Rba Consortium Throu Its ... vs State Of U.P.Throu.Its Chief ...
2015 Latest Caselaw 5684 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

AFR									      Reserved
 
Court No. - 4
 

 
Case :- MISC. BENCH No. - 8501 of 2015
 
Petitioner :- Rba Consortium Throu Its Authorized Signatory & Anr.
 
Respondent :- State Of U.P.Throu.Its Chief Secy.Govt.Of U.P.Lko.& Ors.
 
Counsel for Petitioner :- Dhruv Mathur,Ashish Mishra,Manju Lata Mishra
 
Counsel for Respondent :- C.S.C.,Kumar Ayush
 

 
Hon'ble Amreshwar Pratap Sahi,J.

Hon'ble Attau Rahman Masoodi,J.

( By Hon'ble Attau Rahman Masoodi,J. )

A manifestation of man's eternal quest to conquer space, time and distance is about to be historically witnessed and achieved with the launching of the Lucknow Metrol Rail Project in the capital city of the State of Uttar Pradesh, which moment has been supplemented with the flutter and excitement of this legal battle between two commercial giants, vying against each other, to bag the prestigious contract of commissioning the project to be executed by the Lucknow Metro Rail Corporation. On the project becoming functional, the vision of reducing and eliminating traffic jams as well as environmental pollution is likely to be fulfilled if not entirely, at least upto the aspirations of the people in their endeavour to preserve the culturally rich heritage city of Lucknow.

The petitioner alleges an unfair treatment meted out to it by the 'Corporation to non suit its tender midway in spite of its lowest bid having been found to be technically and financially sound, on a ground that is unsupportable on any legal principles, and simultaneously complains of award of contract to the third respondent's consortium by deliberately avoiding to investigate the disqualification of the said respondent and negotiating the contract by extending the facility of lowering its bid to match it with that of the petitioner. In short, the entire decision making process to eliminate the petitioner and award the contract to the third respondent is alleged as an unfair deal that reflects a questionable and unlawful stand taken by the Corporation.

The Corporation has defended its action to have treated the participants fairly, and in its affidavits has pointed out a default in the petitioner's tender about non-disclosure of its debarment in other commercial transactions that squarely attracted the fatal disqualification clause under the terms of tender. This discovery of a relevant fact, that was concealed by the petitioner, authorised the Corporation to terminate all negotiations with the petitioner without anything further.

The petitioner contests this position primarily on the ground that such disclosure was not essential and, therefore, irrelevant which was suitably explained prior to the impugned action, but even otherwise, if the same did require consideration then any adverse decision ought to have been preceded followed by a conscious determination on a consideration of the version of the petitioner. This having not been done, the decision making process is in violation of principles of natural justice that attracts infringement of the rights of fair treatment guaranteed under Article 14 of the Constitution of India. Coupled with this, no genuine effort was made by the Corporation to embark upon any enquiry to find out any concealment of relevant information about the alleged disqualification of the third respondent, either before eliminating the petitioner or preceding the award of contract, which came to be finalised by comfortably suiting the conditions as desired by the third respondent in undue haste.

The third respondent has defended the award of contract in its favour by contending that it does not suffer from any disqualification of non-disclosure and it does not suffer from any such disqualification in fact, about which baseless allegations have been made that remain unsubstantiated. The decision taken is just and no terms of the tender have been violated. The petitioner has not laid any foundation to establish the authenticity of the allegations made and has attempted for a fishing and roving enquiry to create a mountain out of a molehill.

We have been very ably assisted by Sri Jaideep Narain Mathur, Senior Advocate alongwith Sri Dhruv Mathur, Advocate for the petitioners, Sri Vijay Bahadur Singh, learned Advocate General for the State of U.P. alongwith his team of State counsel, Sri P.S. Patwalia, learned Senior Counsel and Addl. Solicitor General of India alongwith Sri Kumar Ayush for the Lucknow Metro Rail Corporation and Sri Rakesh Dwivedi, Senior Advocate assisted by Sri Ashish Mishra for the respondent no. 3.

The Tender

The term 'contract' and 'contract agreement' have been distinctly defined in the tender document according to which tenders were invited on 12.12.2014 by Lucknow Metro Rail Corporation Ltd. (hereinafter referred to as the 'LMRC'), codifying the same as LKRS01 for design, manufacture, supply, testing, commissioning and training of 80 no. standard gauge cars, electrical multiple units including train control, signalling and telecommunication system for N-S Corridor of Lucknow Metro Rail Project. The due date for submission of tenders complete in all respects was 21.4.2015.

This writ petition has come to be filed at a stage when negotiations for award of contract agreement had already materialised between LMRC and respondent no. 3 (consortium of companies) on 2.9.2015 which is alleged to have come to the knowledge of the petitioners by surprise on the basis of some publication made in the newspaper on 8.9.2015. Disqualification of the petitioners (consortium of companies), in the tender process being resorted to without any prior notice to the petitioners and notwithstanding that the financial bid offered by them was found to be the lowest, is essentially the subject matter of challenge in the present writ petition. The prayer made in the writ petition thus, reads as under:

"(i) issue a writ, order or direction in the nature of Certiorari quashing the LOA issued by the Respondent No. 2 in favour of Alstom Transport India Limited (Respondent No. 3) in furtherance of the tender in question i.e. LMRC/Elect/RS/Tender/LKRS-01.

(ii) issue a writ, order or direction in the nature of Certiorari quashing the decision of the Respondent No. 2 to grant the contract for "Design Manufacture, Supply, Testing, Commissioning the Training of 80 nos. Standard gauge cards, Electrical Multiple Units (EMUS) including Train Control, Signalling and Telecommunication System for N-S Corridor of Lucknow "MRTS Project" to Alstom Transport India Limited (Respondent No. 3) in furtherance of the tender in question i.e. LMRC/Elect/RS/Tender/LKRS-01.

(iii) issue a writ, order or direction in the nature of Mandamus restraining the respondents from awarding the contract for "Design Manufacture, Supply, Testing, Commissioning the Training of 80 nos. Standard gauge cards, Electrical Multiple Units (EMUS) including Train Control, Signalling and Telecommunication System for N-S Corridor of Lucknow "MRTS Project" to Alstom Transport India Limited (Respondent No. 3) in furtherance of the tender in question i.e. LMRC/Elect/RS/Tender/LKRS-01.

(iv) issue a writ, order or direction in the nature of mandamus directing the Respondent Nos. 1 & 2 to consider the bid of the Petitioner no. 1 for the award of the contract in in furtherance of the tender in question i.e. LMRC/Elect/RS/Tender/LKRS-01, being the lowest bid received against the said tender.

(v) issue a writ, order or direction in the nature of mandamus directing the Respondents no. 1 & 2 to finalize the tender in question i.e. LMRC/Elect/RS/Tender/LKRS-01 treating the Petitioner No. 1's bid to the lowest (L-1)."

LMRC is a joint venture company (SPV-Special Purpose Vehicle) of the Government of India and Government of Uttar Pradesh incorporated under the Companies Act, 1956, wherein the respective governments hold equal shares. The company has been constituted to implement Lucknow Metro Rail Project. The financial control of 100% shares as well as management being within the pervasive control of the respective governments, as such, the company is the instrumentality of the State within the meaning of Article 12 of the Constitution of India. The appropriate cost of the entire project is about 6880 crores out of which 47% of financial investment is internal and 53% by external funding agencies. The State Government in order to streamline the transport service in the capital city of Uttar Pradesh i.e. Lucknow, took up the cause in Public Interest with the Government of India, as a result LMRC was constituted in order to carry out the Lucknow Metro Rail Project.

The Corporation in the pursuit of its objects invited the instant tenders by making due advertisement in the news papers, in response to which as many as three bidders including the petitioners (consortium of companies), offered their tenders. For the evaluation of tenders which involves multi level evaluation, the process of evaluation commenced after receipt of tenders. All informations relating to the tender process were to be kept confidential and not disclosed as would be evident from the relevant part of clause E.2 in the tender document, reproduced below:

E.2 Confidentiality of Tender Information and Copyright

"............Information relating to the examination, clarification, evaluation and comparison of bids and recommendations for the award of a contract shall not be disclosed to bidders or any other persons not officially concerned with such process until the award to the successful bidder has been announced."

The expenditure of the project in question is to be borne by the Company but its major source under the tender document is provided for through a funding agency. The tender document is designed on global standards and its terms and conditions can be broadly classified into two parts i.e. Technical and Financial bid. The Covenant of Integrity which is in the form of a declaration is an essential component of tender and the same operates throughout i.e. from the due date of filing tender, during the process of contract and currency of contract agreement. The relevant portion of declaration in the prescribed format is extracted below:

"FORM OF TENDER - APPENDIX 16

STATEMENT FOR CONVENANT OF INTEGRITY

(to the Promoter from a Tenderer, Contractor, Supplier or Consultant to be attached to its Tender (or to the Contract in the case of negotiated procedure)

"We declare and convenant that neither we nor anyone, including any of our directors, employees, agents, joint venture partners or sub-contractors, where these exist, acting on our behalf with due authority or with our knowledge or consent, or facilitated by us, has engaged, or will engage, in any Prohibited Conduct (as defined below) in connection with the tendering process or in the execution or supply of any works, goods or services for [specify the contract or tender invitation] (the "Contract") and convenant to so inform you if any instance of any such Prohibited Conduct shall come to the attention of any person in our organisation having responsibility for ensuring compliance with this convenant.

We shall, for the duration of the tender process and, if we are successful in our tender, for the duration of the Contract, appoint and maintain in office an officer, who shall be a person reasonably satisfactory to you and to whom you shall have full and immediate access, having the duty, and the necessary powers, to ensure compliance with this Convenant.

If (i) we have been, or any such director, employee, agent or joint venture partner, where this exists, acting as aforesaid has been, convicted in any court of any offence involving a Prohibited Conduct in connection with any tendering process or provision of works, goods or services during the five years immediately preceding the date of this Convenant, or (ii) any such director, employee, agent or a representative of a joint venture partner, where this exists, has been dismissed or has resigned from any employment on the grounds of being implicated in any Prohibited Conduct, or (iii) we have been, or any of our directors, employees, agents or joint venture partners, where these exist, acting as aforesaid has been excluded by any major Multilateral / Bi-lateral Development Bank / Agency including World Bank Group, African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, European Investment Bank or Inter-american Development Bank etc from participation in a tendering procedure on the grounds of Prohibited Conduct, we give details of that conviction, dismissal or resignation, or exclusion below, together with details of the measures that we have taken, or shall take, to ensure that neither this company nor any of our directors, employees or agents commits any Prohibited Conduct in connection with the Contract [give details if necessary]."

The Covenant of Integrity is the central point of dispute in relation whereof, parties were to make necessary disclosures on the due date having regard to its contents in the form extracted above. The tender document further obligates the tenderers of making certain more declarations on the due date.

Apart from Covenant of Integrity as mentioned above, the tender document contains a check list of information for the purpose of initial filter evaluation and the relevant items of check list informations are extracted below:

"(A) FILTER OF APPLICANTS - CHECKLIST

Name of Applicant : ............................................................

S.No.

Criteria

Yes

No

Has the Applicant abandoned any work in the last ten (10) years ?

Deleted.

Has the Applicant delayed any work in the last ten (10) years by more than 75% of the original period of completion due to his default?

Has the Applicant delayed by more than 50% of original period of completion in more than 20% of the number of works in the last ten (10) years due to his default?

Has the applicant suffered bankruptcy / insolvency in the last ten (10) years?

Has the Applicant been debarred by Government of India / any State Government in India / Central or State Government undertaking as on the due date of submission of bid? (Bidder to furnish a specific undertaking to this effect)

Deleted.

Has any misleading information been given in this application?

Is the Applicant financially sound to perform the work as per criteria T1 and T2?

9A

Is the Net Worth of the applicant (to be obtained from Balance Sheets / Annexure 5 of Initial Filter Questionnaire) in the last financial year positive?

Has the applicant certified that no agent / middleman has been or will be engaged or any agency commission been or will be paid?

Has the Applicant submitted duly filled verification statement no. - 29

"2. A "YES" answer to any question 1, 3, 4, 5, 6, 8 or 15 will disqualify the Applicant.

3. A "NO" answer to any question 9, 9A, 10, 11, 12, 12.1, 13 or 14 will disqualify the Applicant.

4. In the case of a Joint Venture / Consortium / each Individual member must qualify individually in the 'Filter of Applicants - Check List' except for Criteria at serial number 9, 9A, 12 and 12.1. The Criterion at Serial Number 13 applies only to the manufacturer of the Propulsion Equipments, who can be either a member of the Consortium/JV or a sub-contractor."

31.

Applicant and each member of the JV or Consortium shall verify, confirm & declare about DEBARRED as on the due date of submission of bid as noted below. (Here DEBARRED means that the applicant applies to each member of the JV/Consortium) has been blacklisted or debarred by Government of India /any State Government in India / Central or State Government undertaking from participating in the tenders for a notified period of time. Copy of the notification of such debarment shall be submitted in the bid).

By virtue of my signature below, I confirm and verify to my best knowledge and belief that the company represented by me for submitting bid against this tender is not DEBARRED as on the due date of submission of bid.

Signed :____________________

(to be signed by applicant and each member of the group)

Date:_______________________

The successful bidders in the initial filter evaluation are bound to inform LMRC about any debarment by the funding agency/Government of India/State Government/Government undertakings after the due date and before opening of financial package and non-disclosure thereof, if any, results into automatic disqualification and financial package of such a tenderer will not be opened and shall be returned unopened.

Apart from this, clause E4.9 is relevant, which is extracted below:

"E4.9 Tenderers may note that pursuant to their qualification in the 'Initial Filter Evaluation Criteria' and 'Technical Evaluation' as per E4.7 above, in case the tenderer (applies to each individual member in case of a Joint Venture/Consortium) is debarred/blacklisted by Funding Agency/ Government of India/ State Government/ Government Undertaking after the due date of submission of tender but before opening of financial package by LMRC, they shall inform the same to LMRC in writing within 5 working days of issue of such debarment, failing which it will be considered that the bidder has willfully concealed the information and the bidder shall be solely responsible for all implications that may arise in accordance with the conditions of this tender. Any such debarment will result in disqualification of the tenderer and the Financial Package of such tenderer shall be returned unopened.

The tender document also reveals that at every stage of evaluation if the employer, on discovery of any material, finds the tenderer as disqualified, the tender would stand rejected without notice. This position is evident from clause E5.7, relevant extract of which is reproduced below:

"E5.7 Tenderers may note that LMRC at its sole discretion, before award of contract, may ask the tenderers to submit an undertaking to this effect that they have not been debarred by Funding Agency/Government of India/State Government/ Government undertaking after the due date of submission of bid but before the award of contract by LMRC.

Pursuant to their qualification in the 'Initial Filter Evaluation Criteria' and 'Technical Evaluation' as per E4.1 to E4.9 above, in case the tenderer (applies to each individual member in case of a Joint Venture/Consortium) is debarred by FUNDING AGENCY/ Government of India/ State Government /Government undertaking after the due date of submission of bid but before award of the contract by LMRC, they shall inform the same to LMRC in writing within 5 working days of issue of such debarment, failing which it will be considered that the bidder has will fully concealed the information and the bidder shall be solely responsible for all implications that may arise in accordance with the conditions of this tender. Such debarment will result in disqualification of the tenderer and their tender will be rejected.

In case the tenderer fails to inform LMRC of such happening before award of contract and the contract is awarded to them, and if during the course of execution of contract, LMRC discovers of any such occurrence, LMRC reserves the right to terminate the contract and award the contract to the next lowest evaluated bidder at the risk and cost of the said tenderer."

Clause 4.33 and 4.33.1 of the tender document that deal with the corrupt or fraudulent practices, for our purpose are extracted below:

Corrupt or 4.33

Fraudulent

Practices

"4.33.1 The Employer requires that the Bidders/Contractors, their designated contractors and/or their agents observe the highest standard of ethics during Tendering and execution of this Contract. In pursuance of this policy, the Employer:

a. defines, for the purpose of these provisions, the terms set forth below as follows:

(i) "corrupt practice" means the offering, giving receiving or soliciting of anything of value to Employer, Engineer or any of their employees, influence in the procurement process or in Contract execution; and

(ii) "fraudulent practice" means a concealment or misrepresentation of facts in order to influence a procurement process or the execution of a Contract to the detriment of the Employer, and includes collusive practice among Bidders (prior to or after bid submission) designed to establish bid prices at artificial non-competitive levels and to deprive the Employer of the benefits of free and open competition.

(iii) Breach of any of the contract condition during execution.

b. Will reject the Tender for the Work or rescind the Contract if the Employer determines that the Bidder/Contractor has engaged in corrupt or fraudulent practices.

c. Will declare a Contractor ineligible, either indefinitely or for a stated period of time, to be awarded a Contract/s if he at any time determines that the Contractor has engaged in corrupt or fraudulent practices in competing for, or in executing the Contract.

d. Should any employee of the Contractor be determined to have engaged in corrupt, fraudulent, collusive or coercive practice during the execution of the Works, then that employee shall be removed.

e. The successful Bidders/Contractors shall apprise the Employer through Chief Vigilance Officer, LMRC of any fraud/suspected fraud as soon as it comes to their notice."

Relevant facts

In the aforesaid background, a total number of three tenders came to be received in response to the advertisement which fell for consideration in the initial filter evaluation and technical evaluation. The technical evaluation was held on 21.4.2015 and only two tenders qualified in the technical evaluation i.e. the petitioner and respondent no. 3 (both consortium of companies). The technical evaluation was, therefore, approved by the Board of LMRC in its 17th meeting held on 16.7.2015. The qualification in technical bid was intimated to the parties, as is evident from the letter dated 17.7.2015 contained in Annexure-2 to the writ petition, wherein the date for opening of the financial bids was intimated to be scheduled on 24.7.2015.

The financial bids were opened on 24.7.2015 and the petitioners were found to have offered the lowest bid whereas the respondent no. 3 stood as L-2 being the only second qualified bidder. The financial bid of the petitioners being lowest gave rise to a legitimate expectation of being called for the execution of contract agreement, particularly when the Director Level Tender Committee of the LMRC on 28.7.2015 made a recommendation favouring petitioners' financial bid for acceptance. The respondent LMRC has taken a stand on affidavits filed that in order to ensure financial support, it had started negotiations with the European Investment Bank as the agency that had agreed to fund the project. The said bank was, therefore, kept informed of every stage of the tender evaluation so that their concurrence was available to the LMRC for a smooth availability of finances to execute the project.

The tender process sailed smooth till the end of July, 2015 when, all of a sudden, the situation took a new turn upon the alleged receipt of an information by the LMRC from the European Investment Bank (hereinafter referred to as 'EIB') on 30.7.2015. This communication is significant and being relevant, is reproduced below:

"Dear Mr. Kumar

Thank you for the copy of the covenant of integrity.

We note that in the last paragraph of the first page of the covenant, LMRC has amended the standard EIB text of the form without EIB noticing, to require disclosure, inter alia, of debarment not just "... by any major multilateral development bank...." but also bilateral banks/agencies. The amendment is acceptable to EIB. However, you should note that after our own further investigations today, we now know Hyundai Rotem was debarred by JICA on March 11,2015 for four months for making a false statement in a JICA funded bidding procedure. We believe JIC qualifies as a 'bilateral development bank."

http://www.jica.go.jp/english/notice/150311 01.html

As the tender submission was within this period of time, we believe that this debarment should have been disclosed on the covenant. In addition ITT E4.9, E5.7 and Annex FT 16 further requires such disclosure.

Hence LMRC may like to reconsider their position in the light of this new information. We await you response.

Kind regards

Zoltan Donath

Piers Vickers"

It is at this stage that the petitioners on their own volition chose to disclose certain information to LMRC vide letter dated 1.8.2015 wherein debarment by two governmental organisations viz. Airport Authority of India, Delhi Metro Rail Corporation and the last by JICA (multilateral funding agency) on 11.3.2015 for a period of four months were brought to the notice of LMRC. The disclosure of information by the letter dated 1.8.2015 became a subject matter of consideration by LMRC. It appears that non-disclosure of debarment by JICA by letter dated 11.3.2015 which was in the knowledge of the petitioners on the due date of submission of tenders and opening of the same on 21.4.2015, in particular, came to be viewed seriously. Legal advice was also sought by LMRC in the light of communication dated 1.8.2015 and ultimately a Board meeting came to be convened on 21.8.2015. In the deliberations of Board meeting held on 21.8.2015, the petitioners came to be disqualified from the tender process on the ground of concealment of information i.e. non-disclosure of debarment by JICA as on the due date of submitting technical bid on 21.4.2015, albeit the period of four months' debarment by JICA imposed vide letter dated 11.3.2015 against the petitioners was over much prior to the date of opening of the financial bid on 24.7.2015.

The Board also resolved on 21.8.2015 to negotiate with the surviving bidder in the fray, namely, the third respondent, for which no objection was sought from EIB which is said to have been accorded on 25.8.2015. By a confidential letter dated 26.8.2015 respondents no. 3 was invited for negotiations on 27.8.2015 which meeting continued on 28.8.2015 as well. The negotiations for bringing down the cost to the level of financial offer made by the petitioners, on being acceptable to the surviving bidder, a fresh financial package was accordingly submitted by respondent no. 3 on 31.8.2015 which came up for consideration before the Board in its meeting held on 1.9.2015. The Board resolved to award the contract in favour of respondent no. 3 (consortium of companies) after seeking an undertaking in terms of clause E5.7 the relevant part of which reads as under:

E5.7 Tenderers may note that LMRC at its sole discretion, before award of contract, may ask the tenderers to submit an undertaking to this effect that they have not been debarred by Funding Agency/Government of India/State Government/ Government undertaking after the due date of submission of bid but before the award of contract by LMRC...........

The respondents no. 3 submitted an undertaking on 2.9.2015 and soon thereafter the letter of acceptance was issued to them. The contract agreement was executed on 23.9.2015 which has followed by the release of mobilisation advance to the tune of Rs. 100 crores approx. on 24.9.2015. The schedule for implementation of contract agreement is said to have commenced since the date of releasing mobilisation advance and the same is said to be hassle free by LMRC. The above background and factual position is derived from the tender documents and the pleadings on record, which are undisputed.

On record apart from the writ petition, the petitioner has filed a supplementary affidavit dated 29.9.2015, a rejoinder affidavit and impleadment application on 10.10.2015 and a rejoinder to the counter affidavit of the respondent no. 3, the respondent no. 2 LMRC has filed a counter affidavit on 15.9.2015, a counter to the supplementary affidavit on 26.10.2015 and in addition thereto, three supplementary counter affidavits dated 26.10.2015, 16.11.2015 and 26.11.2015. Another additional affidavit has been filed on 7.12.2015. The third respondent has filed a counter affidavit to the supplementary affidavit and an additional affidavit on 7.11.2015, 19.11.2015 and 30.11.2015 respectively. The State Government i.e. the respondent no. 1 has filed its counter affidavit on 31.10.2015. It is here that it would be appropriate to mention that the LMRC has filed its affidavits gradually, which can be termed 'in instalments' and which in our opinion should be avoided as we had passed orders for production of records in order to seek clarity in the counter affidavits that were filed on its behalf.

The contentions and arguments

Sri Mathur's first contention is that the reference to JICA as a bilateral agency in the initial tender documents published on 12.12.2014 was specific but the LMRC itself consciously modified the final tender documents by deleting the specific name of JICA altogether from every part of the tender documents that was made available on 12.2.2015. According to him, this deletion leads to the only inference that any debarment by JICA was, therefore, absolutely inconsequential and the only reasonable inference that one can draw is that as a matter of fact, any information about such debarment of the petitioner was not required to be disclosed at all. The submission is that on this plain understanding the petitioner cannot be held to have defaulted in disclosing the information about debarment by JICA. The disqualification on this count is not attracted under any of the terms of the tender documents including the Covenant of Integrity. The contention is that even if it is assumed that JICA is a bilateral funding agency, its specific exclusion from the initial tender document and the same not having been mentioned in the Covenant of Integrity, did not require any such disclosure. Coupled with this JICA is not the funding agency and EIB is still not the declared funding agency, as such, any information about or from any source about debarment by JICA is immaterial.

On the other hand, the petitioner bona fidely vide letter dated 1.8.2015 did tender this information on its own whereas the LMRC did not choose to part with any information received by it from the EIB nor was the petitioner asked to explain this as per its understanding. The information received by the respondent no. 2 from EIB was not known to the petitioner at all. The LMRC, therefore, chose to preclude the petitioner on the one hand from any alleged adverse information, and on the other came to be fully influenced with the information received by it from EIB to unilaterally decide about the disqualification of the petitioner. Utilization of such material of debarment was inconsequential for the reasons above, the voluntary disclosure about debarment by the petitioner long before the impugned decision, the non-giving of any opportunity to the petitioner to explain any confusion and the quiet negotiation with the respondent no. 3 by allowing it to lower its bid clearly vitiate the entire decision making process of the LMRC. In this regard it has been urged that the CVC guidelines have been violated which require that if cancellation of the lowest bidder has been resorted to, then in that even, reasons have to exist for any negotiation in which the participation of the lowest bidder should not be avoided. As a matter of fact, no negotiations with the second lowest tenderer should be entered into without a formal rejection to be informed to the lowest bidder.

The information about such negotiations with the respondent no. 3 had already been undertaken through letter dated 26.8.2015, replied to by the respondent no. 3 on 27.8.2015 and its formal acceptance by the Board on 1.9.2015. The letter of acceptance was issued to respondent no. 3 on 2.9.2015. Writ Petition No. 7548 of 2015 had been filed by a third party who was not a bidder, questioning the said tendering process in which an affidavit was filed in the second week of September, 2015 that had been drawn up earlier and the aforesaid entire information of the negotiations had been withheld by the LMRC before the Court. Sri Mathur, therefore, contends that the petitioner had no source of information nor this Court was apprised of the finalisation of the negotiations in the said writ petition. The LMRC had deliberately withheld and concealed this information and, therefore, the writ petition, as initially filed, did not contain such details. To the contrary, the affidavit filed by the LMRC in the aforesaid writ petition simply stated that the matter was pending consideration, whereas the matter had been finalised in favour of the third respondent.

Sri Mathur then contends that the debarment of JICA was for four months which period was long over prior to finalisation of the bid. This fact was also disclosed and explained in the letter dated 1.8.2015. Thus, in spite of the same being inconsequential, any adverse impact of such debarment did not exist and was not so vital so as to have any fatal effect on the petitioner's bid.

Another link to this argument that was pointed out by Sri Mathur was the debarment by the Airport Authority of India and the consequential action by the DMRC and JICA that came to be challenged by the petitioner where the Delhi High Court granted an interim order dated 17.08.2015 in favour of the petitioner that protected its participation in other contracts throughout India. He, therefore, submitted that the root cause of the debarment also stood eliminated by judicial intervention, which writ petition is stated to have been ultimately allowed vide judgement dated 23.11.2015.

The next argument of Sri Mathur criticizes the non-disclosure of facts about serious frauds resulting in criminal action about indulgence in bribery in the DMRC contract by the parent company of respondent no. 3 on the strength of newspaper and internet information that was gradually made part of the pleadings as the case progressed after the filing of the petition. On the strength of such material, it is urged that the Company which owns the respondent no. 3 was facing serious action of fraud and bribery and this vital information that remains undisclosed and unexplained even till today was material information so as to equally disqualify the respondent no. 3. This aspect being deliberately not being considered by the LMRC has also resulted in a discriminatory and arbitrary process undertaken by it and has vitiated the decision to award the contract to the respondent no. 3. It is urged that the said facts having not been successfully explained either by the respondent no. 3, clearly establishes non-disclosure by the respondent no. 3 that attracts its clear elimination in a similar way as attributed to the petitioner.

Sri Mathur also submits that the manner in which the LMRC has allowed its decision to be influenced by the information tendered by the EIB, which is not the confirmed and declared funding agency even today, is a clear breach of the confidentiality clause of the terms of tender at the pre-bid acceptance stage. This breach on the part of the LMRC also invalidates the negotiations with the respondent no. 3 that has been favoured by the EIB.

The contention of Sri Mathur also about no serious effort having been made either by the EIB or the LMRC to enquire about the widespread allegations about fraud and bribery of the parent company of the respondent no. 3 so as to gather information about its nefarious dealings which would clearly disqualify the respondent no. 3 as well. He submits that had a sincere effort been made on this score, the real truth about the camouflaged activities of the respondent no. 3 being a fully owned satellite of the parent company in USA would have surfaced to reveal its real status. He, therefore, prays that this Court should lift the veil to find out and discover the truth of such allegations on the material placed and get an enquiry held for the said purpose.

Another argument about the violation of CVC guidelines has also been urged that prohibits negotiations by permitting lowering of bids by an unsuccessful bidder so as to accommodate it against the lowest bidder without rejecting the lowest bid.

Sri Mathur concluded his submissions with his rejoinder vehemently urging that no relevant information was withheld nor any intention to conceal can be construed to automatically disqualify the petitioner on any plausible ground, and if the LMRC was contemplating to do so, it ought to have proceeded for a fair determination after opportunity that would have been in consonance with fair play to the extent as required in such disputes arising out of tender contracts.

The judgements that were relied on by Sri Mathur to substantiate his submissions are as follows:

1. AIR 1963 SC 1572: Dr. Vimla v. Delhi Administration.

(on fraud and deceit)

2. (1998) 5 SCC 170: S.K. Bhargawa v. Collector, Chandigarh.

 
	     (on compliance of natural justice during determination)
 

 
	3. (1991) 3 SCC 273: Poddar Steel Corporation v. Ganesh  		     Engineering Works and others.
 
               (no strict adherence required on disclosure)
 

 
	4. 2013 (10) SCC 95: Rashmi Metaliks Limited and another Vs. 	     Kolkata Metropolitan. Development Authority
 

 

The arguments on behalf of the respondents opened with an equally categorical response by the learned ASGI, Mr. Patwalia, Senior Advocate, who invited the attention of the Court to the various terms of the bid documents to urge that the petitioner was treated fairly and equally at par with all bidders. Upon receipt of three bids, one of them did not qualify and it was only the bid of the petitioner and the respondent no. 3 that survived the initial filtration of tender documents. It is these two bidders whose technical bids were found to be in order and accordingly their financial bids were opened where the petitioner was found to have offered the lowest bid. Upto this stage, not only the petitioner's bid was under active consideration but was also processed and cleared by the Board of the Corporation for being put up for final consideration. However, before that, the Board decided to also inform the EIB, that was the funding agency associated with providing the proposed project finances, and obtain its concurrence as per the tender evaluation conditions. Sri Patwalia also emphasized that the entire decision making process was by the Board consisting of eight members four of whom were responsible high ranking Central Government and State Government civil servants including the Chief Secretary of U.P. and four very highly reputed technocrats under the able guidance of Sri E. R. Sreedharan who pioneered the successful Delhi Metro Rail Project. He urges that the petitioner has not alleged any personal mala fides against the Board or its constituent members having deliberated upon in any impartial manner to either eliminate the petitioner or award the contract to the respondent no. 3. He also points out that no mala fides have been attributed by the petitioner to the funding agency, namely, the EIB, to have dwelt upon the LMRC to take any decision either way. The information received from the EIB on 30.7.2015 was independently assessed by the Board and the fact of debarment of the petitioner by JICA upon discovery came to be fortified by the admission of the petitioner voluntarily through its letter dated 1.8.2015 addressed to the LMRC. It is then that the Board in its meeting dated 2.8.2015 resolved unanimously to disqualify the petitioner in view of the clauses of the tender documents disclosed hereinabove.

Sri Patwalia, advancing his submissions, urged that the decision of the Board was a collective decision after considering each and every document and the bona fides of the Board is absolutely clear that right up to the stage of opening of the financial bid, the petitioner had not raised any complaint or alleged any irregularity in the tendering process. The information which was received from the EIB was only a source of material which was considered independently by the Board and the decision was taken after the said information was found to be correct. This is clearly substantiated by the own admission of the petitioner in the letter dated 1.8.2015 including the fact of dismissal of its employees on account of their misconduct.

Sri Patwalia then contends that the information of the finalisation of the negotiations ought to have been brought to the notice of the High Court in Writ Petition No. 7548 of 2015 but that does not, in any way, come to the advantage of the petitioner nor is it of any disadvantage to the answering respondent on the facts of the present case. He submits that the respondent no. 2 Corporation has filed all its affidavits in the present case and he also submits that the entire records are available as per the disclosure made about the decision making process, which can be perused by the Court. He has further submitted that the affidavits which have been brought on record not only by the respondent no. 2 but also by the respondent no. 3, clearly indicate that JICA is a multinational funding agency, which clearly falls within the definition of a funding agency as defined in the Covenant of Integrity reproduced hereinabove. The deletion of JICA's name from the final tender documents was only to widen the definition of funding agency and not to exclude JICA from the same. There is no declaration either by the government nor is there any material so as to construe that JICA is not a multinational funding agency. Even the petitioner has not been able to demonstrate the same. The question of any incorrect understanding by the petitioner, therefore, does not arise and JICA, in no way, ceases to be a funding agency. He, therefore, contends that the argument of the petitioner that JICA's deletion from the tender documents amounts to its exclusion from the definition of funding agency is misconceived and misdirected.

He then submits that the contention of violation of principles of natural justice while determining the offer of the petitioner and its elimination does not arise as the moment it is established that the facts were deliberately not disclosed about the debarment, the same entails a complete disqualification and the tender has to be simply rejected. He submits that on the admitted position of non-disclosure, this was a clear fraudulent practice as facts were misrepresented by the petitioner about its debarment and, therefore, the elimination clause was attracted. he contends that in matters of award of contract, such principles are not attracted and he has relied on the following decisions to substantiate his submissions:

Sl.

Particulars

Citation

Paras referred

1.

Jagdish Mandal v. State of Orrisa & Ors.

(2007) 14 SCC 518

2 to 6, 10, 11, 17 to 22, 27 to 29 and 33 to 35.

2.

Siemens Public Communication Networks Private Ltd.& anr. v. Union of India and others

(2008) 16 SCC 215

2, 19 to 26 and 35 to 41.

3.

Asia Foundation v. Trafalgar House Construction

(1997) 1 SCC 738

2 to 11

4.

Maa Binda Express Carrier & anr. v. North-East Frontier Railway & ors.

(2014) 3 SCC 760

2 to 5 and 9 to 12

5.

W.B. Electricity Board v. Patel Engineering Co. Ltd.

(2001) 2 SCC 451

6.

Reliance Airport Developer Ltd. v. Airport Authority of India Ltd.

(2006) 10 SCC 1

88 to 99

Apart from the aforesaid submissions, he also submits that such a negotiation which is clearly above board and does not suffer from any infirmity, does not require any interference even in the larger public interest, where the contract has already been set into motion and the project is to be concluded within a year.

Sri Rakesh Dwivedi, learned Senior Counsel for the respondent no. 3 has also advanced his submissions supporting the stand of the LMRC, supplementing it with the aid of the affidavits that have been filed on behalf of respondent no. 3. He contends that the petitioner did not raise any objection to the participation of the respondent no. 3 consortium clearly because this consortium had absolutely no adverse material against it. He submits that the allegation about the parent company of the respondent no. 3 is totally misplaced and on a complete misunderstanding of the corporate status of the respondent no. 3 consortium vis-a-vis the present contract. For this, he has relied upon the judgement in the case of Vodafone International Holdings BV vs. Union of India & others, (2012) 6 SCC 613, particularly paragraphs 57 to 82, 97 to 109, 127, 254 to 260 and 277 to 280 in support of his submissions. He further submits that the argument of lifting of the veil raised by the petitioner's counsel and then trying to understand the legal entity of respondent no. 3 is a misconceived argument and is not available on the facts of the present case, for which reliance is placed on the case of Balwant Rai Saluja and another vs. Air India Ltd. and others, (2014) 9 SCC 407. He further submits that this understanding about the status of JICA, as pleaded by the petitioner, is a camouflaged argument because all the bidding parties had a clear understanding about what is a multinational funding agency. It is for this reason that the petitioner company is also completely silent about their global activities including their holding companies throughout the world. It is for this reason that he contends that the petitioner had full knowledge about the allegations which have now been made against the respondent no. 3 when a similar project at Cochin came to be executed in 2014 that was also a matter of participation of bid by the petitioner and the respondent no. 3, and similar unsubstantiated allegations had been published in the newspapers. The contract was finally awarded to the respondent no. 3 at Cochin and these allegations nowhere found favour, which were already known to the petitioner at the time of the bid in the present project. Yet the petitioners did not choose to raise any complaint which clearly explains their dishonest and mala fide intention of trying to level allegations that too long after the filing of this petition which, in no way, concerns the consortium of the respondent no. 3.

He further submits that the petitioner was well aware about the letter of EIB which was immediately followed by the voluntary disclosure by the petitioner in the letter dated 1.8.2015. This letter also does not level any allegations against the respondent no. 3. Not only this, such allegations have come forward in a desperate mood during the pendency of this petition and not prior to that. Sri Dwivedi submits that if at all such information was relevant then the petitioner ought to have made the same allegations against the respondent no. 3. It is, therefore, clear that the allegations have now been made with a view to prejudice the mind of this Court on the strength of newspaper reports and articles which are baseless. He further submits that internet material information relied on by the petitioner no where establishes any relation of the activities of the respondent no. 3 consortium so as to disqualify either the third respondent on account of its activities or any of its Directors, agents or servants. he has invited the attention of the Court to the entire information in rebuttal placed in the shape of an additional affidavit filed on behalf of the respondent no. 3. He contends that the consortium of the respondent no. 3 and its activities have nowhere been established to be controlled or influenced by those companies about which allegations have been made by the petitioner.

Supplementing the arguments in relation to the disqualification of the petitioner, he submits that any suppression by the petitioner would invite disqualification and there is no discretion left with the employer to grant any leverage to the petitioner for further participation as the petitioners do not qualify on account of non-disclosure including the violation of the terms of the Covenant of Integrity. He submits that the significance of disclosure at every stage is evident and the consequences are inevitable. There is no scope for granting any concession. The petitioner, once it is established that he has violated the terms of the Covenant of Integrity and the mandatory terms and conditions of the tender, does not deserve any relief as prayed for.

Sri Dwivedi has relied on the following decisions to substantiate his submissions:

1. (1997) 1 SCC 738, Asia Foundation & Construction Ltd. vs. Rafalgar House Construction (I) Ltd. & others;

2. (2004) 4 SCC 19, Directorate of Education and others v. Educomp Datamatics Ltd. & others;

3. (2007) 14 SCC 517: Jagdish Mandal v. State of Orrisa & others;

4. (2014) 11 SCC 288: Siemens Aktiengeselischaft and Siemens Ltd. vs. Delhi Metro Rail Corporation Limited & others;

5. (1996) 4 SCC 529: Patna Regional Development Authority & others vs. Rashtriya Pariyojana Nirman Nigam & others;

6. (1997) 7 SCC 435: Ravinder Kumar Sharma vs. State of Assam and others;

7. (2004) 3 SCC 363: Dr. B. Singh vs. Union of India & others;

8. (2007) 2 SCC 588: Ramchandra Murarilal Bhattad & others vs. State of Maharashtra and others;

9. (2014) 9 SCC 407: Balwant Rai Saluja and another vs. Air India Ltd. and others; and

10. (2012) 6 SCC 613: Vodafone International Holdings BV vs. Union of India & others.

Sri Vijay Bahadur Singh, learned Advocate General submitted that the role of the State Government is limited as the tendering process is squarely within the authority of respondent no. 2 but he submits that apart from the facts brought on record that clearly establish a transparent system of tendering process, the scope of judicial review in such matters is very limited. He has relied on the following decisions to substantiate his arguments:

1. (1994) 6 SCC 651: Tata Cellular v. Union of India;

2. (2006) 10 SCC 1: Reliance Airport Developers (P) Ltd. v. Airports Authority of India & others;

3. (2014) 11 SCC 288: Siemens Aktiengeselischaft and Siemens Ltd. vs. Delhi Metro Rail Corporation Limited & others;

4. (2009) 6 SCC 171: Meerut Development Authority v. Association of Management Studies and another;

5. (2014) 8 SCC 804: Jal Mahal Resorts Private Ltd. vs. K.P. Sharma & others;

6. (2001) 2 SCC 451: West Bengal State Electricity Board v. Patel Engineering Co. Ltd. & others;

7. (2007) 14 SCC 517: Jagdish Mandal v. State of Orrisa & others;

8. (2010) 14 SCC 253: Himanchal Pradesh Housing & Urban Development Authority v. Universal Estate & another;

9. (2011) 4 SCC 756: THDC India Ltd. v. Voith Hydro GMBH Company & another; and

10. (1975) 1 SCC 70: M/s Erusian Equipment & Chemicals Ltd. v. State of West Bengal & another.

The sum and substance of the arguments of the respondent is that the tender conditions having been violated on account of misrepresentation and concealment by the petitioner, the petitioner stood disqualified and the tendering process being transparent without there being any element of malice, the scope of judicial review is not available on the facts of the present case. The allegations against the respondent no. 3 have also not been substantiated and, therefore, no ground has been made out for interference.

Discussion and findings

The disqualification of the petitioner was arrived at in terms of the resolution passed by the Board on 21.8.2015 which has been brought on record, alongwith the supplementary counter affidavit filed by LMRC on 26.11.2015. Although the said resolution passed by LMRC remains unchallenged in the writ petition, yet the prayer made in the writ petition extracted above, in our view, calls for a scrutiny of the same within the permissible scope of writ jurisdiction under Article 226 of the Constitution of India.

The case set up by the petitioners is that they have not indulged into any fraudulent practice so as to entail a consequence of disqualification, whereas the employer i.e. LMRC has emphatically alleged deliberate concealment amounting to a fraudulent practice being indulged into by the petitioners while submitting the tender form wherein, no details as required in the declaration of covenant of integrity were furnished as regards the debarment by JICA on the due date i.e. 21.4.2015. Replying 'No' against item-8 of the check list questionnaire without truthfully making disclosure of debarment by JICA in the covenant of integrity was wrong and misleading, therefore, such a conduct on the part of the petitioner constituted fraudulent practice defined under clause 4.33 of the tender document and disqualifies the petitioners at the threshold of tender process on 21.4.2015, is the case set up by LMRC so as to defend the resolution passed on 21.8.2015.

The petitioners have also taken an alternative stand in the rejoinder and supplementary affidavits to the effect that respondent no. 3, in whose favour the contract agreement has been finalised, have also indulged into 'corrupt practices', therefore, this Court on lifting the veil would find that the award of contract agreement by LMRC in favour of respondent no. 3 (Consortium of companies) stands in violation of the same very parameters of the tender document, as have been invoked against the petitioners. The alternative submission in the rejoinder and supplementary affidavits has driven the respondent no. 3 (a consortium of companies) to respond and put up their stand in reply to the prejudice sought to be caused.

The primary question that crops up for our consideration is as to whether the petitioners by the non-disclosure of their debarment have indulged into any fraudulent practice or not. If the answer to above question is 'yes' the alternative case set up by the petitioners becomes irrelevant as this Court is not supposed to enter into a roving enquiry of the matter at the instance of a litigant who fails to have established his own cause except to the extent permissible.

It is crystal clear from the stipulations under the tender conditions recorded above, that a tenderer having indulged into a fraudulent practice entails a consequence of rejection of his tender.

Now coming to the stand of the petitioners in the writ petition set out in paras 17 and 18, we gather that the following statements are only made in relation to disclosures and debarment:

"17. That it is respectfully submitted that as per the tender conditions every tenderer while submitting the tender document had to disclose the facts if it were debarred by Government of India/any State Government in India/Central or State Government Undertaking as on the date date of submission of bid.

18. That it is respectfully submitted that the petitioner no. 1 had submitted its bid on 21.4.2015 and that on the said date the petitioners had not been debarred by Government of India/any State Government in India/Central or State Government Undertaking, thus the petitioner in response to the said clause in the tender document mentioned that it had not been debarred by any of the aforesaid authorities."

The respondent no. 2 i.e. LMRC has placed on record a copy of the declaration i.e. covenant of integrity statement alongwith the affidavit filed on 14/15.9.2015 which in verbatim is the same as appended to the tender form and no details of any description were disclosed by the petitioners about any exclusion or debarment as on the date of submitting the tender on 21.4.2015, except what has been stated in paras 17 and 18 of the writ petition.

The petitioners even at the time of filing the writ petition have not stated as to why the debarment by JICA was not disclosed in the declaration of covenant of integrity nor the understanding of declaration in any particular form absolving them of disclosing the same, was detailed in the writ petition.

It is also an admitted position that the answer in reply to item-8 of the questionnaire in the check list information was given as 'No'. The disclosure of debarment by Airport Authority of India, JICA and DMRC for the first time was admittedly communicated to LMRC on 1.8.2015 and this position is evident in para 26 of the writ petition which reads as under:

"26. That it is submitted that the Petitioner No. 1 communicated to the LMRC about the blacklisting/ debarment order against the Petitioner No. 2 vide its letter dated 1.8.2015.

The above disclosure was made by the petitioners at a juncture when DMRC by letter dated 29.7.2015 had debarred the petitioner no. 2 for five years. The debarment by JICA vide letter dated 11.3.2015 being in the knowledge of the petitioners and operative on the due date of submitting the tender on 21.4.2015, thus, remained undisclosed. Therefore, there appears to be nothing wrong on the part of LMRC to have viewed such a conduct on the part of the petitioners seriously so as to implement the tender conditions scrupulously. The precondition of correct disclosure and the consequences of non-disclosure in the tender conditions are rigorous and no liberal interpretation so as to dilute their impact can be given as it would amount to altering the terms of the tender that are vital for its honest and true execution.

The information tendered by the petitioners to LMRC in their letter dated 1.8.2015 coupled with the legal advice and information received from the proposed funding agency i.e. EIB were put up for discussion before the Board meeting on 21.8.2015, which resolved as under:

"Agenda item-18/4 Evaluation of Financial Packages for Contract LKRS-01: Design, Manufacture, Supply, Testing, commissioning and Training of 80 no. Standard gauge cars Electrical Multiple Units (EMUs) including Train Control & Signaling System for Lucknow Metro Phase I-A Project.

The Board discussed the matter in detail about disqualification of the offer of Consortium of Hyundai-ROTEM, Korea; BEML, Bangalore & Ansaldo S.T.S S.p.A., Italy as per terms of para E4.9. Para E 5.7 of ITI and 4.33 of GCC and Annexure ET16 of Tender Document for Contract LKRS-01. Legal opinion obtained from Advocate General of the State Uttar Pradesh and communicated vide Letter No. 2696/Eight-1-15-38 LDA/15 dated 21.08.2015 of Government of Uttar Pradesh, Housing & Urban Planning Department was also taken into consideration by the Board where in Advocate General has stated that the disqualification of the offer of Consortium of Hyundai -ROTEM, Korea; BEML, Bangalore & Ansaldo STS S.P.A., Italy is valid on the basis of tender documents/ forms wherein there is a mandatory provision that failure to disclose information of debarment by any Funding Agency/Government of India/State Government/ Government Undertaking will be considered as willful concealment of information by the bidder and such debarment will result in disqualification of the Tenderer and its tender will be rejected.

Advocate General of Uttar Pradesh has given the Legal opinion" that in spite of the order of the Delhi High Court, the LMRC can take its own decision in disqualifying the tenderer Hyudnai Rotem and there is no legal impediment if such decision is taken."

The Board has also considered on interim order of the Hon'ble Delhi High Court dated 17.08.2015 under Writ Petition (c) 7656/2015 and LPA 547/2015 stating that order of the respondent (DMRC) dated 10.08.2015 shall not affect the participation of the appellant(Hyudnai Rotem( Tender). The above order of the Hon'ble Delhi High Court does not affect the present tender where offer of Consortium of Hyundai-ROTEM,Korea; BEML, Bengalore & Ansaldo STS S.p.A., Italy are disqualified on account of debarment of Hyundai-ROTEM by Japan International Cooperation Agency (JICA) from March 11, 2015 to July 10, 2015, which the Tenderer has not disclosed at the time of Tender submission for Contract LKRS-01 on 21.04.2015.

After consideration the Board has passed the following resolution:

"RESOLVED THAT in terms of para E4.9 para E5.7 of ITI and 4.33 of GCC and Annexure FT 16 of Tender Document for Contract LKRS-01 offer of Consortium of Hyundai-ROTEM, Korea; BEML, Bangalore & Ansaldo STS S.p.A., Italy stand disqualified and their tender rejected on account of debarment of Hyundai-ROTEM by Japan International Cooperation Agency (JICA) from March 11,2015 to July 10.2015 which the Tenderer did not disclose at the time of Tender submission for Contract LKRS-01 on 21.04.2015.

"RESOLVED FURTHER THAT Director Level Tender Committee of LMRC to make fresh financial package evaluation report for Tender for Contract LKRS-01 taking into account the facts now emerged from debarment and resultant disqualification of offer of Consortium of Hyundai-ROTEM, Korea; BEML, Bangalore & Ansaldo STS S.p.A., Italy."

"RESOLVED FURTHER THAT while considering the offer of the only qualified bidder left in the Tender for Contract LKRS-01 viz. Consortium of ALSTOM Transport India Ltd., Bangalore & ALSTOM Transport SA, France by the Director Level Tender Committee of LMRC, possibility of reduction in rates quoted may be explored by negotiation with the firm in consultation with EIB for further evaluation and award of work by LMRC."

We may note that as per clause E3 of the tender document, it is not permissible for a tenderer to bring about any change in the price or substance of the tender or seek any such change during the tender process except the arithmetical errors, therefore, the consideration of the letter dated 1.8.2015 forwarded by the petitioners in the Board meeting was rightly resorted to so as to determine its implications and in order to level the future course of action.

Sri Jaideep Narain Mathur, learned Senior Advocate assisted by Sri Dhruv Mathur, who was heard at length, has advanced his arguments on both the counts i.e. determination by the Board on the implications of letter dated 1.8.2015 as well as on the aspect of adopting future course of action by respondent no. 2 which has ultimately affected the petitioners' rights of not being treated as L-1 for the purposes of award of the contract agreement.

The resolution passed by the Board has to be examined within the scope of two relevant dimensions of the tender document. The tender document maintains a distinction between 'disclosure' and 'debarment'. The check list questionnaire item-6 read with clause-31 of verification, restricts disqualification of a tenderer exclusively on the ground of debarment imposed by Government of India/States or its instrumentalities as the due date, whereas, the covenant of integrity mandates disclosures of past exclusions by the financial institutions operating globally including multilateral funding agencies. The debarment by any such financial institution in the past or operating on the due date, ipso facto does not disqualify a bidder for participation in terms of tender document but its non-disclosure alongwith necessary details, of course, amounts to tendering a misleading information if the bidder has any such history to its credit singly or jointly. Even the details of measures taken against the employees in the nature of conviction, dismissal or resignation are bound to be disclosed by the tenderer.

The consequence of non-disclosure or tendering a misleading information as envisaged in item-8 of the questionnaire results into an automatic disqualification at the threshold of process and it is for this reason that non-disclosure of operative debarment imposed by JICA on 11.3.2015 against the petitioners assumes significance on the due date. Once it is conceded that JICA qualifies to be a multilateral funding agency on the global scene, there appears to be no justification as to why the debarment by such an agency though having come to the knowledge of the petitioners much before the due date, was not disclosed in the spirit of covenant of integrity. The answer 'no' against item-8 of the check list questionnaire in absence of furnishing details of past debarment by JICA (multilateral funding agency) was, thus, a clear breach of the tender document i.e. covenant of integrity amounting to concealment.

Having critically examined the resolution in the light of factual narration and admissions as above, we come to an irresistible conclusion that the petitioners, for lack of understanding or whatsoever, had offered misleading information in response to item-8 of the questionnaire and had failed to disclose the requisite details in the covenant of integrity which definitely is inclusive of a declaration of exclusion i.e. debarment by any multilateral funding agency etc. We are not impressed by the stand taken by the petitioners in the rejoinder affidavit that the mention of JICA was specifically struck off in the tender document which originally mentioned JICA at the relevant places at which the information of debarment in relation thereto was to be disclosed, for the reason that the terms of covenant of integrity as they stood on the due date remained unaltered and unchanged as compared to what is said to have been circulated before. Moreover, such a stand adopted by the petitioners on a close and comparative scrutiny of the tender document, in any of the two forms, does not lead to the one and only conclusion that the petitioners were not under a bounden duty to disclose the debarment by JICA as on the due date and no such explanation is offered in the letter dated 1.8.2015. The communication of disclosures on 1.8.2015, it is true, became necessary on account of DMRC debarment by letter dated 29.7.2015 which had to be informed in view of clause E5.7 but this communication contains an admission on the part of the petitioner to the effect that the debarment by JICA as on the due date i.e. 21.4.2015 was fully known to the petitioners. The action taken by the petitioner against its erring employees is a further testimony to the debarment which fact also required disclosure. Thus it is clear that the petitioners had failed to disclose the correct information in the spirit of covenant of integrity and a case of giving misleading information is made out.

The next submission made by Sri Mathur, learned Senior Advocate is to the effect that in any view of the matter, it was obligatory on the part of LMRC to have entered into the exercise of determination of establishing fraudulent practice amounting to concealment and failure on the part of the LMRC to issue a notice and observe the principles of natural justice vitiates the resolution dated 21.8.2015. In support of the argument, learned counsel has placed reliance upon a judgement reported in (1998) 5 SCC 170: S.K. Bhargawa v. Collector, Chandigarh (Paras 8 and 9). The argument advanced by the learned counsel is attractive but the same has to be considered in the light of communication of disclosures made by the petitioners on 1.8.2015. Two paragraphs viz. paras 9 and 10 of the communication dated 1.8.2015 being relevant, are extracted below:

"9. That on 19.1.2015, HRC received JICA's letter stating that JICA has learned that the tender document submitted by HRC during the bidding of DMRC's Phase 3 Project contained false information, seeking HRC's reply on the issue. That vide letter dated 30.01.2015, HRC replied to JICA explaining its position, requesting that the Company should not be subjected to any measures based on JICA's Rules. That on 11.03.2015, HRC received JICA's letter regarding Measures being imposed against HRC.

10. That on 30.06.2015, HRC made a submission to JICA submitting a report giving details of the measures taken by HRC in order to ensure that such incidence does not reoccur. That on 15.07.2015, JICA responded to HRC that they have examined the submission made by HRC and having found it to be well organized and consistent with JICA'S goals and procedures. JICA further confirmed that the period of JICA measures, imposed on 11.03.2015, will end on 10.07.2015."

We gather that the information on 01.08.2015 was tendered to LMRC in the context of debarment by DMRC but not to rectify any shortcoming of the covenant of integrity which expressly is impermissible. It remains a truth that the petitioner (HRC) was facing a debarment as on the due date i.e. 21.4.2015 which was not disclosed at the time of submitting the bid.

The requirement of determination as envisaged under clause 4.33.1 (b) may arise in a situation where the party to whom any prejudice is caused may have a reason to dispute the fact or may have a reason to justify, if the existence of such a fact is irrelevant. As observed hereinabove the disclosure of debarment by JICA being a multilateral funding agency was obligatory, and its non-disclosure had a bearing on the conduct of the petitioners on the due date. The right of opportunity, as claimed, therefore, even if the same can be read in the above provision would have been an empty formality in as much as the petitioners could not resile from the statement of having knowledge of the debarment by JICA imposed by letter dated 11.3.2015 as is sufficiently admitted in the communication dated 1.8.2015. Non-disclosure in the covenant of integrity of any such detail is admitted even at this stage. In the facts and circumstances of the present case, the argument so advanced by the learned counsel for the petitioners claiming benefit of opportunity would be asking for a futile exercise. In law, an admission being the best evidence, the submission on behalf of the petitioner, being devoid of merit, is disapproved.

Sri Mathur has also argued that the funding agency i.e. EIB, even not being disclosed to the parties has vitally influenced the tender process on the strength of its communication dated 30.7.2015, therefore, once such a communication was made to be the basis of petitioner's ouster, the matter ought to have been subjected to determination by putting him to notice. It is lastly argued that any negotiation resorted to by LMRC by sidetracking the lowest bidder is in clear violation of the tender process as well as the guidelines of Central Vigilance Commission.

We would have appreciated all these arguments including the argument of any influence exercised by an undisclosed funding agency provided the petitioner was a valid participant, but to say the least, we observe that in commercial matters, the right of opportunity has to be tested on a different criteria and the element of service to public interest is the decisive factor. The communication by EIB, in the light of petitioners' letter dated 1.8.2015, does not constitute a material unknown to the petitioners and to insist that LMRC should have heard the petitioners on this issue, being against the spirit of law of notice and opportunity propounded in the spirit of Article 14 of the Constitution of India, deserves rejection. Once the surviving bidder remains the lone bidder, reference to the CVC guidelines becomes irrelevant and the submission so made, therefore, carries no weight. The case law cited by the petitioners, is not attracted in the facts and circumstances of the present case.

The following portion of clause 4.33.1 deserves reiteration:

"4.33.1 The Employer requires that the Bidders/Contractors, their designated contractors and/or their agents observe the highest standard of ethics during Tendering and execution of this Contract.

Once the standard of ethics in the tender document is set out of the highest standards, to dilute the observance of such norms on technical grounds of procedure needs to be discouraged, except for the fact where the violation of tender conditions is writ large. The present being a clear case of concealment, therefore, we are not inclined to interfere under Article 226 of the Constitution of India.

This Court desists from entering into a roving enquiry in relation to the conduct of respondent no. 3 on the basis of allegations at the instance of the petitioners who have failed to establish their own case. The debarment by DMRC and the judgement passed by Delhi High Court in the context of resolution dated 21.8.2015 passed by LMRC are only relevant to the extent of mention of Clause E 5.7 but the said debarment is not the premise of the resolution dated 21.08.2015. Moreover, the High Court has finally allowed the petition, as is informed.

Except for a few documents which may require a fact finding inquiry, we have not been taken through any clinching evidence or admission against the conduct of respondent no. 3 on the basis of which, this Court at this stage may record a finding of corrupt practice or fraudulent practice having been indulged into by them. However, it is informed that a PIL i.e. Writ Petition No. 10443 (M/B) of 2015 has been instituted on this score by some other party, therefore, we restrict the scope of this writ petition to the extent of grievance raised. By observing so, it is not meant that any corrupt or fraudulent practice indulged into by respondent no. 3 (consortium of companies) has been dealt with by this Court but it is rather open to any aggrieved person to bring all such material to the notice of LMRC for any necessary action in the light of the tender document for entering into any necessary inquiry in this regard. For the present, we accept the statement of LMRC that respondent no. 3 (consortium of companies) has not been found to have indulged into any practice which may result into their disqualification.

We finally observe that the tender document as per the covenant of integrity did mandate disclosure of exclusion/debarment etc. by any multilateral banking/funding agency within its scope as on the due date and during the process of tender, therefore, to say that such a disclosure was not envisaged in the tender document and does not constitute a fraudulent practice as defined in Clause 4.33.1, in our view, is a complete misreading and misunderstanding of the tender conditions and the conclusion of concealment in the facts and circumstances of the present case is inevitably inescapable. The resolution passed by LMRC, therefore, does not suffer from any legal infirmity and we hereby uphold the same.

From a conspectus of the aforesaid finding recorded as also the affidavits exchanged between the parties, the arguments advanced on behalf of the petitioner could not be substantiated in any way. The status of JICA as a multinational funding agency could not be successfully disputed by the petitioner. Once it is established that JICA is a multinational funding agency then the fact of debarment, by itself, cannot be a matter of misunderstanding of the terms of the tender as the final tender document by holding the word JICA did not exclude it from its fold. The argument of Sri Patwalia and Sri Dwivedi on that count, therefore, has to be accepted. Sri Mathur's contention that there was no intention to deceit is not only the issue in as much as what is necessary under the tender document is disclosure in order to enable the employer to assess the correctness or otherwise of such disclosure. The non-disclosure about the debarment during the relevant period on the ground that the name of JICA stood deleted is an argument worth rejection for all the reasons given hereinabove.

The argument of Sri Mathur about the violation of principles of natural justice in determining the offer of the petitioner on the strength of the judgement in the case of S.K. Bhargawa v. Collector (supra) also does not hold water in as much as in that case the apex court had found that the determination required the observance of principles of natural justice as the jurisdiction of the civil court had been ousted on the facts of that case and in such situation, determination was necessary only after opportunity. The ratio of the said case does not clearly apply on the facts of the present case, moreso, the present is a case of contract where the ratio of the decisions in the case Jagdish Mandal and other decisions following the same (supra) are squarely attracted where the apex court has ruled that such principles of natural justice stand at a distance in such negotiations. Apart from this, it is equally true that only one conclusion was possible on the admitted position of non-disclosure. This clearly violated the clauses of the tender conditions and the Covenant of Integrity.

Apart from this, the decision making process has not been influenced and cannot be construed against the petitioner as admittedly till the stage of scrutiny of financial bids, the petitioner was found and recommended for acceptance being the lowest bidder. There was, therefore, no material available to question the tender process. Apart from this, the information received from the EIB only established what was admittedly existing, namely, the debarment of the petitioner on the due date. The Board of the respondent no. 2 had assessed all the factors independently on the receipt of such information and as observed above, we have also not been able to locate any infirmity in the said decision making process.

An argument of breach of confidentiality has also been advanced by Sri Mathur to contend that seeking of information from the EIB is violation of the tender conditions. This cannot be accepted for the simple reason that the confidentiality has to be maintained between the bidders and the employer. Even otherwise, such information has not caused any prejudice to either of the parties in as much as the information from the EIB stands substantiated by the admission of the petitioner himself, as observed hereinabove. Apart from this, such a breach is a breach of tort and cannot be a matter of judicial review in the exercise of jurisdiction under Article 226 of the Constitution of India.

There is a very peculiar aspect pointed out by Sri Rakesh Dwivedi about the conduct of the petitioner, who was having all information and was stealthily pursuing an effort to somehow or the other to dislodge the negotiations of the project. He submits that the petitioner has, in his affidavit, indicated newspaper information about Sri Jaitly, the then Financial Adviser to the Government of U.P. in the Department of NRIs and External Funding Projects. He submits that strangely enough the said information is based on a letter dated 31.8.2015, which letter formed part of another writ petition referred to by the petitioner himself. This letter dated 31.8.2015 signed by Sri Madhukar Jaitly, Adviser, Govt. of U.P., Department of NRIs and Externally Funded Project, is addressed to the Chief Minister and which advances the cause of the petitioner and very strangely mentions about negotiations and finalization of the same on 2nd Sept. 2015 and the hearing of the present writ petition on 28.9.2015. Sri Dwivedi submits that this letter is dated 31.8.2015 whereas it talks about subsequent events and is, therefore, clearly a manipulated letter that has been made the basis of a contention before this Court through a newspaper report. He submits that this attempt on the part of the petitioner is yet another conspicuously dubious attempt to mislead this Court on the strength of a completely fabricated document. Sri Mathur, learned counsel for the petitioner submits that the petitioner is not aware about the contents of the said letter but a photocopy of the same was produced before the Court which narrates the entire pleading of the petitioner's case before the Chief Minister. We only mention this fact as it was an argument raised before us but we refrain from recording any finding as the said letter by itself is not part of the pleadings.

The allegations against the respondent no. 3 consortium could not be supplemented by any clinching material and the argument advanced by Sri Dwivedi with the aid of the affidavits filed on behalf of the respondent no. 3, could not be successfully rebutted by the petitioners. The reliance placed by Sri Dwivedi on the judgement in the Vodafone case (supra) and the other decisions on the issue of violation of natural justice and judicial review clearly militate against the stand taken by the petitioners. The respondent no. 3 entered into a negotiation on the offer made by the respondent no. 2 after the rejection of the petitioner's offer by virtue of the decision of the Board on 1.9.2015. This also does not invite the violation of any CVC guidelines as alleged.

We also clarify that rejection of a tender in the tender process lies in the prerogative of the employer i.e. LMRC and rejection of the petitioner's tender has not culminated into a consequence of black listing or debarment for future at this stage.

Consequently, no case for interference is made out.

The writ petition lacks merit and is accordingly dismissed.

Dated: Dec. 23, 2015

MFA

Case :- MISC. BENCH No. - 8501 of 2015

Hon'ble Amreshwar Pratap Sahi, J.

Hon'ble Attau Rahman Masoodi, J.

The writ petition is dismissed vide our orders of date, on separate sheets.

Dated: Dec. 23, 2015

MFA