Coastal Marine Construction And ... vs The Shipping Corporation Of India ...
2017 Latest Caselaw 8754 Bom

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             IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                 ORDINARY ORIGINAL CIVIL JURISDICTION

                        WRIT PETITION (L) NO.1211 OF 2017

1. Coastal Marine Construction & Engineering Limited
Off. 402, Madhava, Plot No. C-4, 
E Block, Bandra Kurla Complex,
Bandra East, Mumbai 400051.

2. Manoj Sharma
Director of Coastal Marine Company
Add. 402, Madhava, Plot No. C-4,
E Block, Bandra Kurla Complex,
Bandra East, Mumbai 400051.                                  ...Petitioners
            versus
1. The Shipping Corporation of India
Off. Shipping House, 245,
Madame Cama Road, Mumbai 400021.

2. Union of India
Add. Aaykar Bhavan, Maharishi Karve Road,
Churchagate, Mumbai 400 021.

3. Fugro Survey (India) Pvt. Ltd.
Off. Fugro House, D-222/30, T.T.C. Indl. Area,
Navi Mumbai, Pin- 400706.

4. Helms Geomarine Sdn Bhd.
Off. 35L-1-11, KLSC, Jalan Wangsa Delima,
5, Pusat Bandar, Wangsa Maju,
Kuala Laumpur, Malaysia- 53300.                              ...Respondents

Mr. Venkatesh Dhond, Senior Counsel a/w. Mr. Ashwin Shanker, 
Bimal Rajasekar and Ms. Riddhi Nyati, for the Petitioners.
Mr.   Manoj   Khatri   a/w.   Mr.   Arnab   Ghosh,   Mr.   Alvia   Crasta,   Mr. 
Kumar Kothari i/b. M/s. Callidus Legal, for Respondent No. 1.
Mr. Dushyant Kumar, for the Respondent No. 2.
Mr. Rahul Narichania, Senior Advocate a/w. Mr. Madhur Rai i/b. 
PRS Legal, for the Respondent No. 3.
None for the Respondent No. 4.

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                   JUDGMENT RESERVED ON                          : 10th November, 2017 
                   JUDGMENT PRONOUNCED ON : 16th November, 2017
                                 CORAM           : SHANTANU KEMKAR &
                                                   G.S. KULKARNI, JJ.

ORAL JUDGMENT: (Per Shantanu Kemkar, J.)

. In pursuance to the invitation to the bid floated by the

Shipping Corporation on India/first Respondent in February, 2017

for appointment of Geotechnical Subcontractor for provision of

Geotechnical personnel/services/equipment maintenance on board

ONGC's Geotechnical Vessel (GTV) SAMUDRA SARVEKSHAK for a

period of two years, the Petitioners and two other bidders

(Respondent No. 3 and 4) submitted their bids.

2. As per clause 6 of the Eligibility/

Experience/Qualification Criteria for the Bidder as notified in the

invitation to bid, reads thus:

6.1 Bidder must have following minimum experience (as on the date of opening of unpriced bid) in offshore geotechnical investigations.

Bidder independently should have minimum of 4 years experience in carrying out offshore Geotechnical soil investigation works in last 10 years from similar Geotech Drilling DP Vessels, of which at least one contract should be in Indian waters.

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Bidder independently should have a proven track record of completing SI boreholes with a total penetration depth of not less than 8000 mtrs in last 4 years.

Bidder independently should have prior experience in carrying out Geotech soil investigation work at a water depth exceeding 200 mtrs in offshore in last 4 years.

Drilling done in shallow waters of depth less than 20 mtrs and on shore experience will not be considered for above experience purpose. The experience must be in both the activities of offshore geotechnical investigations i.e. field investigations involving rotary drilling, wireline operated sampling and Instu Static Cone Penetration Test equipment from a Geotechnical vessel /barge /floters, Laboratory testing, engineering analysis and reporting for offshore structures like steel jacket platforms and jack up rigs etc. The field investigations must have been executed in water depths exceeding 30 mtrs. and bore hole depths exceeding 80 mtrs. below sea bed (deep borehole) for platform location including Geotechnical investigations for boreholes depths exceeding 30 mtrs below sea bed (shallow borehole) for deployment of jack up rigs.

6.2 Bidders should furnish experience details as per format attached at Appendix I alongwith documentary evidence such as contract or work order copy/confirmation from Client Company for jobs as stipulated in the scope of work in support of their claimed experience. Details of experience and past performance of the bidder, on works/jobs done of similar nature in the past and details of current work in hand and other contractual commitments, indicating areas and clients are to be submitted along with the techno-commercial bid, in support of the experience laid down at para 6.1 above.

6.3 Bidder should perform the Geotechnical operations independently, without subcontracting any of the geotechnical operations to any third parties/ companies.

6.4 Bidder should have an established office set up with Project management and dedicated and experienced support staff in Mumbai, for executing the contract. In case the bider does not have the above, he shall be required to submit an

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undertaking in technical bid stating that he will set up an office in Mumbai, if contact is awarded.

6.5 Bids conforming to above eligibility criteria only will be considered. Bids from parties currently blacklisted by ONGC/SCI will not be considered.

6.6 Personnel experience : The bidder confirm that bidder will provide personnel of requisite experience and qualification throughout the period of contract as per Annexure III. CV of personnel to be attached (emphasis supplied).

3. The case of the Petitioner-Coastal Marine Construction

& Engineering Limited is that though the third Respondent - Fugro

Survey (India) Pvt. Ltd. did not fulfill the experience criteria, the

first Respondent had accepted its technical bid by ignoring the

mandatory minimum experience requirement. According to the

Petitioners the third Respondent was not fulfilling the requisite

experience criteria in its "independent" capacity and had claimed

the fulfillment of the experience criteria by adding the experience

of Fugro Survey (Middle East) Ltd. its Group Company/technical

collaborator/ Subsidiary.

4. The case of the Petitioners is that experience of the

bidder alone was required to be taken and the experience of Group

Company/technical collaborator/Subsidiary could not be taken for

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consideration in view of the use of the word "independently" in

clause 6.1 of the criteria for eligibility regarding experience of

different types mentioned therein. It is the case of the Petitioners

that the interpretation of the term "independently" as done by the

first Respondent leads to arbitrary exercise of powers. It is stated

that had it been made known to the public at large that the

experience of others like Group Company/technical collaborator/

subsidiary was also be taken into consideration, there would have

been much more competition and many other bidders would have

participated in the tender process and thereby there would have

been a wide competition in the best public interest.

5. The first Respondent - Shipping Corporation of India in

its reply has stated that the Petitioners have wrongly interpreted

the term "independently" laid down in the tender condition. The

term "independently" has been used by it to bar any form of

association of the third parties by way of joint ventures and/or

subcontracts. The same does not bar any form of any association

between a parent company and a subsidiary. It has been further

stated by the first Respondent that the parent company of the

bidder needs to guarantee and undertake to provide the technical

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support of the subsidiary as provided in Appendix VII of the tender

document and thus the averment of the Petitioners that the bidder

cannot make use of the qualification of the parent company is

baseless and devoid of merits. It has also been stated that the

Petitioners' objection in regard to taking into consideration the

experience of the Petitioners' group companies/technical

collaborator was considered by the Tender Processing Committee

(for short "TPC") and after consideration of the relevant documents

the TPC has rightly rejected the Petitioners' objection.

6. The third Respondent - Fugro Survey (India) Pvt. Ltd. in

its reply has stated that Fugro group is world's largest and leading

independent services provider for Geo Survey and Geo-Technical

investigation for large constructions, infrastructure and natural

resources. It has been stated that Fugro companies have

undertaken various similar type of works and is involved in all

major Oil and Gas projects in India. It is further stated that so far

as third Respondent is concerned, it is involved in all major oil and

gas projects in India including ONGC's Mumbai High development

and Reliance's eastern offshore Krishna Godavari field

development.

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7. The Petitioners have filed rejoinder and stated that the

bidder cannot rely on the expertise or experience of any joint

ventures, consortiums, sub-contactors or group companies or even

its parent company, in view of the fact that as per the criteria for

experience the bidder should have experience in its "independent

capacity". It has been stated that law does not recognize entity

such as "Group Companies" as stated by the third Respondent. It is

reiterated that the bidder must "independently" meet the eligibility

criteria of experience under the subject tender. It has been further

stated that at the most a bidder which is wholly owned subsidiary,

may rely upon its parent company's experience but the present

case is not of that nature.

8. In order to appreciate the controversy involved in the

Petition, we had directed the first Respondent to produce the

relevant record for perusal. Accordingly the same was produced.

During the course of hearing, it has been perused by us.

9. The relevant portion of the decision of TPC which is

necessary for the purposes of adjudication of the dispute raised in

this Petition reads thus:

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4. COMACOE had sent a letter to SCI regarding the eligibility/ experience/ qualification criteria of bidders in the tender document regarding the experience of parent company, Joint Venture in the tender. This was in reference to a particular bidder who has shown the experience of the sister company. (Copy of the letter is attached at Annex.C). The indirect reference was made to another bidder Fugro Survey (India) Pvt. Ltd. In the letter they h ave interpreted the word "independently" which is mentioned in the tender document which as per them means that the bidding party should fulfill the requirements without relying on parent or any other entity. They have also emphasized that there is no scope for JV/Consortium of Sub-contact arrangement for meeting the tender requirements.

. The same was discussed in the TPC meet at length. . Joint Venture/Consortium is for two unrelated companies. Nowhere it is mentioned in the tender document that the parent, sister experience cannot be used by the bidder for qualifying in the tender. COMACOE has viewed the term "independently" very narrowly.

. Fugro N.V. is an internationally renowned organization. Fugro N.V does the geotechnical operations and surveys in all the major offshore oil producing countries and is a leading company in this field. It has its subsidiaries all over the world and it operates through these subsidiaries. As a company policy, Fugro N.V the umbrella company does not directly bid or operate in India. It operates through its subsidiary, Fugro Survey (India) Pvt. Ltd. in India, which is one of the bidders in this tender. They have used the experience of Fugro Survey (Middle East) Ltd. to fulfill some experience requirements. Informatively, the Indian subsidiary is also a contractor with ONGC. The geotech operations are highly specialized operations with a few players.

. TPC decided that the main purpose of the tendering process was to encourage healthy competition and as the bidder fulfilled the required qualifications, the same should be eligible for qualification in the technical evaluation.

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10. The learned counsel for the Petitioners has placed

strong reliance on the condition laid down in clause Nos. 6.1 and

6.5 as extracted in paragraph 2 above and argued that since the

third Respondent was not having minimum experience in its

"independent capacity" which was the essential requirement for

complying the criteria of minimum experience, the decision of the

TPC to hold third Respondent eligible runs contrary to the

experience condition notified by the first Respondent. He, therefore

argued that since the third Respondent was not having requisite

eligibility qualification, the acceptance of its technical bid and the

further process of acceptance of price bid be quashed and re-

tender be ordered, so that there would be fair opportunity to all

aspirants to participate in the tender process thereby giving room

for a fair competition. He submits that had it been made known to

all that the use of word "independently" at various places in clause

6.1 and 6.5 would be construed so liberally to the extent that

experience of Group Company which is not a parent company

having no legal nexus with the bidder company will also be

calculated and was acceptable for considering the experience of the

bidder, there would have been many other bidders who would have

participated in the bidding process.

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11. On the other hand, the Respondent Nos. 1 to 3 have

opposed submissions made on behalf of the Petitioners by arguing

that the Petitioners had not approached to the Court immediately

after third Respondent was qualified for technical bid and having

waited till opening of the financial bid, it cannot be allowed to

challenge the tender after it failed in the financial bid. It has been

argued that in view of the clause 5.1 of the tender document, the

decision of the first Respondent is required to be taken to be final

and binding in regard to the interpretation of the clause of the

tender and therefore the Petitioners interpretation of clauses 6.1

and 6.5 cannot be accepted. According to them the Petitioners are

construing the word "independently" in a narrow manner. It is also

the case of the Respondents that in the aforesaid clauses, nowhere

it has been mentioned that the parent or sister company's

experience cannot be used by the bidder for qualifying in the

tender. In the circumstances, it has been argued that the third

Respondent being subsidiary of Fugro Survey (Middle East) Ltd.

Company, its experience could have been used and has been

rightly used by the third Respondent. The learned counsel for the

third Respondent has placed reliance on the judgment passed by

the Supreme Court in the case of Jagdish Mandal vs. State of

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Orissa and Ors. (2007) 14 Supreme Court Cases 517 to contend

that no case for interference in writ jurisdiction is made out.

12. We have heard the learned counsel for the parties and

considered the averments made in the Petition, reply and rejoinder.

We have also gone through the record produced by the first

Respondent.

13. On 20th June, 2017 this Court had passed following

interim order which was continued from time to time :-

3. Since the bids are opened and all the parties to the writ petition are aware of the figures, Respondent No. 1 need not seek permission of the Court to proceed with the matter and decide who should get the tender since 30 th June is the last date. However, if it is not a petitioner in whose favour the award of tender will be made, then Respondent No. 1 shall not issue work order till the next date of hearing.

14. True it is, normally the Courts will not interfere in the

decision of the tender evaluation committee consisting of experts

unless it is malafide or wholly perverse. It is also a settled position

of law that in the matters relating to tenders if the decision relating

to award of contract is bonafide and is in public interest, the

Courts will not in exercise of powers of judicial review interfere even

if procedural aberration or error in assessment or prejudice to a

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tenderer is made out. The power of judicial review will not be

permitted to be invoked to protect private interest at the cost of

public interest or to decide the contractual disputes. The

evaluation of tenders and awarding of contracts are essentially

commercial functions and principles of equity and natural justice

stay at a distance in such matters, the Court is concerned

primarily as to whether there has been any infirmity in the

decision making process. The Courts certainly examine whether

the decision making process was reasonable, rational, not arbitrary

and violative of Article 14 of the Constitution. The Court will not sit

as a Court of Appeal but merely reviews the manner in which the

decision was made as it has no expertise to correct the

administrative action. It is also well settled that the Court is not

empowered to scrutinize the terms of the invitation of tenders

because it is the realm of contract and as such the decision more

often are made collectively by experts. It is also been held by catena

of judgments that the Government must have freedom of contract.

A fair play is necessary for an administrative body functioning in

administrative spare. The Courts have also to consider that the

quashing of decision may impose heavy administrative burden on

the administration. Even if some defect is found in the decision

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making process, the Court must exercise its discretionary powers

under Article 226 of the Constitution of India in furtherance of

public interest and not merely on the making out of a legal point.

[See Jagdish Mandal vs. State of Orissa, (2007) 14 Supreme

Court Cases, 517, (relied upon by the third Respondent), Air

India Ltd. vs. Cochin International Airport Ltd. (2000) 2 SCC

617, Tata Cellular vs. Union of India, (1994) 6 SCC 651, B.S.N.

Joshi & Sons Ltd. vs. Nair Coal Services Ltd., (2006) 11 SCC

548, Raunaq International Ltd. vs. I.V.R. Construction Ltd.

(1999) 1 SCC 492].

15. Having heard the learned counsel for the parties, we

find that the only question which is required to be decided in this

Petition as to whether the clause Nos. 6.1 and 6.5 permit the TPC/

first Respondent to take into consideration the experience of

another company namely Fugro Survey (Middle East) Ltd. along

with the experience of the third Respondent bidder company for

the purposes of fulfilling the experience criteria.

16. It is pertinent to mention here that from the minutes of

the meeting of TPC, it reveals that the TPC had observed that the

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company Furgro (Middle East) Ltd. is unrelated company from the

bidder third Respondent company. There is no material to accept

the contention of the third Respondent that Furgro (Middle East)

Ltd. is its Parent Company or the third Respondent is its

Subsidiary.

17. On a plain reading of clause Nos. 6.1 and 6.5 we find

ourselves unable to agree with the claim of the Respondents that

the experience of the "Group Company" can also be taken into

consideration while considering the experience of bidder when the

clauses are so clear requiring therein that "the bidder

independently should have experience". In this view of the matter,

even though clause 5.1 provides that in the event of any dispute as

regards interpretation of the clauses, the decision of the first

Respondent shall be final and binding, the interpretation as has

been done by the first Respondent leads to absurdity and provides

for arbitrary exercise of powers.

18. In our considered view the condition NO. 6.1 and 6.5

regarding eligibility criteria being fundamental condition of tender

for being qualified for the purposes of experience if allowed to be

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interpreted as has been done then the said condition would

become redundant. By putting the aforesaid clauses, the

Respondent No. 1 having restricted the entry of the bidders to

those who "independently should have experience" could not have

allowed the other bidders to claim experience of technical

collaborator/totally unrelated Group Companies. By doing so the

first Respondent has violated the fundamental experience

qualification condition and thereby acted in arbitrary manner

vitiating the entire decision making process. As noted above, we

also have not come across any document to show that the third

Respondent bidder is Subsidiary of Fugro Survey (Middle East) Ltd.

or that the said Company is Parent Company or Sister Company of

the third Respondent bidder.

19. In what way the "Group Company" or "Subsidiary" can

be termed as parent or sister company of the third Respondent for

claiming the experience said company i.e. Furgo Middle East

Private Limited" has also not been explained by first or the third

Respondent in their reply affidavit. On the other hand, the reply

affidavit filed by these Respondents is not touching to the main

issue raised by the Petitioners. In reply, it has been stated by the

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first Respondent that the term "independently" does not bar any

form of any association between a parent company or subsidiary.

However it is not the case of the third Respondent that Fugro

Middle East Pvt. Ltd company is its parent, sister or subsidiary

company. It is also the case of the first Respondent that Appendix

VII of the tender provides for guarantee to be given by the parent

company. However, admittedly the guarantee in terms of Appendix

VII has not been given by third Respondent as during the course of

arguments, it has been stated by counsel for both the Respondents

that the guarantee in the form of Appendix VII was not required to

be furnished in the present case as the said clause is not

applicable. We may also note that the third Respondent to support

its association with Fugro (Middle East) Ltd. has submitted a

document titled "Memorandum of Understanding" wherein the

third Respondent has referred itself as the bidder and has referred

Fugro (Middle East) Ltd as a "Technical Collaborator" and not that

it is Parent Company.

20. Keeping in view the aforesaid facts and the settled legal

position as stated above, we are of the view that while accepting

the third Respondent's bid, the first Respondent has acted

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arbitrary and has violated the fundamental condition of the tender

in respect of eligibility criteria. The first Respondent firstly

restricted the number of bidders from participating in the tender

process by putting the said eligibility criteria and thereafter

arbitrarily accepted the bid of the third Respondent by relaxing the

condition by interpreting it contrary to its spirit by taking into

consideration the experience of altogether unrelated company, in

the garb of the technical collaborator/ group company or the

Subsidiary company. The use of the expression "Subsidiary"

company or "Group Company" or "Technical Collaborator" of the

third Respondent company for taking into consideration the

experience of Fugro Survey Middle East Ltd. is merely an eye wash

and the same is of no use in view of the condition regarding

experience criteria as extracted above.

21. Thus the decision of the TPC/first Respondent is wholly

arbitrary and contrary to the fundamental tender

condition/regarding experience, this Court certainly has

jurisdiction to interfere in the matter.

22. As a result, the decision of the TPC holding the third

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Respondent eligible in Technical Bid and the decision of the first

Respondent to award contract in favour of the third Respondent is

liable to be and is hereby quashed and set aside.

23. The first Respondent is at liberty to issue fresh tender

fixing the eligibility criteria as it may deem fit. We expect that the

first Respondent will adhere to the conditions as may be

incorporated in the fresh tender document.

24. With the aforesaid, the Petition is allowed to the extent

indicated above.

25. No order as to the costs.

                   (G.S. KULKARNI, J.)           (SHANTANU KEMKAR, J.)




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26. At this stage a prayer has been made by the learned

counsel for the third Respondent to stay the operation of this order.

We decline the prayer.

                   (G.S. KULKARNI, J.)                  (SHANTANU KEMKAR, J.)




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