M.P. Telelinks, Reliance ... vs Bsnl Ltd. And Anr.
2002 Latest Caselaw 1974 Del

JUDGMENT

R.S. Sodhi, J.

1. This judgment shall dispose of C.W.P. 5773/2001, 1005/2002 and 2099/2002.

2. The respondent-Bharat Sanchar Nigam Limited (for short 'the BSNL') floated a Tender Enquiry No. MM/SW/032001/00020 dated 27th March, 2001 for procurement of 441 lac Conductor Kilometers (LCKM) of PIJF Telecom Cables. There were 36 different sizes of the aforesaid cable which were tendered for by the 1st respondent, the bidders were required to bid for the same separately in the form of a table prescribed in Part-II of Schedule-VII of the tender document. The petitioner in C.W.P. Nos. 5773/2001, 1005/2002 and 2099/2002 were amongst the bidders. The conditions of tender required vendors to be evaluated and ranked according to a vendor rating formula, prescribed. This was done separately for each of the 36 sizes of the cables for which tenders were invited. The vendors rating to be accorded by the 1st respondent to each bidder was calculated as per the formula specified in Clause 19.1 of Section 4 of the Special Conditions of tender. The formula for determination of vendor rating was as under;

"VR = 0.6 x PR + 0.30 x DR + 0.1 QR

Where PR = Price Rating DR = Delivery Rating QR = Quality Rating"

Price Rating: Price rating has 60% weightage in the VR Formula. The Price rating of each vendor for each size of cables calculated as a ratio of the lowest price quoted by any vendor to the price quoted by the particular vendor.

Quality Rating: There is 10% weightage in Quality Rating to vendors having ISO 9001/9002 certification and those without such certification were given zero rating.

Delivery Rating: Delivery rating had a weightage of 30% in the VR Formula. The delivery rating of Vendors were separately calculated as per formula specified in Clauses 19.3.1 to 19.3.6 of the Special Conditions (Section IV).

3. Under the aforesaid formula of "Vendor Rating" for evaluation of bids, it is not necessary that a bidder who quotes the lowest price (L1 price) for a particular size of cable would become automatically entitled to maximum orders or any orders. This is because the price quoted by a bidder has only 60% weightage. The Delivery Rating of the bidder calculated on the basis of the previous delivery performance of the bidder was given 30% weightage and therefore become critical in determining the ranking (Vendor Rating) of the bidder for the purpose of placement of order by the respondent.

4. The individual Delivery Rating of each vendor was to be calculated by the respondent No. 1 prior to the tender opening by a formula which measures its past performance during a specified period, referred to as the WINDOW period. However, the prescribed formula cannot be made applicable to such Bidders who were new entrants. Such new entrants were placed with small quantities of "educational orders" by BSNL as compared to the regular commercial orders. The tender provides a separate Clause 19.3.6 to determine the Delivery Rating of new Vendors. The relevant clause reads as under:

"19.3.6 In case of Vendors who have executed only Educational Orders, a Delivery Rating equal to Average Industrial Rating or Delivery Rating earned by them in Educational Orders whichever is less will be given."

5. The bids submitted by the various tenderers including the petitioners were to be opened on May 22, 2001. Prior to the opening of tender. The 1st respondent had calculated the Delivery Rating of all eligible vendors in the industry, as well as the Average Industrial Delivery Rating on the basis thereof.

6. Immediately prior to the opening of the tender on 22.5.2001, the respondent No. 1 announced the delivery rating of each of the manufacturers of PIJF cables who had during the period May 1, 1999 to April 30, 2001 (WINDOW PERIOD) made supplies to the Ministry of Communications/Department of Telecommunication and/or the respondent No. 1 on the basis of previous commercial orders.

7. Upon such announcement, objections were raised as to the inclusion of M/s INCAB in the 'Average Industrial Rating' in terms of Clause 19.3.6 by the new vendors. These new vendors were deemed to have, as per the provisions of Clause 19.3.6 of Section 4, Delivery Rating equal to the 'Average Industrial Rating'. Since M/s INCAB's individual rating was zero, its exclusion would lead to increase in 'Average Industrial Rating' and its inclusion would reduce it. The new vendors would benefit if M/s INCAB was not included while the others would benefit if M/s INCAB did figure in the calculation of the 'Average Industrial Rating'. M/s Reliance Engineering Limited, the petitioners in C.W.P. 1005/2002, objected to the inclusion of INCAB while the other two petitioners, namely, M/s Concepta Cables Limited and M/s M.P. Telelinks Limited swere in favor of inclusion of M/s INCAB. The question, therefore, that fell for determination was interpretation of Clause 19.3.6 of Section 4. The relevant Special Condition of the contract in Section 4 are set out below:

"13(i) The purchaser intends to limit the number of bidders selected for ordering against this tender to 2/3rd of the participating and eligible bidders in each group (eligible as per Clause 2 of Section II of the Bid Documents). The bidders for placement of order will be selected from the list of technically and commercially responsive bidders arranged in decreasing order of the Vendor Rating starting from the highest. Any faction below 0.5 in the number of vendors, as computed above shall be ignored and the same equal and above 0.5 will be rounded off to the next higher integer.

13(ii) The bidder with the highest Vendor Rating (V-I bidder) will be considered for about 30% of the tendered quantity. The balance quantity will be distributed amongst the remaining selected bidders in each group in direct ratio of their Vendor Rating.

13(iii) The clause is subject to following conditions:-

(a) In the event of any of the eligible bidder(s) not agreeing to supply the equipment or not being considered by BSNL, for ordering the equipment, interse ranking of the vendors below the aforesaid bidder/bidders will be recast to fill up the vacated slots. This will be done to ensure that the numbers of bidders supplying the equipment remains same as earlier.

(b) The ordering quantity shall not be more than 6 (six) months production capacity of the bidder.

(c) The "Over flow" quantity (if any) left out after initial distribution of the quantity shall be distributed amongst all the techno-commercially responsive bidders in the direct proportionof their vendor Rating e.g. even to these bidders who are not in the consideration zone of 2/3rd Nos. of eligible bidders. The order for "over flow" quantity shall be placed immediately as far as possible after placement of initial order.

(d) No order for over flow quantity will be placed on those bidders who have already been placed orders equal to their 6 (six) months production capacity even if the orders for over flow quantity are placed separately and subsequently as the same is a part of tendered quantity.

(e) In case any bidder refuses to honour his bid for any size of cable in which he has emerged as L1 bidder, no order will be placed on him for any six of cable in any group and his entire EMBG amount (Bid Security) will be forfeited and the supplier will be debarred from participating in the next tender.

(f) The purchaser also reserves the right for placement of order of the entire tendered quantity of the cable in that group or size of the cable on the bidder who is in consideration zone for placing order and whose price has been evaluated as the lowest price for that size/group of Cable.

14. The bidder can quote for any six of cables in one OR more groups provided he has valid type approval certificate for that size of cable on the date of tender opening and has also successfully executed E.Os/C.Os. For at least one size of cable in each of these groups: Quotation by the bidder not supported with valid TAC for that size of cable shall not be considered for evaluation.

15. The quantity quoted in each size of the cable shall be equal to 6 (six) months TEC evaluated production capacity of the bidder OR tendered quantity whichever is less. In case the bid for any size of cable is for quantity less than the quantity mentioned above, the bid will be treated as non-responsible and rejected for that size of cable.

16. Every bidder is required to submit his latest authenticated infrastructure assessment certificate issued by TEC and a declaration as per Annexure 'A' along with his bid.

17. The word "Goods" "equipment and accessories" used in the bid document shall mean the tendered item as given in Section V (Schedule of Requirement) of the bid document.

18. The delivery of goods shall commence immediately on placement of purchase order on vendor and shall be completed within 6(six) months thereafter (Ref. Clause 19.3.9 of Section IV also).

(i) Non-adhence of the above mentioned delivery schedule will attract imposition of L/D charges as mentioned in Section III of the Bid Document.

(ii) The above delivery period of 6(six) months is linked with 6 month's production capacity of the bidder and is applicable to the P.Os. For initial ordering quantity. The delivery period of any 'Add on' OR 'Over flow' quantity (if any) being ordered subsequently will be based upon the requirement of BSNL. However, it will be linked in consonance with the production capacity of the bidder.

(iii) Status of actual supplies made every month shall be intimated on first day of the following month. Any slippage in the supplies from the committed supply schedule will attract imposition of liquidity damages as per clauses in Section III of the bid document. However, the preponement of supply schedule after consultation with the purchaser is permissible.

(iv) Advance Purchase Order (APO) will be placed indicating circle-wise lump sum quantity.

19. All the vendors will be rated as per the following Vendor Rating formula:

VENDER RATING (VR) + 0.6 PR + 0.3 DR + 0.1 QR

where PR = Price Rating DR = Delivery Rating QR = Quality Rating

19.1 PRICE RATING (PR)

PL PR = PQ

Where PL = Lowest price quoted by a vendor for the product being tendered.

PQ = Price quoted by the vendor being evaluated for the tendered item.

19.2 DELIVERY RATING (DR): The delivery rating will be calculated as per the formula given below:

   Q1      [             T                ]   + 0.3   E   Qi

 
  DR = 0.7        Q       TR + 1.5 E Tx.qx                              P

 
  QP

 
  Q



 

Where, Qi  QP 

 

If Qi QP, then take Qi + QP

Q = Quantity supplied within Scheduled delivery period.

SDP = Scheduled Delivery Period or Initial Delivery Period

(IDP)

Q = Total ordered quantity.

T = Scheduled delivery period in months. Tx = Time taken beyond Scheduled D.P. In months for each extension including Scheduled D.P.

R = Q1 Q

qx = Quantity supplied during each extended period.

P = Number of supply segments or slots (within (Schedule DP)

Qi = Quantity delivered in a particular supply segment or slot (within DP)

Qp = Quantity to be delivered in every supply segment or slot (within schedule DP).

19.3 For calculation of DR, the following procedure as per above formula will be adopted.

19.3.1 The period for calculation of delivery rating will be from 1.5.99 to 30.4.2001 (two years) referred as 'Window'.

19.3.2 All purchase orders during the 'WINDOW' will be considered for calculation of the Delivery Rating. However, in respect of any such P.O., the scheduled delivery date extends beyond the 'WINDOW', then in respect of such P.O.(s), the Delivery Rating shall be calculated taking into account, the supplies required to be made within the period common to both the 'WINDOW' and the scheduled delivery period that shall be taken as prorate basis.

19.3.3 All supplies made within any period of the 'WINDOW' in respect of P.Os. Issued prior to the commencement of the 'WINDOW' shall be considered for the Calculation of DR, provided such period of the 'WINDOW' falls within original scheduled delivery date stipulated in the P.O. And not any further extensions accorded and this shall be further subject to the following provision.

From out of supplies actually made during the 'WINDOW', shortfall if any in supplies to be made prior to the commencement of the 'WINDOW' shall be offset and the balance quantity alone shall be taken as effective supply during the 'WINDOW'.

19.3.4 The formula for computing overall DR taking into account the DR for every P.O. Is given below:

 

  
  n

 
  E Qoi. DRi

 
  Overall Delivery Rating (ODR)       i=1

 
  n

 
  E Qoi.

 
  i=1

 
  Where : Qoi             = Quantity ordered for the i

 
  th P.O.

 
  DRi                           = Delivery Rating for

 
  the 1 th P.O.

 
  N            = No. of P.Os.



 

19.3.5 The Delivery Rating of Vendors who have not executed any commercial order during 'WINDOW' will be rated based upon their past performance. In case their past performance is equal to or above the average DR of the firms under consideration, they will be given average delivery rating. However, if their past performance is below average delivery, the actual performance will be taken for calculation of Delivery Rating. The 'WINDOW' for this purpose shall be of same duration.

19.3.6 In case of vendors who have executed only Educational Orders, a Delivery Rating equal to Average Industrial Rating or Delivery Rating earned by them in Educational Orders whichever is less will be given.

19.3.7 For the purpose of calculation of Delivery Rating only, the date of delivery will be taken as the date of issue of Inspection Certificate by QA Wing. However, for the purpose of payments and liquidated damages, the delivery will continue to be as stipulated in the Purchase Order."

8. The petitioners in C.W.P. 1005/2002, who had only executed educational order, Delivery Rating was to be calculated in accordance with Clause 19.3.6, submitted that the reference to the terms "Average Industrial Rating" or "Delivery Rating" as mentioned in Clause 19.3.6 would mean "Average Delivery Rating" to be calculated with reference to only those parties who had bid and were eligible. The contention of the petitioners in C.W.P. 5773/2001 and C.W.P. 2099/2002 is that this rating is to be calculated from the 'Average Industrial Rating' i.e. taking into consideration all those who had made supplies within the WINDOW period i.e. with effect from 1.5.1999 to 30.5.2001. 'Average Industrial Rating', the same has to be calculated with reference to Clauses 19.3.1, 19.3.3, 19.3.5 and 19.3.6.

9. The 1st respondent, upon re-evaluation of the conditions of tender, came to the conclusion that the 'Average Industrial Rating' was to be calculated by including all those firms that had made supplies during the WINDOW period and that it did not restrict it merely to the participants in the tender.

10. Having heard learned counsel for the parties at length, it has emerged that there was no consistent past practice in the Department to calculate "Average Industrial Rating" under Clause 19.3.6 of Section 4 of the tender document. In the present tender of 2001-2002 which is the subject matter of the dispute, the 'Average Industrial Rating' under Clause 19.3.6 was worked out by CGM(QA) and was announced on 22.5.2001 which included M/s INCAB, a non-participant, whose vendor rating as per Clause 19.3.2 and 19.3.3 was zero. This was done on the basis that the term "Industrial Average" included all those in the industry who had made supplies within the WINDOW period.

11. The term "Industrial Rating" used in the tender has to be interpreted inconsonance with other clause of the tender. Clause 19.3.1 lays down the period for calculation of Delivery Rating between 1.5.1999 to 30.4.2001 while Clause 19.3.2 stipulates that all Purchase Orders issued during the WINDOW will be considered for calculation of the Delivery Rating. Further, Clause 19.3.3 stipulates that all supplies made within any period of the WINDOW in respect of Purchase Orders issued prior to commencement of the WINDOW shall be considered for the calculation of 'Delivery Rating' provided such period of the WINDOW falls within the original Schedule delivery date stipulated in the Purchase Order without extension accorded. This necessarily means that all Purchase Orders issued during the WINDOW and deliveries made within the period of the WINDOW would form the basis of calculation of the Delivery Rating. This cannot be read to mean only deliveries made during the WINDOW by the eligible participants to the tender. Newcomer cannot possibly be given a higher Delivery Rating against those having a proven track record. Clause 19.3.5 stipulates that the vendors who have not executed any commercial orders during the WINDOW, will be given notional Delivery Rating. This has to be calculated in accordance with Clause 19.3.6 with reference to 'Average Industrial Rating' which must include industrial having Purchase Orders during the WINDOW in accordance with Clause 19.3.2 and supplies made within the period in accordance therewith. In which view of the matter, the inclusion of M/s INCAB for the purpose of evaluating the 'Average Industrial Rating' cannot be faulted with. Even otherwise, the Supreme Court in Punjab Communication Limited v. Union of India and Ors. has held that unless a policy decision is so unreasonable as is hit by Wednesbury's Rule, legitimate expectation can be lawfully defeated. Further, the Supreme Court has in Tata Cellular v. Union of India laid down parameters within which the courts will exercise jurisdiction under Article 226 of the Constitution. The petitioners in C.W.P. 1005/2002 have not been able to show that the policy decision is unreasonable and/or violates Wednesbury's Rule to warrant an interference by this Court under Article 226 of the Constitution. In this view of the matter, we are of the considered opinion that the interpretation of the 1st respondent to Clause 19.3.6 suffers from no infirmity and the inclusion of M/s INCAB in arriving at the 'Average Industrial Delivery Rating' is justified.

12. In view of the foregoing discussion, C.W.P. Nos. 5773/2001, 1005/2002 and 2099/2002 are disposed of.