Aishwarya Telecom Pvt. Ltd. ... vs Bharat Sanchar Nigam Limited (A ...
2005 Latest Caselaw 1319 Del

JUDGMENT

Madan B. Lokur, J.

Page 1273

1. The Petitioner is aggrieved by the decision of Respondent No.1 to load its tender with the cost of additional fibre holders. As a result of loading, the Petitioner (who was the lowest bidder) became the third lowest bidder and, therefore, would not be entitled to the tender floated by Respondent No.1.

2. Briefly, the facts of the case are that on 25th April, 2005 Respondent No.1 floated a tender for supply of 84 ribbon type O.F. Splicing Machines. These machines consist of several items and accessories including (1) Optical fibre hot jacket remover (2) High precision cleaver ribbon (3) Electrode (4) Fuse (5) Fibre holder etc. etc.

3. As far as fibre holders are concerned, 84 sets thereof were required by Respondent No.1 as per the bid documents.

4. The Petitioner as well as some others including Respondents No. 2 and 3 gave their bids and in the chart given by Respondent No.1 in its counter affidavit, the evaluated package cost of all the eligible bidders, who were technically and commercially responsive, was as follows:-

Sr. Name of Bidder                Total quoted Package Cost Total evaluated Package
No.                                                         cost with discounting AMC
1   M/s. Tirumala Seven Hills (P)   Rs.5,98,15,560.00       Rs.5,95,82,833.28
    Ltd.
2   M/s. Aishwarya Telecom (P)      Rs.5,51,15,592.00       Rs.5,37,64,003.06
    Ltd.
3   M/s. Seven Hills                Rs.7,65,17,271.60       Rs.7,60,98,363.50
    Opticommunication (P) Ltd.
4   M/s. VXL Technologies Ltd.      Rs.5,99,35,176.00       Rs.5,97,02,449.28
 

5. In terms of Clause 9.1 of Section II of the Notice Inviting Tender, a bidder is required to state the basic unit price of all the goods that it proposes to supply as per the price schedule. In compliance with this clause, the basic unit price for one set of fibre holder as given by the eligible bidders was as follows:-

                              Unit Price            Total for 84 sets

Aishwarya                   Rs. 54,843             Rs. 46,06,812
Tirumala Seven Hills        Rs.  25,000            Rs. 21,00,000
Seven Hills Optic Comm      Rs. 51,925             Rs. 43,61,700
VXL Technologies            Rs. 25,100             Rs. 21,08,400
Page 1274
 

6. Section IV of the Notice Inviting Tender contains the Special Conditions of Contract and Clause 19 thereof, which is of some importance, states that if any item required as per the schedule of requirements is not quoted by the bidder, then it shall be supplied free of cost.

This Clause reads as follows:-

"19. Any item, required as per the schedule of requirements/tender conditions/technical specifications/Clarifications but not quoted / included by the bidder in the Bill of Material/Price bid, shall be supplied free of cost by the bidder."

7. It appears that as per the understanding of Respondent No.1, the item 'fibre holder' was not only a separate item, but was also included in the accessories described as 'optical fibre hot jacket remover' and 'high precision cleaver ribbon' of which 168 sets each were required. In other words, as per the understanding of the bid documents by Respondent No.1, a total of 336 sets of fibre holders were required to be supplied in respect of these two items, in addition to 84 sets of fibre holders otherwise mentioned in the schedule of requirements.

8. It is significant to note that none of the bidders understood the bid documents in the manner above mentioned, with the result that all of them offered bid only for 84 sets of fibre holders.

9. In terms of Clause 19 contained in the Special Conditions of Contract, we would have expected Respondent No.1 to require each bidder to supply the additional 336 sets of fibre holders free of cost. However, instead of doing so, what Respondent No.1 did was to take the unit price of each fibre holder as quoted by the bidders and on that basis, calculate the additional cost for 336 sets of fibre holders required for two accessories, namely, 'optical fibre hot jacket remover' and 'high precision cleaver ribbon'. The result of this loading was that since the unit price quoted by Tirumala Seven Hills Pvt. Ltd. (Respondent No.2) and VXL Technologies Ltd. (Respondent No.3) was quite low as compared to the unit price quoted by the Petitioner, the overall value of the tender underwent a dramatic change. The revised evaluated package cost of all the bidders then became as follows:-

 Sr.No.    Name of Bidder                 Total Package        Total Package cost      Ranking
                                         Cost after loading   after loading and
                                                              discounting the AMC
     
1    M/s. Tirumala Seven Hills (P) Ltd.  Rs.6,82,14,216.00      Rs.6,79,81,489.28        L-1
2    M/s. Aishwarya Telecom (P) Ltd.     Rs.7,35,42,840.00      Rs.7,21,91,251.06        L-3
3    M/s. Seven Hills                    Rs.9,39,64,071.60      Rs.9,35,45,163.50        L-4
     Opticommunication (P) Ltd.
4    M/s. VXL Technologies Ltd.          Rs.6,83,68,776.00      Rs.6,81,36,049.28        L-2


Page 1275
 

10. The above table is relevant only for the purpose of showing that Tirumala Seven Hills (P) Ltd. (Respondent No.2) became the lowest tenderer while the Petitioner became the third lowest tenderer. Ms VXL Technologies Ltd. (Respondent No.3) became the second lowest tenderer. The rates mentioned in the above table have no other importance.

11. As a result of Tirumala Seven Hills (P) Ltd. (Respondent No.2) becoming the lowest bidder, Respondent No.1 recommended award of the contract to it, at the pre-loaded price of Rs.5,95,82,833.28 that is about Rs.60 lakhs higher than the pre-loaded price quoted by the Petitioner. In other words, the exercise of loading was undertaken only to redetermine the lowest bidder and then to award the contract at a higher price to the newly determined lowest bidder.

12. As against this, if Clause 19 of Section IV of the bid documents pertaining to Special Conditions of Contract was put into operation, Respondent No.1 could have demanded the additional fibre holders from all the bidders including the Petitioner and Tirumala Seven Hills Pvt. Ltd. (Respondent No.2) at the original evaluated package cost without loading.

13. For some reason which we are unable to comprehend, Respondent No.1 has decided to pay Rs.60 lakhs to Tirumala Seven Hills Pvt. Ltd. (Respondent No.2) over and above the original offer of the Petitioner, even though there is no necessity for doing so. We find this to be rather strange.

14. To make sure that we had clearly understood the situation, we asked learned counsel for the Petitioner more than once whether his client is prepared to supply the additional 336 sets of fibre holders free of cost in terms of Clause 19 of the bid documents and his answer was in the affirmative. Consequently, the Petitioner is prepared to fulfilll the contract at the rate quoted by him, that is, Rs.5,37,64,003.06 while Respondent No.1 insists on awarding the contract to Tirumala Seven Hills Pvt. Ltd. (Respondent No.2) at Rs.5,95,82,833.28, that is, at an additional cost of about Rs.60 lakhs.

15. Learned counsel for Respondent No.1 sought to justify the extra payment being made to Respondent No.1 on the basis of paragraph 2 of Chapter 8 of the Revised Guidelines to Committee for Evaluation of Tender issued by the Department of Telecommunications, Sanchar Bhawan, New Delhi on 9th May, 1994. This clause reads as follows:-

"2. Wherever there is an variation between the Technical Compliance Statement and the Drawings / Literature attached in support of or merely with Technical Compliance Statement the bidders should be asked to clarify/confirm specifically the technical compliance. In cases where offered product is under-provided the CET should load the quoted price appropriately so as to bring it to the desired level of technical compliance."

16. We do not see how the above clause helps learned counsel for Respondent No.1 because Clause 19 of Section IV of the Special Conditions of Contract (which we have already referred to) makes it clear that if any item required as per the schedule of requirements is not quoted by the bidder, then it shall be supplied free of cost to Respondent No.1. There is then no question of loading the original tender price in respect of any of the bidders in the present Page 1276 case. Moreover, Clause 2 above relied upon by Respondent No.1 postulates loading taking place so that there is technical compliance with the tender documents. Such a situation has not arisen in the present case in as much as admittedly all the bidders were technically and commercially responsive, as mentioned in the counter affidavit. Therefore, there is no question of any further technical compliance in terms of the Revised Guidelines relied upon by Respondent No.1.

17. Reference was also made by learned counsel for Respondent No.1 to a document 'Common Irregularities/Lapses Observed in Stores/Purchase Contracts and Guidelines for Improvement in the Procurement System' by the Chief Technical Examiner's Organization, issued by the Central Vigilance Commission, Government of India. Paragraph 7.5. of this document was referred to by learned counsel and as far as we are concerned, a plain reading of this paragraph shows that it is totally inapplicable to the present case. Paragraph 7.5 relied upon by learned counsel reads as follows:-

"7.5 The Evaluation/Loading criteria on account of acceptable range of deviations in the commercial terms and conditions viz. Payment Terms, Deliver period, Performance Bank Guarantee etc. is not being incorporated in the bidding documents. The evaluation of the offers is being made simply on the price quoted which is not in order. The comparative assessment of offers in true sense would be complete only if it is made on equal footing taking into account the financial implications for the deviations in terms and conditions, in line with unequivocal evaluation criteria specified in the bidding documents.

In one of the cases, it was noticed that due to non-stipulation of payment terms in the tender documents, the bidders quoted prices based on varying advance payment. The offers were evaluated by the Organization simply on the quoted prices, even though L-1 bidder had asked for much higher advance payment in comparison to the L-2 bidder. As such, the evaluation done by the Organization was not on equitable basis as the payment of higher advance, evidently had, financial implications.

The Evaluation / Loading criteria with respect to the important terms like Payment terms, Delivery period, Performance Bank Guarantee etc. having financial implications need to be specified in unambiguous terms in the bid documents so that the evaluation of bids after tender opening could be made in a transparent manner without any subjectivity."

18. It was submitted by learned counsel for Respondent No.1 that loading the cost of 336 additional sets of fibre holders was done so as to provide a level playing field to all the bidders. We are unable to see how this question arises when it is absolutely clear from Clause 19 of Section IV of the Special Conditions of Contract that a bidder is required to supply the items not quoted, free of cost.

19. Learned counsel for Respondent No.1 also submitted that his client has not acted in a mala fide manner while loading the cost of additional fibre holders. We need not go into this issue because such a contention was not even urged by learned counsel for the Petitioner.

Page 1277

20. In view of our above discussion, we are of the opinion that Respondent No.1 has adopted a rather convoluted process of reasoning to conclude that Tirumala Seven Hills (P) Ltd. (Respondent No.2) is the lowest bidder and has compounded the problem by intending to award the contract to it at a price that is Rs.60 lakhs more than the lowest bid. Consequently, the writ petition ought to be allowed. It is held that Respondent No.1 could not load the cost of 336 additional sets of fibre holders to the bid quoted by any of the bidders including the Petitioner and Respondents No.2 and 3. Since such loading was not necessitated by the bid documents and the bidder was obliged to supply 336 additional sets of fibre holders free of cost to Respondent No.1, the consequences thereof will follow.

21. For completion of the record, we may refer to the two decisions relied upon by learned counsel for Respondent No. 1.

22. Harminder Singh Arora v. Union of India, was relied upon to contend that the State or its instrumentality has to act in accordance with the conditions laid down in the tender notice. Reference was made to paragraphs 19 and 29 of the Report. In that case, the contention of learned counsel for the appellant in the Supreme Court was that the tender submitted by respondent No. 4 therein did not satisfy the requirement of the tender notice. It was observed in paragraph 19 that "if the authorities chose to accept the tender of Respondent 4 for supplying pasteurized milk, the appellant should also have been given an opportunity to change his tender. The authorities have, however, given preference to the tender of Respondent 4 for offering to supply pasteurized milk contrary to the terms contained in para 2 of the tender notice. We find considerable force in this contention of the appellant."

Thereafter, it was held in paragraph 29 "In the instant case, the instrumentalities of the State invited tenders for the supply of fresh buffalo's and cow's(tm)s milk and, therefore, this case has to be decided on the basis of bid by the tenderers. There was no question of any policy in this case. It is open to the State to adopt a policy different from the one in question. But if the authority or the State Government chooses to invite tenders then it must abide by the result of the tender and cannot arbitrarily and capriciously accept the bid of Respondent 4 although it was much higher and to the detriment of the State..... The contract of supply of milk was to be given to the lowest bidder under the terms of the tender notice and the appellant being the lowest bidder he should have been granted the contract to supply, especially, when he has been doing so for the last so many years."

23. This decision actually supports the contention of the Petitioner in as much as there is no allegation that the terms of the tender have been changed to favor any of the parties. On the contrary, the actions of the Respondents Page 1278 are detrimental to the interests of the Petitioner who is the aggrieved party, and as per the dictum of the Supreme Court, the tender should have been awarded to him, being the lowest bidder under the terms of the tender notice.

24. West Bengal Electricity Board v. Patel Engineering Co. Ltd., was relied on to contend that correction of mistakes in a bid could not be made if they were beyond the scope of corrections permitted by the instructions to bidders. Such a situation does not even arise in the present case, and we are unable to appreciate the relevance of this decision.

25. We may also observe here that since all the tenderers had admittedly misunderstood the tender conditions, perhaps the appropriate course would have been for Respondent No. 1 to call for a fresh tender, but it did not do so for reasons better known to it. We cannot direct the said Respondent to reconsider the position since it is beyond our jurisdiction. Respondent No. 1 has chosen to go through with the tender process and it must be completed as best as it is possible under the circumstances. Accordingly, Respondent No.1 should proceed to finalise the tender as soon as possible and on the basis of the conclusions reached by us. We make it clear that the Petitioner is bound by the statement made by its learned counsel that it will supply 336 additional sets of fibre holders to Respondent No.1 free of cost.

26. The writ petition is allowed. No costs.