Technofour Electronics Pvt. Ltd. vs Union Of India (Uoi) And Ors.
1999 Latest Caselaw 77 Del

JUDGMENT

Anil Dev Singh, J.

1. By these writ petitions the petitioners challenge the action of the second respondent, Controller of Stores, Central Organisation for Modernisation of Workshops, in awarding Tender No. COFMOW/HRD/ICB-086/96 for supply of 47 nos. CNC Mill Trainer machines and Tender No. COFMOW/HRD/ICB-099/96 for supply of 115 Nos. CNC Trainer Lathe machines to the third respondent. M/s. Denford Limited.

2. The International Development Association and the International Bank for Reconstruction and Development advanced loan to the first respondent, Government of India for technical education projects. In this connection, the second respondent invited two tender enquiries - (1) Tender No. SCOFMOW/HRD/ICB/086/96 published on November 11, 1996 for supply of 47 nos. CNC Mill Trainer machines, and (2) Tender No. COFMOW/HRD/ICB-099/96 published on November 30, 1996 for supply of 115 nos. CNC Trainer Lathe machines, and services connected with the machines, namely, supervision of erection and commissioning thereof. The first petitioner which is a company incorporated under the Companies Act and having its registered office at Pune, Maharashtra, and the third respondent, a company incorporated in England and having its agent-Machine Tools Aid Bureau at Chennai, submitted their tenders. Besides the first petitioner and the third respondent, various other parties also submitted their bids. The first petitioner claims that it is an established manufacturer of CNC control machines and it has been making supplies of the machines to the various companies including Larsen & Toubro, Sandvik Asia, Telco and for various World Bank assisted projects etc. The first petitioner also claims that it participated at various exhibitions and was awarded various awards for its products.

3. While tender No.COFMOW/HRD/ICB-086/96 was opened on January 22, 1997, Tender No. COFMOW/HRD/ICB-099/96 was opened on February 3, 1997. Thereafter certain clarifications were sought from tenderers including the first petitioner. Ultimately the bids of the third respondent were accepted for supply of the above said machines and services connected therewith, namely, supervision of erection and commissioning thereof. The first petitioner and the second petitioner, a shareholder and director thereof, feeling aggrieved of the award of the contracts in favour of the third respondent, have filed the instant petitions.

4. Since the facts of both the writ petitions are almost similar and grounds of challenge are also the same, it will be convenient to deal with Writ Petition No. 5194/97.

The petitioners have, inter alia, raised the following grounds:-

1. The tender of the first petitioner though lower than the third respondent has been rejected on arbitrary grounds.

2. The ambient temperature at which the equipment has to operate in certain places is 50 degree Celsius but that requirement has been reduced by the second respondent to 40 degree Celsius to suit the third respondent.

3. The evaluation of the petitioner's offer has been made on wrong basis inasmuch as an amount of Rs. 41,000/- representing the cost of "Tutor Software" has been added thereto though it was optional for the second respondent to buy or not to buy the same. In fact the "Tutor Software" was not an essential item and the machines could be used for training purposes without it.

4. The Technical Committee was not right in its view that separate manuals for teachers, students and over-head projectors slides were not submitted with the bids of the first petitioner.

5. The third respondent failed to submit fix quotation in accordance with the tender notice.

6. The tender of the third respondent was unresponsive for the following reasons:-

(I) The machines offered by the third respondent can run only on 230 volts as against tender requirement of 230 volts +_10%).

(II) The third respondent had offered only 9 collets as against the tender requirement of 16 collets.

(III) The feed rate of the machines offered by the third respondent is limited to 500 mm per minute as against tender requirement of 700 mm. per minute.

(IV) The equipment offered by the third respondent cannot operate effectively under dusty conditions as prevalent at the work sites.

(V) The equipment offered by the third respondent does not have "Tutor Software" built into it but comes as an optional item at an exorbitant cost of pound 478 per piece.

5. Learned counsel appearing for the petitioners reiterated the above said pleas. On the other hand, learned counsel for the respondents have justified the acceptance of the tender of the third respondent.

6. I have considered the submissions of the learned counsel for the parties. In the affidavit filed by Mr. Anil Kumar Jain, Deputy Controller of Stores at Central Organisation for Modernisation of Workshops, New Delhi, it is stated that the bid submitted by the third respondent conformed to the terms and conditions stipulated in the tender. It is further averred that on comparison of prices on the basis of the criteria stipulated in the bid documents, the evaluated price of the first petitioner was found to be higher than that of the third respondent even after giving a price preference of 15% as laid down in Clause 27.4 of the I.T.B. Besides, it is stated that the machines offered by the third respondent met all the major parameters as specified in the bid documents. Other minor deviations in some parameters which do not have any significant implications and are not affecting the performance of the machine were considered acceptable as per note 2 under Schedule I of technical specifications of tender documents. The affidavit also alludes to the fact that the bid of the third respondent was firm and responsive. The affidavit further states that the technical specifications for the machines to be purchased against the Technician Education Project were finalised after review by a committee of experts. The technical specifications were also approved by the World Bank before issue of the bid documents. The evaluation of the bid, as per the affidavit, was done exactly according to the bid documents and all the relevant factors were taken into account. Thus, according to the affidavit the bid of the third respondent was accepted after Considering the respective merits of the bids submitted by the tenderers pursuant to the notice inviting tenders for supply of the machines.

7. It needs to be noticed that the procedure adopted for evaluation of the tenders is meant to rule out arbitrariness. First of all, the committee of three officers checks commercial responsiveness of the tenders. Thereafter, offers which are found to be commercially responsive are assessed by a technical officer for their technical responsiveness. Thereafter, the tender documents submitted by the tenderers along with the reports pertaining to their commercial and technical responsiveness are submitted to a tender committee. The tender committee consists of three Heads of Departments of the procurement agency, namely, Central Organisation for Modernisation of Workshops, and an official of the National Project Implementation Unit appointed by the Ministry of Human Resources Development. The committee after examining the tender documents and reports of commercial and technical responsive-ness submit their recommendations to the Chief Administrative Officer of the procurement agency, who is of the rank of the Additional Secretary to the Government of India, for making a final selection.

8. All bids above 200000 US dollars are required to be sent to the World Bank for approval. In the instant case the World Bank after reviewing the evaluation offered no objection to the proposal to the award of contract for supply-cum-supervision of erection and commissioning of the machines to the third respondent-M/s. Denford Ltd. It is pointed out in the counter-affidavit that the petitioners had filed a representation before the World Bank raising the same points which have been raised in the instant petition. It was only after examining the representation of the petitioners and the bid evaluation reports of the procurement agency that the World Bank gave its clearance for placing the orders on the third respondent. In its evaluation report the tender committee, keeping in view the technical evaluation report, stated as follows :-

"14.1 In the technical evaluation report it has been stated that the cost of "Tutor Software" should be loaded in the price quoted by M/s. Technofour, Pune, a Group 'A' offer. M/s. Technofour, Pune, in the course of technical clarifications stated and confirmed that this software is essential for putting the machine into use. As far as the other tenderer in Group 'C, M/s. Denford, U.K., is concerned, the scope of supply includes such equivalent software. Therefore, for the purpose of parity in scope of supply, the cost of this software @ Rs. 41,000/- is to be added in the cost of machine of M/s. Technofour, Pune. At the same time an amount of Rs. 3,600/-, the cost of item, 2.2.1 as discussed in para 13.1 above, staged tooth side face milling cutter has been deducted. After these adjustments, the total CIP cost of M/s. Technofour including spares works out to Rs. 6,35,050/-. The GIF cost of lowest Group 'C offer of M/s. Denford, U.K., works out to Rs. 5,52,251/- which is lower than that of lowest offer in Group 'A'. As per para 27.4 of the ITB of Bid Documents, Group 'A' tenderer is entitled to price preference of upto 15% of GIF costs. In the offer of M/s. Denford, U.K., the British origin GIF value is equivalent to Rs. 4,51,351/- and value of Indian origin is Rs. 1,00,900/-. The comparison of the two lowest Group 'A' and 'C' offers is as below:-.

Group 'C offer of M/s. Denford

CIF Price in Rs. including spares

4,51,351.00

Load by 15% price preference to domestic bidders

67,703.00

First sub-total

5,19,054.00

Add cost of Indian origin equipment in Rs. 1,00,900.00

Second sub-total

6,19,954.00

Add evaluated/quoted charges of L.C., inland, freight & insurance etc.

2,276.00

Total CIP cost

6,22,230.00

Group 'A' offer of M/s. Technofour

Ex-works cost in Rs.

5,48,500.00*

Cost of spares in Rs.

2,850.00

Cost of Tutor Software in Rs.

41,000.00

Sub-total

5,92,350.00

Add evaluated/quoted charges for forwarding & inland trans- portation, insurance and incidental and supervision.

42,700.00

Total CIP cost

6,35,050.00

Thus the lowest technically suitable offer is still from Group 'C', i.e., of M/s. Denford, U.K.

* Rs. 5,52,100 less Rs. 3,600/- for item 2.2.1 - cost of staggered face mill cutter."

9. The question of evaluation of the bid has to be left to the expert bodies. Their opinion cannot be displaced by the High Court unless there are compelling grounds which warrant interference.

10. At this stage it will be apposite to notice the pronouncements of the Apex Court in such like matters.

11. In Tata Cellular v. Union of India, , the Supreme Court laid down the following parameters of the court's power in testing the validity of administrative action with special reference to acceptance or rejection of tenders:-

"(1) The modern trend points, to judicial restraint in administrative action.

(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.

(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(5) The Government must have freedom of con- tract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facets pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."

12. It also held that the duty of the court is to confine itself to the question of legality of the decision of the authority and in this regard it observed as follows :-

" The duty of the court is to confine itself to the question of legality. Its concern should be :-

1. Whether a decision-making authority exceeded its powers ? 2. Committed an error of law,

3. committed a breach of the rules of natural justice,

4. reached a decision which no reasonable tribunal would have reached or,

5. abused its powers."

13. The Supreme Court in New Horizon's Limited and Anr. v. Union of India and Ors., :-.

"At the outset, we may indicate that in the matter of entering into a contract, the State does not stand on the same footing as a private person who is free to enter into a contract with any person he likes. The State, in exercise of its various functions, is governed by the mandate of Article 14 of the Constitution which excludes arbitrariness in State action and requires the State to act fairly and reasonably. The action of the State in the matter of award of a contract has to satisfy this criterion. Moreover a contract would either involve expenditure from the State exchequer or augmentation of public revenue and consequently the discretion in the matter of selection of the person for award of the contract has to be exercised keeping in view the public interest involved in such selection. The decisions of this Court, therefore, insist that while dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and like a private individual, deal with any person it pleases, but its action must be in conformity with the standards or norms which are not arbitrary, irrational or irrelevant. It is, however, recognised that certain measure of "free play in the joints" is necessary for an administrative body functioning in an administrative sphere."

14. Earlier decisions in Ramana Dayaram Shetty v. International Airport Authority of India, , and Kasturi Lal Lakshmi Ready v. State of J&K, , are also to the same effect.

15. Keeping in view the parameters of judicial review as laid down by the Apex Court, no interference with the decision of the second respondent is warranted. The action of the second respondent seems to be free from arbitrariness and is not affected by bias or actuated by malafides. There is nothing unreasonable, irrational or illegal in the decision to award the contract to the third respondent. As already noticed, the second respondent evaluated the offers submitted by the tenderers and found the offer of the third respondent lower than that of the first petitioner and Ors.. Learned counsel for the petitioners submitted that the cost of Tutor Software did not form part of the offer of its clients. He submitted that the Tutor Software was offered as an accessory and the cost of the accessory cannot be added to the cost of the machine offered by the petitioners. He submitted that if the cost of Tutor Software is excluded, the machine of the petitioners would cost less than that of the third respondent. As per the affidavit of the second respondent, the petitioners had quoted for the Tutor Software at an additional price though it was an essential item. The petitioners had recommended that the students should work on the Tutor Software with CNC before using the machine directly as this will not only make their concepts clear but would also avoid misuse, accident and damage while using the actual machine. In order to cross check the averments made in the counter-affidavit of the second respondent I have examined the letter of the first petitioner dated May 11, 1997 addressed to the Controller of Stores and the tender submitted by it. Part two of the letter which deals with Tutor Software, reads as follows :-

"2. Features of Tutor Software -

We enclose herewith Annexure-II giving features of "PCM-200 Tutor Software" offered under optional accessories.

The PCM-200 Tutor Software is going to be beneficial for operation of the machine and training to the students because -

(a) the student can get familiarized with the concept of CNC machining before using the machine directly.

(b) accidents/damages can be avoided which are likely to occur if the students use the machine without familiarising with the concepts of CNC machining.

(c) the students are more confident to operate the machine as they are put high on the learning curve because of Tutor Software.

(d) cross-linking between topics is very natural and easy as compared to. learning from a manual because of the hyper-text technology used in PCM-200 Tutor Software.

(e) the graphic illustrations included in the Tutor Software for various canned cycles are very helpful in understanding the concepts faster.

16. Again, Annexure II to the above said letter of the first petitioner, while specifying the advantages of the Tutor Software, states as under :-

" xx xx xx

The Tutor Software is not only beneficial but an essential item. It is recommended that a student should first work only the Tutor Software for familiarization. This will not only make the concepts clear to student but also avoid misuse, accidents, damages while using the actual machine. Getting familiar with tutor software also increases the confidence of the student and reduces gestation period from being a novice to an expert.

xx xx xx"

17. Thus, it is clear that though the letter states that the Tutor Software is an optional accessory, the same has to be read with the tender submitted by the first petitioner, which clearly states that the Tutor Software is an essential item. The second respondent on evaluation of the tender added the cost of Tutor Software to the offer of the petitioners as otherwise the bid of the petitioners, as per the third respondent, would not be technically and commercially comparable with that of the third respondent whose bid includes such similar software. If, according to the petitioners themselves, Tutor Software was not only beneficial but an essential item, the second respondent cannot be blamed for taking into account its price for working out the financial effect of the bid of the petitioners in order to make a comparison between the bid of the petitioners and that of the third respondent. The second respondent was also of the opinion that even with the addition of Tutor Software the training material provided by the petitioners was insufficient as accessories modules were not available and the same would have to be developed by the user. The second respondent has also taken the stand in the counter-affidavit that the machine offered by the first petitioner cannot be immediately used for training purposes and was not found suitable. This is not accepted by the petitioners. The petitioners claim that the first petitioner had furnished both the manuals as well as

projector slides along with the bid. The question whether or not machine offered by the first petitioner can be immediately used for training purposes and whether or not it is suitable, are the questions which fall in the domain of the second respondent for their consideration. The court cannot venture to go into these questions which are of a highly technical nature.

18. Learned counsel for the petitioners pointed out that as per Clause 26.5 of the tender document the first petitioner had in its bid undertaken to deliver goods at the project site, whereas the third respondent in its bid undertook to deliver the goods at Bombay. The notional cost of delivery of the Denford machine at site had been taken as Rs. 350/- which does not conform to reality of the situation Learned counsel also pointed out that this amount of Rs. 350/- represented only the transpiration charges from port of entry to the site and does not include the insurance charges. He contended that the evaluation of the tender of the third respondent has not been made on real basis. On the other hand, learned counsel for the respondents pointed out that the amount had to be worked out in accordance with Clause 26.5(a)(ii) and Clause 7 of the special conditions of contract. Learned counsel submitted that the transportation charges have been strictly worked out according to the said clause, and so far insurance is concerned the equipment already stands insured from warehouse to warehouse as per the conditions of the bid document. In view of the explanation of the learned counsel for the respondent, nothing turns on the contention of the learned counsel for the petitioners.

19. In so far as the submission of the learned counsel for the petitioners Based on the ground that the specifications of the machine offered by the third respondent do not conform to the tender specifications is concerned, a reference to two charts (Annexures 'F and 'G' to the counter-affidavit) needs to be taken into account:-

" Annexure 'F'

TECHNICAL COMPARISONS

SCHEDULE -I

Specification No. COFMOW/HRD/0100:07:007 (See Cl. 2.1 of Technical Specification) LEADING PARAMETERS TENDER SPECIFICATION DENFORD SPECIFICATION MAJOR PARAMETERS XX XXXX XX

2. a).....

  b) Power supply: 230 + _10% volts, single           230 + _10% Volts, Single Phase, 50
    phase,50 cycles AC        Cycles AC
 

xx xx xx xx  

OTHER PARAMETERS 

XX XX XX 

 5. i) Feed rate: 2-700mm/min          0-1500mm/min
                                                    0-500mm/min on "Z"
ii) Rapid traverse:700mm/min                            0-1500mm/min
                                                     0-500mm/min on "Z"
 

xx xx xx xx" 
 
"ANNEXURE-G 

SECTION VI 
 TENDER SPECIFICATION DENFORD SPECIFICATION 

XX XX XX
    e. i)......                                         i) ...
  ii) Set of collets nom. dia.                   ii) Set of collets nom. dia. 2,2.5,3,4,5,6,
2, 2.5, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15 & 16    7, 8, 9, 10, 11, 12, 13, 14, 15 & 16mm: one set.
          mm: one set one set.
          xxxx xxxx" 
 

20. As would be evident, in so far as major parameters are concerned there are no deviations and the machine of the third respondent fulfills the requirements. Learned counsel for the petitioners submitted that the tender of the third respondent ought to have been rejected as it did not conform to the major parameters of power supply as specified in Clause 1.2b of Schedule I of the tender which specifically envisages the power supply to be in the range of 230 + 10% volts single phase 50 cycle AC. According to the learned counsel, the machine offered by the third respondent performs at only 230 volts. From a reading of the above chart (Annexure 'F)' it does not seem to be correct that the machine offered by the third respondent does not cater for the fluctuation in voltage between 230 volts +_10%.

21. Learned counsel for the petitioners also contended that the tender submitted by the third respondent did not offer requisite number of collets as specified in Clause 2.2(1)(e)(ii). This argument is also belied from the above referred chart (Annexure 'G') to the counter-affidavit, which clearly shows that the bid of the third respondent catered for the requisite number of collets as per the requirement of the tender.

22. It was also canvassed on behalf of the petitioners that the feed rate of the machine offered by the third respondent was limited to 500 millimeters per minute.

23. The question whether a tender fulfills the prescribed conditions which are of technical nature must be left to the judgment of the experts as they are equipped with technical knowledge and experience. This Court does not have the expertise to consider technical matters. No undue interference with the selection of a tender is warranted unless the opinion of the experts is found to be vitiated by irrelevant, irrational and extraneous considerations. It needs to be noted that the various expert committees examined the tenders of the parties and it was for them to assess the merits and demerits of the machines offered by the tenderers. As noticed earlier, the petitioner filed a representation before the World Bank with regard to the acceptance of the tender of the third respondent. The World Bank on consideration of the representation did not find any reason to interfere with the acceptance of the tender of the third respondent. The contention raised on behalf of the petitioners overlooks the fact that the offers are required to meet the major parameters. A minor deviation in some parameter which does not have any significant implications is to be considered acceptable. The affidavit filed by the Deputy Controller of Stores clearly points out that the offer of the third respondent met all the major parameters as specified in the bid document. Therefore, the feed rate offered by the third respondent was found acceptable. In the circumstances, the pleas raised by the petitioners can not be sustained. ,

24. Learned counsel for the petitioners also argued that any violation of Clause 1.5 of the technical specifications of the special conditions of the contract diluted the specifications by providing for the performance of the machine in temperatures ranging upto 40 degree Celsius instead of 50 degree Celsius. Learned counsel for the respondents have invited my attention to the counter-affidavit affirmed by Shri Anil Kumar Jain, Deputy Controller of Stores, wherein the allegation of diluting the specifications to favour the third respondent have been categorically denied. According to the counter-affidavit the specifications were formulated by a team of experts and ambient temperature conditions were taken into account and accordingly temperature level of 40 degree Celsius was arrived at, which is the normal temperature obtaining inside the buildings where machines are to be installed. It is further pointed out in the affidavit that the stipulation of 40 degree Celsius had been made in technical specifications and any contradiction between the main Clause 1.5 of the technical specifications and Clause 12.1 of Schedule II of the General Specifications (Electrical) was removed. The third respondent in its counter-affidavit has pointed out that the machines supplied earlier to various parties in this country have been tested to actually work at 50 degree Celsius though officially the working temperature is specified from 0 to 40 degree Celsius. There is nothing on record to show that the second respondent had fixed the specifications to suit the third respondent.

The petitioners also objected to the acceptance of the tender of the third respondent on the following grounds:-

(1) The machine can not operate effectively in dusty conditions, and

(2) The third respondent failed to submit a fixed quotation and it had submitted two tenders one by itself and the other by its agent.

25. It is also of no significance that the third respondent has submitted two tenders, one by itself and the other by its Indian agent. Even if both the tenders are not the exact mirror images of each other, no fault can be found with the selection of the third respondent.

26. In so far as the allegation of the petitioners that the quotation of the third respondent was not a fixed one, it needs to be noted that the first and the second respondents have specifically denied the allegation (see para 2 of the affidavit of Shri Anil Kumr Jain, Dy. Controller of Stores). As already pointed out, the various committees examined the quotations of the third respondent as well as the other tenderers. Since in the judgment of the expert committees the quotation of the third respondent was found to be in accordance with the tender notice, this court will not interefere. The committees will also know whether or not the machine will operate in the prevalent conditions in this country.

27. Learned counsel for the petitioners also contended that the tender of the third respondent did not comply with Clause 8 of Special Conditions of the bid document. Clause 8 of the Special Conditions of Contract provides for supervision by deputing supervisors for at least two visits and six man days for erection, testing and commissioning of the machines for each site. Learned counsel submitted that while the petitioners had quoted the rate of Rs. 1500 per man day in addition to one time charge of Rs. 1200 per visit, the third respondent had included supervision of five man days and had quoted the charge of Rs. 2000 per man day for additional man days. The second respondent has explained the position in the following manner :-

"In view of above provisions of the Bid Documents, respondent No;3 has estimated two visits and five man days for completion of erection and testing and commissioning of the equipment for each site and provided the same without additional cost. This has been taken into account while evaluating the offer of respondent No.3 for comparison purposes, which is also totally in line with provisions of Bid Documents Clause 26.4 of Instructions to Bidders as mentioned above. In addition Respondent No.3 in their offer covering letter, have agreed that M/s. MTAB (their Indian agents) will also provide training for 4 working days free charge."

28. In view of the explanation given by the second respondent the argument of the petitioners is devoid of force.

29. As per para 37 of the petition, the petitioners had come to know in August 1997 that the tender was being awarded to the third respondent. The petitioner filed the writ petition only on November 29, 1997 and allowed the second and the third respondent to enter into a contract. The second and the third respondents in pursuance of the contract entered into financial commitments. Since the petitioners knew even in August 1997 that the contract was being awarded in favour of the third respondent, there was hardly any justification in not filing the writ petition immediately. The obligations created by the contract between the second and the third respondent are in the process of being executed and any interference at this stage would result in graves prejudice to them. In respect of Tender No. COFMOW/HRD/ICB/099/96, the petitioners had come to know that the tender was being award to the third respondent in June 1997, but they filed the writ petition on December 6, 1997 by which time the second and the third respondent had entered into a contract resulting in financial commitments on either side.

30. As already pointed out, the pleas raised in Writ Petition No. 5321/97 are similar to the one raised in Writ Petition No. 5194/97. Since there is no merit in the pleas of the petitioners, both the writ petitions are dismissed.