Adani Ports And Special Economic ... vs Vishakhapatnam Port Trust
2022 Latest Caselaw 2479 AP

              HIGH COURT OF ANDHRA PRADESH :: AMARAVATI


                    MAIN CASE NO.: W.P.No.6425 of 2022

                               PROCEEDING SHEET
Sl.No. Date        ORDER                                                         OFFICE
                                                                                 NOTE

07.   13.05.2022   RC,J


                                     I.A.No.3 of 2022
                          The present writ petition is filed seeking
                   a writ of mandamus declaring the action of the
                   Respondents in disqualifying the petitioner

Tender No.IM&EE/MOF/EQ-7-Mech/2021, dated 11.10.2021, by issuing the impugned Proceedings dated 07.03.2022 as illegal, arbitrary and contrary to Request for Qualification ('RFQ', for short).

The case of the petitioner company is that it is the largest commercial ports operator in India and has a strong and active presence across 13 domestic ports. It is the further case of the petitioner that the respondent Port Trust issued RFQ for Mechanization of EQ-7 Berth through PPP mode at Visakhapatnam Port Trust on DBFOT for a concession period amounting to 30 (thirty) years and the bidder selected pursuant to RFQ would be responsible for designing, engineering, financing, procurement, construction, operation and maintenance of the project under the concession agreement to be entered between the successful bidder and the port trust. The further case of the petitioner is that works to be executed by the successful bidder include mechanization of the berth for unloading cargo, providing conveying system, yard development, mechanized wagon loading facility, construction of road and fencing and any other works for successful completion and operation of the terminal, so as to create capacity to handle a minimum optimum volume

of 3.61 MTPA (Million Tonnes Per Annum). The further case of the petitioner is that petitioner has submitted an application for pre- qualification dated 26.11.2021 along with other requirements under RFQ document. Without considering the said application, the respondent authority has issued the impugned proceedings informing the petitioner company that it's bid was not qualified as per clause 2.2.8 of RFQ since the petitioner's subsidiary and associate company - M/s Adani Vizag Coal Terminal Private Limited's concession agreement was allegedly terminated by Visakhapatnam Port Trust (VPT). Aggrieved by the same, the present writ petition is filed.

Heard Sri Dammalapati Srinivas, learned senior counsel appearing for Sri Avinash Desai, learned counsel for the petitioner and Sri Ravi Teja Padiri, learned Standing Counsel for Visakhapatnam Port Trust.

Learned senior counsel in elaboration of what has been stated in the writ affidavit has contended that the petitioner company complied with all the pre-requisites while submitting its bid and application for pre- qualification and the first respondent-Port Trust Authority wrongly disqualified the petitioner on trivial grounds which does not have any bearing on the essential bid requirements stipulated under RFQ. Learned senior counsel further contended that there is a proviso to Clause 2.2.8 which stipulates that where an applicant claims that its disqualification arising out of any cause or event specified in this clause 2.2.8 is such that it does not reflect any malfeasance on its part in relation to such cause or event, any wilful default or patent breach of the material terms of the relevant contract, any fraud, deceit or representation in relation to such contract, or any rescinding or abandoning

of such contract, it may make a representation to this effect to the authority for seeking a waiver from the disqualification. In further elaboration, learned senior counsel also brought to the notice of this Court the conditions incorporated under the Tender Notification, dated 11.10.2021, more particularly, Clause 1.2.1. Further to the same, learned senior counsel also drawn the attention of this Court to the guidelines issued by the Central Government which are meticulously to be followed by the Central Government Organizations like the 1st respondent-Port Trust, which is placed on record as exhibit P7. Learned senior counsel further contended that no show cause notice was given by the respondent authorities before disqualifying the petitioner's bid and straight away they have disqualified the petitioner's bid under the impugned proceedings. As such, their action is not justified and the interference of this Court is very much required under Article 226 of the Constitution of India as the same is being illegal and contrary to their own guidelines. It is further contended by the learned senior counsel that in similar set of facts, in another Tender Notification, when the 2nd respondent has disqualified the very same petitioner's tender by invoking clause 2.2.8, the petitioner herein invoked the jurisdiction of this Court and filed W.P.No.455 of 2022. This Court by order dated 03.03.2022 has dismissed the said writ petition. Assailing the said order passed in W.P.No.455 of 2022, the petitioner preferred Writ Appeal in W.A.No.300 of 2022, wherein a Division Bench of this Court passed an interim order directing the authorities not to open the bids. The said order is being extended from time to time. Inspite of an interim direction passed by this Court, in a similar fashion, without any justification and without issuing show-cause

notice, now, in the present tender process also, the 2nd respondent has disqualified the petitioner's tender by the impugned proceedings. As such, the present writ petition has been filed invoking the jurisdiction of this Court. It is further contended that when the matter is listed before vacation, an undertaking has been given by the 2nd respondent authority on 20.04.2022 stating that they will not open the tenders until further hearing. Later, that concession was not given by the learned standing counsel before the Court. Meantime, vacation has approached and now by virtue of changed developments that have taken place in the vacation wherein the respondents have issued Corrigendum stating the date of receiving application date as 16.05.2022 and opening bid as 17.05.2022. In view of the same, it necessitated the petitioner to file the present application (I.A.No.3 of 2022) duly praying the Court to direct the respondents not to open the bids and accordingly moved house motion.

On the other hand, learned standing counsel for the respondents contended that a counter has been filed duly justifying the action of the respondents in disqualifying the petitioner from the tender process as it had not disclosed material facts which are required as per the tender conditions wherein it is stated that any entity which has been barred by the Central/State Government or any entity controlled by it from participating in any project and the bar subsists as on the date of application would not be eligible to submit any application. In further elaboration to the contents raised in the counter, learned standing counsel submitted that the earlier agreement of the petitioner's associate entity was terminated by Visakhapatnam Port Trust. As such, that fact was suppressed by the petitioner while

submitting the present tender document.

In reply to the said submission, learned senior counsel submitted that it is not the Visakhapatnam Port Trust that has terminated the agreement against the associate entity, but it is the associated entity that has terminated the agreement and the said issue is pending adjudication before the learned Arbitrator. Until and unless the said issue is decided by the learned Arbitrator, the question of disqualifying the petitioner from the present tender process invoking Clause 2.2.8 does not arise. He further contended that even otherwise issuance of show-cause notice before disqualifying the petitioner is very much required.

A perusal of the material on record reflects the tender conditions. The Criteria envisaged in clause 1.2.1 reads as follows:

"..Government of India has issued guidelines (see Appendix-V) for qualification of bidders seeking to acquire stakes in any public sector enterprise through the process of disinvestment. These guidelines shall apply mutatis mutandis to this Bidding Process. The Authority shall be entitled to disqualify an Applicant in accordance with the aforesaid guidelines at any stage of the Bidding Process. Applicants must satisfy themselves that they are qualified to bid, and should give an undertaking to this effect in the form at Appendix-I."

The said criteria stipulates that the guidelines issued by the Government of India shall apply mutatis mutandis to this bidding process and the authority shall be entitled to disqualify an applicant in accordance with the aforesaid guidelines at any stage of the bidding process and applicants must satisfy themselves

that they are qualified to bid and should give an undertaking to that effect in the form at Appendix I. Copy of the Appendix-V (Guidelines of the Department of Disinvestment) dated 13.07.2001, is also placed on record as exhibit P7. Clause (f) of the said Appendix reads as under:

"Before disqualifying a concern, a Show Cause Notice why it should not be disqualified would be issued to it and it would be given an opportunity to explain its position."

A perusal of clause 'f' clearly says that an opportunity should be given by duly issuing a show cause notice before disqualifying the concern. Admittedly in the present case though show cause notice has been provided as per their own guidelines and the tender criteria, without issuing show cause notice disqualifying the petitioner is unwarranted is the observation of this Court, prima facie.

On the other hand, learned senior counsel has also drawn the attention of this Court to the interim order dated 28.04.2022 passed by this Court in WA.No.300 of 2022. A copy of the said order is placed on record along with IA.No.3 of 2022. The said order dated 28.04.2022 reads as follows:

"Heard Mr.D.Srinivas, learned Senior Counsel along with Mr.Avinash Desai, learned counsel for the appellant and Mr.P. Sriraghu Ram, learned Senior Counsel along with Mr.Raviteja Padiri, learned counsel for the respondent no.1.

2. Learned counsel for the parties submit that today was the date fixed by the Court for finally hearing the matter, but, due to non availability of the concerned Bench, the matter has been

listed before the incharge Bench. It is jointly prayed that the case be listed on 04.05.2022.

Learned Senior Counsel for the appellant submits that the Court had protected his interest by recording that the tender received by the respondents would not be opened till the matter is finally heard, and the same would expire today and this Court may extend such protection.

The Court finds substance in the stand taken by learned Senior Counsel for the appellant.

Accordingly, till the matter is heard next, the respondents shall not open the tender received by them with regard to the present lis."

Learned Senior Counsel has submitted that by further order dated 04.05.2022, the above order has been extended till 23.06.2022 and thus, the interim order is still subsisting. It is further stated that the facts of the above case are similar to the present case.

In order to resolve the issue in the present writ petition, it would take sufficient time for hearing and passing orders. Learned Senior Counsel submitted that in the event if this Court does not protect the interests of the petitioner and under the guise of impugned proceeding, if the petitioner is not permitted by the respondents to participate in the bid and in the event bids are collected and opened the very purpose of filing writ petition also would be defeated and the petitioner would be put to irreparable loss and hardship which cannot be compensated.

On the other hand, learned standing counsel submitted that the petitioner does not

require any indulgence of this Court as it has not properly submitted the bid documents. Learned standing counsel also relied on the judgment of the Supreme Court in M/s. N.G.Projects Limited v. M/s. Vinod Kumar Jain and others [2022 Live Law (SC) 302] in support of his contention that Courts should refrain from interfering in tender matters.

Law is well settled with regard to interference of this Court in tender process. With due respect, the ratio laid in the said decision is not applicable to the facts of the instant case, as in the present case the respondent authorities themselves are violating their own guidelines and also the criteria condition 1.2.1 as stated supra. Prima facie the impugned order is arbitrary, contrary to their own guidelines and in violation of the clause 'f' wherein issuance of show cause notice has to be provided to the petitioner before passing such an order. In the present case no show-cause notice has been issued is the contention of the petitioner. As such this Court feels it appropriate to pass an interim order.

Accordingly, the respondents are directed not to open the RFQ/RFP bids in Tender No.IM&EE/MOF/EQ-7-Mech/2021, for a period of eight weeks from today.

______ RC, J W.P.No.6425 of 2022 Post on 25.06.2022 for hearing.

______ RC, J Note: Issue CC by 16.05.2022.

B/o Vjl