Delhi High Court
Reliance Infrastructure Ltd. & ... vs National Highway Authority Of ... on 16 December, 2008
Author: Manmohan
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ WRIT PETITION (C) NO. 6638 OF 2008
Reserved on : November 20th, 2008
% Date of Judgment: December 16th, 2008
RELIANCE INFRASTRUCTURE
LTD. & ORS. ........ Petitioners
Through Dr. A.M.Singhvi, Sr. Advocate
with Mr. Mahesh Agarwal,
Mr. Rishi Agarwal &
Mr. Akshay, Advocates.
Versus
NATIONAL HIGHWAY AUTHORITY
OF INDIA & ANR. .......Respondents
Through Mr. Dushyant Dave and
Mr. Ramji Srinivasan, Sr. Advs.
with Mr. Krishan Kumar,
Mr. Sumit Gupta, Mr. Mukesh
Kumar and Ms. Madhuri
Diwan, Advs. for NHAI.
Mr. Gopal Subramaniam, ASG with
Mr. Gaurav Duggal and Mr. Chetan
Chawla, Advocates for UOI.
CORAM:
HON'BLE MR. JUSTICE MUKUL MUDGAL
HON'BLE MR. JUSTICE MANMOHAN
1. Whether the Reporters of local papers may be allowed to see the judgment? Yes.
2. To be referred to the Reporter or not? Yes.
3. Whether the judgment should be reported in the Digest? Yes.
JUDGMENT
MANMOHAN, J.
1. The present writ petition under Article 226 of the Constitution of
India has been filed for setting aside the letter dated 27 th August, 2008
issued by National Highway Authority of India (hereinafter referred to
as 'NHAI') whereby the Petitioners have been held ineligible to
participate in the financial bid for Hyderabad - Vijayawada section from
K.M. 40.000 to K.M. 221.500 of N.H.9 in the State of Andhra Pradesh.
The Petitioners have further prayed for a direction to NHAI to issue
'Request for Proposal' Document, hereinafter referred as RFP, for the
said road project so as to enable them to participate at the second
stage of the bidding process, namely, the price bid.
2. It is pertinent to mention that in this writ petition, the Petitioners
have also challenged the legality and validity of Clause 3.5.2. in the
Request for Qualification (hereinafter referred to as 'RFQ') by virtue of
which only the six highest technical scorers can advance to the second
stage of the tender i.e. price bid, but we have already upheld the
constitutionality, legality and validity of the said Clause in our
judgment and order dated November 3rd, 2008 delivered in WP(C) No.
566/2008, and reported as National Highways Builders Federation
Vs. The National Highways Authority of India & Ors.
Consequently, the said challenge no longer survives.
3. The material facts of this case are that NHAI floated a tender for
construction of a road between Hyderabad - Vijayawada section from
K.M. 40.000 to K.M. 221.500 of N.H.9 in the State of Andhra Pradesh.
The bidders under the said tender had not only to fulfill the minimum
eligibility criteria but had also to be short-listed amongst the top six
highest scorers at the technical bid stage so as to be entitled to
participate at the price bid stage.
4. Under Clause 2.2.2(B) of RFQ the minimum net-worth of the
bidder had to be Rs. 365 crores. Clause 2.2.4(ii), stipulated that a
bidder had to provide a Certificate from a Statutory Auditor specifying
its net-worth.
5. In the present case, the Petitioners provided a Certificate from an
Auditor 'Chaturvedi & Shah' showing the Petitioner No.1's net-worth at
Rs. 8641 crores. Though, the net-worth stipulated in the Auditor's
Certificate was higher than the required net-worth of Rs. 365 crores,
the Certificate admittedly did not state that it had been issued by a
Statutory Auditor. The Net-worth Certificate issued by the Auditor of
Reliance Energy Ltd. is reproduced hereinbelow for ready reference:-
CHATURVEDI & SHAH
Chartered Accountants
TO WHOMSOEVER IT MAY CONCERN
We have examined the audited financial statements for
the year ending March 31 2007 of M/s Reliance Energy
Limited (hereinafter referred to as the "the Company").
On the basis of such examination and the information
and explanation given to us by the management, we
hereby certify the Net-worth of the Company as set out
in the following table:
Name of the Company Net-worth (Note 1)
For year 1(2006-07)
in Rs.Crore
Reliance Energy Limited 8,641.31
Note 1: Net-worth = (Subscribed and Paid up Equity +
Reserves) - (Revaluation reserves + miscellaneous
expenditure not written off + accrued liabilities*)
* Accrued liabilities, represents liabilities not accounted
in the books of account.
(Seal)
CHARTERED ACCOUNTANTS
Place: Mumbai
Dated: 16/01/2008.
6. The RFQ document stipulated that if a bid was filed by a
consortium, then the net-worth of the bidder would also include its
associates' net-worth. By virtue of Clause 3.2.1, the categories of
experience was defined to include 'telecom' and 'power'.
7. On 30th April, 2008, the NHAI sought clarification from the
Petitioners with regard to a Power-of-Attorney issued by Reliance
Energy. However, no clarification was sought with regard to the above
referred Auditor's Certificate.
8. In the initial evaluation exercise carried out in June, 2008 the
independent financial consultant of NHAI awarded the Petitioner a
Technical score of 439.19 against the Petitioners self-proclaimed score
of 49628.67 for the following reasons:-
Name of Claimed Evaluated Remark
member/ score score
associates
Reliance 16708.47 0 In the experience
Energy Ltd. Certificate it is not
(Member) mentioned that it is
from Statutory
Auditor
Reliance 32501.22 0 Certificate in
Communica- support of
tions Ltd. Associate
(associate) relationship with
AAA
Communication (P)
Ltd. (member) is
from Chartered
Accountant but it
has not been
mentioned that it is
from the Statutory
Auditor.
JPTEGCL 418.98 439.19 Due to the
applicable Foreign
Currency
Conversion rate
there is an increase
in the Technical
Score
9. Thus, the reduction in score was firstly due to non-submission of
documents certified by a Statutory Auditor in support of Associate
Status and secondly because of submission of net-worth certificate
from a Chartered Accountant without mentioning that it was from a
Statutory Auditor of the company. Thirdly, the experience relating to
electricity had been quoted in a consolidated form without giving the
required project specific detail.
10. Dr. Singhvi, learned Senior Counsel for the Petitioners, stated
that as the Petitioners 'were informed' that they were not being pre-
qualified in the absence of a Statutory Auditor's Certificate under
Clause 2.2.4(ii), the Petitioners on 30th June, 2008 wrote to NHAI that
the Certificate provided by the Petitioner along with its bid document
was that of a Statutory Auditor although the words 'Statutory Auditor'
had not been mentioned in the said Certificate.
11. It seems that the Petitioner made a similar representation to the
Government of India, Ministry of Shipping, Road Transport and
Highways Department (hereinafter referred to as 'the Ministry'). In
pursuance to the Petitioner's and other similarly placed bidders'
representations, the Ministry on 2nd July, 2008 requested NHAI to send
its comments to the representations within three days. It was also
requested by the Ministry that for at least ten days the process of issue
of RFP be deferred. It was further mentioned that the said letter had
been issued with the approval of the Minister (S, RT&H).
12. On 7th & 10th July, 2008, the Petitioner again wrote to the
Secretary to the Ministry regarding the alleged irregularities in the
bidding process. In pursuance to the Ministry's letter dated 2nd July,
2008, NHAI vide its letter dated 4th July, 2008 sent its comments to the
representations made by the various bidders.
13. By another letter dated 11.07.2008 the Ministry directed NHAI to
place the matter before its Board and requested that the process of
issue of RFP be deferred until further intimation. However, the
Secretary to the Ministry on 11th July 2008 itself, at its own initiative,
also appointed a two Member Committee comprising of the Director
General (Road Development) & Special Secretary and Member
Technical, NHAI to review the entire matter. The said Committee
submitted its report, which was forwarded to the Ministry under cover
of its letter dated 29.07.2008.
14. The recommendations of the Technical Committee appointed by
the Ministry are reproduced hereinbelow for ready reference:-
"Recommendations
In view of above observations, the situation is now
that evaluation for qualification under Hyderabad-
Vijaywada project package has been carried out in
different way as against the other seven packages, for
which request for qualifications (RFQ) were received
during the same period based on the same
guidelines/RFQ document. As such the procedure being
followed for other seven packages cannot be ignored.
Further, in case of two project packages namely, (i)
MP/Maharashtra Border-Dhule and (ii) Pimpalgon-Gonde,
for which shortlist was finalized but the above procedural
exercise is being carried out before the declaration of
result. The Committee, therefore, feels that in order to
have fair exercise, all the applicants of Hyderabad-
Vijaywada project also deserve equity and natural justice.
Had the same procedure been adopted for this package
and the necessary clarifications been asked from the
applicants, the outcome of the qualification exercise may
have been different. Therefore, the Committee
recommends that:
(i) In order to ensure equity and natural justice,
NHAI may relook into the qualification exercise for
this projects packages following the same procedure
as for the other seven project package and ask the
bidders for clarification on the qualification aspects
without allowing them to submit additional
document and without any addition in further claims
of score as is being followed in other seven project
packages. As such, it could be limited to
clarification for example whether the Chartered
Accountant furnishing certificate is actually the
Statutory Auditor or not. Following the same
procedure, NHAI may consider to give one week
time for clarifications as being followed for
subsequent cases subject to that the clarifications
do not result in increase in claimed score.
(ii) This exercise could be carried out for all the
applicants.
(iii) As a result of above exercise there is
likelihood of change in the shortlist of top six
bidders. In case it is decided to issue RFPs on the
changed list of six shortlisted bidders, this may lead
to further representations and possible litigation.
Under the circumstances there could be two
options for carrying the project further:-
(a) NHAI Board may consider one time
relaxation for this particular package and may
increase the number of bidders in the shortlist
to accommodate those who qualify in the
review exercise and whose experience score
is higher than the final score (after review) of
the present lowest scorer (M/s Madhucon-
Galfar-SREI)in the already declared shortlist.
However, its implication on other seven
project packages where evaluation is going
on will also need to be kept in view as also
the legal implications.
(b) NHAI Board may consider annulling the
whole exercise and direct re-invitation of RFQ
for this package (Hyderabad-Vijaywada). This
would also meet the ends of justice as all
prospective bidders would have an
opportunity to apply and be evaluated as per
the present evaluation procedure.
(Nirmaljit Singh) (G. Sharan)
Member (Technical) Director General (Road Development)
National Highways & Spl Secretary Department of Road
Authority of India Transport & Highways."
15. By communication dated 7th August, 2008, the Ministry without
waiting for NHAI Board's decision asked NHAI to obtain necessary
clarifications from the various bidders and to revaluate the technical
score of all the bidders. The findings of the revaluation were directed
to be placed before the NHAI Board for a decision. The relevant
portion of the said letter is reproduced hereinbelow:-
" A meeting was taken by Hon‟ble Minister (S, RT&H) on
5.8.2008 to review the progress of evaluation of RFQ and
award of concessions for projects under NHDP. In the
meeting taken by Secretary (RT&H), the matter relating to
Hyderabad-Vijaywada Project was also discussed.........
In order to expedite the process, it is requested that
necessary clarifications from the applicants may be
obtained immediately and the applications re-evaluated.
The findings of the re-evaluation may be placed before
the NHAI Board for a decision in the matter."
(emphasis supplied)
16. In view of the aforesaid directions of the Ministry, NHAI vide
letter dated 08.08.2008 asked the Petitioner to furnish clarification on
the following issues :-
"1 Furnish clarification for the below mentioned
Project Code(s).
Project Codes Clarifications Required.
1a, 1b, 1c, 1d, 1e, 1f, To clarify details/specific
1g, (Reliance Energy document in the application
Ltd.) which establishes associate
relationship and to clarify that
experience certificate is from the
statutory auditor. (Please indicate
the precise location/page
number)
2a (AAA 1. Certificate to substantiate
Communication Pvt. "Associate relationship"
Ltd.) from the Statutory Auditor is
not available. Please clarify.
Please indicate the precise
location/page number.
2. To clarify whether the
experience certificates are
from Statutory Auditor.
(Please indicate the precise
location/page number)
(emphasis supplied)
17. However, in the forwarding letter accompanying the clarification
it was specifically mentioned as under:-
" For the sake of clarifications, we would like to
inform you that no additional documents whatsoever will
be accepted for the purpose of clarifications. The
clarifications have to be in the form of a letter and you
can refer to documents already submitted by you along
with your RFQ Application."
18. On 12th August, 2008, the Petitioners sent their clarification.
While it reiterated that the net-worth Certificate provided by the
Petitioner along with the bid document was that of a Statutory Auditor,
the Petitioner clarified in respect of AAA Communications Pvt. Ltd. that
the annual report clearly mentioned that the said Company owned
63.41% of Reliance Communications. Additionally, the Petitioner also
enclosed a new Certificate of a Statutory Auditor confirming the
association between AAA Communications and Reliance
Communications Ltd.
19. The clarification of the Petitioner concerning project codes at Sl.
No. 1a to 1g regarding Associate relationship were accepted and its
experience score increased. However, in respect of Associate status
with AAA Communication Pvt. Ltd., NHAI's independent consultant did
not accept the certificate submitted by M/s. M.S. Sethi & Associates
along with the RFQ application at page 50 as M/s. M.S. Sethi &
Associates were admittedly not the Statutory Auditors of the Member
Applicant. In fact, after receipt of Petitioner's clarification, NHAI's
independent consultant increased the Petitioner's score from 439.19 to
2354.51, but as the Petitioners still did not make it to the list of first six
shortlisted bidders, it was not allowed to move to the price bid stage.
20. Dr. A.M.Singhvi appearing for the Petitioners submitted that
NHAI's insistence in the initial valuation of requiring the words
'Statutory Auditor' written on the net-worth certificate was a hyper
technicality. He submitted that in any event because of the
revaluation conducted by NHAI themselves at the insistence of two
member Committee, this objection no longer survived.
21. Dr. Singhvi further submitted that Clause 2.2.9 did not require
that to confirm association, a Statutory Auditor's Certificate was
required. According to him, the request for a Statutory Auditor's
Certificate with regard to confirming only the shareholding of a
company in another company which does not increase or decrease a
person's financial capability or technical capability is perverse. He
further pointed out that the annual report filed along with the bid
document clearly mentioned that AAA Communications owns 63.41%
share of Reliance Communications, but the same was arbitrarily
ignored. Clause 2.2.9 is reproduced hereinbelow for ready reference:-
"2.2.9. In computing the Technical Capacity and Net-
worth of the Applicant/Consortium members
under Clauses 2.2. and 2.2.3, the Technical
Capacity and Net-worth of their respective
Associates would also be eligible hereunder.
For purposes hereof, Associate means, in
relation to the Applicant/Consortium member,
a person who controls, is controlled by, or is
under the common control with such
Applicant/Consortium member. As used in
this definition, the expression "control"
means, with respect to a person which is a
company or corporation, the ownership,
directly or indirectly, of more than 50% (fifty
per cent) of the voting shares of such person,
and with respect to a person which is not a
company or corporation, the power to direct
the management and policies of such person,
whether by operation of law or by contract or
otherwise."
(emphasis supplied)
22. Lastly, Dr. Singhvi submitted that despite Clause 3.2.2 of the RFQ
stipulating that a bidder's Power and Telecom projects are to be taken
into account, the Respondents illegally did not consider both the
businesses and kept the Petitioners out of the race through this illegal
calculation.
23. Mr. Gopal Subramaniam, Additional Solicitor General, appearing
for the UOI initially tried to minimize the importance of a Statutory
Auditor's Certificate by stating that only the most meritorious must
proceed to Stage-II, namely, the price bid stage and for an
oversight/mistake by an Auditor, a bidder should not be penalized. But
when it was pointed out to Mr. Subramaniam that the stand of UOI
seemed to be at variance with the stand of NHAI, as NHAI had rejected
bids at the initial stage not only in Hyderabad - Vijayawada project but
in other similar projects also for want of a net-worth Certificate
specifying that the same had been issued by a Statutory Auditor even
though, the said Auditor may be a Statutory Auditor, Mr. Subramaniam
took time to obtain instructions.
24. Subsequently, Mr. Subramaniam submitted to the Court that on
a detailed perusal of the RFQ, he was of the view that the Statutory
Auditor's Certificate was not only a primary but a mandatory document
as it was an assurance by a responsible authority that a bidder met the
net-worth and experience criteria. In this context, he referred to
Clauses 2.2, 3.2 as well as Annexures and Forms mentioned in
Appendix I of the RFQ. The relevant portion of the said Clauses and
Annexures are reproduced hereinbelow:
"2.2 Eligibility of Applicants......
2.2.2 To be eligible for pre-qualification and short-listing,
an Applicant shall fulfill the following conditions of
eligibility:
(A) Technical Capacity: For demonstrating
technical capacity and experience (the "Technical
Capacity"), the Applicant shall, over the past 5 (five)
financial years preceding the Application Due Date,
have:
(i) received payments for construction of Eligible
Project; and/or
(ii) commissioned and paid for execution of BOT
(Build-Operate-Transfer), BOLT (Build-Own-
Lease-Transfer), BOO (Build-Own-Operate),
BOOT (Build-Own-Operate-Transfer) or other
similar projects that qualify as Eligible
Projects; and/or
(iii) collected and appropriated revenues of
BOT/BOL/BOO/BOOT or other similar projects
that qualify as Eligible Projects,
such that the sum total of the above is more
than Rs.1460Crore (Rs. One thousand four
hundred sixty crore) (the "Threshold Technical
Capability").
Provided that at least one fourth of the
Threshold Technical Capability shall be from
the Eligible Projects in Category 1 and/or
Category 3 specified in Clause 3.2.1.
(B) Financial Capacity: The Applicant shall have
a minimum Net-worth (the "Financial Capacity") of
Rs365Crore (Rs. Three Hundred and Sixty Five Crore)
In case of a Consortium, the combined technical capability
and net-worth of those members, who have an equity share
of at least 26% each in such Consortium, should satisfy the
above conditions of eligibility.....
2.2.4 The Applicants shall enclose with its application, to
be submitted as per the format at Appendix-I, complete
with its Annexures, the following:.......
(ii) certificate(s) from its statutory auditors
specifying the net-worth of the Applicant, as at
the close of the preceding financial year, and
also specifying that the methodology adopted
for calculating such net-worth conforms to the
provisions of this Clause 2.2.4(ii). For the
purposes of this RFQ, net-worth (the "Net-
worth") shall mean the sum of subscribed and
paid up equity and reserves from which shall
be deducted the sum of revaluation reserves,
miscellaneous expenditure not written off and
accrued liabilities......
3. CRITERIA FOR EVALUATION...
3.2 Technical Capacity for purposes of evaluation.
3.2.1 Subject to the provisions of Clause 2.2., the following
categories of experience would qualify as Technical
Capacity and eligible experience (the „Eligible
Experience") in relation to eligible projects as
stipulated in Clauses 3.2.3 and 3.2.4 (the "Eligible
Projects"):
Category 1 : Project experience on Eligible Projects in
highways sector that qualify under
Clause 3.2.3
Category 2 : Project experience on Eligible Projects in
core sector that qualify under Clause
3.2.3
Category 3 : Construction experience on Eligible
Projects in highways sector that
qualify under Clause 3.2.4
Category 4 : Construction experience on Eligible
Projects in core sector that qualify
under Clause 3.2.4
For the purpose of this RFQ:
(i) highways sector would be deemed to include
highways, expressways, bridges, tunnels and
airfields; and
(ii) core sector would be deemed to include
power, telecom, ports, airports, railways,
industrial parks, petroleum and natural gas,
pipelines, irrigation, water supply, sewerage
and real estate development......
3.2.3 For a project to qualify as an Eligible Project under
Categories 1 and 2 :
(a) It should have been implemented on BOT,
BOLT, BOO, BOOT or other similar basis;
(b) The entity claiming experience should have
held, in the company owing the Eligible
Project, a minimum of 26% equity during the
period for which Eligible Experience is being
claimed.
(c) the capital cost of the project should be more
than Rs. 146 Crore (Rs. One Hundred Forty Six
crore); and
(d) the entity claiming experience shall, during
the past 5 (five) financial years preceding the
Application Due Date, have (i) commissioned
the construction work of the project and paid
for it, and/or (ii) collected and appropriated the
revenues of such project after commencement
of commercial operation........
3.2.6 Applicant‟s experience shall be measured and stated
in terms of a score (the "Experience Score"). The
Experience Score for a given category would be the
project costs or certified payments/receipts, as the
case may be, divided by one crore and then
multiplied by the applicable factor in Table 3.2.6
below. In case the Applicant has experience across
different categories, the score for each category
would be computed as above and then aggregated to
arrive at his Experience Score.
Table 3.2.6. : Factors for Experience
across categories.
Category Factor
Category 1 1.25
Category 2 1.00
Category 3 0.75
Category 4 0.50
ANNEX-III
FINANCIAL CAPACITY OF THE APPLICANT
(Refer to Clauses 2.2.2(B), 2.2.4(ii) and 3.4 of the RFQ)
Net
Net Cash Accruals Wroth
***
Applicant Member
type* Code** Ye
Year Year Year Year Year
ar
1 3 4 5 1
Single entity
Applicant
Consortium
Member 1
Consortium
Member 2
Consortium
Member 3
Consortium
Member 4
TOTAL
Name & address of Applicant‟s Bankers:
* An Applicant consisting of a single entity should fill in
details as per the row titled Single entity Applicant and
ignore the rows titled Consortium Members. In case of a
Consortium, row titled Single entity Applicant may be
ignored.
** For Member Code, see instruction 4 at Annex-IV of this
Appendix-I.
*** The Applicant should provide details of its own Financial
Capability or of an Associate specified in Clause 2.2.9.
Instructions :
1. The Applicant/its constituent consortium members
shall attach copies of the balance sheets, financial
statements and Annual Reports for 5 (five) years
preceding the Application Due Date. The financial
statements shall:
(a) reflect the financial situation of the Applicant
and its Associates where the Applicant is
relying on its Associate‟s financials;
(b) be audited by a statutory auditor;
(c) be complete, including all notes to the
financial statements; and
(d) correspond to accounting periods already
completed and audited (no statements for
partial periods shall be requested or
accepted).
2. Net Cash Accruals shall mean Profit Tax +
Depreciation.
3. Net-worth shall mean (Subscribed and Paid-up Equity
+ Reserves) less (Revaluation reserves +
miscellaneous expenditure not written off + accrued
liabilities).........
7. The Applicant shall provide an Auditor‟s Certificate
specifying the net-worth of the Applicant and also
specifying the methodology adopted for calculating
such net-worth in accordance with Clause 2.2.4 (ii) of
the RFQ document.
ANNEX-IV
DETAILS OF ELIGIBLE PROJECTS
(Refer to Clauses 2.2.2(A), 3.2 and 3.3 of the RFQ)
Project Code :
Refer Particulars of
Item
Instruction the Project
Title & nature of the project
Year-wise payments
received/made or revenues
Entity for which the project
Location
Project
Date of commencement of
Project/contract
Date of
Equity shareholding (with
period during which equity
Instructions : .........
6. The total payments received/made or revenues
appropriated for each Eligible Project are stated in
Annex-II of this Appendix-I. The figures to be provided
here should indicate the break-up for the past 5 (five)
financial years. Year 1 refers to the financial year
immediately preceding the Application Due Date; Year
2 refers to the year before Year 1, Year 3 refers to the
year before Year 2, and so on.....
12. Certificate from the client or the Applicant‟s statutory
auditor must be furnished as per format below.
13. If the Applicant is claiming experience under
Categories 1 & 2, it should provide a certificate from
its statutory auditor in the format below;
Certificate from the Statutory Auditor regarding
BOT projects
This is to certify that ____________________(name of the
Applicant) is/was an equity shareholder in __________
(title of the project company) and holds/held Rs. *** cr.
of equity (which constitutes __% of the total paid up
and subscribed equity capital) of the project company
from ______ (date) to ______ (date). The project was
completed and commissioned on _____ (date of
commission of the project).
We further certify that the total estimated cost of the
project as on the date of commission was Rs. *** cr., of
which Rs. *** cr. of capital expenditure was incurred
during the past five financial years as per year-wise
details noted below:
* * *
We also certify that the annual revenues collected and
appropriated by the Applicant during the past five
financial years were Rs. *** cr. as per year-wise details
noted below:
* * *
Authorised Signatory
Name :
Designation :
Signature of the Authorised
Signatory and date.
14. If the Applicant is claiming experience under
Categories 3 & 4, it should provide a certificate from
its statutory auditors or the client in the format given
below :
Certificate from the Statutory Auditor/Client regarding
construction works
This is to certify that ____________________(name of the
Applicant) was engaged by __________ (title of the project
company) to execute _________ (name of project) for
_______ (nature of project). The construction of the
project commenced on ______ (date) and the project was
commissioned on ______ (date). It is certified that
_________ (name of the Applicant) received Rs. *** cr. By
way of payment for the aforesaid construction.
We further certify that the total estimated cost of
construction of the project is Rs. **** cr., of which Rs. ****
cr. was paid to the Applicant by the project company
during the past five financial years as per year-wise
details noted below :
* * *
[It is further certified that the payments indicated above
are restricted to the share of the Applicant who undertook
these works as a partner or a member of joint
venture/consortium.]
Authorised Signatory
Name :
Designation :
Signature of the Authorised
Signatory and date.
15. It may be noted that in the absence of any detail in the
above certificates, the information would be
considered inadequate and could lead to exclusion of
the relevant project in computation of Experience
Score."
(emphasis supplied)
25. He further submitted that any ambiguity in the Auditor's
Certificate would be contrary to public interest as most of the bidders
were multi-national corporations and it would be difficult, if not
impossible, for NHAI to verify the facts mentioned by the bidder, other
than by requiring a Statutory Auditor to vouch for the same.
26. We are of the opinion that furnishing a net worth certificate by a
statutory auditor was an essential condition of eligibility which was to
be enforced rigidly and not treated merely as an ancillary or subsidiary
condition which could be deviated from. In our view, an Auditor's net
worth certificate without specifying that it was being issued by a
Statutory Auditor could not be considered to be responsive and
conforming to the mandatory eligibility criteria as, firstly, the said
certificate was of crucial, critical importance and interlinked with
various other tender terms. The Statutory Auditor's certificate had to
be absolutely transparent and self-speaking. It was not the
Respondents responsibility to conclude that an auditor's certificate was
a statutory auditors certificate either by way of a process of derivation
or by way of search through a maze of papers. Secondly, the RFQ had
cast a heavy duty on a responsible authority like a Statutory Auditor to
vouch for facts and figures and any ambiguity or relaxation could, in
our opinion, lead to disastrous consequences. It is pertinent to
mention that most of the bidders were consortiums comprising of
foreign companies and NHAI was in no position to verify their net worth
or the value of the projects executed by them or the revenues
generated by them from their projects. Thirdly, the project in question
is an infrastructure project having huge financial stakes in which the
bidders would have surely created a large professional team to
prepare, scrutinize and submit their bids. Consequently, in our view,
neither in law nor in equity, the Petitioners are entitled to any
relaxation or waiver of the mandatory term of the tender.
27. Though Mr. Subramaniam, learned ASG, submitted that the
Ministry had not interfered in the functioning of NHAI, the counter
affidavit of NHAI candidly admits that the revaluation of the bids had
been done only in accordance with the directions of the Ministry. The
relevant extract of the counter affidavit of NHAI is reproduced
hereinbelow:-
"That it is the humble and respectful submission of the
Respondent No. 1 that the entire sequence of events as
aforesaid confirm that the Respondent No. 1 Authority has
acted as per the directions of the Government of India,
Ministry of Shipping, Road Transport and Highways.....
The whole exercise of re-evaluation was subsequent to the
directions of the Government of India by which the
Respondent No. 1 is bound under the provisions of Section
33 of the National Highways Authority of India Act,
1983............."
28. We have already held in accompanying judgment rendered by us
in WP(C) No. 6792/2008 titled as GMR Infrastructure Ltd & Anr.
Vs. National Highways Authority of India & Anr. that the
Ministry's order directing a review/revaluation of bids was neither legal
nor justified as the same was not in accordance with the provisions of
the NHAI Act which envisages NHAI as an autonomous statutory body.
In any event, in view of Mr. Subramaniam's subsequent stand that the
statutory auditors certificate was a mandatory requirement which
could not be dispensed with, the entire raison d‟etre behind the
revaluation exercise directed by the Government of India no longer
survived. Consequently, we are of the view that NHAI's insistence of
requiring the phrase 'Statutory Bidder' written on the net-worth
certificate was not a hyper-technicality and the revaluation conducted
at the directive of the Ministry was beyond its jurisdiction, illegal and
unjustified. Therefore, the initial valuation exercise conducted by NHAI
was proper and the Petitioners were not entitled to be short-listed for
the RFP/price bid stage.
29. Moreover, we also do not agree with the submission that to
confirm association, a Statutory Auditor's Certificate was not required.
NHAI has drawn our attention to the clarification issued by it during a
pre-bid meeting held on 5th November, 2007. In the said clarification, it
was specifically stated that to establish an associate relationship, a
Statutory Auditor's Certificate had to be provided.
30. The clarification is reproduced hereinbelow :-
"CLARIFICATIONS TO THE QUERIES RECEIVED FROM
APPLICANTS WITH REGARD TO RFQ
Sub: Design, Engineering, Finance, Construction,
Operation and Maintenance for 4/6 laning of selected
stretches on different National Highways under NHDP Phase
III. - Pre-Application Conference for 6 Sub-projects in the
States of Andhra Pradesh, Orissa & Rajasthan approved by
PPPAC vide minutes of meeting dt. 5.11.2007 - Clarification
Queries concerning RFQ.
S. Reference Queries/Request Reply from NHAI
No. clause in
RFQ
14. Regarding the Supporting
definition of Statements
Associates provided in certified by
Clause 2.2.9, we Statutory
would need further Auditor should
clarifications of the be provided.
documentation to be
provided to evidence
the condition of
associate of any
member of the
Consortium.
(emphasis supplied)
31. In our opinion, in view of the clarification provided by NHAI in its
pre-bid meeting, it was mandatory on the part of the Petitioners to
furnish a Statutory Auditor's Certificate to establish its association.
32. Though the Petitioners had stated that the Associate Relationship
can be verified from the Annual Report for the year ending 31.03.2008
submitted along with the RFQ, NHAI's counter states that only on one
of the unsigned pages in the Application, it had been written that
Reliance Communications Limited is subsidiary company of AAA
Communications. Moreover, as a complete balance-sheet along with
Auditors report had not been submitted and the balance-sheets of
earlier years submitted along with the application were only signed by
the Director and not by the Statutory Auditor, the same could not be
treated as an authentic supporting document in support of Associate
Relationship.
33. We also find from NHAI's affidavit that the experience relating to
electricity business had been wrongly quoted in a consolidated form
without giving the required project specific details which was a basic
requirement for understanding in which Category the Project fell and
whether the Project was having the required threshold limit.
34. Before we conclude, we may note that the RFQ document
specifically prohibited any representation from a bidder who had not
been shortlisted for the second stage of the tender, namely, the price
bid. The relevant clause 2.2.1 of the RFQ document reads as under:-
"E. QUALIFICATION AND BIDDING
2.21 Short-listing and notification
After the evaluation of Applications, the Authority
would announce a list of short-listed pre-qualified
Applicants (Bidders) who will be eligible for
participation in the Bid Stage. At the same time,
the Authority would notify the other Applicants that
they have not been short-listed. The Authority will
not entertain any query or clarification from
Applicants who fail to qualify....."
(emphasis supplied)
35. Further, Clause 4.2(d) of the RFQ prohibited receiving of
representations from the unsuccessful applicants. The said clause
reads as under :
"(d) "Undesirable practice" means establishing contact
with any person connected with or employed by the
Authority with the objective of canvassing, lobbying or in
any manner influencing or attempting to influence the
Bidding Process."
36. Clause 2.18. of the RFQ states that all information submitted to
NHAI shall be treated as confidential. The representations made by
the Petitioner, however, clearly indicate that the information qua other
bidders was available with the Petitioner.
37. In our view, the Petitioner in approaching the Ministry tried to
circumvent the bar imposed by Clauses 2.2.1 and 4.2(d) of the RFQ.
We have already held in our accompanying judgment in GMR's case
(supra) that the Petitioner in order to achieve what was forbidden by
Clauses 2.2.1 and 4.2(d) could not have adopted the route of
approaching the Ministry. To our mind, in case the Petitioners were
aggrieved by NHAI's decision not to shortlist them amongst the six top
technically qualified bidders, the Petitioners' remedy lay in
approaching a Court of Law and not in filing representations to NHAI
and the Ministry in violation of the specific stipulation in the RFQ. In
Reliance Airport Developers (P) Ltd. Vs. Airports Authority of
India & Ors. reported in (2006) 10 SCC wherein the Petitioner in
response to newspaper reports kept on supplying fresh documents for
consideration to the Tender Committee, the Apex Court held that not
only the Petitioner's conduct constituted a breach of tender terms but
it went against the very concept of fairness in the process of
evaluation of bids.
38. Keeping in view the aforementioned facts and the conduct of the
Petitioners, the present Petition is dismissed but with no orders as to
costs.
MANMOHAN, J
MUKUL MUDGAL, J
th
December 16 , 2008
rn/sb
