Brahler Ics India Pvt. Ltd. vs Union Of India And Ors.
2001 Latest Caselaw 1860 Del

JUDGMENT

Mukul Mudgal, J.

1. This writ petition challenges the action of respondents 1 to 4 ordering fresh price bids in respect of supply of Digital Wireless Interpretation System in the Parliament Library Building and further seeks the grant of the said contact on account of its bid being the lowest and its fulfilling all the qualifications prescribed in the Notice Inviting Tender.

2. This writ petition avers as under:

The petitioner is a Company which has German collaboration and its German Principles are the leading manufacturers of Conference Public Address System renowned all over the world. The respondent No. 1 is Union of India; respondent No. 2 is the Director General (Works), CPWD, New Delhi; respondent No. 3 is the Chief Engineer, Parliament Library Project, CPWD, New Delhi, respondent No. 4 is the Executive Engineer, Parliament Library, CPWD, New Delhi, respondent No. 5 is M/s Hi-Tech Audio System Pvt. Ltd., New Delhi, respondent No. 6 is M/s Sonic International, Delhi and respondent No. 7 is M/s Philips India Ltd., New Delhi. The petitioner is already a supplier to Lok Sabha, Rajya Sabha, Vigyan Bhavan, Vidhan Sabha, Bhopal etc. The petitioner was prequalified by the respondent No. 4 on 29th of March, 2000 for the installation of a Simultaneous Interpretation System and Conference System in the Auditorium & Committee Halls in the Parliament Library. Pursuant to the procurement of requisite papers by the petitioner Company On 8.6.2000 the Meeting of the Technical Committee was called by the respondent No. 1 which was attended by representative of respondent No. 2 as well as the representative of all the proposed bidders. Various clarifications were given to the bidders. The petitioner submitted its tender on 26th of June, 2000 in two different envelopes - one containing the technical & unpriced cover and the other containing the commercial bid Along with its Letter dated 26.6.2000. There were in all 5 bidders apart from the petitioner and eventually the petitioner and respondents 5 to 7 were declared qualified. In response to a Letter dated 12th of September, 2000, received from respondent No. 3 asking for certain information Along with catelogue & specifications of the equipment meeting the NIT specifications, the petitioner by its Letter dated 22.9.2000 furnished the clarifications and the details asked for by the respondent No. 3. Another Letter was received on 3.11.2000 from respondent No. 3 regarding confirmation for the systems description. The petitioner responded by its Letter dated 11.11.2000 to the above and demonstrated its equipment on 22.11.2000. The petitioner further confirmed the systems description by its Letters dated 27.11.2000 & 29.11.2000. On 1.12.2000 a letter was written to the petitioner by respondent NO. 3 informing that the technical and the commercial issues had been reviewed and the final requirements of the Department were set out in detail in the said letter dated 1.12.2000. The bidders were asked therefore to resubmit their confirmation letter with technical information in one envelope and revised price/rates in a separate sealed envelope. The petitioner vide its letter dated 5.12.2000 submitted the clarifications sought by the respondent No. 3 Along with the revised bid. The new price bid was opened on the date and time fixed and the petitioner's bid for Rs. 2.24 crore was declared as L-1. The bid of the respondent No. 5 was for Rs. 2.49 crore; the bid of respondent No. 7 was for Rs. 3.53 crore and the bid of respondent No. 6 was for Rs. 3.54 crore. The petitioner complied with all the additional requirements and the suggestions which the respondent No. 3 wanted within the price offered by it and also offered to absorb all additional costs which may be necessitated by any other requirement of the petitioner within the price quoted. Even thereafter on 16.2.2001 the respondent No. 4 raised further queries and sought a different kind of Digital Panel with up and down push button for selection of languages even which the petitioner agreed to provide without extra costs. Thereafter certain other clarifications was asked for and duly given by the petitioner. From the very beginning, the respondents 3 & 4 have repeatedly raised uncalled for queries/objections regarding the petitioner's equipment with a view to favor respondent No. 5 and/or respondent No. 7 so as to exclude the petitioner. The petitioner had not objected to the submission of fresh offers in December, 2000 since the earlier commercial bids had not been opened and the price offered by the each bidder was not know. The petitioner's plea is that once the petitioner's technical bid is accepted and the price bids have been opened and the prices quoted by each of the bidders known, it is not lawful for the respondents to invite for the fresh offers from the bidders which converts the tender to an auction. It was further submitted that Mr. K.L. Malhotra who runs a dealership of M/s Philips India, respondent No. 7 herein in the name of his son, had been appointed as a Consultant by M/s Broadcast Engineer Consultants India Ltd., who are the Consultants for the present contract. It is submitted that it is the at behest of Shri K.L. Malhotra that fresh offers are being made to favor respondent No. 7. Thus the respondent Nos. 1-4's Letter dated 16.2.2001 for inviting fresh price bids is challenged by the present writ petition.

3. Mr. V.P. Singh, learned Senior counsel for the petitioner has contended that the committee in its report recorded all 3 findings in favor of the petitioner. Even then it made a recommendation for calling for a revised price bid which was contrary to its own findings. Similarly the Central Works Board, CPWD (hereinafter referred to as 'the CWB') wrongly followed the committee's recommendation and recommended the fresh price bid which led to the impugned Order dated 16.2.2001. He contended that the petitioner having been held to be qualified in the technical bid and having been held to be L1 in the opening of financial bid by being 56% below the estimated cost, it was not open to the respondents to ask for fresh price bids, particularly when the petitioner had clarified that even if any other specifications different from those asked in N.I.T. or even otherwise were required, the petitioner was prepared to supply them without any financial implications. He further submits that the acceptance of the petitioner's bid even otherwise is eminently in public interest, as the petitioner's financial bid is about 56% lower than the estimated price and its acceptance would save the public exchequer considerable expenditure. He further submitted that once the petitioner's technical bid was cleared and he was found to be L1 in the financial bid, sustained efforts have been made to somehow derail his bid. He has referred to the presence of Shri K.L. Malhotra, an employee of Broadcasting Engineers Consultants of India Ltd., a Govt. of India Enterprise (BECIL) in the all the meetings of the Advisory Committee as part of the cause for discrimination against the petitioner as K.L. Malhotra's son was associated with one of the competitors i.e., M/s Philips India Ltd., respondent No. 7. He further submitted that once the petitioner was found to be L1 all post tender negotiations ought to have been with L1 alone as per CVC guidelines. He further submitted that the irrespective of the fact whether CVC guidelines were binding, the said CVC guidelines formed part of the CPWD manual and hence were binding in any event on the respondents.

4. The summary of the respondent Nos. 1-4's plea in the words of the respondents counsel, Mr. Sanjay Jain is as follows:

"1) Whether the clarificatory meetings held between the respondents (officers of CPWD) and the parties responding to the Notice Inviting Tender (NIT) dated 4.5.2001 - after opening of their respective technical bids (26.6.2000) but before opening of their price bids (7.12.2000) -

were so held due to any malafide or bias against the petitioner?

2) On 7.12.2000, when the petitioner was found to be L1 (Lowest Tenderer in terms of price), whether it was mandatory to award it the contract?

3) Whether it was imperative for CE (Chief Engineer) to refer the matter to higher authorities for decision on awarding contract, after opening of the price bids?

4) Whether the meeting of Central Works Board (CWB) on 16.1.2001 would not have been held if the competitors had not complained about the deficiencies and contradictions of the technical bid submitted by the petitioner?

5) Why was BECIL (Broadcasting Engineers Consultants of India Ltd., a Govt.

of India Enterprise) appointed as Consultant?

6) Whether BECIL had any role to play in decision making process of awarding of the contract by CWB?

7) Whether BECIL made any such remarks or observations not based on merits but stemming from extraneous motives, which would have adversely influenced the decision of CWB to award or not to award the contract to the petitioner?

8) Whether CVC guidelines filed by the petitioner at page 359 are applicable or relevant to the nature of transaction, which is the subject matter of the present writ petition?

9) In what circumstances the price bids were re-called by CWB?"

5. The respondent Nos. 1-4 have contended accordingly that the petitioner by responding to the call for revised price bids by Letter dated 26.2.2001 to seek extension of time to submit the revised price bids and by submitting the revised price bids on 28.2.2001 waived off all objections and is estopped from challenging the Letter dated 16.2.2001. It is also contended that the decision making process has been fair, equitable and bona fide and no malice actuates the call for the revised price bids. It is further submitted by the respondents 1 to 4 that the technical bid by the petitioner being incomplete and inadequate and not complying with the NIT, the respondents 1 to 4 were entitled to reject the said technical bid. Since the petitioner was being treated equitably, instead of rejecting its technical bid a sufficient and further opportunity was given to the petitioner to improve upon its technical bid. It is further submitted that the tender being of highly technical and sensitive nature, respondent No. 4, the Executive Engineer and the Chief Engineer, the respondent No. 3, had accordingly referred the entire matter to the Central Works Board which is the supreme boy under the CPWD Rules and competent to take the decision on such matters.

6. In so far as the plea of mala fide is concerned, I am not dealing with the said plea in view of the judgment and the discussion which follows.

7. The respondent No. 5 while supporting the respondents 1 to 4 generally have further taken the plea that under Article 226 no direction can be given to the State to enter into a contract with any particular person and only the decision making process and not the decision itself which can be questioned in a writ Court. It is also contended that it is open to the government not to accept the lowest tender and the petitioner cannot claim any rights merely by virtue of this being the lowest tenderer, i.e., apart from decisions which cautioned against exercise of writ jurisdiction in questioning tender evaluation, reliance was placed on the decision of the Division Bench of this Court in Alcatel India Ltd. v. Mahanagar Telephone Nigam Ltd. and Anr. 92 [2001] DLT 586 (DB) to contend that even after acceptance of a technical bid, the deficiencies in technical requirements of a technically approved bid can still be examined. The above decision was also relied upon for the proposition that since no binding contract came into existence between the parties, the government could not be prevented from scrapping the tender and a mandamus could not issue to a purchaser to place a purchaser order on a particular seller.

8. The principal question involved in the present writ petition is whether technical deficiencies could be pointed out or resorted to in order to call for a fresh financial bid. In my view, the pleas of the respondents 1 to 4 that the bid of the petitioner was technically deficient would have been tenable and entertainable if the respondents were inviting fresh technical bids. In the present case, it is not the fresh technical bids which are being invited but it is the fresh price bids which could only follow if the respondents 1 to 4 were technically fully satisfied with the technical bids. The calling of the fresh financial bids though on the ground of technical deficiency/alteration/inadequacy is clearly arbitrary, unreasonable and unsustainable.

This Court cannot lose sight of the fact that two following factors:

(a) that the petitioner's bid is about 50% less than the estimated price for the equipment in question;

(b) that several meetings on the technical parameters, variations and alterations in the original NIT were held including the petitioner and the very factum of calling for the price bids is indicative of the fact that the technical bids of the parties including that of the petitioner was found to be in order.

(c) The third factor is that the petitioner in any event agreed within the prices quoted to meet with any other technical deviation/requirement of the respondents 1 to 4 and this has been the petitioner's plea right from the beginning and which was also reiterated by the learned counsel for the petitioner.

Another plea which was raised by the respondents 1 to 4 was that it was the discretion of the respondents 1 to 4 to scrap the bid process and call for fresh technical and financial bids and such action cannot be questioned in the writ jurisdiction. In my view, the above plea seeks the resolution of a hypothetical situation. In the present case, the respondents have not scrapped the NIT or the process initiated further to the NIT dated 5.5.2000 as well as 5.12.2000 when the petitioner submitted that revised bid. The plea regarding enforceability of the CVC Guidelines and whether or not the CVC Guidelines are applicable or enforceable in general is academic. In so far as CPWD Rules are concerned, these guidelines indisputably formed part of CPWD Manual and cannot therefore, be ignored. These guidelines clearly provide that any negotiation has to be held with L1 that is the petitioner as per the tenders submitted pursuant to the notice dated 5.12.2000.

9. From 26th of June, 2000 when the first tender was submitted by the petitioner several times the technical information was sought Along with catalogue and specifications which were furnished by the petitioner. Thereafter on 3.11.2000 a confirmation for the system description was sought form the petitioner which was responded by the petitioner on 11th of November, 2000 and the equipment demonstrated on 22.11.2000, 27.11.2000 and 29.11.2000 and thus the petitioner confirmed it system description. Thereafter respondent No. 3 after review of technical and commercial issues and setting out the final requirements of the department sent a letter dated 1st of December, 1000 to the petitioner and all the bidders were asked to resubmit their confirmation letter putting the technical bid in one envelope and the revised price bids in another letter. On 5.12.2000 the petitioner had given the clarifications sought by respondent No. 3 Along with the revised bids. Considering the above sequence of events, the technical enquiries of the respondents were answered/clarified and confirmed and demonstration given prior to the submitting of the bids on 5.12.2000, the technical bids thus stood cleared and was no longer opened to alteration particularly after the opening of the financial bids.

10. In my view, therefore,e the writ petition is entitled to succeed. The petitioner had successfully cleared the technical bid. Upon the opening of the financial bid, the petitioner was found to have been the lowest tenderer. In fact the petitioner's tender was found to be more than 50 per cent less than the estimated price. Significantly the petitioner had also offered within the quoted prices to meet with all the variations in the technical specifications sought by the respondent. The Central Public Works Department is bound by the guidelines issued by the Central Vigilance Commission because the said guidelines formed part of its own manual. Consequently all negotiations had to be carried on post tender with the lowest tenderer. Instead the respondent had chosen to call for the fresh financial bids which are impugned in this writ petition. The resort to fresh financial bids is clearly contrary to the CVC guidelines incorporated in the CPWD manual. If it all any technical variation was required negotiations ought to have been held only with the petitioner. Not only is the petitioner's bid substantially lower than the estimated price but he petitioner has also offered within the quoted prices all other alterations and replacements suggested by the respondents. Consequently the petitioner being the lowest tenderer cannot be denied the rights accruing to it. The rivals of the petitioner cannot be part of the fresh financial bid which in fact is not called for at all.

11. I am not going into the question whether there were any mala fide or bias against the petitioner but merely proceeding on the fact that once the petitioner is found to be L1 after the opening of the price bids then the petitioner's bid could not be rejected out of hand merely on the ground that the Consultant had objected by a complaint about the deficiencies and contradictions of the technical bids submitted by the petitioner. The petitioner's technical bid ha been cleared by the respondents themselves. In so far as the Alcatel India Ltd.'s Case is concerned, there is no doubt that according to the aforesaid judgment, the Government could scrap the tender but such is not the situation in the present case. I am not required to consider the issue whether the scrapping of the tender by the Government is justified as no scrapping of tender has been done by the Government of India in the present case. Accordingly, the aforesaid judgment of Alcatel is not applicable to the present case. The Government is in fact going through the tender and in that view of the matter, it is certainly open to this Court to consider the decision of the Government to ask for fresh financial bids. Once the technical bid is cleared the, petitioner would be greatly prejudiced by the disclosure of its financial bids. The very purpose of confidentiality of a financial bid of a tender is defeated by the procedure sought to be adopted by the respondents 1 to 4.

12. The plea that whether the Court under Article 226 should be the technical evaluator of the bids in my view is an academic plea because the respondents themselves had cleared the technical bid and the petitioner's right to be considered for its financial bid which was the lowest only arises after its technical bid is cleared. In the present case the Court is not sitting over the technical evaluation done by the respondents. It is in fact endorsing it. Consequently the judgments relied upon by the respondents in respect of this Court's limited jurisdiction in interfering with technical evaluation are not germane. Once the technical bid is considered and found acceptable and the petitioner found to be the lowest tenderer (L1) then it is no longer open to the respondents to call for fresh financial bids as that would directly violate the CVC guidelines forming part of the CPWD manual, requiring negotiation with the lowest tenderer.

13. The writ petition is accordingly allowed and the Letter dated 16.2.2001 calling for fresh price bids in regard to supply of Digital Wireless Interpretation System and 3 Nos. Committee Rooms and Conference System for 7 Nos. Committee rooms in the Parliament Library Building at Pandit Pant Marg, New Deli is quashed and the respondents 1 to 4 are directed to proceed with the processing of tender thereafter in accordance with law. However, it is made clear that nothing said in the aforesaid judgment would come in the way of the Government if it chooses to do so from scrapping the tender for valid reasons as per the decision of the Division Bench of this Court in the Case of Alcatel India Ltd. (Supra).

14. With these observations, the petition stands allowed with no orders as to costs.