Victoria Engineering Works And ... vs Union Of India And Ors.
1995 Latest Caselaw 20 Del

JUDGMENT

D.P. Wadhwa, J.

(1) These two petitions raise a common question and can be disposed of by this judgment. In both these petitions the petitioners challenge limited tender for supply of 52000 numbers of 15 Meters Tubular Self Supporting Masts/Towers issued by the Department of Telecommunications, Telecom Commission, Ministry of Communication, Government of India. Limited tender documents have been issued to 24 parties who have been made respondents 5 to 27 in writ petition No. 4091/94. In writ petition No. 4353/94, however, there are only two respondents, and the names of the parties to whom limited tender documents had been issued have been separately mentioned in Annexure-I to the petition. We do not think for the purpose of the issues involved in these petitions those parties are either proper or necessary parties. We will, therefore, strike out their names in Civil Writ Petition No. 4091/94. We in fact limited the notice of this petition only to respondents 1 to 4. These petitioners seek appropriate writ, order of direction quashing the Tender No. 11-14/94-MMT(RN) in so far as the same has been issued to limited participants and the petitioners seek a further direction by issuing a writ of mandamus commanding the respondents to allow the petitioners as well to participate in the said tender.

(2) To understand the issues involved in these two petitions we will concentrate on the facts in Civil Writ Petition No. 4091/94 (Victoria Engineering Works). Telecom- Policy of the Government- of India envisages that every village in the country will have a public telephone by 31 March 1997. The respondents say that this implies provision of 4,37,166 village public telephones (VPTs) in the next three years, i.e. 1994-97 and about one lakh village public telephones are to be provided during the year 1994- 95. It is stated that for this purpose it was estimated that 99,630 masts of height of 15 meters will be required. In 1992 the respondents invited a public tender for supply of 66,000 numbers of 15 Meters Masts (Tubular Self Supporting Towers). Fifty three offers were received highest of which was Rs.65,750.00 and lowest Rs.8,940.00 per tower. The respondents gave a counter offer of Rs.8,649.00 per tower to 17 parties (to whom as well as some others limited tenders are now sought to be issued) and an order of 30,000 numbers of towers was given to these 17 parties at Rs.8,649.00 per tower. A repeat order was placed on these 17 parties for supply of 19.400 masts/towers in June 1994 at the same rate of Rs.8,649.00 per tower. Respondents say 80,000 masts/towers still remain to be procured for the year 1994- 95. Out of these numbers it is stated that there is a reservation of 30% (24,000) for departmental public sector and 5% (4,000) for telecom factories, the net requirement for procurement of these masts/towers from the public number 52,000. To justify the issue of limited tender enquiry and keeping the petitioners out of that the respondents give the following reasoning :-

"3. Since almost half the year is over and no substantial progress had been made in the procurement of these masts, it was decided at the highest level that a limited tender be called for so that the supply of 52,000 masts can be completed and the installa fanytingtion of the necessary number of VPTs be completed before 31.3.1995. 4. The tender has been limited to 24 suppliers who are Respondents 5 to 28 in the present writ petition. It is respectfully submitted that even if the tender had not been limited to these 24 suppliers, the petitioner would not have qualified for the tender in view of the provision of Section Iv Clause 3 of the Contract under the heading Special Conditions of Contract. This reads as follows :- "The bidders having type approval for the tendered item from the Department of Telecommunications as on opening date of tenders are only eligible for participation." Apart from anything else the petitioners do not satisfy this requirement and, therefore, cannot make any grievance before this Hon ble Court that they have been excluded. In other words, even if the petitioners had been called, they would not meet the eligibility conditions. There is no violation of Article 14 of the Constitution."

It is then stated that all this was done with a view to reduce the delay in procurement for meeting the targets and that was the reason for deciding to issue a limited tender on type approved bidders. The tender was opened on 27 September 1994. The respondents have not disclosed the rates quoted by the bidders, and perhaps rightly so, as it is stated that all the parties except two had given response to the limited tender and that response was under evaluation and tenders were yet to be finalised. Then the respondents finally state as under :-

"THE Petitioners do not have type approval for the tendered item. No notice inviting tender was issued to them being non- eligible ab initio as per tender conditions. The Respondents No. 5 to 28 appear in the list of type approved vendors and notice inviting tender was issued to them. Out of these 24 type approved vendors M/s. Mace and Telecom Factory Calcutta did not submit the bids on bid opening day i.e. 27.9.1994."

(3) Petitioners are challenging this action of the respondents being arbitrary and discriminatory. They say they are fully qualified to supply the masts/towers to the respondents and their names should have been included for the limited tender enquiry. The petitioner Victoria Engineering Works says that it is a small scale industrial unit having permanent registration certificate of the National Small Industries Corporation Ltd. (NSIC) and has a factory located in Howrah in West Bengal. It says it has all the infrastructure and has been manufacturing various items since 1963 such as line materials for telecom stores, track items and wagon components for Railways and various engineering items for DGS&D inclusive of steel trunks and barbed wire. It says its staff is competent and has got qualified engineers. Then the petitioner says that it added an additional line for the manufacture of 15 meters self supporting towers and also obtained the NSIC's registration certificate under single point registration and also got infrastructure assessment done by the Director (QA), Telecorn, Calcutta, for this item. It is then stated that the design for the above 15 meters tower was approved by the Structural Engineering Research Centre, Madras, under the Council of Scientific and Industrial Research, and further approval of welded joints, plates, flanges, nut bolts, was also approved by the Structural Engineering Research Centre. It is stated that this was done as per the instructions of the Director (QA), Telecom Department, Calcutta. On 25 July 1994 Victoria wrote to the Chairman, Department of Telecommunications (DOT) that it was an established supplier of Telecom Stores for the last two decades and had also manufactured and supplied Hamilton Tubes to the Dot besides other line materials. Victoria informed the Dot that it had recently designed and developed the manufacturing of 15 meters towers required by the Dot for its stores and that its design had already been approved by the Structural Engineering Research Centre, Madras. A xerox copy of the approval was attached with the letter. A request was made that Victoria may be given opportunity to supply some 15 meters towers. This was replied to by the Dot by its letter dated 16 August 1994. Victoria was informed that its case had been considered carefully in the Directorate and that it was informed that a tender for procurement of 15 meters self supporting masts was going to be issued shortly and Victoria was requested to participate and complete in the tender. On 30 August 1994 Victoria complained to the Chairman, Telecom Commission, that though it was informed that a tender was going to be issued shortly but it came to know that repeat orders for 20,000 numbers of 15 meters towers were being issued to the existing parties only and an appeal was made that Victoria may be given opportunity to supply at least 500 numbers of 15 meters towers. A similar request was made by letter dated 9 September 1994 to the Minister in charge of DOT. On 12 September 1994 Victoria again wrote to the Chairman, Dot, that it had come to know that existing parties had been given orders for supply of 19,400 numbers of 15 meters masts/towers, and that the order was released on 7 September 1994. Again appeal was made to place an order for supply of 500 numbers of these towers. Yet another letter was written by Victoria on 16 September 1994 drawing the attention of the Department to its letter dated 16 August 1994 wherein Victoria had been advised to participate in the tender which was going to be issued. Victoria said that it had come to know that limited tender was being issued amongst existing parties only which was to be opened on 27 September 1994. Victoria, therefore, complained that it would be contrary to the assurance given by the Department to it and that it had been denied opportunity to participate in the limited tender. A representation was also made by Victoria to the Minister in charge of Dot on 21 September 1994. Since there was no response from the department, this petition (CWP No. 4091/94) came to be filed on 24 September 1994. With this petition bid documents respecting the tender for supply of 15 meters tubular self supporting tower have also been filed which limited tender is under challenge. These documents run into 50 pages and the only condition which bars the petitioners to participate in the tender enquiry is that :

"THE bidders having type approval for the tendered item from the Department of Telecommunications, as on opening date-of tenders are only eligible for participation."

(4) Respondents admit that the petitioners have design approval but they say that apart from design approval an infrastructural assessment was also required to be made and a prototype of the item to be supplied was required to be submitted to the respondents. They say that the approval of the prototype by the Telecom Engineering Centre means that a person is entitled for making a bid tor tenders hosted by the respondents, but the petitioners have not reached the state of having obtained the approval of the prototype from the Telecom Engineering Centre and in the absence of this type approval the petitioners cannot be considered for grant of the tender. It is averred that design approval and type approval are two separate and distinct concepts and that though the petitioners may have design approval but they do not have type approval. During the .course of arguments a question arose as to when a party can have the type approval from the Telecom Engineering Centre. We required the respondents to produce before us any administrative instructions under which the department was required to give approval to prototype tower before a person could give offer to the tender floated by the department. In .spite of opportunities having been granted we have not been shown any such instructions. When the Victoria wrote to the Chairman, Dot, as far back on 25 July 1994 that its design had been approved by the Structural Engineering Research Centre, Madras, Victoria was not informed that any type approval was also required. Rather Victoria was told that it could participate in the tender which was going to be issued shortly. There is no administrative instruction as to when and how a party can have the type approval of the prototype by the Telecom Engineering Centre. This lends support to the argument of the petitioners that this condition has now been invoked in order to deprive others equally qualified persons from participating in the tender and that an attempt was being made and a cartel formed to hike the price of the towers. It was pointed out that only three weeks earlier repeat orders were placed for supply of these towers without any price escalation which price was fixed in September 1992 at the rate of Rs.8,649.00 per tower. Reservation of certain number of towers to be supplied by the Government companies was also questioned during course of arguments. It was stated that there was no indication at what price these Government companies would supply the towers to the DOT. It was submitted that it would be contrary to various office memoranda issued by the Department of Public Enterprises for giving price/purchase preference for production and servicing of public enterprises. However, since this issue was not squarely raised in the pleadings we are not going into that. We are inclined to agree with the submission of the petitioners that only two grounds have been mentioned to oust the petitioners, these being delay and non-type approval of the prototype from the Dot as on the opening date of the tenders. As far as delay is concerned, the petitioners cannot be made responsible for that. It cannot be made use of by the respondents to deprive the petitioners of their legitimate right, if they have any, to participate in the tender. No explanation is forthcoming as to when repeat orders were placed only three weeks earlier then what was the necessity to call for fresh limited tenders for the same item if delay was the consideration. No explanation is also forthcoming as to how the petitioners could have got the type approval done earlier from the Dot and how. All this leads to a valid criticism by the petitioners that the condition of type approval had been placed to deprive the petitioners to participate in the tender. The so called eligibility criteria only amounts to saying that only those who had earlier supplied material to Dot are eligible to participate in the tender. As noted above, petitioners say that such a eligibility condition did not exist in the earlier open tender and that it has been invoked now with mala fide intentions to favor only a few selected persons so as to avoid free and fair competition. We agree with the petitioners that approval of the Structural Engineering Research Centre was the only prior condition for participating in the previous opened tender and that infrastructural assessment of the petitioners had already been done by the Dot and further that the approval of prototype of the tower is granted or to be obtained only prior to making commercial supplies. This would appear to be so in the usual and ordinary course as earlier to that there will be no, occasion to get the type approval. A prototype of the tower can be made and offered for inspection or approval only when the specifications are known and an order is placed. Type approval is in the nature of sample approval before bulk supplies are made. Respondents have filed an additional affidavit of Mr. O.P. Bibra, Assistant Director General, Dot, after the arguments had been concluded drawing our attention to Chapter Iii of the Telecom Commission - Manual of Procurement of Telecom Equipment and Stores, and to the relevant portion pertaining to limited tenders reading as follows :-

"HOWEVER, in some cases the equipment is sophisticated and requires thorough technical screening, testing and prototype approval by the Telecom Engineering Center/Quality assurance to ensure that these requirement are of sufficient quality level to be used in public Telecom Network. In such cases an open Tender may result in the participation of unknown bidders in open tenders, whose capability in making such equipment is yet to be established, and who submit unrealistic bids, which cause major difficulties in tender evaluation process. In such cases, it would be necessary to screen out such bidders so that the department could interact only with bidders who have intrinsic capability as well as proven track record of supplying such sophisticated equipment. Where such equipments are required at a rather short notice, it would be worth while restricting Bids by issue of short notice tenders only to those parties who have proven expertise in manufacture and supply of such equipment and who have prototype approval and production clearance."

(5) We do not think that supply of 15 meters tower/mast is such an equipment which is sophisticated and requires thorough technical screening, etc. This condition in the additional affidavit filed subsequently would appear to be an after thought and does not appear to be the basis for issuing the limited tenders only to a few parties. It is nowhere stated in the counter affidavit filed in opposition to the writ petition that this was also in consideration of the respondents while issuing the limited tender enquiry. Further, respondents' contention that at highest quarter a certain decision was taken also does not show as to what is this highest authority. Earlier we have noted above, the Chairman, Dot, in response to the letter of the petitioners had indicated that they will be entitled to participate in the tender. The petitioners have already got the approval of the Structural Engineering Research Centre, Madras, under the Council of Scientific and Industrial Research, a Government body. Except for the fact that the petitioners do not have type approval for no fault of theirs, it is not disputed that they are fully qualified to participate in the tender. Again the affidavit is silent as to what are the requirements of type approval and how a party can approach the Dot for the purpose. In the absence of the procedure prescribed for giving the type approval as to how and when it is done and how much time it takes, it will appear to us that the condition in the tender document that a party having type approval on the opening date of tender can only apply is arbitrary and without any rational basis. We will, therefore, strike down this condition as far as the impugned order is concerned keeping otherwise the terms of the tender intact. This having been done, respondents are directed to forthwith examine the case of the petitioners . for issue of tender documents and then to consider their offers, if any, along with other offers. Till then tenders be not finalised. However, due to urgency as shown in the counter-affidavit the respondents shall be entitled to place repeat orders to limited extent as hithertofore done. In the circumstances, there will be no order as to costs.