospecifying evaluation criteria. It is no doubt true that even inthe absence of the specific stipulations in the terms andconditions, those conditions which form part of the statutoryconditions are to be read along with the terms and conditions issuedby the second respondent. By applying the same there is nodifficulty to conclude that the petitioner as well as the thirdrespondent are not coming within the eligibility criteria or zone ofconsideration for considering their applications. 8.The learned senior Counsel also relied upon the judgmentrendered in NEW HORIZONS LIMITED AND ANOTHER V. UNION OF INDIA ANDOTHERS (1995 (1) SCC 478) wherein while construing the requirementsregarding a company it was held that the authority should take intoconsideration the experience gained by the tenderer not necessarilyin his own name but also the past experience entered into underanother constitutional personality. The Supreme Court in that casehas construed the provisions of the Companies Act regarding thelifting of the Corporate veil to find out the real character of thepersonality. That decision was taken on the concept of lifting ofcorporate veil in the sense in construing the meaning of the term"joint venture". In para 23 of the said decision it has been held asfollows:"23. Even if it be assumed that the requirementregarding experience as set out in the advertisementdated 22.4.1993 inviting tenders is a condition abouteligibility for consideration of the tender, though wefind no basis for the same, the said requirementregarding experience cannot be construed to mean thatthe said experience should be of the tenderer in hisname only. It is possible to visualise a situationwhere a person having past experience has entered into apartnership and the tender has been submitted in thename of the partnership firm which may not have any pastexperience in its own name. That does not mean that theearlier experience of one of the partners of the firmcannot be taken into consideration. Similarly, a companyincorporated under the Companies Act having pastexperience may undergo reorganisation as a result ofmerger or amalgamation with another company which may https://hcservices.ecourts.gov.in/hcservices/ have no such past experience and the tender is submittedin the name of the reorganised company. It could not bethe purport of the requirement about experience that theexperience of the company which has merged into thereorganised company cannot be taken into considerationbecause the tender has not been submitted in its nameand has been submitted in the name of the reorganizedcompany which does not have experience in its name.Conversely there may be a split in a company and personslooking after a particular field of the business of thecompany form a new company after leaving it. The newcompany, though having persons with experience in thefield, has no experience in its name while the originalcompany having experience in its name lacks persons withexperience. The requirement regarding experience doesnot mean that the offer of the original company must beconsidered because it has experience in its name thoughit does not have experienced persons with it and ignorethe offer of the new company because it does not haveexperience in its name though it has persons havingexperience in the field. While considering therequirement regarding experience it has to be borne inmind that the said requirement is contained in adocument inviting offers for a commercial transaction.The terms and conditions of such a document have to beconstrued from the standpoint of a prudent business man.When a businessman enters into a contract whereundersome work is to be performed he seeks to assure himselfabout the credentials of the person who is to beentrusted with the performance of the work. Suchcredentials are to be examined from a commercial pointof view which means that if the contract is to beentered with a company he will look into the backgroundof the company and the persons who are in control of thesame and their capacity to execute the work. He wouldgo not by the name of the company but by the personsbehind the company. While keeping in view the pastexperience he would also take note of the present stateof affairs and the equipment and resources at thedisposal of the company. The same has to be theapproach of the authorities while considering a tenderreceived in response to the advertisement issued on22.4.1993. This would require that first the terms ofthe offer must be examined and if they are foundsatisfactory the next step would be to consider thecredentials of the tenderer and his ability to performthe work to be entrusted. For judging the credentialspast experience will have to be considered along withthe present state of equipment and resources available https://hcservices.ecourts.gov.in/hcservices/ with the tenderer. Past experience may not be of muchhelp if the machinery and equipment is outdated.Conversely lack of experience may be made good byimproved technology and better equipment. Theadvertisement dated 22.4.1993 when read with the noticefor inviting tenders dated 26.4.1993 does not precludeadoption of this course of action. If the TenderEvaluation Committee had adopted this approach and hadexamined the tender of NHL in this perspective it wouldhave found that NHL, being a joint venture, has accessto be benefit of the resources and strength of itsparent/owning companies as well as to the experience indata base management, sales and publishing of its parentgroup companies because after reorganisation of theCompany in 1992 60% of the share capital of NHL is ownedby Indian group of companies namely, TPI, LMI, WML, etc.and Mr.Aroon Purie and 40% of the share capital is ownedby IIPL a wholly-owned subsidiary of Singapore Telecomwhich was established in 1967 and is having longexperience in publishing the Singapore telephonedirectory with yellow pages and other directories.Moreover in the tender it was specifically stated thatIIPL will be providing its unique integrated directorymanagement system along with the expertise of itsmanagers and that the managers will be actively involvedin the project both out of Singapore and resident inIndia."It is nodoubt true that the Apex Court has considered the procedureto be followed in respect of the advertisement to be issued, tendersto be called for, to be opened in a fair manner, but that wasdecided in the context of lifting of corporate veil for thecorporate personality in the sense of joint venture. 9.However in the present case it relates to the provisionsof the Act and also the rules where the clauses have been explicitlymade out and the question is as to whether the participants havestrictly complied with the requirements of the Act and also with theterms and conditions by which the tenders were called for by thesecond respondent.10.A reference to the list of participants/applicants showsthat apart from the petitioner and the third respondent, other twoparticipants have made necessary applications. Those applicationswere also already opened in the presence of the parties. 11.In such circumstances, the writ petition is disposed ofwith a direction against the second respondent to consider theremaining two applicants in accordance with the terms and conditions https://hcservices.ecourts.gov.in/hcservices/ issued by the second respondent and in accordance with theprovisions of the Tamil Nadu Transparency in Tenders Act, 1998 andthe Tamil Nadu Transparency in Tenders Rules, 2000 and passappropriate orders in making selection.It is made clear thatthe selection shall be done strictly in accordance with the termsand conditions as well as the Act as stipulated above by the secondrespondent. No costs. Consequently, M.P.No.1/2009 is also disposedof.Sd/Asst.Registrar/true copy/Sub Asst.RegistrarsalTo1.The Director of Collegiate EducationDirector of Public Information ComplexChennai 600 0062.The SecretaryTamilnadu B.Ed.Admission 2008Lady Willington Institute of Advanced Studiesin Education CampusTriplicane,Chennai 600 0053.Broadline Computer SystemsNo.7, II FloorKhader Nawaz Khan RoadNungambakkam, Chennai 600 034+1cc to M/s.G.Elanchezhiyan, Advocate Sr 44632KS(CO)km/9.9.W.P.NO.18022/2009& M.P.No.1/2009